982 MASSACHUSETTS MUTUAL . LIFE INSURANCE CO. [191 v. PEOPLE 'S LOAN & INVESTMENT COMPAN Y. MASSACHUSETTS MUTUAL LIFE INSURANCE C O. v. , PEOPLE 'S LOAN & IN VESTMENT COMPANY. 4-4079 Opinion delivered December 16, 1935. 1. ACCORD AND SATISFACTION. —W he r e, after a lessor assigned the rent under a written lease, the lessor, in accordance with a prior agreement with the lessees to reduce the rent if business conditions warranted it, reduced the rent, whether the assignee's acceptance of monthly checks for the reduced amount reciting "payment in full" amounted to an accord and satisfaction held for the jury. 2. ACCORD AND SATISFACTION—BASIS.-TO constitute the basis of an accord and satisfaction, the dispute need not be well founded, but must be made in good faith. 3. ACCORD AND SATISFACTION — ACCEPTANCE OF PAYMENT IN FULL.— When a claim is disputed or unliquidated, and tender of a check or draft in settlement thereof is of such character as to give the creditor notice that it must be accepted in full satisfaction of the claim or not at all, retention and use thereof by the creditor constitutes an accord and satisfaction. 4. TRIALBURDE N OF PROOF.—Where, in an action to recover rents, there was no question as to monthly rents having been paid, but it was a question whether the payments were in full of rent, a requested instruction placing upon the defendants the burden to prove the payments held properly refused. 5.- ACCORD AND SATISFACTION — PAYMENT IN FULL.—Where, in an action for rent, there was a dispute between the assignee of a
ARK.] MASSACHUSETTS MUTUAL LIFE INSURANCE Co. 983 v. PEOPLE'S LOAN & NVESTMENT . COMPANY. lease and the lessee .as to the amount of rent due, acceptance by the assignee of monthly checks reciting "rent in full!' held to constitute an accord and satisfaction. Appeal from Sebastian Circuit Court, Fort Smith District ; J. Sam Wood, Judge ; affirmed. Action by Massachusetts Mutual Life Insurance Company against the People 's Loan & Investment-Coni-pany and others. Plaintiff has appealed from an adverse judgment. James B. MeDonongli, for appellant. Miles, Armstrong & Young, for appellees. MEHAFFY, J. The appellant brought this suit in : the Sebastian Circuit Court against the appellees, alleging that on January 6, 1926, Fred Browne, Lee G. • Sims and Charles S. Holt entered into a lease contract whereby Fred Browne leased to Lee G. Sims and Charles S. Holt a building at 1100 Garrison Avenue on corner of Garrison and Townson avenues, in Fort Smith, Arkansas. The building consisted of a basement, occupied by the People 's Loan & Investment Company, and tbe first floor, occupied (by it. The lease was for five years; beginning February 1, 1929, at a rental Value of $2,400, payable $200 on the first of each month. It was alleged that, by the terms of the lease, Lee G. Sims and -Charles S. Holt agreed and obligated theMselves to pay Fred Browne $2,400 a year for said premises, said payments to- be made in the sum of $200 for each month; At the time the lease was made the People 's Loan & Investment Company was occupying the premises, and has continued • to occupy said premises from that date down to the commencement of this action. During the time covered by the lease, the People 's Loan & Investment Company has paid, by its oWn checks, the sum of $100 per mont1L' less a deduction of $22.92, which appellant alleges was wrongfully deducted. On May 10, 1932, Fred Browne eXecuted and acknowb edged an assigninent of the rents to 'the appellant. It is alleged that the appellant accepted said payments as payments on the contract,- and advised the ap-pellees that said payments would he acCepted as payments on the contract, and. that appellees were liable to
984 MASSACHUSETTS MUTUAL LIFE INSURANCE CO. [1.91
v. PEOPLE 'S LOAN & INVESTMENT COMPANY.. the appellant for the total sum of $200 per month. The lease Contract terminated January 31, 1934. For the period ending on that date; the People's Loan & Investment Company paid to the appellant the -sum of $1,200 less $22.92. It alleged. appellees were indebted to it in the . sum • of_ $1,222.92 for_ the year ending January 31, 1.934: Appellant also -alleged that, since the termination of the lease, the appellees have occupied, and are now occupying said premises, and are indebted to appellant for the month of February,.1934; the sum of $200. Appellant asked judgment, of $3,022.92. Appellant foreclosed its mortgage upon the premises and‘bought the premises at the foreclosure : sale, •and is now owner of the same, and Fred Browne •has no, interest in said premises or the rent, and no interest in this lawsuit. The appellees .filed- answer in which . they stated that they had never-. .seen the 'original assignment from Browne to appellant: did not know whether the copy attached was. cOrrect; and therefore denied same ; denied that on June 1, 1932, Fred Browne was . witbout authority to ; collect the rents, and denied that the appellees .were withoUt authority pay Browne ; adthitted that they -paid. Browne the rents up to January- . 31, .1933 ; denied that they became indebted to the . appellant, and were indebted tO it.: They admit-that they paid Bailey, agent -of appellant, the sum of $100 . per Month less a deduction of $22.92, •but deny- that said deduction was wrOngful; deny . that the appellant accepted tbe payments on contract, and advised. appellees that said ;payments would be• accePted as payments on contract, and that appellees were liable to appellant for the total Suth of $200 per month.; admit- that for the period ending January 31, 1934,- they paid appellant the sum of $1,200 less- $22.92; deny that for said period of tithe they were indebted to appellant in the sum of $2,400; deny that- they -are 'indebted to .appellant in any sum. • They allege in their answer that on January 13, 1932, they entered into an agreement with Fred Browne, that, for -and in 'consideration. of .paying Fred Browne twelve months' rent in advance the rent should be reduced to the. sum -of $1754er month, making , a total of $2,100.
ARK.] MASSACHUSETTS MUTUAL LIFE INSURANCE Co. 985.
v. PEOPLE 'S LOAN & INVESTMENT COMPANY. They alleged : that, at that time, it was agreed that a further reduction would be made if linsiness conditions , warranted, and that they then and there paid Fred Browne the sum of • $2,100;-.that on May 12, 1932; they:,received. notice from Bailey, agent .of appellant, that the : rents under said lease was to be paid to..appellant•; that on the. same day they received a letter from Fred Browne confirming same; that under the agreement- set ont;there were no rents . due under the lease until February 1, 1933, and Bailey was• so . notified by, letter. •They state:•that.on January 24, 1933, they entered into another , agreement with Fred Browne. whereby the, rents,were. reduced under said lease . 'to $100 per month, which agreement ;was ef-. fective to February 1,1933. By the terms of .said agreement the reduction was to continue to November 30, 1933, and that . said agreement was in forge and •effectuntil the termination of the original lease.. - In . May, 1932, appel-lees -were served with • notice .by the electric .inspector the city of Fort -Smith that certain changes were. necessary in the electric wiring in the building ; that .the repairs amounted to $22.92; that this is a just , dobt against-the owner of , the building; that on .February 28,.1933,• they paid •to Bailey, agent for appellant, the amount . of $77.08, which was the rent for February, less the $22.92. . They allege, that they paid the rept • t the rate . of • $100, per month under the terms of the contract, and-that theyare not indebted to the appellant in any,•amount. An amendment . was filed to -the 'answer in . Whieh•-it was alleged that they paid rent for the -building for the. months . of , February,' 1933, to January, 1934; :$100 per Month, and that these payments.were made by check, on which was the notation, ,` `rent and alleged this as an accord and . satisfaction.-. . :There:was a jury trial, a . verdict and judgment fol. appellees, and the. caseis here on-appeal: , • • Appellant contends .first ithat undet . the: facts there was no . dispute as:to the- refits,- : and 'the , amount thereof becoming due after January 31, 1933.. The lease -agreement was made for five-years, to connhence on February 1, 1.929, and was for $200 per monthil Fred Browne, the owner of the property, being indebted to the Alassachu.-
986 MASSACHUSETTS MUTUAL LIFE INSURANCE Co. [191 v. PEOPLE'S LOAN & INVESTMENT COMPANY. setts Mutual Life Insurance Company, appellant, on May 10, 1932, made an assignment of the rents to the appellant. Prior to the assignment, -on January 13, 1932, ap-pellees entered into . an agreement with Fred Browne by which the rent would be reduced if they would pay a year's rent in advance. It was reduced for that year to $175 per month, and they thereupon paid Fred Browne $2,100. The evidence shows that, at the time they made this agreement, it Was agreed that a further reduction would be made if business conditions warranted. There were no rents due after the payment of the $2,100 until February 1, 1933, and the agent of the appellant was notified of this. On January 24, 1933, Fred Browne reduced the rents to $100 per • month, effective February 10933. This was carrying out the original agreement made at the time the rent was paid in advance: After the asSignment in May, 1932, Mr. Bailey, agent for appellant, wrote to appellees notifying them of the assignment, and stated that the rents due, or that hereafter may become due, .were to be paid to Bailey, agent of appellant. Fred Browne, on May 12, 1932, also wrote appellees advising them that all rents due would be paid by them to . Mr. Bailey. On May 16, 1932, the appellees wrote to Mr. Bailey acknowledging his letter about the assignment, in which letter they Stated that; as Mr. Browne had already ad-vised- Bailey, the rent on the property had been paid to January 31, -1933, and that at the expiration of that period, unless otherwise notified to the contrary, all rents would be paid to Bailey. • There can therefore be no question about the rent to the period ending January 31, 1933. On February 20, 1933, Bailey wrote te the appellees that he had on Feb-ruary 8 written to Sims, calling his attention to the rent in the sum of $200 being due, and payable February 1. Bailey stated to them that he was advised I by his company to collect the.rent. On February 23, 1933, the ap-pellees wrote to Bailey stating that they thought they had already made it clear that the rent was not due on the • first . of the month, but due on the last day of the
ARK.] MASSACHUSETTS MUTUAL LIFE INSURANCE. CO. 987
v. PEOPLE'S LOAN & INVESTMENT . COMPANY. month, and a. check would be sent at that time. Oh Feb-ruary 20 appellees had written a letter to Bailey that the rent would be paid in the future as it had in the past. In that letter tbe appellees also stated that 'from the check for rent they had deducted $22.92 which they had paid to the electric company for• repairs to electric wiring, Which tbey were forced to pay or .have the lights cut off. On January 24, 1933, Fred Browne wrote appellees a letter calling attention to the former agreement when rent had been paid in advance, and agreeing to reduce the rent to $100 per month, effective with the rent of February, 1933. On February . 28, 1933, appellees wrote Bailey a letter inclosing a check for $77.08, and calling his attention to the deduction of $22.92 which they stated they had previously explained to him. .On March 1, 1933, Bailey wrote to appellees acknowledging the receipt of the check for- $77.08, advising thein that he .could not accept the check as payment of the rent, but accepted the same as a credit on the 'rent. Bailey testified, however, that, after holding the check for a Week, he deposited it. On March 31, 1933, •appellees wrote to Bailey inclosing a check for $100, the letter stating that the amount covered rent for the month of March, 1933, in. full. On May 8 Bailey cashed his 'check. On April 1,• 1933, Bailey wrote appellees, acknowledging the receipt of the check for $100, and again advising them that it was not accepted as a payment in full; but only as a credit on the. rent. Appellees wrote to Bailey about the rent in the future, calling his attention to the..fact that they had learned that some of the checks for rent had been changed by Bailey, before cashing them. • All of the checks- showed that they were for rent "in fall" for the previous Month. It appears from the evidence that, before Browne assigned the rents to the appellant; he had reduced the rents to $175 per month with An hgreement,that, if •conditions Warranted it, he would thereafter reduce the rent to $1.00 per month. After the asSignment he did reduce it to $100 per month. There was a dispute between the parties as to. the amount of the rent. .Of •COurse; before' the assignment
988 MASSACHUSETTS MUTUAL LIFE INSURANCE Co. [191
v. PEOPLE'S LOAN & INVESTMENT COMPANY. Fred Browne'had a right to reduce the rent, and if he did that the amount stated in the lease was no longer controlling. As to whether the acceptance of the checks and the conduct , of the parties was an accord and satisfaction, was a question of fact . for the jury. There was a dispute about the amount of the rent. We do not agree with the appellant in its contention that there was no dispute about the amount of the rent. The evidence shows that the appellees contended .all the time that the rent had been reduced to $100 per month, and the appellant contended that the rent was $200 . per month. Checks were sent to the appellant for $100, which had the notation that it was for the rent "in full." • : At the same . time that the appellees sent the check they wrote a letter in . which they stated that that was payment of the month's. rent in full. The :appellant contended:that it accepted . the check as a credit on rent, but not as payment of the rent in full. And no matter which one was tight, if there was a dispute or controversy about the aMount of the rent, as to whether the actions and .conduct of the parties •aMounted to accord and satisfaction; was a question fot the jury: At the time the agreement Was made tp reduce the i7ent to $175, it was , also agreed that there would be a further reduction if conditions warranted. Thereafter Browne made a further reduction. This, however, was after' the assignment.. -Whether the appellees were right in claiming this reductiOn is immaterial if it *ere made in good faith. "While it is riot necessary that the dispute or controversy should be well founded, it is necessary that it should be made in good faith." 1 C. J; 554: : - We think from the' evidence in •his case there can be no question, but that the -appellees acted in good faith. "When a claim is disputed or unliquidated, and the fender of a check or draft in settlement thereof is of such character as to give the creditor -notice that it must be accepted in full satisfaction of the.claim or not at all, the retention and use thereof by the creditor constitutes an accord arid satisfaction." 1 C. J. 562 ; Pekin Cooper-age v. Gibbs, 114 Ark. 559; 170 S. W. 574 ;- Cunningham
JVRK.] MASSACHUSETTS MUTLAL LIFE'NSURANCE Co. 989 v. PEOPLE'S LOAN & INVESTMENT COMPANY. ' Company V; RaugkDarragh Grain Company, 98 Ark. 269, 135 S. W. 831; Barham. v.. Bank of Delight, 94. Ark: 158, 126 8. :W. 394; Cannon v. Hope•Fertilizer Company, 176 Ark.. 435, 2 S: : ( 2d) • 1100. = • - The apPellaiit next conteridS that the court 'erred in placing the biiiden 'of 'Pt oVirig . the *Payments upon the plaintiff.: 'There WaS no . dispute 'about 'the Paymentg: 'The . appellant admitted' eVety 'payment that 'the appel-lees . claim . to have made, and:the inStruction tequested theappellant wasl-ndt proper.- R . was as folleWs The defendants claim: partial Paythent : on 'the rents,, and, the .Ceurt instructs the jnry that the bniden' Of pre y ing pay-- mentS rests uPonthe defendant's: ' The defendants ' did not claim partial . payment, but each time they made a payment, .they , claimed it was a payment in full. If there had . been any dispute . about the payments, .then the burden wouid . have . been on the , de- fendant •tO prove . payments.: . The court . refused to give the. above .insttuction, and gave,: the :following :. ``:The burden of proof i is upon the:plaintiff :to . make ,out, its case bY a preponderance of thp ,was correct, since there was no Clispute about the amount , of the payments. , .• • It is next contended by the appellant that the assignment of the rent and the acceptance of the assignment by defendants, 'as a matter- of law, substituted the plaintiff as tbe lessor in the lease, and obligated the defendants to pay to the plaintiff $200* per month, beginning February 1, 1933. What we haVe already said answers this contention.. „ It is then contended by the appellant that the court eir . ed in . giving, on' motion . of ;the defendants, their re- quested instruction . No. 7.. That instruction. simply told the. jury in. effect ;that if . there was „a; dispute 'between the parties, and if the check was sent .and had a notation, "rent . in full,"-■ and 'saitreheek -was accepted; and the .proceeds kePt; that . Would conStitute' an accord and satisfaction. We do not think 'there Was any error in giving this instruction. , If there was a • .dispute in, good -faith as., to the amount; and the .check was . marked 'pay-
990 [191 ment in full," and accepted by the payee, this would constitute accord and satisfaction. Appellant also contends that the court erred in refusing to give its instruction No. 2. We think the court did not err in this, because the only question, it seems to us, is whether there was a dispute or controversy in good faith, and whether the payments made were accepted by the appellant. We think appellant's instruction No. 3, given by the court, fully covers this matter. Wbat we have already said is a sufficient answer to appellant's objection to the court's refusing to instruct the jury orally that the plaintiff was entitled to recover the sum of $22.92. This is the same situatiou exactly as the other payments, and the check was made, and the appellant was informed that that was in full payment for the amount of rent for that month. If there is no substantial evidence, the questioh of whether there is accord and satisfaction is a question of law,. but when there is substantial evidence that there was a dispute about the amount, that checks were sent and, appellant was notified that it was' in: full payment, and accepted the check, it was then a question of fact for the jury. We find no error, and the judgment is affirmed. MCHANEY, J., Concurs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.