AUSTRIAN IMPORT SERVICE, INC.,FROM A DISTRICT COURT APPELLANT, v. CARL MANDRELL, APPELLEE

 
 
COURT OF APPEALS
FIFTH DISTRICT OF TEXAS
AT DALLAS
 
NO. 05-88-01178-CV
 
AUSTRIAN IMPORT SERVICE, INC.,FROM A DISTRICT COURT
 
        APPELLANT,
 
 
v.
 
 
CARL MANDRELL,
 
        APPELLEE.OF DALLAS COUNTY, TEXAS
 
 
 
BEFORE JUSTICES HOWELL, LAGARDE AND WHITTINGTON
OPINION BY JUSTICE HOWELL
AUGUST 7, 1989
 
        Appellant, Austrian Import Service, Inc. (AIS), filed suit against appellee, Carl Mandrell (Mandrell), seeking recovery of a 1985 Porshe 911 Targa automobile (the Targa). The trial court granted a motion for directed verdict against AIS. In four points of error, AIS contends that the trial court erred in entering its judgment because there was no evidence or insufficient evidence that the sale of the Targa was complete and that there was no evidence that the cashing of the checks constituted accord and satisfaction. For the reasons below, we affirm the judgment of the trial court.
        On January 6, 1986, Mandrell began negotiations with Gunter Stromberger (Stromberger), owner of AIS, for the purchase of the Targa and trade-in of a Porshe 928. These negotiations took place at night. Because of the darkness, Stromberger did not inspect the trade-in. Mandrell's trade-in developed engine trouble, and, thus, it could not be driven. Negotiations were memorialized in writing on an AIS autoparts invoice. The writing read in pertinent part:
        [S]old to Carl Mandrell . . . 11/6/85 . . .
        1985 Porshe 911 Targa WPOZZZ91ZFS140075                $30,000
        -Trade[-] in 928 WPOZZZ92ZES840185                        $23,000
    Carl Mandrell agrees to pay any charges
        over $500 to get 928 Porshe in good
        running condition enginewise.
                                                                   Total         $7,000
Stromberger and Mandrell both signed the writing. That night Stromberger allowed Mandrell to make copies of documentation on the conversion of the Targa. Stromberger also loaned the Targa to Mandrell that night.
        The next morning, AIS had the 928 inspected by a local foreign automotive shop. AIS received a report from the shop that the 928 needed extreme repairs and was in bad shape. Mandrell never returned the Targa; however, he returned several times to finalize the deal. During his last visit, Mandrell strongly denied the repair shop's report. In fact, he stated that the 928 was in good shape and that it would not require $500 for repairs.
        Mandrell then left title documents for the 928 and two checks, one for $7,000 and the other for $2,500, in an envelope on Stromberger's desk. FN:1 The $7,000 check stated "for full payment for 1985 Porshe # WPOZZZ91ZFS140075." This writing was crossed out by AIS, and an endorsement was typed on the back. The endorsement read, "[W]ithout prejudice to any rights to 1985 Porshe 911 Targa." AIS deposited this check during the same time it filed suit against Mandrell for return of the Targa.
        Rather than discuss each point of error separately, we will discuss all points of error together. AIS claims that the evidence does not support the judgment of the trial court. In two points of error, AIS asserts that the sale of the Targa was never completed, and thus it should recover the Targa. Specifically, AIS contends that since the 928 was not in good shape the sale was never actually consummated.
        The record reveals that the writing signed by both Stromberger and Mandrell stated that Mandrell was obligated to "pay any charges over $500 to get [the] 928 Porshe in good running condition enginewise." The record also reflects that Sromberger asked Mandrell to return the Targa after he received a bad report from the repair shop. However, the $7,000 check deposited by AIS contained the notation "paid in full for 1985 Porshe." Thus, it is clear from the record that the parties disputed whether the 928 was in "good shape enginewise." But, since AIS deposited the checks, the question for us becomes whether this dispute was resolved.
        In his pleadings, Mandrell asserted that AIS waived its rights under the writing because it accepted and deposited the checks totaling $9,500. Another term for this affirmative defense is accord and satisfaction. The defense of accord and satisfaction rests upon a new contract, express or implied. 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. Eicker v. Snider, 517 S.W.2d 926, 928 (Tex. Civ. App.--Waco 1974, writ ref'd n.r.e.).
        Where there is a bona fide dispute and the debtor tenders his check to the creditor upon condition that it be accepted in full payment, the creditor must either refuse the check or accept it burdened by the attached condition. If he accepts the check and cashes it, the creditor impliedly agrees to the condition, although he may expressly notify the debtor that he is not accepting the check with the condition, but is only applying the check as a partial payment on the account. Pileco, Inc. v. HCI, Inc., 735 S.W.2d 561, 562 (Tex. App.--Houston [1st Dist.] 1987, writ ref'd n.r.e.). Thus, it is not enough for a creditor to merely insert on the check that it is accepted "without prejudice" to the creditor's claims for full payment of the balance, nor is it sufficient for the creditor to strike the debtor's condition from the face of the check. Pileco, 735 S.W.2d at 562.
        Nevertheless, AIS asserts that this common law rule of accord and satisfaction was changed by section 1.207 of the Texas Business and Commerce Code, which provides: "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 'without prejudice,' 'under protest' or the like are sufficient." TEX. BUS. & COM. CODE ANN. 1.207 (Vernon 1968). We note that Pileco expressly held the opposite by ruling that the "well-established doctrine of accord and satisfaction should not be displaced, except by an express legislative action." Pileco, 735 S.W.2d at 562-63. Thus, the Pileco court overruled Pileco's contention regarding any effect section 1.207 may have had on the common law rule.
        In Pileco, the Houston Court of Appeals ruled that an express restrictive notation written by the debtor on his check, and then endorsed by the creditor constituted "an unmistakable communication" to the creditor that its acceptance of the check constituted full satisfaction of the underlying obligation. Pileco, 735 S.W.2d at 563; see also Jenkins v. Henry C. Beck Co., 449 S.W.2d 454, 455 (Tex. 1969). We hold that the same rule applies to this case.
        The record reveals ample evidence that the $7,000 check was an "unmistakable communication" to AIS that its cashing of the check constituted full satisfaction of the underlying writing. We hold that it is inconsequential that Stromberger crossed out the restrictive notation nor that he inserted a "without prejudice" provision. We conclude that the cashing and depositing of the $7,000 check created, as a matter of law, an accord and satisfaction. Consequently, there was sufficient evidence that the sale of the Targa was complete and that an accord and satisfaction was created. We overrule appellant's points of error.
        We affirm the trial court's judgment.
                                                  
                                                  CHARLES BEN HOWELL
                                                  JUSTICE
 
DO NOT PUBLISH
TEX. R. APP. P. 90.
 
88-01178.F
 
FN:1 Stromberger and Mandrell later agreed that the purchase price of the Targa would be $32,500. Thus the difference between the purchase price and trade-in was $9,500 instead of $7,000.
File Date[10-11-89]
File Name[881178F]