*1 DICUS, d/b/a PILLOW AND Terry Glen PILLOW DICUS FARM v. THERMOGAS COMPANY OF

WALNUT RIDGE CA 82-111 S.W.2d 292 of Arkansas Court Appeals delivered December Opinion ¿r for Morgan, by: Henry, R. Henry appellants. John brief No for appellee. Pillow Glen Corbin, L.

Donald Judge. Appellants, Dicus, Thermogas Company and Terry requested appellee, fertilizer per Ridge, liquid of Walnut apply pounds acre application acre to at a set appellants’ per farmlands $7,631.55 Appellee representing cost. billed for appellants the applica- then application. figured 309-acre Appellants $4,872.33. arose Controversy tion on acres for a total Appellants debt. correct amount what was the over *2 appellee $4,872.33 “acc with a notation for mailed a check in through Appellee scratched of the check. on the face full” accepted in not “check and wrote on the check this notation payment The trial court awarded Dicus.” of account. H. full appellee

judgment the full between for the difference paid by appellee check amount and the claimed amount by appellants. We reverse. appeal accord and satisfac- is whether an

The issue on appellants case, cite reached. In this one-brief tion has been Wilson, pre-code v. American Insurance Union cases.In two Court, (1927), Supreme 841, at the Ark. S.W. 417 844, page stated: where a is well stated this state that law apply upon sends a check to his creditor to

debtor disputed reception claim the and collection the it an and satisfac- check the creditor renders tion of the debt. page 845,

Further, the stated: at Court “liquidated” used in connection The term when subject reference satisfaction has with the of accord and dispute. not to a claim which a debtor does clearly Here, there no reflects that was the record agent, liquidated Appellee’s principal Howard claim. appellants’ Dicus, check testified the he received that at time controversy the check after existed and he cashed that marking through in full” and wrote notation “acc the accepted payment H. of account. Dicus.” “check not full Appellant Refining Brooks, v. also cites Co. Root following (1936), 1, 90 S.W.2d 221 the rule Ark. which stated Peoples Loan Co. v. & from Massachusetts Mutual Ins. Life page 982, 5: Ark. 831at Investment 88 S.W.2d unliquidated, disputed and the a claim is When or is of thereof such tender of a check or draft in settlement give that it must be notice character as creditor all, accepted or not at claim in full satisfaction creditor constitutes thereof the retention use (Citing cases). an accord satisfaction. necessary it also said that was

It was there founded, dispute controversy but that well should be necessary good faith. it that it should exist was payee-creditor There, which contained receiveda check given payment of final check is this indorsement: “This covering purchase NE1/4 on account of lease west, township range south, NW1/4, 17 depositing County, for Before the check Arkansas.” Union following payee-creditor collection, *3 made notation the the “Payment payment.” final its but not on The Court stated back: on account option accepting payee

that of had the returning his it. He had made the check as tendered or of by election was bound it. Appellee’s holds here. unilateral altera-

The same true legal consequence. option had the tion is of no He returning accepting or of it. the check as tendered Code, 85-1- Ark. Stat. Ann. The Uniform Commercial provides: rights per- party explicit A who with reservation perform- promises performance forms or or assents to offered the other ance in a demanded or manner rights party thereby prejudice reserved. does prejudice”, protest” Such words as “under “without the like are sufficient. interpreted yet Ann. 85-1-

Arkansas has not Ark. Stat. as its effect on rule of accord to the common law our has not altered satisfaction. We hold that § 85-1-207 to If we were common law rule of and satisfaction. “payment rights that a creditor reservehis on a decide full” universally accepted can seriously check, has been it what circumvent community a con- as in the business Thus, disagreements. we venient means for the resolution acceptance by a of a check offered hold creditor disputed payment is an accord claim of a debtor in full by the claim. A action unilateral satisfaction and creditor attempted protest reservation or an payment no in full is of offered as of a check the alteration Ap . legal consequence. Chancellor, v. Hamilton See Inc Super. 345, pliance A.2d 175N.J.

Reversed. J.,

Cooper, dissents. Judge, dissenting. This R. case raises Cooper, James question impression Arkansas, in the of first State Code, Commercial Ark. Stat. Ann. § whether Uniform (Add. 1961),has altered the common law rule of 85-1-207 payment checks”. accord and satisfaction asitrelates “full majority, any analysis, without has reversed the trial court, and held that the common law rule has not been changed by adoption of the Uniform Commercial Code in Arkansas. attempted disputed appel- debt, an settlement of a

In appellees $4,872.33 mailed check for lants with a Appellee notation “acc full” on the face of the check. through wrote, scratched the notation and “check not accepted in full of account. H. Dicus.” The trial *4 apparently court found that this reservation of was judgment appellee effective,and awarded for the difference by in the full amount claimed it and the amount tendered appellants. attorney Neither the trial court nor either mentioned the U.C.C. question

The initial in this case is whether the U.C.C. applies only transaction, to this since U.C.C. is § 1-207 applicable falling to transactions under the sub U.C.C.’s through Planting articles, stantive two v. nine. Peek Co. W. Kennedy (1975). Sons, Inc., 669, 519 H. & Ark. S. W.2d involving In cases check a sent to a creditor marked “payment effect, the debtor as in full” or words to that some underlying courts have looked at the transaction to deter provisions apply. See, mine whether the Van U.C.C. (Wis. App. Tollard, 678, 291 Sistine v. N.W. 2d Wis.2d Fier, Blottner, Derrico, v. Weiss & 1980); Hoffman such an Using 999 420 N.Y.S.2d Misc.2d be to determine whether necessary it would approach, is delivery in the case at bar transaction underlying trans- If the goods. underlying services or a transaction services, then the does not delivery action is a law rule of accord satisfaction and the common apply However, if decision in this case. would control then the goods, is a transaction transaction underlying (Add. 1961), Ark. Stat. Ann. does 85-2-102 apply, § Ark. (Add. Ann. makes (4) 1961) and Ark. Stat. 85-2-103 § 1961) (Add. applicable. Stat. Ann. 85-1-207 § be better would to determine approach I believe Article 3 the check is a instrument under negotiable whether U.C.C., 1961). Ann. etseq. (Add. of the Ark. Stat. 85-3-101 § lead to in the law uniformity This type analysis all, overriding “full checks”. After concerning behind the enactment of the U.C.C. was to provide purpose law. is a negotiable commercial If check uniformity U.C.C., under Article 3 of the then Ark. Stat. instrument makes Ark. Ann. (4) (Add. 1961) Ann. Stat. 85-3-102 § § (Add. 1961) applicable. 85-1-207 be considered a writing may negotiable In order that a instrument, it must contain an unconditional promise order, and no other or obligation power, pay promise, as authorized Article 3. Ark. Ann. 85-3-104 Stat. except § The courts of the various states were (1) (b) (Add. 1961). split on the issue of whether the addition full” or “payment words to that effect were conditional and thus made the check until the addition of U.C.C. non-negotiable, Ann. Ark. Stat. (f). (1) That (1) (f) (Add. 1961). 85-3-112 draft, that a term in a states that the which provides it, full satis- payee, by endorsing cashing acknowledges faction of an drawer does affect the obligation the instrument.1 of Article 3 negotiability of Under this type achieved, in the law would be because analysis, uniformity *5 same to all cases a check involving law apply payable a bank and 1 Acheck is a draft drawn on on demand. Ark. Stat. 1961). (2) (b) (Add. Ann. 85-3-104 §

407 regardless “payment effect, or marked full” words to that underlying transaction. negotiable the check involved in Since the caseat bar is 3, apply, instrument under Article the U.C.C. does and it necessary becomes to determine whether Ark. Stat. Ann. § (Add. 1961)has altered the common 85-1-207 law rule of accord and satisfaction. Arkansas Statutes § Annotated 85-1- (Add. 1961)provides: 207 party explicit rights

A who with reservation of promises performs performance per- or or assents to formance in a manner demanded or offered the other thereby party prejudice does not reserved. prejudice”, protest” words Such as "without “under the like are sufficient. jurisdictions split

The courts in other are on the effectof jurisdictions U.C.C. Several § 1-207. have held that U.C.C. § prior existing does not alter the 1-207 law accord and legislature satisfaction.2 The basis for this view is that the explicitly provide did not § U.C.C. was intended 1-207 modify Thus, the law of accord and satisfaction. it would appear legislatures adopted that several U.C.C. § 1-207 intending existing especially so, that it reflect law. is This given 1-103, when consideration is which to provides: displaced ,by particular provisions Unless Act, principles equity, including this of law and capacity law merchant and the law relative to Printers, Kroesen, Inc., 2 Connecticut Inc. v. Gus Rptr. 184 Cal. 436 Inc., Meats, Purveyors, Lindsay American Food (1982); Inc. v. Ga. 153 383, (but App. (1980) questioning 265 S.E.2d 325 the soundness of this Chancellor, theory); Appliance Inc. v. Hamilton Super. 175 N.J. Interiors, Inc., 1326(1980); Gervey Eder 418 v. Yvette B. A.2d 407 So.2d 312 Inc., (Fla 1981); Truckways, Brown v. Coastal App. 454, 261 App. N.C. Burns, (1980); (Wyo. State 1979); S.E.2d v. 593 P.2d 828 John Washington, Dept. 671, 610 Corp., Fisheries Sales v. App. Wash. J-Z also, Hawkland, See (1980); P.2d on the 1-207 Effect of Check, Doctrine of Accord and Satisfaction Conditional 74 Com. L.J. Rosenthal, Dissatisfaction, Discord (1969); Section Code, Commercial L. Rev. 48 Colum. Uniform *6 408 fraud, agent, estoppel, principal

contract, mis- bankruptcy, mistake, duress, corecion, representation, invalidating supple- validating shall cause or other ment (Add. provisions. § Ann. 85-1-103 [Ark. its Stat. 1961)]. “this states that:

Also, to the above section the comment applicability commercial to indicates the continued except law, supplemental as insofar bodiesof of all contracts “ [Emphasis they explicitly displaced added.] this Act. are Interiors, Gervey Inc., 312 407So.2d Eder v. YvetteB. In stating Court, Appellate 1981), its App. (Fla. the Florida holding not alter does that U.C.C. § 1-207 reason for satisfaction, existing said: prior law on accord party writes the check unfair to the who It is money only spending thinking if the he will be his party, dispute over, other be to allow the will whole knowing expectation, to weasel of that reasonable markings by putting own on the deal his around the why person’s no § checks. There is reason other 1-207 being exception interpreted the basic to should be as an possible interpret good faith, duty when is it consistently. two sections jurisdictions does § have held that U.C.C. 1-207 Other existing prior law of and satisfaction.3 alter 3 Dairy, v. White Bivins 1978); Jung, (Fla. App. Miller v. 361 So.2d 788 Tallman, (Ala. 1979) dictum); Scholl v. App. (approved 1122 378 So.2d Corp., 1976); v. Crown Financial (S.D. Peterson 476 N.W.2d 490 247 Co., 425, (E.D. 1979) (note); Blickle Or. F.Supp. 1155 Pa. Kilander v. Co., (1977) dictum); Lange-Finn Inc. v. (approved in Const 571 P.2d Co., Inc., 15, 403 N.Y.S. Albany Supply Steel & Iron 94 Misc.2d 2d 1012 Inc., 1978); (N.Y. Sup. Corp. v. & 103 Misc.2d Kroulee A. Klein Ct. 441, Distributors, Inc., (1980); Braun v. C.E.P.C. 426 N.Y.S.2d (1980) (New York’s annotation to App.Div.2d 433 N.Y.S.2d 447 party permits “This section involved provides, § get way accept he can transaction whatever Code-covered long rights... payment, so losing his to sue for the balance ... without Summers, also, The explicitly rights.”) his See White &R. as he reserves J. Hawkland, (2d 1980); ed. the Commercial Code 13-21 Law under the Doctrine Accord and 1-207 on Satisfaction Effect of Check, Com. Conditional L.J. joint The U.C.C. was the work the National Con- ference of on Commissioners Uniform State Laws and the completed

American Law Institute. The first draft was The New York Law 1952. Revision Commission undertook *7 analyzing by Many of the task section U.C.C. section. changes were made in the Official Draft of the as a U.C.C. result of the of York recommendation the New Law Revi- adoption sion Commission. Prior to the New of the U.C.C. York, the New York Commission on Uniform State report including U.C.C., Laws submitted its by on the examining relationship section annotations between provisions existing the U.C.C. and the New York law. This report stated in reference to U.C.C. § 1-207: permit,

The Code rule in Code-covered acceptance transactions, part of a . . . requiring in

tendered full settlement without acceptor gamble legal right to with his to demand the payment. [Report balance of the... of the Commission Legislature on Uniform State Laws to of State of New pp. York, (1961).] do not

We have that section section annotations to guide determining legisla- inus the intent of the Arkansas enacting 1-207, ture in U.C.C. I think but the New York light annotation, study of the extensive and intense done persuasive. there, is policy Assembly of the Arkansas General

adopting the Uniform is Commercial Code4 that the courts attempt give of this State are to to the Uniform Commercial interpretation, only Code a uniform state, not within this but with also those of other states. Ark. Stat. Ann. § 85-1-102 (2) (c) (Add. 1961). However, since the courts other states split are on prior the effect that has on the § 1-207 existing may of satisfaction, law accord and this Court question by adopting decide this interpretations. the “better” of the two leading rule, greater

I believe the better to uniformity, that, cases, is in Article 3 U.C.C. § 1-207 displaces the common law rule accord and satisfaction. No.

4 Act 1961. common hold that the me more to logical

It seems has been modified and satisfaction law rule accord view, the law majority to the Contrary 1-207. the view- destroyed by will not be and satisfaction will con- herein. Accord and satisfaction expressed point are for where be an effective tool compromise tinue to the settlement availability for reserved. Its specifically faith would made good disputes through compromises not be affected. court.

I the decision of trial would affirm in this I Glaze joins am authorized state Judge dissenting opinion. *8 Arkansas v. STATE of

Richard WILLIAMS CR 82-93 CA S.W.2d of Arkansas

Court of Appeals December delivered Opinion