Alabama Divorce – Accord and Satisfacti0n

This decision is bad law and a trap for the unwary. Wallace v. Wallace, Case No. 2030855 (Ala. Civ. App. March 11, 2005).

Husband and wife had agreed in their divorce settlement to sell the house. Pending the sale of the house, the wife would remain in the house and the husband was to pay 1/2 the primary and home equity line mortgage payments. After the sale of the house, the husband was to pay the wife a total of $8,750 in monthly payments. The anticipated sale did not occur for 16 months, and then only because the husband listed the house with a real estate agent.

Presumably because he had contributed to the mortgage payment for 16 months instead of some unspecified (shorter) period, the husband sent the wife after the sale of the house a check for $840 and wrote on the memorandum line of the check the words “property settlement – payment in full.” The husband included with the check calculations purporting to show that he had paid $9,599.83 in contributions to the monthly mortgage payments.

After the wife consulted with her lawyer, the wife’s lawyer wrote the husband’s lawyer and said this:

[The wife] contacted me and informed me the closing on the house was in January 2003. Under the terms of the divorce [judgment], [the husband] is to begin making monthly payments to [the wife] the month following the closing in the amount of $ 385 per month until the sum of $ 8,750 has been paid. [The wife] informed me she received a check from [the husband] in the amount of $ 840 which stated ‘property settlement – payment in full.’

I do not know the rationale behind [the husband’s] actions, but the balance due per the court order is $ 7,910…. Please forward this letter to [the husband] and advise him to make the monthly payments as ordered to avoid contempt proceedings.

Acting on instructions from her attorney, the wife crossed out “in full” on the check and cashed it.

The husband petitioned for a declaratory judgment, and the wife counter-petitioned for Rule Nisi. The trial court ruled that the husband had satisfied his obligations under the property settlement provision.

The court finds that the wife’s action by taking the check marked payment in full and marking out the ‘in full’ portion then accepting the proceeds therefrom constitutes an accord and satisfaction of the amounts owed. Further, the court finds that the husband otherwise discharged his obligations under the property settlement for a period longer than a reasonable period of time as would be construed under the terms of the original settlement agreement between the parties. As such, the husband has fully discharged his obligation to the wife by the actions noted herein and does not owe her any additional sums under the property settlement.

The Court of Appeals affirmed, saying:

In the instant case, the husband introduced into evidence an accounting of the payments he had made toward the debt owed on the marital home during the approximately 16 months during which the wife lived in the marital home after the divorce judgment was entered. The husband also submitted to the trial court a copy of the $ 840 check conspicuously stating “property settlement – payment in full,” and the February 17, 2003, letter in which he asserted that he had already paid the wife $ 7,910 towards his obligation under property-division portion of the divorce judgment and that only $ 840 remained unpaid. The husband also indicated in that February 17, 2003, letter that the enclosed check was for the “balance of the property settlement” and specified “payment in full” on the check. The wife consulted an attorney before she endorsed and deposited the husband’s check. We conclude that there is substantial evidence to support the conclusion that the husband offered his check as a good-faith offer to extinguish his obligation under the property-division portion of the divorce judgment. Ex parte Meztista, supra. Also, there is substantial evidence to support the conclusion that the husband’s dispute of the amount he owed the wife under the divorce judgment was “real, not simulated, and based upon a ground that is at least colorable. Ex parte Southern Cotton Oil Co., 207 Ala. at 706, 93 So. at 664.

Judges Crawley and Pittman dissented, saying that the trial court had misapplied the law and that an accord and satisfaction had not occurred:

The trial court interpreted the marriage settlement agreement in a way that is contrary to the plain language of the agreement and in a manner that abrogated the intent of the parties, and the trial court did not consider the document as a whole. Additionally, the husband failed to establish that his offer of an accord was made in good faith or that the dispute was bona fide. I would reverse the trial court’s judgment and render a judgment for the wife granting her petition to hold the husband in contempt, ordering the husband to make payments pursuant to section 7.1 of the marriage settlement agreement, plus interest on all payments past due, and awarding the wife an attorney fee in the amount of $ 1,000.

The moral from this bad decision is clear: if anyone writes a check to you and writes ANYTHING on the check purporting to limit your rights, DO NOT CASH THAT CHECK. Instead, insist that the payor issue a clean check without the limitation.

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