Arender v. Gilbert
343 So. 2d 1146 (1977)
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Rule of Law:
When a creditor accepts a debtor's tender of a lesser sum explicitly offered as full compensation for a disputed or unliquidated claim, a binding accord and satisfaction is formed, which bars the creditor from later seeking additional payment.
Facts:
- On July 11, 1973, Jess Carr Gilbert entered into a 30-day exclusive listing agreement with Frank Arender, a real estate broker, to sell woodland and timber on his property.
- The agreement specified a total selling price of $1,704,480, a $35,000 commission for Arender, and a bonus clause granting Arender one-half of any sale proceeds exceeding that price.
- Arender found buyers who formed a corporation, Three Rivers Farm, Inc., which executed an option on July 26, 1973, to purchase a modified parcel of the land for $1,798,560.
- Arender did not have an ownership interest in Three Rivers Farm, Inc., but Gilbert came to believe he did and grew dissatisfied, considering Arender to be representing the buyer's interests.
- The sale closed on August 17, 1973, but was immediately complicated when a stop-payment order was placed on the buyer's check due to an unrelated lawsuit affecting the property.
- During a tense meeting on August 18, 1973, to resolve the sale's problems, Arender demanded his $35,000 commission, even though the original agreement stipulated it was not due until January 1974.
- In response to the demand, Gilbert's attorney drafted a letter, which Arender signed, acknowledging his fee was $35,000 and that he accepted a note for that amount as 'full compensation for my services'.
Procedural Posture:
- Frank Arender, d/b/a Farm Realty Company, filed suit against Jess Carr Gilbert in a Louisiana district court (trial court) to recover a bonus payment.
- Gilbert filed a reconventional demand (counterclaim) against Arender seeking the return of the $35,000 commission already paid.
- The trial court rendered a judgment rejecting the claims of both parties.
- Both Arender, as appellant, and Gilbert, as appellee who also appealed the rejection of his reconventional demand, appealed to the Court of Appeal of Louisiana, Third Circuit.
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Issue:
Does a letter, signed by a real estate broker, acknowledging a specific fee as 'full compensation' for services and accepting a promissory note for that amount, constitute an accord and satisfaction that bars the broker from later claiming an additional bonus under the original listing agreement?
Opinions:
Majority - Culpepper, Judge
Yes. The letter and Arender's acceptance of the tendered note constitute a valid accord and satisfaction, which bars his claim for any further compensation. The court found that all three required elements were present: (1) an unliquidated or disputed claim, (2) a tender by the debtor, and (3) an acceptance by the creditor. The claim was disputed because Gilbert believed Arender was not entitled to his fee since the property sold and the credit terms differed from the listing agreement, and he suspected Arender of disloyalty. Arender provoked the dispute by demanding his commission months early, creating a negotiation where he bargained away his chance at a future bonus for the certainty of a $35,000 note. The letter's unambiguous language stating the note was 'full compensation' for his 'fee' put Arender on notice that he was settling the entire claim, not just the commission portion. Therefore, this settlement estops him from now seeking the bonus.
Analysis:
This case illustrates the application of the common law doctrine of accord and satisfaction within Louisiana's civil law system. It clarifies that a 'dispute' for the purpose of this defense does not require formal haggling; knowledge of the dispute can be imputed to the creditor from the circumstances, such as a tense negotiation and a document offering 'full compensation'. The decision establishes that when a party in a vulnerable or uncertain position chooses a certain, immediate payment over a speculative future gain, that choice can create a binding settlement that extinguishes all related claims. This precedent reinforces the finality of such agreements and cautions creditors to understand the full import of accepting payments offered in 'full satisfaction' of a disputed debt.
