Problem.Dispute.Check tendered in satisfaction

    Consider the following cases, adapted from Consolidated Edison Co. of New York, Inc. v. Arroll, 66 Misc.2d 816, 322 N.Y.S.2d 420 (N.Y.City Civil Ct. 1971). 

    Part A

    Homeowner has been billed $250 by her public utility for consumption of gas and electricity during December.  She does not dispute the bill but cannot afford to pay it.  She delays paying any portion of the bill for several months but is able to pay and does pay much smaller bills for subsequent months.  The public utility eventually sends her a notice that it will discontinue providing utility service if she does not pay the December bill by a specified date.  Still unable to pay the bill in full, homeowner tenders the utility a check for $150 with the following restrictive indorsement written on the back of the check above the place where the public utility will indorse the check prior to deposit:   "Accepted in full satisfaction of claim for gas/electricity for December."  Upon receipt of the check, an employee of the public utility credits the account of homeowner $150.00, crosses out the restriction, indorses the check on behalf of the utility, and deposits the check for collection, and homeowner's bank pays the check.  Because this problem arises frequently with others of utility's millions of customers, the utility seeks your advice on how to proceed with homeowner and how to proceed generally with all of the utility's customers.  What is your advice?  See UCC 3-311 and its Official Comments, added to the Commercial Code in 1990, Comment d to R.2d Contracts 281,  UCC 1-207 (amended in 1990 to add subsection (2)), and its comments, Foakes v. Beer, Cal. Civ. Code 1521-24. 

    Part B

    Homeowner claims that she has been erroneously billed $250 by her public utility for consumption of gas and electricity during December.  Homeowner claims to owe only $150.00.  After unsuccessful efforts to resolve the dispute with a customer service representative, homeowner mails public utility a check for $150.00 with the following restrictive indorsement written on the back of the check above the place where the public utility will indorse the check prior to deposit:   "Accepted in full satisfaction of claim for gas/electricity for December."  Upon receipt of the check, an employee of the public utility credits the account of homeowner $150.00, crosses out the restriction, indorses the check on behalf of the utility, and deposits the check for collection, and homeowner's bank pays the check.  Because this problem arises frequently with others of utility's millions of customers, the utility seeks your advice on how to proceed with homeowner (e.g. add $100 to January bill for amount unpaid in December?) and how to proceed generally with all of the utility's customers.  What is your advice?  See UCC 3-311 and its Official Comments.  

     Note that California adopted UCC 3-311 in 1992 without repealing Cal. Civ. Code 1526(a), part of a statute that had been adopted in 1987.  With those two statutes still on the books, how should the problem be resolved in California?