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Holtzman v. Laforet

A-4171-97T3 (N.J. Super. App. Div. 1999) (Unpublished)

CHECKS; ACCORD AND SATISFACTION—A creditor’s retention and use of a check obviously presented as a full satisfaction payment constitutes an accord and satisfaction even though the creditor endorsed the check as a partial payment.

By settlement of a small claims case, a debtor was to pay its creditor $400 “by check within 60 days of the date of this stipulation.” In the event the debtor did not make the payment, judgment was to be entered in the amount of $1,030.20 plus court costs. The money was not received on time. As a result, a judgment for the larger amount was entered on the record. A few months later, the creditor received a check. It was dated three days after the original settlement agreement, drawn to the order of the creditor in the amount of $400, and described as “settle Sm Claims ct.” The creditor endorsed the check and deposited it or cashed it. Above the endorsement, however, the creditor typed the following: “accepted only [as] a partial payment in settlement of… .” Thereafter, on application by the debtor, the lower court vacated the judgment. The creditor appealed and the Appellate Division affirmed the lower court. The Court found it apparent that the debtor had submitted the $400 check in settlement of the claim and pursuant to the settlement stipulation. It was unimportant to the Court when the check was sent because it was apparent from the check, its date, and the surrounding circumstances that the debtor intended it to extinguish its obligation to the creditor. It was also apparent that the creditor considered the check to have been submitted in full satisfaction of the liability because the creditor deemed it necessary to attempt to modify the submission using the endorsement. “A creditor’s retention and use of the check submitted in full satisfaction constitutes accord and satisfaction.” N.J.S. 12A:1-207, by its terms, does not apply to an accord and satisfaction.


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