Depositing a “Full Satisfaction” Check Discharges Disputed Claims: South Dakota Affirms UCC 3‑311 as Controlling

Introduction

In Berwald v. Stan’s, Inc., 2025 S.D. 33, the Supreme Court of South Dakota resolved two significant issues arising out of a long‑running dispute between a dairy operator and a local feed mill:

Whether a dairy’s breach‑of‑contract claim over a cancelled soybean meal commodity contract was extinguished by accord and satisfaction when the dairy deposited a check conspicuously tendered in full satisfaction; and
Whether a new trial was warranted based on (a) late-produced expert materials and (b) post‑verdict allegations of juror bias.

The case stems from plaintiff-appellant Calvin Berwald’s dealings with defendant-appellee Stan’s, Inc. Alongside a dispute over the cancellation of a soybean meal contract, Berwald alleged that customized calf starter from Stan’s was contaminated, causing the death of more than 200 calves. The circuit court entered summary judgment for Stan’s on the contract claim based on accord and satisfaction. A jury later found a breach of the implied warranty of fitness for a particular purpose but awarded no damages. The court denied Berwald’s motion for a new trial.

On appeal, the Supreme Court affirmed, offering a clear roadmap for accord and satisfaction by negotiable instrument under South Dakota’s UCC, and reinforcing strict limits on post‑verdict juror impeachment under Rule 606(b).

Summary of the Opinion

Appellate jurisdiction: The Court applied Stock v. Garrett, 2025 S.D. 8, to hold that a notice of appeal’s failure to designate the underlying judgment is a procedural defect—not a jurisdictional bar—if the notice is otherwise timely. It therefore reached the merits.
Accord and satisfaction by check: SDCL 57A‑3‑311 (UCC 3‑311) governs accord and satisfaction by negotiable instrument. Where (1) a check is tendered in good faith as full satisfaction, (2) the claim is unliquidated or subject to a bona fide dispute, and (3) the claimant obtains payment, the claim is discharged if the check or an accompanying writing conspicuously states it is tendered in full satisfaction. Prior protest or “reservation of rights” does not avoid discharge. Summary judgment for Stan’s was affirmed.
New trial—newly discovered evidence: The late-produced expert report and photographs were not newly discovered (they were in the plaintiff’s possession during trial), were cumulative/impeaching, and would not probably produce a different result. No new trial.
New trial—juror misconduct: Juror statements about deliberations are barred by SDCL 19‑19‑606(b) unless they concern extraneous prejudicial information or an outside influence. The juror letter described intrinsic deliberation matters; no admissible showing of extrinsic influence or prejudice. No new trial.

Analysis

Procedural Gatekeeping: Appellate Jurisdiction

The appellant’s notice of appeal listed the orders (summary judgment and denial of new trial) but omitted the underlying judgment. Historically, such an omission was treated as jurisdictional under Wilge v. Cropp. The Court, however, relied on its very recent decision in Stock v. Garrett, 2025 S.D. 8, 17 N.W.3d 856, to hold that:

Timely service and filing (SDCL 15‑26A‑6) is the jurisdictional prerequisite;
Designating the judgment (SDCL 15‑26A‑4(1)) is a procedural requirement, the violation of which is not jurisdictional absent prejudice; and
Notices of appeal are liberally construed; absent prejudice, the appeal proceeds (citing Ries and International Union of Operating Engineers).

Applying Stock, the Court found no prejudice from the omission and reached the merits. To the extent Wilge suggested a jurisdictional bar, it is no longer controlling.

Accord and Satisfaction by Negotiable Instrument

Statutory Framework and Doctrinal Clarification

The Court carefully distinguished two South Dakota statutory schemes:

General accord and satisfaction: SDCL 20‑7‑1 et seq., historically altering the common law in contexts outside negotiable instruments; and
Accord and satisfaction by negotiable instrument: SDCL 57A‑3‑311 (UCC 3‑311), which “follows the common law rule with some minor variations,” and governs checks and other negotiable instruments (SDCL 57A‑3‑104).

The Court held that when a negotiable instrument is used, SDCL 57A‑3‑311 controls. To the extent earlier cases under SDCL 20‑7‑4 conflict—particularly on whether the underlying claim must be unliquidated or genuinely disputed—they are inapplicable in the negotiable‑instrument setting. This is an important doctrinal clarification for South Dakota practitioners: you must analyze accord and satisfaction by check under UCC 3‑311, not the general accord statute.

The Court also emphasized the interplay with SDCL 57A‑1‑308 (reservation of rights). Subsection (b) explicitly states the reservation‑of‑rights mechanism “does not apply to an accord and satisfaction.” Thus, writing “under protest” or otherwise purporting to reserve rights upon depositing a “full satisfaction” check does not prevent discharge under 3‑311.

The 3‑311 Elements and Their Application

Under SDCL 57A‑3‑311(a)–(b), a claim is discharged if the payor proves:

Good faith tender of an instrument as full satisfaction;
The claim amount was unliquidated or subject to a bona fide dispute at the time of tender; and
The claimant obtained payment (e.g., by endorsing and depositing the check);

and the check or an accompanying writing contains a conspicuous statement that it is tendered in full satisfaction.

Good Faith (SDCL 57A‑1‑201(b)(20))

“Good faith” means honesty in fact and observance of reasonable commercial standards of fair dealing. The Court found good faith as a matter of law where Stan’s:

Notified Berwald twice before tender of its intent to cancel the contract and its buyout methodology (CBOT futures less a local basis);
Provided an itemized calculation with the check; and
Made a market‑based payment that neither misrepresented facts nor departed from industry norms, with no contrary evidence from the plaintiff.

The opinion also notes UCC examples where good faith would be lacking (e.g., systematically printing “full satisfaction” on all checks regardless of dispute, or exploiting a destitute claimant with an unreasonably small check), but those were not present here.

Bona Fide Dispute or Unliquidated Claim

The record established a true, pre‑tender dispute over cancellation and payment terms, with both sides taking opposing positions in writing. Moreover, the damages exposure for an anticipatory repudiation of a commodity contract was unliquidated—it depended on fluctuating market prices and potential incidental and consequential damages through the contract term (see SDCL 57A‑2‑711 to 713, 57A‑2‑715).

Payment Obtained + Conspicuous “Full Satisfaction” Statement

The check was accompanied by a conspicuous statement that it would satisfy all obligations between the parties, and Berwald endorsed and deposited it. Under 3‑311, deposit equals “obtaining payment,” triggering discharge when the other elements are met.

Protest or Reservation Is Ineffective

Although Berwald had previously objected to the cancellation and buyout methodology, the Court reiterated the common‑law rule that words of protest do not prevent accord and satisfaction, and SDCL 57A‑1‑308(b) bars the reservation‑of‑rights workaround in the 3‑311 context.

Precedents and Authorities the Court Relied On

Scholl v. Tallman, 247 N.W.2d 490 (S.D. 1976): Accord and satisfaction is fundamentally a matter of contract; protests do not defeat it.
Eberle v. McKeown, 159 N.W.2d 391 (S.D. 1968): General accord statute altered common law outside the UCC; now limited by 3‑311 when a check is used.
McMahon Food Corp. v. Burger Dairy Co., 103 F.3d 1307 (7th Cir. 1996): Good faith tender requirement under UCC 3‑311.
Thomas Creek Lumber & Log Co. v. United States, 36 Fed. Cl. 220 (1996): Bona fide dispute must predate discharge.
Flambeau Prods. Corp. v. Honeywell Info. Sys., Inc., 341 N.W.2d 655 (Wis. 1984): One party’s arbitrary refusal to perform cannot manufacture a “dispute” for accord and satisfaction.
Stock v. Garrett, 2025 S.D. 8, 17 N.W.3d 856: Appellate notice defects are procedural, not jurisdictional, when timely filed.

Practical Implications

For payors: A market‑based, transparent check tendered with an explicit “full satisfaction” statement can discharge a disputed or unliquidated claim once deposited—without need for a signed settlement agreement.
For claimants: Depositing a “full satisfaction” check is legally perilous; prior protest or a reservation‑of‑rights notation will not preserve the claim under SDCL 57A‑1‑308(b). Do not negotiate the instrument unless you accept the accord. Consider whether UCC 3‑311(c) or (d) safe harbors could apply in other cases (e.g., designating a person/address for such tenders or timely returning payment), though they were not at issue here.
On summary judgment: Where undisputed facts establish good faith, a bona fide dispute/unliquidated claim, and deposit of a conspicuously “full satisfaction” check, courts may resolve accord and satisfaction as a matter of law.

New Trial Motions

Newly Discovered Evidence (SDCL 15‑6‑59(a)(4))

A new trial based on newly discovered evidence requires a strict showing that the evidence was undiscovered despite diligence, is material (not merely cumulative or impeaching), and would probably produce a different result. The plaintiff received the expert’s 2010 report and photographs during trial, used the report for impeachment, and obtained an exclusionary sanction against their admission for late disclosure. The Court agreed with the trial court that:

The materials were not “newly discovered” in the legal sense (they were available before the evidentiary record closed);
They were largely cumulative/impeaching of testimony already explored; and
There was no reasonable probability of a different verdict had they been disclosed earlier.

Juror Misconduct (SDCL 15‑6‑59(a)(2) and Rule 606(b))

Post‑verdict, a juror reported that another juror was “professionally affiliated” with Stan’s, allegedly learned after the trial. The Court applied SDCL 19‑19‑606(b) (Rule 606(b)):

Juror testimony about internal deliberations is inadmissible; only evidence of extraneous prejudicial information or outside influence may be considered.
The letter mainly described the juror’s influence during deliberations—an intrinsic matter barred by 606(b).
No admissible showing indicated that extraneous information was conveyed to other jurors or that any outside influence affected the jury.
Given South Dakota’s 10‑of‑12 verdict rule and the parties’ waiver of polling, there was no record of prejudice affecting the verdict.

Result: No abuse of discretion in denying a new trial on either ground.

Complex Concepts Simplified

Accord and satisfaction: A binding settlement where the creditor accepts something different (often money) in full satisfaction of a disputed or unliquidated claim. Once accepted, the original claim is discharged.
Negotiable instrument: A check or similar instrument that can be transferred and is payable on demand or at a set time (SDCL 57A‑3‑104).
UCC “good faith”: Honesty in fact plus fair dealing under reasonable commercial standards (SDCL 57A‑1‑201(b)(20)).
Unliquidated claim: A claim whose amount is not fixed and cannot be computed by simple math or by the contract alone; often depends on market movements or additional consequential damages.
Bona fide dispute: A genuine disagreement between the parties, not merely a unilateral, arbitrary refusal to perform.
Conspicuous statement: Clear language on the check or in a letter that the payment is offered as “full satisfaction” of the claim.
Reservation of rights (57A‑1‑308): A mechanism to accept performance while preserving claims—except it does not apply to accord and satisfaction under 3‑311.
Rule 606(b) (SDCL 19‑19‑606(b)): Limits juror testimony to impeach a verdict; courts may not consider evidence of deliberations unless it concerns extraneous information or outside influence.
CBOT “local basis”: The difference between local cash price and CBOT futures price on a given date; commonly used in grain/meal markets.

Impact

Contract and commercial practice: This opinion cements that accord and satisfaction by check in South Dakota is governed by UCC 3‑311. Businesses that tender settlement checks should document the dispute, provide transparent calculations, and include conspicuous “full satisfaction” language to achieve discharge when appropriate. Counterparties should not deposit such checks unless they intend to settle.
Agribusiness and commodity contracts: For cancelled forward contracts, damages are often unliquidated and tied to market dynamics. That context readily meets the 3‑311 threshold when disputes arise and a buyout check is tendered and deposited.
Litigation strategy: Plaintiffs must develop evidence to rebut “good faith” tender if they intend to avoid 3‑311 discharge at summary judgment. Mere protest of cancellation is insufficient if the check is deposited.
Appellate practice: Although the Court saved the appeal under Stock, best practice remains to designate the judgment in the notice of appeal.
Trial practice: Late discovery production risks exclusion but will not necessarily yield a new trial; parties should subpoena and enforce disclosure early. Allegations of juror bias must be supported by admissible evidence of extrinsic information or outside influence; generalized claims about deliberation dynamics will not suffice under Rule 606(b).

Conclusion

Berwald v. Stan’s, Inc. provides a detailed and practical restatement of South Dakota law on accord and satisfaction by negotiable instrument. When a payor, in good faith, tenders a check with a conspicuous “full satisfaction” statement to resolve an unliquidated or genuinely disputed claim, and the payee deposits the check, the claim is discharged—regardless of prior protest or attempted reservation of rights. The Court’s opinion squarely situates such issues within SDCL 57A‑3‑311, clarifies the inapplicability of general accord authorities where they conflict, and signals that summary judgment may be appropriate when the 3‑311 elements are undisputed.

On the procedural front, the decision applies Stock to treat certain notice‑of‑appeal defects as non‑jurisdictional, and on post‑trial practice, it underscores the narrow window for new trial relief based on newly discovered evidence and the stringent Rule 606(b) limits on juror impeachment. Collectively, the opinion offers clear guidance to commercial actors and litigants alike: settle by check with care; deposit with caution; and litigate discovery and juror‑influence issues within well‑defined procedural confines.

Key Citations

SDCL 57A‑3‑311 (Accord and satisfaction by negotiable instrument)
SDCL 57A‑3‑104 (Negotiable instrument defined)
SDCL 57A‑1‑201(b)(20) (Good faith)
SDCL 57A‑1‑308(b) (Reservation of rights inapplicable to 3‑311 accord)
SDCL 57A‑2‑711 to 713; 57A‑2‑715 (UCC buyer’s remedies; damages)
SDCL 19‑19‑606(b) (Rule 606(b): juror testimony/affidavits)
SDCL 15‑26A‑3, ‑4, ‑6, ‑7 (Appellate jurisdiction and notices)
SDCL 15‑6‑59(a)(2), (a)(4) (New trial grounds)
Stock v. Garrett, 2025 S.D. 8, 17 N.W.3d 856
Scholl v. Tallman, 247 N.W.2d 490 (S.D. 1976)
Eberle v. McKeown, 159 N.W.2d 391 (S.D. 1968)
Russo v. Takata Corp., 2009 S.D. 83, 774 N.W.2d 441
State v. Birdshead, 2015 S.D. 77, 871 N.W.2d 62
State v. Otobhiale, 2022 S.D. 35, 976 N.W.2d 759