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Modern Dust Bag Co., Inc. v. Commercial Trust Co.

Court of Chancery of Delaware, New Castle County

April 7, 1954

MODERN DUST BAG CO., Inc.
v.
COMMERCIAL TRUST CO.

Action for mandatory injunction requiring assignee of accounts for paper purchased by plaintiff to release to plaintiff paper of a special kind and quality used solely by plaintiff and not available for purchase elsewhere. On plaintiff's motion for summary judgment, the Court of Chancery, Bramhall, Vice Chancellor, held that acceptance by assignee of check tendered in full settlement of account constituted accord and satisfaction of indebtedness on account, in view of bona fide dispute as to balance owing on account.

Motion for summary judgment granted.

Page 379

[34 Del.Ch. 355] Action for mandatory injunction for the return of personal property of a special kind and quality used solely by plaintiff and not available for purchase elsewhere. Motion of plaintiff for summary judgment.

Daniel O. Hastings and Clarence W. Taylor (of Hastings, Stockly & Walz), Wilmington, for plaintiff.

Thomas Herlihy, Jr., Morris Cohen Wilmington, for defendant.

BRAMHALL, Vice Chancellor.

Plaintiff had been purchasing from Franklin Mills, Inc. (hereinafter designated as ‘ Franklin’ ), a certain kind of paper used by plaintiff and manufactured exclusively by defendant. In making deliveries it was a practice for Franklin to deliver the paper purchased by plaintiff to the Wilmington Marine Terminal and draw invoices against plaintiff in favor of Franklin for the purchase of the paper. Franklin borrowed from defendant from time to time certain moneys, assigning its open accounts to defendant as collateral security therefor. When Franklin became financially embarrassed, an arrangement was made between plaintiff and defendant whereby plaintiff agreed to pay to defendant the sum borrowed by Franklin on the assigned accounts. Plaintiff gave to defendant its promissory note in the sum of $13,985.97, and also assigned to defendant certain warehouse receipts representing paper held at the Wilmington Marine Terminal in plaintiff's name which had been placed there by Franklin. According to a letter dated August 10, 1951, from defendant to plaintiff, defendant agreed to hold the warehouse receipts and the assignment of accounts covering [34 Del.Ch. 356] invoices due Franklin as collateral. Thereafter plaintiff paid to defendant two checks, one for $5,000 and the other for $9,416.66, or a total of $14,416.66. The latter check when tendered to defendant bore the following endorsement:

‘ By endorsement this check when paid is accepted in full payment of the following account

‘ Bills from Franklin Mills

‘ Bal.’

Defendant cashed this check with the following endorsement:

‘ The Commercial Trust Co. of Wilm, Del accepts and endorses this ck for payment only on the following terms:

‘ As partial payment on account balance due by Modern Dust Bag Inc.

in the amt of $11,297.24

Paid by this ck 9,416.66

Bal remaining unpaid 1,880.58

and admittedly due to Commercial Trust Company.'

Defendant then released to plaintiff most of the paper which had been assigned as collateral except two quantities which defendant ...


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