No. 86-188
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
INTERSTATE PRODUCTION CREDIT
ASSOCIATION, a corporation,
Plaintiff and Respondent,
ROBERT K. ABBOTT and RITA
ABBOTT, husband & wife,
Defendants and Appellants.
APPEAL FROM: District Court of the Tenth Judicial District,
In and for the County of Fergus,
The Honorable Roy Rodeghiero, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Robert K. Abbott, pro se, Lewistown, Montana
For Respondent:
Craig R. Buehler, Lewistown, Montana
Submitted on Briefs: August 14, 1985
Decided: October 9, 1986
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
This is an appeal from the order of the District Court,
Tenth Judicial District, Fergus County, authorizing plaintiff
to take possession of collateral pursuant to a security
agreement between plaintiff and defendants. We affirm the
District Court order.
Defendants raise two issues on appeal. Defendants first
argue that plaintiff Interstate Production Credit Association
(PCA) was not the real party in interest and therefore had no
right to seize the collateral. Defendants contend they
entered into an agreement with Central Montana Production
Credit Association, and that it was incumbent on plaintiff
Interstate PCA to prove it had an interest in the security
agreement. Interstate PCA responds that the issue of real
party in interest was not raised at the hearing, and is
therefore barred from being considered for the first time on
appeal.
Rules 17 (a) and 9 (a), M.R.Civ.P. are identical to the
federal rules. Rule 17 (a3 states: "Every action shall be
prosecuted in the name of the real party in interest." Under
Rule 9(a), M.R.Civ.P., challenges to a party's capacity to
sue or be sued must be raised by specific negative averment
in the pleadings. Failure of a party to raise the issue of
capacity by specific negative averment in the responsive
pleading or in a motion before the pleadings results in a
waiver of that defense. Summers v. Interstate Tractor &
Equipment Co. (9th Cir. 1972), 466 F.2d 42, 49.
In his opening statement, counsel for Interstate PCA
explained that Central Montana PCA and Interstate PCA were
"one and the same identities" [sic]. Defendants did not
object to Interstate PCA1s standing at that time, or at any
other time during or after the hearing. Their first
challenge to PCA1s standing is here on appeal. We therefore
hold defendants' failure to assert plaintiff's lack of
standing in a timely manner is a waiver of their right to
this defense.
The second issue raised by defendants is whether the
District Court erred in finding the security agreement debt
was not discharged by an accord and satisfaction.
Defendants' claim of accord and satisfaction is based on the
following facts.
On January 2, 1985, defendants entered into a loan and
security agreement with the PCA. They used their farm
machinery, livestock and crops as collateral. The defendants
defaulted on their regular loan installment in July, 1985.
As of December 5, 1985, the date of the notes' maturity,
defendants owed PCA over $130,000. In the fall of 1985,
defendants offered to settle the debt with PCA. Defendants
proposed to give PCA the machinery listed on the security
agreement, listed at $66,000, plus the proceeds from sale of
cattle in exchange for extinguishment of the debt. PCA
refused the offer.
On December 7, 1985, defendants received a $3,126.60
check from the sale of cattle at the Public Auction Yards in
Billings. The check was made jointly payable to defendants
and PCA, since there was a chattel mortgage on defendants'
brand to the PCA. Defendants took the check to a print shop
in Billings and had the following language printed on the
back of the check:
Payee Abbott offers his interest in this draft to
co-payee as an accord between payees, whereby
acceptance of his interest herein will extinguish
all obligation existing as allowed by 28-1-1401
M.C.A. 1983. Endorsement hereof by co-payee is
acceptance of this offer and is meant to be
evidence of full satisfaction extinguishing all
debt as specified 28-1-1402 eta1 supra. [sic]
Co-payee intends hereby that its endorsement is
acceptance of part performance after breach and
that same operates as a full and separate receipt
for the consideration and evidences full execution
of accord and releases Abbott fully from all
obligation existing now and forever.
The typeset used was similar to that already printed on
the check by the Public Auction Yards.
On December 18, 1985, defendants presented the above
endorsed check to a PCA receptionist-cashier at the Lewistown
office, saying they had a check for payment on cattle they
had sold. The receptionist took the check, stamped it for
deposit, and gave defendants a receipt crediting their loan
account. Defendants argue that since the receptionist could
have read the printed endorsement and rejected the check, but
did not do so, she accepted the terms of the endorsement.
They argue that the printing on the back of the check is an
accord, and that by cashing the check, PCA performed the
satisfaction. Defendants rely on §§ 28-1-1401 through -1403,
MCA, as support for their contention.
Montana statutes define accord and satisfaction as
follows:
28-1-1401. Accord--definition and effect. An
accord is an asreement to accept in extinction of
an obligation something different from or less than
that to which the person agreeing to accept is
entitled. Though the parties to an accord are
bound to execute it, yet it does not extinguish the
obligation until it is fully executed.
28-1-1402. Satisfaction--definition and effect.
Acceptance by the creditor of the consideration of
an accord extinguishes the obligation and is called
satisfaction.
The critical language is that "an accord is an
agreement." This presupposes a meeting of the minds of the
parties as to the terms of the accord. This Court has held
"[aln accord and satisfaction is founded upon contract
. . .." Sawyer v. Somers Lumber Company (1929), 86 Mont.
169, 177, 282 P. 852, 854. The essential elements of a
contract are 1) parties capable of contracting; 2) their
consent; 3) a lawful object and 4) adequate consideration.
Section 28-2-102, MCA. As to the element of consent, it must
be free, mutual and communicated by each party to the other.
Section 28-2-301, MCA.
The element of mutual consent is clearly lacking in the
alleged agreement between defendants and PCA. Defendants, in
an otherwise routine transaction, presented the PCA
receptionist with a Public Auction Yard check, merely telling
her they were there to present a check from sale of their
cattle. They did not indicate to her that they were there to
negotiate an accord. The language printed on the back of the
check by which the defendants purport to bind PCA, was
typeset in such a manner as to make the language appear to be
boilerplate. Defendants admitted at the hearing below that
they hoped no one at PCA would read the language before
cashing the check.
This Court has held that the endorsement of a check by a
creditor for the purpose of cashing it is not such a writing
as would give rise to an accord under the Montana statutes.
Geissler v. Nelson (Mont. 1986), 722 P.2d 632, 635, 43
St.Rep. 1372, 1376; Sawyer v. Somers Lumber Co. (1929), 86
Mont. 169, 177, 282 P. 852, 854. The presentation of a check
in order to trick the creditor into extinguishing an existing
ohligation does not rise to the level of a new agreement.
Our review of the record indicates the District Court's
finding that no accord and satisfaction was executed, and
that PCA was entitled to take possession of the collateral
pursuant to the security agreement, is supported by
substantial, credible evidence.
We affirm the District Court.
A@.Justice
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We Concur:
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