Mcmahon Food Corp. v. Burger Dairy Co

103 F.3d 1307 (7th Cir. 1996)

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Nature of the Case

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Facts

D sold milk products to P. P placed several orders each week. D's product manager entered the orders onto a “load ticket.” If there was a discrepancy between the amount P ordered and the amount D was able to ship, the load ticket reflected that discrepancy, including the exact number of milk cases. D created invoices from the tickets. for MFC. D also charged P a $1.00 deposit for each milk case delivered to P and gave an equal credit for each case returned. D mailed a weekly invoice. P always late in its payments, and D had difficulty collecting. P made unauthorized deductions for dairy products shipped and delivered which it claimed not to have received. P also claimed credits for returning full truckloads of empty cases, while the actual count reflected only partial truckloads of returned cases. D did not give P the credit P. The differences began to become significant. By mid-February of 1992, P was in arrears $58,518.41; with half of this total for unauthorized credits for returned milk-cases. The parties met, and P claims it was agreed that D would no longer charge P a deposit for milk cases in exchange for P's agreement to pay the invoices as they became due. They did not otherwise resolve the amounts past due, nor did they agree upon the amount of credit due for the empty milk cases allegedly returned. D claims no such deal was made and the issues remained unresolved. After the February meeting, P made full payments for three weeks of current purchases but then made no further payments until May 13, 1992, when it remitted a $100,000 check to Burger with an accompanying voucher stating “on account detail to follow.” D's records reflect that the $100,000 covered less than half the debt P had amassed by that time, including the $58,518.41 February debt. A new sales manager took over at D. D, and P met and P claims that it would pay in full if an amount were agreed upon. P assured the new manager of D had settled the February debt. They went through only the invoices dated February 15 through June 6, 1992, and determined that P still owed a balance of $51,812.98. P promptly made out a check to for that amount. He attached a voucher to the check on which was typed, “payment in full thru 6/6/92 ••• $51,812.98.” P added a handwritten note stating, “Clear statement of account thru 6/6/92 to follow,” followed by his signature. D never sent P the “statement of account.” McMahon also asked Carter to sign the voucher as a condition of receiving the check, which Carter did without protest. At the end of his notes, Carter wrote, “current to 6-6-92. D's accounting manager and comptroller negotiated the June 17th check. Before doing so, and without consulting he crossed out P's restrictive endorsement “payment in full” and “full statement of account to follow” from the voucher, and added the notation “without prejudice,” followed by his own signature. The comptroller later testified that he struck out the language on the voucher because he knew it was insufficient to make P's account current. D informed P that the check had been cashed, the restrictive endorsement stricken, and that P still owed D over $64,000. P filed suit against D, asking the federal district court to issue a declaratory judgment that it had reached an accord and satisfaction relieving it of any debt. D countersued. The trial court found P in arrears and awarded D damages in the amount of $58,518.41, plus interest and costs. This appeal followed.