Opinion
39156.
DECIDED DECEMBER 5, 1961. REHEARING DENIED DECEMBER 20, 1961.
Action on bond, etc. Albany City Court. Before Judge Jones.
Devine Busbee, George D. Busbee, for plaintiff in error.
Nall, Miller, Cadenhead Dennis, Burt Burt, H. P. Burt, James W. Dorsey, contra.
The payee's indorsement of a check given him for labor on a highway contract does not import a legal assignment to the indorsee, who gave cash for the check, of the laborer's claims under the payment bond of the highway contractor. Whether such indorsement imports an equitable assignment of the laborer's claims under said bond is a question beyond the jurisdiction of the City Court of Albany.
DECIDED DECEMBER 5, 1961 — REHEARING DENIED DECEMBER 20, 1961.
Plaintiff (plaintiff in error) sued the defendant (defendant in error) on a payment bond executed by Charles R. Shepherd, Inc., hereinafter called contractor, as principal, and the defendant as surety. The bond, attached to the petition as an exhibit, recites that the contractor had a contract with the State Highway Department for certain highway construction; that it was executed and is binding upon the parties in accordance with Ga. L. 1956, p. 340 ( Code Ann. § 23-1705 (2)). The defendant is obligated on the bond to the State Highway Department of Georgia "for the use of all persons doing work, including subcontractors, or furnishing skill, tools machinery, or materials under or for the purpose of the contract" unless the contractor "shall promptly make payment to all persons supplying him or them with labor, material, including subcontractors . . . for or in the prosecution of the work provided for in said contract. . ." The petition alleges that Consolidated Construction Co., Inc., hereinafter called subcontractor, supplied labor, materials, machinery and equipment for the work provided for in the contract. The subcontractor issued payroll checks to seven of its employees. Each of the employees indorsed his check in blank to plaintiff, and plaintiff cashed their checks aggregating $511.42. The drawee bank did not honor the checks because there were no funds on deposit in the subcontractor's account, and plaintiff received no payment on the checks. The defendant filed a general demurrer, which the court sustained, dismissing the petition. The plaintiff assigns error.
The question presented is whether the payees' indorsements of bank checks issued by a highway subcontractor to laborers, carry with them assignments by the laborers of their claims under the provisions of the contractor's payment bond required by statute. Clearly the plaintiff was not among those for whom the express terms of the statute required protection. ". . . all subcontractors and all persons supplying labor, materials, machinery, and equipment in the prosecution of the work provided for in said contract." Code Ann. § 23-1705 (2). Neither is plaintiff included as a beneficiary by the express terms of the bond, quoted supra.
Each of the laborers whose check plaintiff cashed had two distinct rights. One was his right to payment as payee of a negotiable instrument. The other was the right (chose in action) to recover under the payment bond in the event he was not otherwise paid for his work on the project covered by the contract. The former right may be transferred by an indorsement in blank. Code Ann. § 14-401. The latter right (chose in action) may be transferred by an assignment. Here the laborers transferred whatever rights they had in the checks by indorsing them in blank. However, the blank indorsements did not per se operate as assignments of the laborers' separate and distinct rights (choses in action) to recover under the payment bond. In this State an assignment of a chose in action must be in writing; the meaning of a legal assignment is a transfer of title or interest by writing. Turk v. Cook, 63 Ga. 681.
The plaintiff contends and cites authority for the proposition that by virtue of his being an indorsee of the checks he became the assignee of valid equitable assignments of the rights of the payees under the bond. Finch v. Enke, 54 S.D. 164 ( 222 N.W. 657); Shoshoni Lumber Co. v. Fidelity Deposit Co., 46 Wyo. 241 ( 24 P.2d 690, 699). "An equitable assignment is such an assignment as gives the assignee a title which, though not cognizable at law, will be recognized and protected in equity." Smith v. Folsom, 190 Ga. 460, 470 ( 9 S.E.2d 824).
However, the question whether or not this petition sets out a cause of action in equity was beyond the jurisdiction of the City Court of Albany. Constitution Art. VI, Sec. IV, Par. I ( Code Ann. § 2-3901); Code Ann. § 37-101; Ga. L. 1897, p. 408. For this reason, and because, under the above cited authorities, the petition did not set out a cause of action at law, the trial court did not err in sustaining the general demurrer.
Plaintiff relies on Alley v. First Nat. Bank of Gainesville, 46 Ga. App. 527 ( 168 S.E. 317). There the court held that a court of law, without invoking equitable principles, could declare a judgment in favor of the transferee of the note to be a special lien on the property described in the security deed securing the note, even though the security deed had not been transferred. The court stated that "the law gives full, adequate, and complete relief," under the statute, Code Ann. §§ 67-1706 and 67-1707, providing that transfers of certain evidences of indebtedness (including security deeds) shall carry with them to the transferee "the lien connected with the same without specifically transferring the lien." A lien is a "claim or charge on property, either real or personal, as security for the payment of some debt or obligation. . ." 53 C.J.S. 826, § 1. The Alley case is not authority for granting the relief sought by the present plaintiff, because he does not sue on an evidence of indebtedness secured by a lien.
Judgment affirmed. Felton, C. J., and Bell, J., concur.
ON MOTION FOR REHEARING.
On motion for rehearing, the plaintiff contends that this court has misconstrued his cause of action; that he is not seeking equitable relief; and that therefore his petition is an action at law upon a statutory bond. However, he contends that the right to bring this action is based upon an equitable assignment of the rights of the laborers to recover under the payment bond.
If the plaintiff is in fact the holder of an equitable assignment of these rights, a recovery in his name will depend upon equitable principles and the exercise of equitable jurisdiction. 4 Pomeroy's Equity Jurisprudence, pp. 800-801, §§ 1277, 1278. Accord, Brown v. Southern Ry. Co., 140 Ga. 539 ( 79 S.E. 152); Beasley v. Anderson, 167 Ga. 470 ( 146 S.E. 22). To enforce these rights at law, the plaintiff must sue in the names of his assignors (laborers) for his own use. Franklin v. Mobley, 73 Ga. App. 245, 249 ( 36 S.E.2d 173); Leverett, Hall Christopher, Georgia Procedure and Practice, pp. 80-81, § 4-30. It is true that the holder of the equitable title to a chose in action may amend by adding as plaintiff in his suit the name of the person who holds the legal title, suing for his own use. However, there has been no such amendment in this case prior to the sustaining of the defendant's general demurrer.
Plaintiff strenuously insists that the holders of equitable rights may enforce the same in a court of law citing Glover v. Stamps, 73 Ga. 209 (54 AR 170) and Dobbs v. Perlman, 59 Ga. App. 770 ( 2 S.E.2d 109). These cases do not stand for any such general rule. They are examples of actions based on equitable principles that are specifically authorized at law. The Glover case was an action in ejectment and held that a "perfect equity" is the equivalent of legal title. This is a rather narrow and limited exception to the general rule and according to one authority has resulted in some confusion. Powell on Actions For Land, pp. 139-140, § 138. The Dobbs case was an action in assumpsit for money had and received based upon the equitable principles of unjust enrichment. However, it is "an action at law because of its origin as a mode of action in the common-law courts." Sheehan v. City Council of Augusta, 71 Ga. App. 233, 237 ( 30 S.E.2d 502).
The plaintiff's contention, that an action to enforce an equitable right may be asserted at law provided the petition does not pray for affirmative equitable relief, is unsound. If this were true, any party seeking the enforcement of an equitable right could convert his case into a law case simply by electing to pray for relief that can be granted in legal actions.
Motion for rehearing denied. Felton, C. J., and Bell, J., concur.