| Ark. | Oct 26, 1914
(after stating the facts). As has been stated, the proof was sufficient to support the jury’s finding that the staves had not been manufactured in .accordance with the specifications; and we also think the proof was sufficient to support a finding upon the part of the jury that the appellant company was advised, before. mailing the check to the appellee milling company, that the company was not the owner of the staves, but had shipped them for the owner; but it is not insisted that the milling company had no authority to assent to the appellant’s proposition about rejointing the staves; and, in fact, we think the proof abundantly sufficient to show that such authority existed had that question been raised. But appellees say this service was not. performed as charged for and that in this rejointing a great many good staves were thrown aside as culls, and the verdict of the jury sustains them in this contention and their recovery -would be sustained but for the evidence in regard to the accord and satisfaction.
“It is true that, in order to constitute an accord and satisfaction, it is necessary that the offer of the payment should be made by one party in full satisfaction of the demand, and should be accepted as such by the other. But when the claim is disputed and unliquidated, and a less amount than is demanded is offered in full payment, the question as to whether the creditor in such case does so agree to accept the amount offered in full satisfaction of his demand is a mixed question of law and fact. If the offer or tender is accompanied by declarations and acts so as to amount to a condition that if the creditor accepts the amount offered it must be in satisfaction of his demand, and the creditor understands therefrom that if he takes it subject to that condition, then an acceptance by the creditor will estop him from denying that he has agreed to accept the amount in full payment of his demand. His action in accepting the tender under such conditions will >speak, and his words of protest only will not avail him.”
To the same effect see Cunningham v. Rauch-Darragh Grain Co., 98 Ark. 273, and Barham v. Kizzia, 100 Ark. 252.
“If, however, an agent without authority receives a payment in accord and satisfaction of a demand owing his principal, and the principal receives from the agent and appropriates the money so paid, with knowledge of the transaction, he, of course, ratifies the act of the agent.”
To the same effect is the ease of Cashmar-King Supply Co. v. Dowd, 146 N.C. 191" date_filed="1907-11-27" court="N.C." case_name="Cashmar-King Supply Co. v. Dowd & King">146 N. C. 191, where it is said:
“It is not within the power of the plaintiff to repudiate his (the agent’s) act as being one not authorized, and apply the money as a payment on the debt. The money must be accepted according to the intention of the parties to the transaction and applied accordingly; that is, to the full discharge of Dowd’s liability, or rejected for the want of authority, in which case the parties would be restored to their original rights. Sound morality and fair dealing imperatively require the law to apply this rule 'to our business affairs. The plaintiff is- not permitted to ‘blow hot and cold,’ or to accept and reject at the same time. ’ ’
In support of the position that the consideration does not have to be returned where an accord and satisfaction is had or a release of a demand given which was induced by fraud, appellees cite the case of Industrial Mutual Indemnity Co. v. Thompson, 83 Ark. 575. In that case it was said:
“The jury having determined, upon evidence sufficient here, that the receipt was fraudulently obtained and therefore void, it was not a prerequisite to the maintenance of appellee’s suit that she should have tendered to appellant the amount she had been paid. St. Louis, I. M. & S. Ry. Co. v. Smith, 82 Ark. 105" date_filed="1907-02-04" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway Co. v. Smith">82 Ark. 105, and authorities cited. The jury made a deduction in their verdict of the amount that had been paid. Moreover, the question is raised here for the first time. It could not avail also for that reason.”
It will be observed that the court there cited ihe case of St. Louis, I. M. & S. Ry. Co. v. Smith, 82 Ark. 105" date_filed="1907-02-04" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway Co. v. Smith">82 Ark. 105, in which the facts were that the purported release relied upon in that case was 'signed under a misapprehension, of the recitals of that instrument induced by a false statement of the claim agent for the company who made the settlement as to the purport of the writing. Moreover, it was said in the case quoted from that the question of fraud was raised for the first time on appeal, and there was no necessity to review tire authorities in that case and there was no intention to announce a' rule in conflict with the case cited nor the older casqs of St. Louis, I. M. & S. Ry. Co. v. Brown, 73 Ark. 42" date_filed="1904-11-12" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway Co. v. Brown">73 Ark. 42, and Harkey v. Mechanics & Traders Ins. Co., 62 Ark. 274" date_filed="1896-04-11" court="Ark." case_name="Harkey v. Mechanics' & Traders' Insurance">62 Ark. 274. There was no necessity in this Industrial. Mutual Indemnity Co. v. Thompson case to discuss under what circumstances the consideration must be returned where it was shown the settlement had been procured by fr'aud.
The case of St. Louis, I. M. & S. Ry. Co. v. Brown, supra, distinguishes those cases where the consideration must ibe returned as a condition precedent to the maintenance of a suit from the oases where this requirement is not imposed, and in that case it was there said:
“Money paid to a party as a consideration for a release does not have to be tendered or refunded, to enable such a party to bring and maintain his suit, where it is shown that at the time the money was paid him and the release was executed he was incapable of making a contract, and that by fraud and circumvention or imposition he was induced to sign a paper of whose contents and character he was ignorant. Chicago, R. I. & P. Ry. Co. v. Lewis, 109 Ill. 120" date_filed="1884-01-23" court="Ill." case_name="Chicago, Rock Island & Pacific Railway Co. v. Lewis">109 Ill. 120.”
The facts in this Brown ease were that a release of personal damages had been signed by a person at a time when, by reason of physical injuries and of narcotics which had been administered to him, he was incapacitated to contract, and it was held that that contract was not binding upon him, and it was there expressly said that the ease was distinguished from eases like Harkey v. Mechanics & Traders Ins. Co., 62 Ark. 274" date_filed="1896-04-11" court="Ark." case_name="Harkey v. Mechanics' & Traders' Insurance">62 Ark. 274, and St. Louis & C. R. Co. v. Selman, 62 Ark. 347.
In the case of Harkey v. Ins. Co., supra, a receipt had been signed in full settlement of a loss sustained by the insured from a fire, and it was shown that this settlement had been procured by fraud practiced upon him through the representations of the adjuster of the insurance company. Without returning or tendering the sum paid in satisfaction of .this loss, the insured sued to recover upon the policy, and a demurrer to the complaint having been sustained by the trial court on the ground that it did not show that plaintiff had returned or offered to return to the defendant the money received on the compromise before the commencement. of the suit, the cause was dismissed and, in affirming that action of the trial court, Mr. Justice Riddick, speaking for this court, said:
“This is not a case where a debtor compromises with his creditor by the payment of a part of an undisputed debt in satisfaction of the whole, nor is it a case where a party has been induced by fraud to sign a release of his claim through ignorance. of the character and contents of the instrument signed. In each of these cases a different rule- would apply. Reynolds v. Reynolds, 55 Ark. 373; Mullen v. Old Colony Railroad,, 127 Mass. 89. This case rests on the rule that one who receives money or property in consideration of making an agreement, and afterward seeks to avoid and hold for naught such agreement, must first give back to the other party the consideration received. The plaintiff had no right of action at law upon his policy until he had rescinded the agreement annulling such policy by offering to return the money received from defendant upon such agreement.” A number of cases are cited in the opinion in support of the proposition there announced.
In the late case of Bearden v. St. Louis, I. M. & S. Ry. Co., 103 Ark. 341" date_filed="1912-04-29" court="Ark." case_name="Bearden v. St. Louis, Iron Mountain & Southern Railway Co.">103 Ark. 341, there was a release which was held to be void because the court said the evidence wa's sufficient to warrant a finding that the plaintiff in the suit, at the time she signed the release, under the evidence, Avas not aAvare of the contents of the paper, and her signature had been induced by reason of her ignorance and illiteracy, and suffering at the time, and it was there said: “There was evidence to warrant the finding that the settlement and release were fraudulent and void. This case is ruled on this question by the case of St. Louis, I. M. & S. Ry. Co. v. Brown, 73 Ark. 42" date_filed="1904-11-12" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway Co. v. Brown">73 Ark. 42. According to the doctrine of that case, “money paid a party as a consideration for a release does not have to be tendered or refunded to enable such party to bring and maintain his suit where it is shown that, at the time the money was paid him and the release was executed, he was incapable of making a contract, and that, by fraud and circumvention or imposition, he was induced to sign a paper of whose contents and character he was ignorant.”
Whatever reason originally may have prompted the distinction which the courts have made between the cases where the consideration must be returned and those cases where that requirement is not exacted, the rule appears to be that, as a condition precedent to the rescission of an accord and satisfaction, or a release where the accord was made or the release given as the result of fraud practiced in their procurement, the consideration must be returned or tendered before the suit can be maintained; but that rule is subject to certain exceptions which are stated in 1 Cyc. p. 339, as follows:
“As a general rule, one who seeks to avoid the effect of an accord and satisfaction on the ground of fraud, mistake or for any other reason (it is apprehended) must restore or offer to restore to the other party whatever he has received by virtue of the transaction.
“The rule, however, is subject to some limitations and exceptions. It does not apply where the agreement is absolutely void, or where the other party has failed to comply with other material obligations which were of the essence of the agreement, or where defendant admits that what was paid was justly due under the contract sued on. So, where the claimant executes a release for two distinct claims, on the understanding (superinduced by the other party’s fraud) that it applies only to one of them, he need not tender back the consideration received before suing on the other. It has also been urged that another exception should be made in case of the party’s mental incapacity or financial inability to meet this requirement; but it was held that, even if the rule admitted of any such exception, the exception can not obtain unless the fraud remained undiscovered or the mental incapacity continued until after the consideration for the agreement had been expended or otherwise put beyond plaintiff’s control.”
A discussion of the same principle is found in 34 Cyc., p. 1071, in the article on the subject of Eeleases, and in the discussion of the necessity for the restoration of the consideration as a condition precedent to attacking a release, it was there said:
“It is generally held that if a person enters into a release 'and afterward seeks to avoid the effect of it on any ground that will entitle him to rescind it, he must first restore what he has received, although there is some authority to the effect that such restoration or tender need not be made, and that it is sufficient to credit the amount paid with interest on the judgment recovered.”
After this statement of the rule there follows, on page 1073, a statement of the exceptions to it, .and where it was said:
“When a releasor who is himself free from negligence, is deceived as to the nature of the instrument executed by him, as for instance, where the release is represented to be a receipt for a gratuity, or for expenses, for loss of time, for wages, to indicate absence of any ill-will, or that it was a partial release, as that it was a release for damages to clothing or property and in fact included personal injuries, the consideration received need not be restored or tendered. Likewise, according to some cases, where the releasor was mentally incapable of executing the release. Nor .is a releasor required to return that which in any event he would be entitled to retain, either by virtue of the release itself or of the original liability, but credit must be given on the judgment. Furthermore, the releasor is entitled to retain the consideration received by him from the releasee by virtue of a transaction independent of the release. It has beén held that if the releasor be an infant, he may repudiate his release without restoring or tendering the consideration. * * * ’ ’
A number of oases in our own reports illustrate these exceptions, and several of them are cited in the notes to the text which we have just quoted. Among such cases are the following. St. Louis, I. M. & S. Ry. Co. v. Reilly, 110 Ark. 182" date_filed="1913-11-17" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway Co. v. Reilly">110 Ark. 182; St. Louis, I. M. & S. Ry. Co. v. Bearden, 107 Ark. 363" date_filed="1913-03-17" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway Co. v. Bearden">107 Ark. 363; St. Louis, I. M. & S. Ry. Co. v. Hambright, 87 Ark. 614" date_filed="1908-11-02" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway Co. v. Hambright">87 Ark. 614; Bearden v. St. Louis, I. M. & S. Ry. Co., 103 Ark. 341" date_filed="1912-04-29" court="Ark." case_name="Bearden v. St. Louis, Iron Mountain & Southern Railway Co.">103 Ark. 341; St. Louis, I. M. & S. Ry. Co. v. Sandidge, 81 Ark. 264" date_filed="1907-01-07" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway Co. v. Sandidge">81 Ark. 264; Hot Springs Bd. v. McMillan, 76 Ark. 88" date_filed="1905-06-17" court="Ark." case_name="Hot Springs Railroad v. McMillan">76 Ark. 88; StLouis, I. M. & S. Ry. Co. v. Higgins, 44 Ark. 293" date_filed="1884-11-15" court="Ark." case_name="St. Louis, Iron Mountain & Southern Railway v. Higgins">44 Ark. 293; George v. St. Louis, I. M. & S. Ry. Co., 34 Ark. 613" date_filed="1879-11-15" court="Ark." case_name="George v. St. L., I. M. & S. R'y Co.">34 Ark. 613, also the cases which have been quoted from.
It follows, from what we have said, that there was a valid accord and satisfaction in this ease and that appellees, not having returned or tendered the amount of the check, will be held to have accepted it in full satisfaction of this demand, and the judgment of the court below will, therefore, be reversed and the cause of action dismissed.