Summary
holding that money due and to become due under an existing contract may be assigned
Summary of this case from In re MillerOpinion
No. 24514
Decided April 4, 1934.
Assignments — Future installments under contract assignable — Consent of obligor not required — Equitable assignment accomplished, when — Intent and effect of equitable assignment ascertained, how.
1. Money due and to become due under an existing contract is subject to assignment, which may attach to each installment as it becomes due and payable to the assignor.
2. In equity, the consent of the debtor ( i. e., the one obligated to the assignor) to an assignment is not required, even though it be for only a part of an entire debt or claim, and such assignment is enforceable.
3. An equitable assignment requires no particular form. It is accomplished where there is an intention on one side to assign and an intention on the other to accept, supported by a sufficient consideration and disclosing a present purpose to make an appropriation of a debt or fund.
4. The intent and effect of an equitable assignment are to be ascertained from all the language used, construed in the light of the surrounding circumstances. The object sought to be accomplished may be considered, as well as the conduct of the parties.
CERTIFIED by the Court of Appeals of Van Wert county.
This action of interpleader was brought originally in the Court of Common Pleas of Van Wert county, Ohio, by Clarence C. Judkins, auditor of Van Wert county, acting as clerk and fiscal agent of the joint board of county commissioners of Van Wert and Paulding counties, requesting the judgment and direction of the court as to the distribution of a fund of $2,899.43 among a number of persons claiming an interest therein through purported assignments, liens and proceedings in aid of execution. Said fund represented the balance due under the contract described in the next paragraph.
On December 31, 1929, the joint board of county commissioners of Van Wert and Paulding counties entered into a written contract with John G. Roos, doing business as Excavation and Construction Company, for the improvement of the Blue creek joint county ditch, whereby Roos agreed to make the improvement as specified for $10,728.90, payable in installments, upon estimates of the county surveyor in charge.
Roos began work under the contract, and on April 3, 1930, executed the following written instrument:
"Van Wert, Ohio, April 3, 1930.
"C.W. Ringer, Auditor,
"Van Wert County, Ohio.
"Dear Sir:
"For value received from the Van Wert National Bank, Van Wert, Ohio, I hereby assign, convey and transfer all my rights, titles and interests in the amount due me on my contract for the improvement of Blue creek, located in Van Wert and Paulding counties, to the Van Wert National Bank, as collateral security for loans advanced to me for the purpose of carrying out the terms of my contract on the Blue creek improvement.
"You are hereby requested to forward checks in payment of all my estimates to my order, in care of the Van Wert National Bank, Van Wert, Ohio.
"Signed this third day of April, 1930, at Van Wert, Ohio.
"John G. Roos.
"Witness: David Brumback."
This instrument was delivered to the auditor of Van Wert county, acting as fiscal agent for the joint board of county commissioners, who made a written acknowledgment of the same, as follows:
"Van Wert, Ohio, April 4, 1930.
"The above assignment received by me this fourth day of April, 1930, and placed on file. Checks for all estimates will be forwarded to The Van Wert National Bank, payable to John G. Roos.
"C.W. Ringer,
"Auditor of Van Wert County."
From April 3 to July 12, 1930, the Van Wert National Bank loaned Roos the total sum of $2,200, evidenced by three promissory notes bearing his signature, which notes remain unpaid.
Between April 9 and December 13, 1930, twenty-five estimates in varying amounts were delivered to Roos for work done under the contract, the first fifteen of which were paid on warrant by the treasurer of Paulding county, and the remaining ten estimates on warrant by the treasurer of Van Wert county.
Roos delivered all but two of these estimates to the Van Wert National Bank, which in turn presented them to the proper county auditor. The auditor then issued his warrants, directed to the treasurer of his county, which warrants were generally made payable to the Excavation and Construction Company, or order, and delivered them to the bank. The bank endorsed the same and collected the money.
David L. Brumback, president of the Van Wert National Bank, testified as follows on this subject:
"Q. And then what was done with the warrants? A. The warrants were presented to the treasurer and the money drawn.
"Q. Then what was done with the money? A. The money was used for carrying the expenses of the contract. Mr. Roos came in, we would — money would be deposited so he could pay his men and some money was taken in cash to pay his accounts.
"Q. And what part, if any, was left after the expenses were taken care of out of this cash received from these warrants, to apply on the indebtedness, as evidenced by the three notes? A. None. The money was advanced for the purpose of getting the work started, paying the expenses. We were looking to the balance due."
On October 28, 1930, Roos made an assignment in the amount of $208.18 to Charles Danner. On November 19, 1930, he made an assignment to Frank W. Mullenhour, Sr., of $1,055.63; and on December 9, 1930, he made an assignment of $2,500 to the General Excavator Company of Marion, Ohio, plaintiff in error herein.
All of these assignments covered funds due or to become due to Roos under the said contract, and were filed with the auditor of Van Wert county.
The Van Wert National Bank claims ownership of the Mullenhour assignment, through re-assignment to it.
Danner answered in the Court of Common Pleas, setting up his assignment, but appears to have done nothing more. He is not before this court.
Six liens for labor and one for material were duly filed with the auditor of Van Wert county.
This action was precipitated when the General Excavator Company took judgment against Roos for $3,000, and interest, on a cognovit note, and sought to satisfy the same in part through proceedings in aid of execution against the said fund of $2,899.43.
The parties agreed that the liens for labor and material should be paid, leaving a balance of $2,320.47, which is less than either the claim of the Van Wert National Bank, including interest, or that of the General Excavator Company.
The Court of Common Pleas decided in favor of the Van Wert National Bank and awarded it the entire amount, less the costs of the action. From this judgment an appeal was taken by the General Excavator Company to the Court of Appeals, which reached the same conclusion as the lower court. Finding its judgment in conflict with the holding in the case of State, ex rel. Cowen, State Highway Commr., v. Robins McDaniel, 10 Ohio App. 382, the Court of Appeals certified its record to this court.
Messrs. Mouser, Young, Mouser Wiant and Messrs. Hoke Wright, for plaintiff in error.
Mr. John I. Miller and Messrs. Blachly Beard, for defendants in error.
By the process of elimination this controversy has narrowed down to one between the Van Wert National Bank and the General Excavator Company, each claiming a prior right to the fund described. The bank claims preference through the purported assignment of April 3, 1930, while the excavator company asserts priority through its purported assignment dated December 9, 1930, which was accepted by the auditor of Van Wert county, acting as fiscal agent for the joint board of county commissioners.
The validity and sufficiency of the assignment to the bank is challenged on two principal grounds: First, that there was no acceptance thereof by the auditor of Van Wert county in his capacity of fiscal agent, and, second, that the warrants being drawn in favor of the contractor, such reservation and control of the funds on his part is shown as to destroy any effectiveness the assignment might otherwise have had.
The further contention is made that if the assignment is good, it should be limited under its terms to those estimates due and to the amount of loans made on the date of its execution.
It is established in Ohio, and by the weight of authority elsewhere, that money due and to become due under an existing contract is subject to assignment, the assignment attaching to each installment as it becomes due and payable to the assignor. Public Finance Co. v. Rowe, 123 Ohio St. 206, 174 N.E. 738, and Ohio cases cited therein; Seymour v. Finance Guaranty Co., 155 Md. 514, 142 A. 710; Fairbanks v. Crump Irrigation Supply Co., 108 Cal.App. 197, 291 P. 629; Hinkle Iron Co. v. Kohn, 229 N.Y. 179, 128 N.E. 113; King v. Hardin Lumber Co. (Tex.Civ.App.), 187 S.W. 401; Bryan v. Askin Marine Co., 146 S.C. 520, 144 S.E. 231; 5 Corpus Juris, 864, et seq.; 2 Ruling Case Law, 599, et seq.
This is an equitable action and is controlled by equitable principles. The consent of a debtor, i.e., the one obligated to an assignor, is not required to an assignment, even though it be for only a part of an entire debt or claim. Such assignment will be enforced against the debtor in equity. Pittsburgh, C., C. St. L. Ry. Co., v. Volkert, 58 Ohio St. 362, 50 N.E. 924; 80 A. L. R., note beginning at page 414.
Was the purported assignment to the Van Wert National Bank sufficient to support the bank's present claim?
An equitable assignment needs no particular form and may even be oral. So long as there is an intention on one side to assign and an intention on the other to accept, supported by sufficient consideration, and disclosing a present purpose to make an appropriation of a debt or fund, it is enough. 2 Ruling Case Law, 614; 5 Corpus Juris, 910.
Since intent is the controlling factor, it is to be ascertained from all the language used, construed in the light of the surrounding circumstances. The object to be accomplished through the assignment may, therefore, be taken into consideration, as well as the conduct of the parties.
In the present case, Roos obviously required financial assistance to carry out the contract. The bank was willing to lend it, upon adequate protection. The evident desire of the parties was to give the bank protection to the extent of the money which might be loaned in order to complete the contract. Therefore, to limit the first paragraph of the communication of April 3, 1930, addressed by Roos to the auditor of Van Wert county, to such estimates as were then due, and to the amount of money then loaned, would be placing a construction upon it not in accord with the purpose to be served or with the intent of the parties.
If the second paragraph of this communication stood alone, it would of course be insufficient to create an assignment; but when read in connection with the first paragraph, and when the conduct of the parties in relation to the sums which became due to Roos from time to time upon the estimates is considered, we think the requirements of an equitable assignment are sufficiently met.
Even though most of the warrants were made out in the name of the Excavation and Construction Company, under which name Roos did business, they were, with but two exceptions, collected by the bank, and the bank exercised such dominion and control over the funds so collected as to constitute an appropriation thereof. The fact that the bank did not satisfy its loans at once out of the moneys received did not operate to destroy the effectiveness of its assignment, which covered the entire amount due and to become due under the contract.
There are two distinct and diverse rules in regard to the priority rights of different assignees of the same fund in the hands of a debtor. The one adopted in England, and perhaps in a majority of the states of this country, is that the assignee who first gives notice of his claim to the debtor is preferred, unless he had knowledge of an earlier assignment or unless his assignment is without a valuable consideration. The other rule, adopted in some of the states and in the federal courts, is that among successive assignees the one prior in point of time should prevail, irrespective of notice. 31 A. L. R., note beginning at page 876; 2 Pomeroy's Equity Jurisprudence (4th Ed.), 1396 et seq.; 5 Corpus Juris, 953, et seq.; Fairbanks v. Crump Irrigation Supply Co., supra; Wilson v. Duncan (5th C. C. A.), 61 F.2d 515; First National Bank v. Bangor Trust Co., 297 Pa. 115, 146 A. 595; Standard Oil Co. v. Powell Paving Contracting Co., 139 S.C. 411, 138 S.E. 194.
Here the assignment to the bank was first in point of time and was first brought to the attention of the auditor as fiscal agent. The maxim "Qui prior est tempore, potior est jure" applies with double force.
Our opinion being that the bank has a valid and enforceable assignment entitling it to receive the fund in question, it becomes unnecessary to discuss or decide the other matters presented by counsel.
The judgment of the Court of Appeals will be affirmed.
Judgment affirmed.
WEYGANDT, C.J., ALLEN, STEPHENSON, JONES, MATTHIAS and BEVIS, JJ., concur.