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SAN JUAN V. ST. JOHN'S GAS CO., LTD., 195 U. S. 510 (1904)

U.S. Supreme Court

San Juan v. St. John's Gas Co., Ltd., 195 U.S. 510 (1904)

San Juan v. St. John's Gas Company, Limited

No. 41

Argued November 3, 1904

Decided December 12, 1904

195 U.S. 510


Under both the common and the civil law, in the absence of a stipulation to the contrary, the character of the money current at the time fixed for performance of, and not at the time of making, a contract is the medium in which payment may be made.

Where there has been a bona fide dispute as to the medium of payment under a contract and an agreement is finally reached that a payment in one medium shall extinguish a larger amount in another medium, the payment is a complete accord and satisfaction and the rule that a less

Page 195 U. S. 511

sum, although accepted in full satisfaction of a larger liquidated amount, is not binding as to the excess for want of consideration is inapplicable.

The gas company, defendant in error, an English corporation, sued the City of San Juan, the plaintiff in error, to recover $14,600.60, alleged to be due for services in lighting 485 street lamps from November, 1899, to September 16, 1900. Annexed to the petition was an account showing the items from which the balance resulted. The city generally denied, and pleaded that, under the contract for lighting, it had at various times imposed fines upon the company for neglect of its contract duty, which fines were a set-off, and extinguished the sum sued for. A statement of account was also filed by the city, showing the alleged set-off. Both the accounts credited the gas company for lighting with $15,125.70. In the account of the gas company, that company credited itself with several small items for labor and materials supplied to, and materials appropriated by, the city, aggregating $246.42, and for interest calculated at twelve percent up to September 16, 1901, the items in question and the interest amounting to $2,215.96, making the total credited to the company $17,588.08. These sums were not in the account of the city. Whilst the credit items in both accounts therefore agreed except as above stated, there was this further difference: the account of the gas company stated that the sums to its credit were payable in gold or United States money; whilst the account of the city stated such items as payable in Porto Rican currency, declared to be worth forty percent less than United States gold or currency. The gas company debited itself with various payments made to it by the city on account of the services rendered and for the sum of a certain ground rent, all amounting to $2,987.42, leaving in its favor the balance sued for. The city's account, whilst debiting the company with payments in United States gold to the amount stated in the gas company's account, treated the debt as being due in Porto Rican currency, and figured the payments in gold as extinguishing a larger amount by forty percent than the face value

Page 195 U. S. 512

of the gold. In addition, the gas company was debited with certain fines imposed and other charges, and was moreover debited in Porto Rican money with two sums aggregating $8,836.88, amounting, if paid in gold, to $5,332.13. These two debits, it was recited in the account, were the sums in Porto Rican money or its equivalent in gold, which the city was bound to pay to the firm of Mullenhoff & Korber, to which firm the gas company, with the consent of the city, had transferred a portion of its claims against the city in Porto Rican money, to be paid in its equivalent in gold. By the result of the debits against the gas company, the items credited to it were extinguished, and the account balanced. Thus, the substantial difference between the two accounts arose from the fact that one stated the debt to be payable in gold or United States money, the other treated it as payable in Porto Rican currency.

Subsequently, the city pleaded that it had paid to Mullenhoff & Korber the sum of $5,196.80 in United States gold, and was entitled to due credit therefor, and it was thereafter agreed between counsel that this amount had been paid under the transfer in question. As will hereafter appear, $4,337.32 of the sum was paid as the equivalent of $7,228.20 in Porto Rican currency, the amount due for street lighting up to June 1, 1900, if estimated in Porto Rico, while the balance of $859.48 was paid as satisfying the charge made for street lighting in the month of June, 1900, also consisting of a larger sum in Porto Rican money.

At the trial, the undisputed proof showed that, in 1875, the city made a contract, to last for twenty-five years, with one Steinacher for the lighting of the city, which contract, about 1878, was assigned to the gas company; that, shortly after, there was a difference between the parties as to whether the sums due under the contract were payable in Porto Rican money or in current foreign money. As a result, all the payments up to and exclusive of the items embraced in the suit were received by the gas company, under protest, in Porto Rican currency. So far as any payments made on account of the

Page 195 U. S. 513

items embraced in the suit and stated in both accounts, it was undisputedly shown that they were made in United States gold. There was proof tending to show that the city, in making them, insisted that the gold should extinguish its equivalent amount in Porto Rican currency, whilst the company claimed that the payments should only extinguish a sum equal to the face value of the United States gold.

Concerning the transfer to the firm of Mullenhoff & Korber, and the payment made by the city to that firm, it was indisputably shown as follows: that the gas company, being in want of funds, had agreed to transfer to the firm a given portion of its claim, and applied to the city to recognize the assignment, and to pay to the transferees the sum assigned, and that action was taken on this request by the city, and was accepted in writing by Scott, representing gas company, as follows:

"I, Ramon Negron Flores, Secretary of the City Council of the City of San Juan, hereby certify, that at the meeting held by the City Council of San Juan, on the eighteenth day of this month, the following resolution was passed:"

"20. -- The President of the City Council declared that Mr. Scott, the contractor of the public lighting for the city, and Mr. Korber, a member of the firm of Mullenhoff and Korber of this city, had called on his office and stated that the amount of seven thousand two hundred and twenty-eight pesos and eighty-seven cents, Porto Rican currency, total amount of the credit due to Mr. Scott, on account of his services as contractor from November of the year one thousand eight hundred ninety-nine, to last May, being deducted the amounts already collected by the said contractor, should be delivered to the above said firm, to the credit of which Mr. Scott wishes this amount to be passed."

"The City Council agreed with the declarations of the president, and passed the resolution considering the said balance of seven thousand two hundred and twenty-eight pesos with eighty cents equivalent of four thousand three hundred and

Page 195 U. S. 514

thirty-seven dollars and thirty-two cents in favor of the firm Mullenhoff & Korber, being therefore the municipal corporation relieved from any compromise with Mr. Scott concerning the said amount, without any prejudice to the resolutions to be passed some time in the future, about the claims previously filed by the said contractor."

"And to begin the respective proceedings, I write and sign this declaration in San Juan of Puerto Rico this twenty-second day of June of the year one thousand nine hundred."

"(Signed) R. Negron"

"On twenty-second June, being present Mr. Scott and Mr. Korber, the latter acting as representative of the firm, of which he is a partner, I notified them the above resolution, and they affixed their signature as a proof of their acquiescence to the same, declaring at the same time, that the amount of the account of the month of June of this year should be recognized as due to the same firm, to which the said amount must be paid. I certify it."

"(Signed) R. Negron"

"(Signed) Mullenhoff & Korber"

"(Signed) (Signed) L. A. Scott"

"San Juan, June 19th, 1900"

"Let it be done. The Mayor, Egozcue."

There was testimony, admitted without objection, tending to show that, at the time the city accepted this transfer, it was understood that the reservation made in the written agreement related only to fines which it was contended the city had unjustly imposed on the company. The court rejected the offer of the city to prove that the parties, by their conduct prior to the period covered by the items sued for, had interpreted the contract as meaning that the payments were to be made in Porto Rican money, and not otherwise. The court also refused to instruct at the request of the city that the contract was payable in Porto Rican money, and charged that

Page 195 U. S. 515

it provided for payment in foreign money, exclusive of Spanish gold, which was current in the island at the time the contract was made. The court further instructed that the payments made by the City of Mullenhoff & Korber in gold should be debited to the city at the face value of those payments, unless the jury found that the minds of the parties had met on a new contract to substitute Porto Rican currency for the foreign current money stipulated by the contract. The court, moreover, refused the request of the city to charge that, if at the time of the transfer to Mullenhoff & Korber, there was a compromise entered into between the parties by which the payment to the firm of a given amount in United States currency should extinguish a larger amount of the debt due the company in Porto Rican money, that the parties were bound thereby, as to such payment. Besides, the jury were instructed that, as there was no proof concerning the fines imposed by the city upon the company, as stated in the account of the city, such items must be disregarded, and that interest, as calculated in the account of the city, not being exigible under the local law, must also be disregarded.

There was a verdict and judgment thereon against the city for $8,761.35, and this writ of error was prosecuted.

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