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Under California law knowledge of a creditor’s agent may be
imputed to the creditor to make an accord entered into by the
agent valid where the creditor, with knowledge of the acts of the
agent, accepts the remittance from the agent and uses the
proceeds. B&W Engg. Co. v. Beam, 137 P. 624 (Cal. 1913). In B&W
Engg.v. Beam, supra at 628, the court stated:
if plaintiff’s assignor was not willing to accept such
payment in full satisfaction of its claim in keeping
with the settlement made by Crowley it should, within a
reasonable time, have repudiated such settlement and
returned the money paid thereunder. * * * Failing in
this the acceptance and retention of the payment in
question was, under all the circumstances of the
transaction, tantamount to an express ratification of
the compromise made by Crowley, and operated to estop
plaintiff’s assignor from denying the authority of
Crowley to execute such agreement.
Here, the lease agreement between petitioners and the
Pellegris did not address potential claims against third parties.
The Pellegris did not have express authority from petitioners to
release JTF from liability to petitioners arising from the crop
damage. Prior to the execution of the release, petitioners had
notified Giannecchini that the Pellegris were not authorized to
enter into a settlement on their behalf. Petitioners also
retained counsel who advised them not to cash the check,
apparently to avoid an accord and satisfaction. Under these
circumstances, we conclude that there was reasonable basis for
petitioners to believe that if, rather than repudiating the
settlement by the Pellegris by returning the check or at least
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Last modified: May 25, 2011