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Cano v. Arizona Frozen Products Co.

Supreme Court of Arizona

June 30, 1931

M. R. CANO, Appellant,
ARIZONA FROZEN PRODUCTS CO., a Corporation, Appellee

APPEAL from a judgment of the Superior Court of the County of Pima. Fred W. Fickett, Judge. Judgment affirmed.

Mr. Edward Aboud, for Appellant.

Mr. James R. Dunseath, for Appellee.


[38 Ariz. 405] LOCKWOOD, J.

Arizona Frozen Products Company, a corporation, hereinafter called plaintiff, brought suit in the superior court of Pima county against M. R. Cano, hereinafter called defendant, for damages in the sum of $5,000 for the unlawful use by defendant of the trademark of plaintiff. Defendant demurred generally to the complaint and set up as a plea in bar that prior to the inception of this action plaintiff brought suit in the federal District Court against defendant for infringement of the same trademark involved in this case, praying in such action for an injunction and damages, and that plaintiff in open court waived his claim for damages, judgment being entered solely for injunctive relief; and claiming that by virtue of said judgment and waiver of damages plaintiff was barred from maintaining this action.

Plaintiff answered to the plea in bar, admitting the judgment and waiver of damages, but alleging that such damages were waived in consideration of certain promises made by defendant to plaintiff, which consideration had failed. The case was heard before the trial court sitting without a jury, and judgment was rendered in favor of plaintiff in the sum of $1,450, from which judgment and the order overruling the usual motion for new trial this appeal was taken.

[38 Ariz. 406] There are some nine specific assignments of error, but we discuss only the questions

Page 954

of law raised thereby which are necessary for the determination of the case. The first is whether or not the complaint stated a cause of action. While it cannot be said the complaint is a model of pleading, we gather fairly therefrom that plaintiff was the owner of a trademark; that defendant had unlawfully used such trademark, and that plaintiff was damaged thereby in the sum of $5,000. We think it sets up a right in plaintiff, an unlawful invasion of the right by defendant, and damages resulting from such invasion. We are of the opinion this is sufficient as against a general demurrer, and the latter was properly overruled.

The second is in effect whether or not the pleadings and the evidence sustain the judgment rendered by the trial court. Briefly stated, the plaintiff claims that defendant unlawfully infringed its trademark and thereby it was damaged in the sum of $5,000. Defendant's answer is in confession and avoidance. He admits the unlawful use of the trademark, but alleges that a compromise agreement was entered into whereby all damages for such unlawful use were waived by plaintiff. Plaintiff replies, admitting the waiver of damages, but alleging that the consideration for such waiver had failed.

Judging from the entire record, it was apparently the theory of defendant that a formal compromise and settlement had been made of the matter in dispute, and that plaintiff had thereby waived all rights on its original claim, so that its only remedy was a suit for breach of the compromise agreement and not one on the original cause of action.

There are two forms of settlement of matters in dispute between parties. The first is called an "accord and satisfaction." An "accord" is an agreement whereby one of the parties undertakes to give or perform and the other to accept in satisfaction of [38 Ariz. 407] the claim, liquidated or in dispute, something other than or different from what he is or considers himself entitled to, and a satisfaction is the execution of such an agreement. 1 C.J. 523. A "compromise and settlement," on the other hand, is an agreement between two or more persons who, in order to avoid a lawsuit, amicably settle their differences on such terms as they can agree on. 12 C.J. 314. The vital distinction which is usually made between a "compromise and settlement" on the one hand, and an "accord and satisfaction" on the other, is that while an accord which has not been executed does not afford a bar to the original action, a valid compromise agreement, although executory, operates as such a bar. Memphis v. Brown, 20 Wall. (87 U.S.) 289, 22 L.Ed. 264; McCoy v. Milbury,, 87 N.J.L. 697, 94 A. 621; Flegal v. Hoover, 156 Pa. 276, 27 A. 162; 12 C.J. 315.

It is difficult in many specific cases to determine whether the facts show a compromise and settlement or an accord and satisfaction, and the courts sometimes use these phrases indiscriminately. We think, however, a careful analysis of the different cases will show that although the terms maybe used loosely, the best reasoned decisions are based on a real difference between the two forms of settlement. But even when the agreement in question is admittedly technically one of compromise and settlement, and we follow the strictest rule in determining its effect, if one of the parties fails to complete the agreement itself, as distinct from failing to carry out the terms of the completed agreement, the other party may elect to regard the agreement to compromise as rescinded, and may proceed on the original cause of action. McElrath v. United states, 102 U.S. 426, 26 L.Ed. 189; Benson v. Larson, 95 Minn. 438, 104 N.W. 307; Voight v. Voight, 96 Neb. 465, 148 N.W. 83; Tomson [38 Ariz. 408] v. Heidenheimer, 16 Tex. Civ. App. 114, 40 S.W. 425; Christensen v. Hamilton Realty Co., 42 Utah 70, 129 P. 412. To illustrate the difference: If A, who claims B owes him $2,000, offers to accept a note of $1,000 in full settlement of the claim and B delivers the note, if it is not paid when due, the suit must be on the note, and not on the original claim. But if B, although promising to deliver the note, fails to do so, A may sue on the original obligation.

With the above rules of law to guide us, let us determine whether the evidence in the present case is of such a nature that plaintiff was entitled to maintain its suit on the original cause of action. We must assume, following our well-established rule, that the trial court took that view of the evidence ...

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