The plaintiff, under an agreement with the defendant therefor, did certain dredging work, at a rate per diem agreed upon between the parties, on the defendant's ranch in Sonoma County, at the head of San Pablo Bay, on account of which the defendant paid to it one thousand dollars about September 1, 1900, leaving a balance of $97.75 unpaid upon the amount then claimed to be due. September 17th the plaintiff presented a bill for $721.35 (including said unpaid amount of the former bill), which it claimed to be then due to it. The defendant objected to this bill on the ground of the unsatisfactory character of the work, and also disputed his liability for one item of $168.60 in the bill, but after a few days the dispute was compromised, and the plaintiff agreed to accept $650. The defendant thereupon paid it that amount of money on September 25th, and the plaintiff gave the defendant the following receipt, which was indorsed across the face of the bill and signed by its president: "Paid $650 in full satisfaction of all claims and guaranteed against liens." The work was not completed at that date, and after its completion the plaintiff brought the present action to recover the sum of $550.45 claimed by it to be due for work done "between the 19th and 30th days of September." In his answer the defendant denied any liability to the plaintiff, and alleged that all claims in its favor on account of any dredging work had been fully compromised, satisfied, and discharged. Judgment was rendered in favor of the plaintiff, from which and from an order denying a new trial the defendant has appealed. *Page 275
At the trial the defendant read in evidence the aforesaid bill of September 17th, together with the indorsement of the plaintiff thereon, and gave his testimony of the circumstances under which it was made. The plaintiff's president was a witness in its behalf, and when upon the stand was asked the following questions: "Mr. Wright, at the time of that conversation between Mr. Whitney and yourself, that you have just referred to was any bill or claim under discussion or consideration other than that shown on this exhibit?" to which he answered, "No, there was nothing else except that bill." — "When you took this $650 what claims were you settling?" to which he answered, "That bill." — "Were you settling anything else?" to which he answered "No, sir."
Objections to each of these questions were duly made by the defendant upon the ground of incompetency, in that the plaintiff sought thereby to contradict the terms of a written instrument by parol evidence. The court overruled the objections, and the defendant duly excepted thereto.
The appellant contends in support of his appeal that the court erred in these rulings, and that for this reason the judgment should be reversed. On the other hand, the respondent contends that the evidence was properly received under the rule that the terms of a receipt may be always explained or contradicted by parol evidence.
The rule is universal that a simple receipt for money or for property paid or delivered is not conclusive thereof, but is merely prima facie evidence of the fact. Such a receipt is only an acknowledgment or admission by the party giving it that he has received the money or property therein named and, like any other admission or recital, may be controverted or explained by extrinsic evidence. (Greenleaf on Evidence, sec. 305; 2 Parsons on Contracts, [555]; Comptoir d'Escomptes v. Dresbach, 78 Cal. 15, [20 P. 28].) The same rule obtains even though the receipt purports to be "in full" or "in full payment," of an admitted or undisputed liability or indebtedness. A creditor does not discharge his debtor from all liability upon an admitted obligation for two thousand dollars by receiving from him only one thousand dollars, even though he give him a receipt "in full" for his claim. Such an agreement is without any consideration to *Page 276 support it. (Ryan v. Ward, 48 N.Y. 204, [8 Am. Rep. 539];American Bridge Co. v. Murphy, 13 Kan. 35; Morris v. St. Pauletc. Co., 21 Minn. 91; Price v. Treat, 29 Neb. 543, [45 N.W. 790].) An exception to this rule prevails in Connecticut, the courts of that state having at an early day (Fuller v.Crittenden, 9 Conn. 401, [23 Am. Dec. 364]), following the rule then prevailing in England, held that such a receipt had the effect to discharge the claim, and that parol evidence could not be received to contradict its terms.
A receipt "in full of all demands" is held in Illinois(Waldrath v. Norton, 5 Gilm. 437) and in Missouri (Ireland v.Spickard, 95 Mo. App. 53, [68 S.W. 748]), to be subject to explanation by parol evidence; while in Indiana (Henry v. Henry,11 Ind. 236, [71 Am. Dec. 354]), New York (Vedder v. Vedder, 1 Denio, 257), Wisconsin (Conant v. Kimball, 95 Wis. 550, [70 N.W. 74]), and other states it is held otherwise. So, too, a receipt of that character, joined with a receipt for the amount of a particular demand, will be limited to the matter particularly expressed. (See Grumley v. Webb, 44 Mo. 444, [100 Am. Dec. 304];Randall v. Reynolds, 52 N.Y. Super. Ct. 145; Civ. Code, sec.1648)
A receipt may, however, be accompanied with a contract; as, for example, where the money for which it purports to be given is paid in discharge of an unliquidated claim for damages, or upon a compromise or settlement of a contractural liability, when the amount claimed therefor is disputed and the receipt purports to be in full payment or satisfaction of such claim. In such cases the transaction is regarded as an accord and satisfaction, and the instrument will have the same effect as a release from the claim. Such an instrument may be contradicted as to any facts which it erroneously recites, and evidence will also be received for the purpose of showing that it was given by reason of some fraud or mistake sufficient in equity to set it aside; but in the absence of such evidence it is to be construed in accordance with the rules for interpreting written contracts. A claim or demand about which there is a bona fide dispute, either as to the amount claimed or as to the existence of any liability therefor, is an unliquidated claim, and the acceptance of a part thereof upon a compromise of a dispute will be a sufficient consideration for an agreement on the part of *Page 277 the creditor to discharge the entire claim. (Tuttle v. Tuttle, 12 Met. 551, [46 Am. Dec. 701]; Nassoiy v. Tomlinson, 148 N.Y. 326, [51 Am. St. Rep. 695, 42 N.E. 715].) A receipt given upon such compromise which purports to be in full satisfaction of the claim will operate as a contract by the creditor for the discharge of the debtor, and, like any other written contract, is not subject to be varied or explained by parol evidence. (Coon v. Knap,8 N.Y. 402, [59 Am. Dec. 502]; Fuller v. Kemp, 138 N.Y. 231, [33 N.E. 1034); Komp v. Raymond, 42 App. Div. 32, [58 N.Y. Supp. 909]; Hills v. Sommer, 53 Hun, 392, [6 N.Y. Supp. 469]; Tanner v.Merrill, 108 Mich. 58, [62 Am. St. Rep. 687, 65 N.W. 664];Cummings v. Boars, 36 Minn. 350, [31 N.W. 449]; Conant v.Kimball, 95 Wis. 550, [70 N.W. 74]; Stapleton v. King,33 Iowa, 28, [11 Am. Rep. 109]; Babcock v. Hawkins, 23 Vt. 561; Hilliard v. Noyes, 58 N.H. 312; Goodwin v. Goodwin, 59 N.H. 548.)
Under these rules the indorsement of the plaintiff upon the bill paid by the appellant, "Paid $650 in full satisfaction of all claims," is not only an admission that that amount of money was paid, but it also operated as a contract of the plaintiff for the release of the defendant from its claim. The testimony of both the appellant and the president of the plaintiff shows that the defendant disputed the correctness of the bill, and that in consequence of such dispute the latter agreed to receive $650 therefor, and signed the above indorsement. The term "satisfaction" has a distinctive significance in legal phraseology, and imports a release and discharge of the obligation in reference to which it is given, and the statement in the indorsement that the money paid was in satisfaction of "all" claims is without any ambiguity in its terms, and includes not only the claim on which it was written, but every other claim which the plaintiff then had against the defendant. It was therefore error for the court to receive testimony for the purpose of explaining the terms of the indorsement, or seeking to place a limitation upon the meaning of the words employed. Especially was it error to permit the witness to testify as to his understanding of the claims he was settling. (Squires v.Amherst, 145 Mass. 192, [13 N.E. 609]; Baker v. Baird, 79 Mich. 255, [44 N.W. 604]; Solary v. Webster, 35 Fla. 363, [17 So. 646].) *Page 278
Whether the agreement thus indorsed upon the bill had the effect to discharge the defendant from liability for the work done for the plaintiff after September 25th cannot be determined upon the record before us. Such discharge was alleged by him in his answer, and upon the trial he gave testimony to the effect that the $650 was paid to the plaintiff upon an agreement between them that it should cover not only the work already done, but all work thereafter to be done, by the plaintiff under their previous agreement. At the trial this defense was presented in two branches; one by the above indorsement, which by its terms is limited to claims existing at the date it was given; the other by this verbal agreement. The finding of the court that the allegations of the answer constituting this defense are "untrue," in so far as it refers to the claims covered by the indorsement, is, as we have seen, not sustained by the evidence; but the failure to make a finding upon that portion of the defense which the defendant sought to sustain by the testimony respecting the verbal agreement, notwithstanding such testimony was denied by the plaintiff, necessitates a new trial.
The payment to the plaintiff by the Beet Sugar Company is not available to the defendant as a defense to the plaintiff's claim. Aside from the objection that such defense is not alleged in the answer, there was no evidence that the payment was made for or on account of the defendant.
The judgment and order denying a new trial are reversed.
Cooper, J., and Hall, J., concurred.