Ifc Credit Corporation v. Bulk Petroleum Corporation

403 F.3d 869 (7th Cir. 2005)

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Nature of the Case

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Facts

D and P entered into a series of agreements by which D leased gasoline tanks and equipment from D to be used at various gas stations operated by D. D was given an option to purchase the equipment at the end of the 72-month lease term. The purchase price was to be the greater of the fair market value of the equipment and $31,419.40, together with all applicable taxes. The lease documents also provided for the extension of the lease term at a rate of $2,820.52 per month. Two weeks later, P assigned the D lease to Finova Capital Corporation. Beginning in November 2000, P and D engaged in negotiations concerning the termination of the lease and purchase of the equipment. The parties could not agree on a purchase price. While these negotiations were ongoing, Finova notified D in writing that all further negotiations regarding the purchase option were to be conducted with P (and with Witowski specifically). Finova then promptly filed for bankruptcy. D sent a letter to Finova and a check for $31,419.40, made out to Finova Capital Corporation. The invoice attached to the check read 'pay off lease 5613500,' and the endorsement area on the back of the check stated 'payment in full of lease and purchase option # 5613500.' The accompanying letter stated that the check represented 'payment in full of the lease and the purchase option' and that 'acceptance of this check represents full satisfaction of the obligation of D to Finova Capital Corporation.' Id. at 42A. The letter concluded by stating that if Finova did not accept the check, then it should inform D as to where it should ship the leased equipment back to Finova. Eventually, P received a copy of the letter and the check. The check was negotiated three days later by Finova on June 25, 2001. Following the negotiation of the check, P did not return the tendered money or claim that Finova had negotiated the check in error. P retained the tendered money, claiming that it constituted only partial satisfaction of D's outstanding obligations under the agreement. D refused to make further payments, contending that its contractual obligations under the lease had been fulfilled upon acceptance and negotiation of the $31,419.40 check to Finova. P sued D seeking to recover $207,961.88. D filed a motion for summary judgment, claiming a valid accord and satisfaction. The court granted summary judgment to D and P appealed.