{ "id": 8553447, "name": "BAILLIE LUMBER COMPANY, INC. v. KINCAID CAROLINA CORPORATION", "name_abbreviation": "Baillie Lumber Co. v. Kincaid Carolina Corp.", "decision_date": "1969-04-30", "docket_number": "No. 6927SC87", "first_page": "342", "last_page": "354", "citations": [ { "type": "official", "cite": "4 N.C. App. 342" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "80 S.E. 2d 23", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "239 N.C. 409", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8627117 ], "opinion_index": 0, "case_paths": [ "/nc/239/0409-01" ] }, { "cite": "109 S.E. 2d 171", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "250 N.C. 547", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8624893 ], "opinion_index": 0, "case_paths": [ "/nc/250/0547-01" ] }, { "cite": "9 A. 2d 77", "category": "reporters:state_regional", "reporter": "A.2d", "year": 1939, "opinion_index": 0 }, { "cite": "40 Del. 274", "category": "reporters:state", "reporter": "Del.", "case_ids": [ 440417 ], "year": 1939, "opinion_index": 0, "case_paths": [ "/del/40/0274-01" ] }, { "cite": "106 S.E. 2d 576", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "249 N. C. 390", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8615823 ], "opinion_index": 0, "case_paths": [ "/nc/249/0390-01" ] }, { "cite": "21 S.E. 410", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1895, "opinion_index": 0 }, { "cite": "116 N.C. 339", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8654729 ], "year": 1895, "opinion_index": 0, "case_paths": [ "/nc/116/0339-01" ] }, { "cite": "73 S.E. 2d 488", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "236 N.C. 435", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8626252 ], "opinion_index": 0, "case_paths": [ "/nc/236/0435-01" ] }, { "cite": "96 S.E. 2d 438", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "245 N.C. 469", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8613205 ], "opinion_index": 0, "case_paths": [ "/nc/245/0469-01" ] }, { "cite": "107 S.E. 2d 98", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "249 N.C. 591", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8619554 ], "opinion_index": 0, "case_paths": [ "/nc/249/0591-01" ] }, { "cite": "123 S.E. 2d 575", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "256 N.C. 213", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8571938 ], "opinion_index": 0, "case_paths": [ "/nc/256/0213-01" ] }, { "cite": "64 S.E. 2d 171", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "233 N.C. 312", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8606625 ], "opinion_index": 0, "case_paths": [ "/nc/233/0312-01" ] }, { "cite": "26 S.E. 2d 897", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "223 N.C. 344", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8607214 ], "opinion_index": 0, "case_paths": [ "/nc/223/0344-01" ] }, { "cite": "101 S.E. 2d 668", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "247 N.C. 590", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8628037 ], "opinion_index": 0, "case_paths": [ "/nc/247/0590-01" ] }, { "cite": "109 S.E. 43", "category": "reporters:state_regional", "reporter": "S.E.", "opinion_index": 0 }, { "cite": "182 N.C. 325", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8655920 ], "opinion_index": 0, "case_paths": [ "/nc/182/0325-01" ] }, { "cite": "131 S.E. 2d 678", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "260 N.C. 101", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8573114 ], "opinion_index": 0, "case_paths": [ "/nc/260/0101-01" ] }, { "cite": "113 S.E. 2d 587", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "opinion_index": 0 }, { "cite": "252 N.C. 269", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8621119 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nc/252/0269-01" ] }, { "cite": "88 S.E. 2d 825", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "opinion_index": 0 }, { "cite": "242 N.C. 506", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8617903 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nc/242/0506-01" ] }, { "cite": "84 S.E. 393", "category": "reporters:state_regional", "reporter": "S.E.", "opinion_index": 0 }, { "cite": "168 N.C. 340", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8659558 ], "opinion_index": 0, "case_paths": [ "/nc/168/0340-01" ] } ], "analysis": { "cardinality": 842, "char_count": 27676, "ocr_confidence": 0.608, "pagerank": { "raw": 5.573606511999673e-07, "percentile": 0.9474803357261369 }, "sha256": "1ff04a6fed5c722339394cc571c9240c3ba1f1dd6d70941a012e64cf0b12e8b1", "simhash": "1:66e2378a988a7a62", "word_count": 4709 }, "last_updated": "2023-07-14T18:50:38.610889+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Britt and PARKER, JJ., concur." ], "parties": [ "BAILLIE LUMBER COMPANY, INC. v. KINCAID CAROLINA CORPORATION" ], "opinions": [ { "text": "Mallard, C.J.\nWhen the case was called for trial, the parties submitted to the court an agreed statement of facts and issues as follows:\n\u201cAgeeed Statement of Facts AND Issues\nPlaintiff and Defendant stipulate and agree the facts in this case are as follows:\nPlaintiff is a lumber distributor in Hamburg, New York. Defendant is a furniture manufacturer in Lincolnton, North Carolina. Sometime prior to April 6, 1967, defendant placed an order with plaintiff for 8,964 feet of cherry lumber. Plaintiff filled the order and on April 6, 1967, sent its statement to defendant in the amount of $2,447.61 for the lumber. A copy of the statement is attached.\nOn August 16, 1967, defendant, through its attorneys, wrote its creditors offering a 35% settlement to them. A copy of defendant\u2019s letter to plaintiff is attached.\nOn August 25, 1967, plaintiff replied to defendant\u2019s offer. A copy of plaintiff\u2019s letter of reply is attached.\nThere were no further communications between plaintiff and defendant until February 27, 1968.\nOn February 27, 1968, defendant forwarded its check number 4985 in the amount of $428.33 to plaintiff with the words \u2018first installment of agreed settlement\u2019 on the face of the check, which was endorsed by plaintiff \u2018with reservation of all our rights.' A copy of the check is attached.\nOn April 2, 1968, defendant forwarded its check number 5118 in the amount of $428.33 to plaintiff with the words \u2018final installment of agreed settlement\u2019 on the face of the check, which was endorsed by plaintiff \u2018with reservation of all our rights.\u2019 A copy of the check is attached.\nOn May 2, 1968, plaintiff entered suit against defendant for $1,590.95, which is the difference between the amount of plaintiff\u2019s statement of April 6, 1967, and the two checks forwarded to plaintiff by defendant.\nPlaintiff and Defendant agree that the issues that arise in this case are as follow:\n1. Was defendant indebted to plaintiff in the amount of $2,-447.61 for the purchase of lumber, as alleged by plaintiff in its Complaint?\nANSWER: Yes, by agreement of the parties.\n2. Was there an accord and satisfaction between plaintiff and defendant, as alleged by defendant in its Further Answer and Defense?\nANSwer: .(To be answered by the Court)\n3. How much, if any, is plaintiff entitled to recover from defendant?\nAnswer: .(To be answered by the Court)\u201d\nDefendant Kincaid assigns as error a portion of the findings of fact by the trial judge, all of the conclusions of law, and the signing and entering of the judgment.\nThe judgment, which includes the court\u2019s findings of fact, reads as follows:\n\u201cThis matter coming on to be heard before the undersigned Judge presiding over the September 1968 Mixed Session of the Superior Court for Lincoln County, the parties submitted to the Court an agreed statement of facts, and agreed that the issues submitted by them be answered by the Court. The Court therefore makes findings of fact, and enters its conclusions of law and judgment as follows:\nFINDINGS op Fact\n1. On May 6, 1967, plaintiff sold and delivered to defendant certain lumber, for which defendant agreed to pay plaintiff $2,447.61.\n2. Under date of August 16, 1967, defendant, as part of a general settlement with its creditors, offered to pay plaintiff 35% of the sum of $2,447.61 due plaintiff, in full satisfaction of the debt.\n3. Under date of August 25, 1967, plaintiff agreed to accept said settlement, upon condition that payment of the offered sum be made to it on or before September 20, 1967.\n4. Defendant did not pay said sum to plaintiff on or before September 20, 1967.\n5. On February 27, 1968, defendant forwarded a check in the amount of four hundred twenty-eight dollars thirty-three cents ($428.33), being one-half (%) of thirty-five (35%) per cent of plaintiff\u2019s claim, to the plaintiff with the words \u2018First installment of agreed settlement\u2019 on the face of the check. Said check was endorsed by plaintiff \u2018With reservation of all our rights\u2019 and was cashed by the plaintiff. On April 2, 1968, defendant forwarded its check #5118 in the amount of four hundred twenty-eight dollars thirty-three cents ($428.33) to the plaintiff with the words \u2018Final Installment\u2019 on the face of the check. Said check was endorsed by the plaintiff \u2018With reservation of all our rights\u2019 and was cashed by the plaintiff.\nConClusioNS of Law\n1. No accord and satisfaction was had between plaintiff and defendant.\n2. Plaintiff, by accepting the checks of defendant dated February 27, 1968, and April 12, 1968, with reservation of rights, reserved its right to collect the balance of the amount claimed to be due it.\n3. Defendant is indebted to plaintiff in the sum of $1,590.05 (sic).\nJudgmeNT\nIt is ordered, adjudged and decreed:\n1. That plaintiff have and recover judgment of defendant in the sum of $1,590.05 (sic), with interest thereon from May 6, 1967, until paid.\n2. That defendant pay the costs of this action.\u201d\nThe \u201cfindings of fact\u201d in paragraph numbered 5 are not identical to the facts contained in the \u201cAgreed Statement of Facts and Issues\u201d; however, they are in substantial accord and Kincaid, having agreed to the facts, will not be heard to controvert them.\nHowever, Kincaid contends that the court erred when it failed to find that the checks were tendered to Baillie in full satisfaction of Baillie\u2019s claim. Kincaid specifically requested the court to so find. Kincaid also contends that the refusal of the court to so find was tantamount to an affirmative finding that it had not made such a request.\nThe burden of proving the defense of accord and satisfaction was on Kincaid. The question of accord and satisfaction maybe one of fact and of law. Rosser v. Bynum, 168 N.C. 340, 84 S.E. 393; Allgood v. Trust Co., 242 N.C. 506, 88 S.E. 2d 825. In this case the trial judge was the judge of both the law and the facts. The court, upon the competent evidence offered, found the facts and then stated as its conclusion of law that there was no accord and satisfaction between the parties. The facts found support the conclusions of law and the judgment. Kincaid\u2019s assignment of error to the findings of fact and failure to find other facts is overruled.\nG.S. 1-540 reads as follows:\n\u201cBy agreement receipt of less sum is discharge. \u2014 In all claims, or money demands, of whatever kind, and howsoever due, where an agreement is made and accepted for a less amount than that demanded or claimed to be due, in satisfaction thereof, the payment of the less amount according to such agreement in compromise of the whole is a full and complete discharge of the same.\u201d\nBy the words of this statute, G.S. 1-540, a compromise and settlement is indicated; and a compromise, as distinguished from accord and satisfaction, must be based on a disputed claim while accord and satisfaction may be based on an undisputed or liquidated claim. Products Corporation v. Chestnutt, 252 N.C. 269, 113 S.E. 2d 587.\nIn 1 Strong, N.C. Index 2d, Accord and Satisfaction, \u00a7 1, it is said:\n\u201cA compromise and settlement must be based upon a disputed claim; an accord and satisfaction may be based on an undisputed or liquidated claim.\nAn accord and satisfaction is compounded of two elements: An accord, which is an agreement whereby one of the parties undertakes to give or perform and the other to accept in satisfaction of a claim, liquidated or in dispute, something other than or different from what he is or considers himself entitled to; and a satisfaction, which is the execution or performance of such agreement.\u201d\nIt should be noted that G.S. 1-540 applies as a compromise and settlement when an agreement is made and accepted. In the case before us Kincaid in the letter of its attorney made a conditional offer to Baillie. The condition was to pay thirty-\u00f1ve per cent if a sufficient number of creditors accepted the proposal within sixty days from 16 August 1967. In reply thereto on 25 August 1967, Baillie made a conditional acceptance of the offer. The conditions were to accept if Kincaid\u2019s letter contained all of the relevant information and if payment was made to Baillie on or before 20 September 1967. Thus, it is seen that Baillie did not accept the offer of Kincaid as made. The counterproposal as made by Baillie was not accepted by Kincaid. It is part of the agreed statement of facts that after 25 August 1967 there was no further communication between the parties until 27 February 1968. Baillie was not paid anything on its account on or before 20 September 1967 in accordance with its proposal. The principles of law applicable here have been stated by Justice Rodman in the case of Prentzas v. Prentzas, 260 N.C. 101, 131 S.E. 2d 678, as follows:\n\u201cDefendants\u2019 plea of accord and satisfaction \u2018is recognized as a method of discharging a contract, or settling a cause of action arising either from a contract or a'tort, by substituting for such contract or cause of action an agreement for the satisfaction thereof, and an execution of such substitute agreement.\u2019 Walker v. Burt, 182 N.C. 325, 109 S.E. 43; Products Corp. v. Chestnutt, 252 N.C. 269, 113 S.E. 2d 587; Bizzell v. Bizzell, 247 N.C. 590, 101 S.E. 2d 668; Allgood v. Trust Co., 242 N.C. 506, 88 S.E. 2d 825, 1 Am. Jur. 2d 301.\nThe word \u2018agreement\u2019 implies the parties are of one mind \u2014 all have a common understanding of the rights and obligations of the others \u2014 there has been a meeting of the minds. Richardson v. Storage Co., 223 N.C. 344, 26 S.E. 2d 897; Sprinkle v. Ponder, 233 N.C. 312, 64 S.E. 2d 171; Allgood v. Trust Co., supra; McCraw v. Llewellyn, 256 N.C. 213, 123 S.E. 2d 575. Agreements are reached by an offer by one party and an acceptance by the other. This is true even though the legal effect of the acceptance may not be understood. Wright v. McMullan, 249 N.C. 591, 107 S.E. 2d 98; McGill v. Freight, 245 N.C. 469, 96 S.E. 2d 438; Greene v. Spivey, 236 N.C. 435, 73 S.E. 2d 488.\u201d\nThe accord is the agreement and the satisfaction is the execution or performance of the agreement. Bizzell v. Bizzell, supra.\nThere is a well-recognized distinction between liquidated or undisputed claims and unliquidated or disputed ones. Under the common law, an agreement to receive a part of a debt due in lieu of the whole of an undisputed, as distinguished from a disputed debt due, was held to be a nudum pactum as to all in excess of the sum actually paid. Union Bank v. Board of Commissioners, 116 N.C. 339, 21 S.E. 410 (1895).\nIn the present case the account of Baillie for the lumber sold and delivered by it to Kincaid was both liquidated and undisputed. An account is liquidated when the amount thereof has been fixed by agreement or if it can be exactly determined by the application of rules of arithmetic or of law. Black\u2019s Law Dictionary, 4th Ed.\nIt is the law in North Carolina, nothing else appearing, that a check given and received by the creditor, which purports to be payment in full of an account, does not preclude the creditor accepting it from showing that in fact it was not in full unless under the principle of accord and satisfaction there had been an acceptance of the check in settlement of a disputed account. Koonce v. Motor Lines, Inc., 249 N. C. 390, 106 S.E. 2d 576; Allgood v. Trust Co., supra; Rosser v. Bynum, supra.\nThe original proposal of Kincaid did not contain any reference to payments of the proposed thirty-five per cent by installments; therefore, when Baillie received the check dated 27 February 1968, there had been no offer theretofore made to pay anything by installments and certainly no agreement to pay a sum less than the total amount due had been theretofore made and accepted with respect to the account Kincaid owed Baillie. There had been an offer made by each party but no acceptance by the other of the offer as made. Therefore, unless the words printed on the face of the first check, \u201cFirst instalment of agreed settlement\u201d or the words on the second check, \u201cFinal instalment of agreed settlement,\u201d constitute a new offer and unless the indorsement constitutes an acceptance thereof, the provisions of G.S. 1-540 do not apply.\nWe do not think that the words appearing on the face of the first check constituted any specific offer of settlement. It was vague in that it stated it was the first installment of an agreed settlement. Baillie, upon receipt of it, could not know how many more installments were to follow because there had been no agreed settlement. Under the circumstances, Baillie was entitled to treat the transaction as merely the act of an honest debtor remitting less than was due. Baillie, by its indorsement of the first check, \u201cWith reservation of all our rights,\u201d put Kincaid on notice that it was not accepting such check as an agreed settlement.\nThe second check is dated 12 April 1968 which is over forty days after the date of the first one. Even if this second check was mailed on 2 April 1968, as indicated in the agreed statement of facts, the indorsement by a collecting bank, as shown on the back thereof, indicates that it was being negotiated on 18 April 1968. From this, it is manifest that the drawee bank could not have paid this check until after that date. Kincaid had ample notice from Baillie\u2019s indorsement \u2019over its signature that the first check had not been accepted as an installment on a settlement for less than the full amount due.\nIn 1 Am. Jur. 2d, Accord and Satisfaction, \u00a7 18, p. 317, there appears the following:\n\u201cThe fact that a remittance by check purporting to be \u2018in full\u2019 is accepted and used does not result in an accord and satisfaction if the claim involved is liquidated and undisputed, under the generally accepted rule that an accord and satisfaction does not result from the part payment of a liquidated and undisputed claim. The creditor is justified in treating the transaction as merely the act of an honest debtor remitting less than is due under a mistake as to the nature of the contract.\u201d\nWe do not think that in this case the memorandum placed on the face of the checks by Kincaid and the memorandum placed on the back of the checks by Baillie, in view of the circumstances and of the dates of the two transactions, constitute an offer and acceptance so as to bring this transaction as a matter of law within the provisions of G.S. 1-540.\nThe checks involved herein were in payment of part of a liquidated and undisputed debt which was already due. Kincaid has paid but a part of its indebtedness and suffers no detriment. By these partial payments, Baillie has received no more than it was entitled to receive for its lumber sold and delivered to Kincaid. No consideration exists for the discharge of the balance due Baillie for its lumber. Consideration must in some form or other be present in an accord. Bizzell v. Bizzell, supra; State of Del. v. Mass. Bonding & Ins. Co., 40 Del. 274, 9 A. 2d 77 (1939).\nIn Casualty Co. v. Teer Co., 250 N.C. 547, 109 S.E. 2d 171, it is said:\n\u201cWhether denominated accord and satisfaction or compromise and settlement, the executed agreement terminating or purporting to terminate a controversy is a contract, to be interpreted and tested by established rules relating to contracts. Dobias v. White, 239 N.C. 409, 80 S.E. 2d 23.\u201d\nBaillie contends that the provisions of G.S. 25-1-207 are applicable. This section of the statute is a part of the Uniform Commercial Code and reads:\n\u201cPerformance or acceptance under reservation of rights. \u2014 A party who with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as \u2018without prejudice,\u2019 \u2018under protest\u2019 or the like are sufficient.\u201d\nThis section of the statute comes under Article 1 which is that portion of the Uniform Commercial Code setting forth \u201cGeneral definitions and Interpretation.\u201d We are required to liberally construe and apply the provisions of the Uniform Commercial Code to promote its underlying purposes and policies. G.S. 25-1-102.\nThe Uniform Commercial Code became effective at midnight on 30 June 1967. G.S. 25-10-101. Section 25-10-102 provides that the Code shall not apply to transactions validly entered into before 1 July 1967. The lumber was sold and delivered prior to 1 July 1967; however, all the transactions with respect to the checks as set forth above occurred after 1 July 1967, the date the Code became effective. We think that the provisions of the Uniform Commercial Code are applicable to the giving and receiving of the checks in this ease. G.S. 25-3-104.\nApplying the provisions of G.S. 25-1-207 to the facts of this case, it is clear that Baillie by indorsing the checks, \u201cWith reservation of all our rights,\u201d complied with that portion of the statute requiring an explicit reservation of rights. Apparently, Kincaid was claiming a right to settle under its rejected offer of payment of thirty-five per cent of Baillie\u2019s claim. Baillie contended that such was unwarranted and that it was entitled to payment of its account. \u2019We hold that Baillie, by its indorsement with explicit reservations, did not accept the second check in full payment but in the manner provided in G.S. 25-1-207 'reserved its right to collect the remainder of its unpaid bill.\nWe also hold that the checks sent by Kincaid and accepted \u2018by Baillie, under the circumstances presented by this record, do not as a matter of law result in an accord and satisfaction of the undisputed and liquidated account owed Baillie hy Kincaid, and the trial court found and concluded that they did not. It.follows, therefore, that.Baillie had the.right to enforce collection of the unpaid balance of its original claim.\u2019 \u2022 . \u2022 -\u00a1,\nFor the reasons stated above, we think all of Kincaid\u2019s assign-merits of error should be and they are, therefore, overruled. The judgment of the Superior Court is affirmed.\nAffirmed.\nBritt and PARKER, JJ., concur.", "type": "majority", "author": "Mallard, C.J." } ], "attorneys": [ "Ervin, Horack & McCartha by C. Eugene McCartha for plaintiff appellee.", "Keener & Cagle by Joe N. Cagle for defendant appellant." ], "corrections": "", "head_matter": "BAILLIE LUMBER COMPANY, INC. v. KINCAID CAROLINA CORPORATION\nNo. 6927SC87\n(Filed 30 April 1969)\n1. Accord and Satisfaction \u00a7 2\u2014 burden of proof\nThe burden of proving the defense of accord and satisfaction is on the debtor.\n2. Accord and Satisfaction \u00a7 2\u2014 question of law and fact\nThe question of accord and satisfaction may be one of fact and of law.\n3. Trial \u00a7 57\u2014 trial by agreement of the parties \u2014 role of the trial judge\nIn a trial wherein the parties submitted to the court an agreed statement of the facts and issues to be answered by the court, the trial judge is the judge of both the law and the facts.\n4. Appeal and Error \u00a7 57\u2014 review of findings of fact\nWhere the facts supported by competent evidence are sufficient to support the conclusions of law and the judgment, an assignment of error to the findings of fact and to the failure to find other facts will be overruled.\n5. Accord and Satisfaction \u00a7 1; Compromise and Settlement \u00a7 1\u2014 disputed and undisputed claims\nA compromise and settlement must be based on a disputed claim; an accord and satisfaction may be based on an undisputed or liquidated claim.\n6. Compromise and Settlement \u00a7 1\u2014 statutory settlement\nG-.S. 1-540 applies as a compromise and settlement when an agreement is made and accepted.\n7. Accord and Satisfaction \u00a7 1\u2014 essentials of the accord \u2014 offer and acceptance\nAn offer by a debtor to pay its creditor thirty-five per cent of the undisputed contract price of lumber on condition that within sixty days from August 16 a sufficient number of its other creditors accept a similar offer of thirty-five per cent in full settlement of their accounts, and the reply by the creditor agreeing to accept thirty-five per cent of the account in settlement of the debt provided that payment be made on or before September 20, do not constitute an agreement such as will support the debtor\u2019s plea of accord and satisfaction.\n8. Accord and Satisfaction \u00a7 1\u2014 essentials of the agreement and satisfaction\nAn accord and satisfaction is composed of two elements: the accord which is the agreement and the satisfaction which is the execution or performance of the agreement.\n9. Accord and Satisfaction \u00a7 1\u2014 payment on undisputed claim \u2014 common law rule\nUnder the common law, an agreement to receive a part of a debt due in lieu of the whole of an undisputed, as distinguished from a disputed debt due, was held to be a nudum pactum as to all in excess of the sum actually paid.\n10. Accord and Satisfaction \u00a7 1\u2014 definition of liquidated account\nAn account is liquidated when the amount thereof has been fixed by agreement or if it can be exactly determined by the application of rules of arithmetic or of law.\n11. Accord and Satisfaction \u00a7 1\u2014 acceptance of check in payment \u2014 creditor\u2019s right to collect balance of debt\nNothing else appearing, a check given and received by the creditor which purports to be payment in full of an account does not preclude the creditor accepting it from showing that in fact it was not in full unless under the principle of accord and satisfaction there had been an acceptance of the cheek in settlement of a disputed account.\nIS. Accord and Satisfaction \u00a7 1\u2014 what constitutes an agreement \u2014 payment by and acceptance of check\nWhere there had been no agreement between the creditor and debtor to pay a sum less than the total amount of the account due, nor had there been an offer to pay the debt by installments, payment by the debtor of thirty-five per cent of the undisputed debt by two separately dated checks bearing on the face of one the words \u201cfirst instalment of agreed settlement\u201d and on the other \u201cfinal instalment of agreed settlement,\u201d and the negotiation of the checks by the creditor with the indorsement \u201cwith reservation of all our rights,\u201d do not as a matter of law result in accord and satisfaction of the undisputed account; consequently, the creditor may enforce collection of the unpaid balance of the account. G.S. 1-540.\n13. Accord and Satisfaction \u00a7 1\u2014 the accord \u2014 necessity for consideration\nConsideration must in some form be present in an accord.\n14. Accord and Satisfaction \u00a7 1; Compromise and Settlement \u00a7 1\u2014 applicability of contract law\nWhether denominated accord and satisfaction or compromise and settlement, the executed agreement terminating or purporting to terminate a controversy is a contract, to be interpreted and tested by established rules relating to contracts.\n15. Uniform Commercial Code \u00a7 3\u2014 construction and interpretation\nThe courts are required to liberally construe and apply the provisions of the Uniform Commercial Code to promote its underlying purposes and policies. G.S. 25-1-102.\n16. Uniform Commercial Code \u00a7 3\u2014 date of application\nThe Uniform Commercial Code, which became effective at midnight on 30 June 1967, does not apply to transactions validly entered into before 1 July 1967.\n17. Uniform Commercial Code \u00a7 3\u2014 date of application\nAlthough lumber was sold and delivered prior to 1 July 1967, provisions of the Uniform Commercial Code are applicable to the giving and receiving of checks in payment of the lumber where the transactions relating to the checks occurred after 1 July 1967. G.S. 25-10-101, G.S. 25-10-102, G.S. 25-3-104.\n18. Uniform Commercial Code \u00a7 4\u2014 what constitutes acceptance under reservation of rights\nWhere debtor pays thirty-five per cent of an account with checks bearing on the face of one the words \u201cfirst instalment of agreed settlement\u201d and on the other \u201cfinal instalment of agreed settlement,\u201d the creditor reserves its right to collect the remainder of the unpaid account when it indorses the checks \u201cwith reservation of all our rights.\u201d G.S. 25-1-207.\nAppeal by defendant from Snepp, J., September 1968 Civil Session of the Superior Court of Lincoln County.\nThe plaintiff, Baillie Lumber Company, Inc. (Baillie), a lumber distributor in New York, on 6 April 1967 sold and delivered a quantity of lumber to the defendant, Kincaid Carolina Corporation (Kin-caid). On 6 April 1967 Baillie sent its statement for the lumber to Kincaid in the amount of $2,447.61. There was no controversy over the quantity, quality, or price of the lumber. Kincaid admits in its answer to Baillie\u2019s complaint that the contract price for the lumber was $2,447.61 and that it was payable within thirty days. Kincaid did not pay for the lumber, and on 16 August 1967, through its attorneys, wrote its creditors, enclosed a financial statement, asserted that it could not pay them, and offered them a thirty-five per cent settlement. This letter contained, among other things, the following:\n\u201cProvided a sufficient number of creditors accept this proposal within sixty (60) days from the date of this letter, the stockholders will make available to the company sufficient funds to pay to the trade creditors 35% in full settlement of their account. The company also intends to pay in full forty-four creditors whose accounts are less than $200.00 each, and which accounts total $3,145.37. The stockholders feel that this will enable them to liquidate the current assets in an orderly fashion, and to find a buyer for the fixed assets under other than forced sale conditions.\u201d\nOn 25 August 1967 Baillie replied to defendant\u2019s letter, as follows:\n\u201cGentlemen:\nRe: Account Owing to Baillie Lumber Co., Inc. in the Amount of $2,447.61\nWe have reviewed your letter of August 16, 1967, and the enclosed Statement of Financial Position as of July 31, 1967.\nProvided that such letter and such Statement of Financial Position together contain all of the relevent (sic) information which is needed to be furnished to enable us, as a creditor of Kincaid Carolina Corporation, to determine the action to be taken on the proposal therein made to creditors and provided that payment is made to us on or before September 20, 1967, we agree to accept 35% of our account in full settlement.\u201d\nThe record reveals no further communication between the parties until the date of 27 February 1968 when Kincaid forwarded to Baillie its check no. 4985 dated 27 February 1968 in the sum of $428.33 with the following words typed on the face thereof: \u201cFirst instalment of agreed settlement.\u201d Baillie received the money for this check after typing on the back thereof above its indorsement the following words: \u201cWith reservation of all our rights.\u201d\nThereafter, Kincaid forwarded to Baillie its check no. 5118 dated 12 April 1968 in the sum of $428.33 with the following words typed on the face thereof: \u201cFinal instalment of agreed settlement.\u201d Baillie received the money for this check after writing on the back thereof above its indorsement the following words: \u201cWith reservations of all our rights.\u201d\nOn 2 May 1968 Baillie instituted this action asserting, among other things, that Kincaid had paid $856.66 of the contract purchase price of the lumber, leaving a balance due of $1,590.95. Kincaid in its answer asserted that Baillie had agreed upon a settlement of this account and had accepted payment of a lesser sum in compromise of the whole as a full and complete discharge of the same. As a further answer, Kincaid asserted in its answer that when Baillie received, cashed, retained, and appropriated the proceeds from the two checks that such resulted in an accord and satisfaction and that G.S. 1-540 is a complete defense and bar to any recovery in this case.\nWhen the case came on for trial, the parties submitted to the court an agreed statement of facts and agreed that the issues submitted by them be answered by the court.\nThe court made findings of fact, conclusions of law, and entered judgment that Baillie have and recover of Kincaid the sum of $1,-590.05 with interest. Kincaid appealed, assigning error.\nErvin, Horack & McCartha by C. Eugene McCartha for plaintiff appellee.\nKeener & Cagle by Joe N. Cagle for defendant appellant." }, "file_name": "0342-01", "first_page_order": 362, "last_page_order": 374 }