Jenkins v. Henry C. Beck Co.

The problem here is o.ne of accord and satisfaction in the context of a summary judgment. We disagree with the Court of Civil Appeals, 440 S.W.2d 85, that such was shown as a matter of law.

Petitioner, Lenox Jenkins, plaintiff below, a subcontractor, sued Henry C. Beck Company, a corporation, the contractor, for alleged unpaid balances due him in the total sum of $16,855.34. Beck in its answer admitted owing Jenkins the sum of $10,675.73, which was tendered into court. Beck also filed a counterclaim against Jenkins for expenses in the sum of $5,315.14 incurred as a result of Jenkins’ failure to perform the work provided in the subcontract between the parties. The subcontract with Beck obligated Jenkins to perform certain interior work on a construction project in Dallas for a total consideration of $180,945.75. The subcontract further provided for periodic progress payments by Beck to Jenkins, less statutory retainage, and for payment of the balance of the contract price upon completion of the work of Jenkins; also, that “no payment to subcontractor shall operate as an approval of subcontractor’s work or materials, or any part thereof.” Requests for payment were made by Jenkins to Beck from time to time as the work progressed. In three instances Beck deducted what is termed “back charges” by issuing its checks to Jenkins accompanied by vouchers containing these notations: “This check is tendered in full payment of items listed below”; thereunder appeared the item “This Payment,” with the amount entered; the item “Less Charges,” with the amounts entered; the item “Plus Credits,” which was in blank; and the final item “Amount this Check,” with the amount entered. Jenkins cashed the three checks. The total amount of the deducted charges in the three checks was $5,315.14, which is the sum claimed by Beck in its counterclaim against Jenkins. Beck moved for summary judgment upon the theory that its tender to Jenkins of the checks and attached vouchers carrying the stated notations, and the act of Jenkins in accepting and cashing the checks, effected an accord and satisfaction as a matter of law. The motion was granted by the trial court and this was affirmed by the Court of Civil Appeals.

The burden was upon Beck as the movant for summary judgment to conclusively establish the affirmative defense of accord and satisfaction. This defense rests upon a new contract, express or implied, in which the parties agree to the discharge of the existing obligation by means of the lesser payment tendered and accepted. Industrial Life Insurance Company v. Finley, 382 S.W.2d 100 (Tex.Sup.1964). The evidence must establish an assent of the parties to an agreement that the amount paid by the debtor to the creditor was in full satisfaction of the entire claim. McCarty v. Humphrey, 261 S.W. 1015 (Tex.Com.App.1924, judgment adopted). The minds must meet and where resting in implication the facts proved must irresistibly point to such conclusion. Simms Oil Co. v. American Refining Co., 288 S.W. 163 (Tex.Com.App.1926). There must be an unmistakable communication to the creditor that tender of the lesser sum is upon the condition that acceptance will constitute satisfaction of the underlying obligation. It has been said that the conditions must be made plain, definite and certain, Clay v. Rossi, 62 Idaho 140, 108 P.2d 506 (1940) ; that the statement accompanying the tender of a sum less than the contract price must be so clear, full and explicit that it is not susceptible of any other interpretation. Sanders v. Standard Wheel Co., 151 Ky. 257, 151 S.W. 674 (1912); that the offer must be accompanied with acts and declarations which the creditor is “bound to understand,” Preston v. Grant, 34 Vt. 201 (1861); Crucible Steel Co. v. Premier Mfg. Co., 94 Conn. 652, 110 A. 52 (1920).

Assuming without deciding that the parties were shown to have been in dispute, it cannot be said under the circumstances here that the voucher notations carried unequivocal notice to Jenkins that the checks were conditionally tendered in full and final satisfaction of Beck’s obligation to him at the time, the acceptance of which would bind Jenkins to an accord and satisfaction. The reference to full payment of items listed below is itself unclear, i. e., whether to the item “This Payment,” the amount claimed to be due by Jenkins for the period in question, or to the final and lesser item “Amount this Check.” The uncertainty is accentuated by the fact that Beck was not contractually bound to the finality of a progress payment since the subcontract provided that no payment to Jenkins w.ould operate as an approval of his work or materials. As to Jenkins, then, the voucher notations were reasonably subject to the construction that Beck was approving the work and materials of Jenkins for the period in question to the extent of the payment tendered and would not to such extent thereafter assert the right of disapproval; but that Beck was withholding approval of the work or materials represented by the deducted charges for final adjustment after completion of the work. Or, the voucher notations were subject to the construction that Beck was merely notifying Jenkins of his unwillingness to pay him on an interim basis for any work or use of materials which were considered questionable or unacceptable, notwithstanding the protective provisions in the subcontract, with final settlement to be made when Beck became obligated to pay the balance of the contract price. In no event, however, can it be said that the notations carried a clear and certain message to Jenkins that Beck was asserting its contractual right of disapproval to the extent of the deducted charges and that acceptance of the checks in the lesser amounts would constitute full and final payment of all claims of Jenkins for the period in question. It follows that new contracts of accord and satisfaction cannot be implied as conclusively arising on the face of the papers evidencing the three progress payments in question.

The judgments below are reversed and the cause is remanded to the trial court for further proceedings.