Summary
In Tyler, that firm had entered into a contract with the State Highway Commission to do certain road work, including the hauling of sand. Tyler subcontracted the sand hauling to Broom.
Summary of this case from McDaniel Bros. v. Burk-HallmanOpinion
No. 33833.
January 2, 1940. Suggestion of Error Overruled February 12, 1940.
1. CONTRACTS.
What parties to contract consistently do thereunder is evidence, and often the best evidence, of what contract required that they should do.
2. CONTRACTS.
Where subcontractor agreed to furnish trucks for road work, and contractor agreed to pay "fifty per cent of the amount due the party furnishing, to the party selling the trucks, and the other fifty per cent to the party furnishing the trucks," contractor did not agree to pay to seller one-half gross earnings of subcontractor, but only one-half amount due subcontractor after deductions for expenses as required by contract between contractor and subcontractor.
3. ASSIGNMENTS.
The assignee of a contractual right is bound by terms of contract to the same extent as the assignor.
4. ASSIGNMENTS.
The assignment of a contractual right confers only the right which the assignor has therein.
5. ASSIGNMENTS.
A contractual right may not be assigned if assignment will vary materially obligor's duty or increase materially the burden or risk imposed on him by contract, or impair materially his chance of obtaining return performance.
6. ASSIGNMENTS.
Where there is no more than a formal acceptance of assignment of contractual right, rights of assignee are still limited to rights of assignee are still limited to rights of assignor.
7. ASSIGNMENTS.
Where seller of trucks to subcontractor relied on contractor's agreement to pay to seller half of amount due subcontractor, delivered trucks before contractor's acceptance of subcontractor's assignment of half his gross earnings from road work, and did not rely on such acceptance, acceptance created no new obligation, and contractor was only liable to seller for amount due subcontractor after deductions for expenses as required by contract between contractor and subcontractor.
APPEAL from the chancery court of Jones county; HON. A.B. AMIS, SR., Chancellor.
Paul B. Johnson, of Hattiesburg, and Jeff Collins, of Laurel, for appellant.
Complainant failed to prove that the agent, a timekeeper, had any authority to execute the alleged contracts. Appellee made no investigation or inquiry as to his authority.
2 C.J. 665; Howze v. Whitehead, 95 Miss. 978, 46 So. 401; J.B. Colt Co. v. Black, 144 Miss. 515, 110 So. 442; Russell v. Palatine Ins. Co., 63 So. 644, 106 Miss. 290; Gulfport and Miss. Coast Traction Co. v. Faulk, 80 So. 340, 118 Miss. 890; Cape County Savings Bank v. Gwin Lewis Grocery Co., 86 So. 275, 123 Miss. 443; Felix Gruner Lumber Co. v. Algonquin Lumber Co., 85 So. 191, 123 Miss. 157; Coulson v. Stevens, 85 So. 83, 111 Miss. 497; King v. Levi, 13 So. 282; Malone v. Robertson, 12 So. 709; White v. Lee, 52 So. 206, 97 Miss. 493; Hopkins v. Buckley Terry Co., 71 So. 877, 111 Miss. 621; Busby v. Y. M.V.R.R. Co., 43 So. 1, 90 Miss. 13; Ismert-Hincke Milling Co. v. Natchez Baking Co., 86 So. 588, 124 Miss. 205; Royal Feed and Milling Co. v. Thorn, 107 So. 282, 142 Miss. 92; Aetna Ins. Co. v. Singleton, 164 So. 13, 174 Miss. 556.
The burden of proof was upon appellee to prove agency of timekeeper and scope of his authority.
J.B. Colt Co. v. Black, 110 So. 442, 144 Miss. 515; Planters' Lumber Co. v. Sibley, 93 So. 440, 130 Miss. 26.
The burden of proof was upon appellee to prove the amount of the account and all credits and balance due of the Miss. Truck Equipment Company, if they were to receive any credit on that account. Second, not having alleged or claimed on the account of the Mississippi Truck Equipment Co. in their bill of complaint, they had no right to prove it, and therefore had no right to any credits on it.
Griffith's Chan. Practice, Secs. 388, 573.
There was no proof that J.B. Carrington was the agent of appellant with authority to make this contract, and there is no proof of any ratification or estoppel, and therefore appellee was not entitled to recover.
J.B. Colt Co. v. Black, 144 Miss. 515, 110 So. 442; Roy Realty Co. v. Burkhardt, 111 So. 289, 146 Miss. 270.
Appellee was stopped to claim 1/2 the gross earnings of J.J. Broome.
The only paper that was ever brought to the notice of the company was "To Whom It May Concern." Therefore, if appellant was bound at all, it was only under this letter, and it more than performed the requirements of the letter.
It appears from the record that it was necessary for the Tyler Company to advance to Broome for labor, gasoline, oil, repairs, etc., amounts in the aggregate exceeding one-half his gross pay under the contract. If the Tyler Company were obliged in addition to these advances to pay to the Laurel Company one-half the gross proceeds, it would amount, as a practical proposition, in depriving the Tyler Company of its contract in that it would impose upon it the payment of more in gross for the work than the contract called for, or else they would have to decline to go on with the contract; or, in other words, lose the contract. May an assignor by an assignment to a third party so maneuver as to deprive the other party to the assignor's main contract, of that contract? If, in other words, the Tyler Company paid to the Laurel Company the entire amount under the contract less expenses paid out by the Tyler Company in carrying out the contract, is there anything upon which the bill may be maintained?
The rule is announced by the American Law Institute that a right may be the subject of effective assignment unless (a) the substitution of a right of the assignee for the right of the assignor would vary materially the duty of the obligor, or increase materially the burdens or risk imposed upon him by his contract, or impair materially his chance of obtaining return of performance.
A.L.I., Restatement, Contracts, Sec. 161; 4 Am. Jur., p. 234; p 261, Sec. 41; pp. 311-312, sec. 104; p. 325, sec. 121; 128 Minn. 307, 150 N.W. 903; Crane Ice Cream Co. v. Terminal Freezing Heating Co., 47 Md. 588, 128 A. 280, 39 A.L.R. 1184; Sparks v. Jasper County, 213 Mo. 218, 112 S.W. 265.
Welch Cooper, of Laurel, for appellee.
There are two reasons why the appellant is bound by the acts of J.B. Carrington. The first reason is that Carrington was acting within the scope of his apparent authority. The second reason is that there was a ratification of the acts of Carrington by the appellant. There is still another reason why the decree in this case will have to be affirmed. There was beyond all question and dispute an assignment on the part of Broome to the appellee of fifty per cent of Broome's gross earnings. There did not have to be any consent on the part of appellant. It had notice of the assignment and had no reason for not complying. It paid any part of the fifty per cent assigned to the appellee to anyone else at its peril.
Wilcox v. Routh, 9 S. M. (17 Miss.), 476; Dyle v. Griffin, 122 Miss. 828, 85 So. 93; Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609; C.L. Gray Lbr. Co. v. Shubuta Motor Co., 169 Miss. 393, 153 So. 155; Allen v. T.J. Moss Tie Co., 157 Miss. 392, 128 So. 351; Wasserman v. Cosmopolitan Trust Co. of Boston et al., 252 Mass. 253, 147 N.E. 742; Nascho Kostoff et ux v. Meyer-Kiser Bank, 201 Ind. 396, 167 N.E. 527, 69 A.L.R. 796; Restatement of the Law of Agency, Secs. 1, 73.
Broome had the right to make the assignment and the Laurel Equipment Company had the right to accept it and it had the right to call on the appellant to pay according to the tenor of the assignment. Since when has it become necessary for a debtor to consent to an assignment of his indebtedness to another? The appellant gratuitously took upon itself to act as guardian for Broome. It said by its conduct to Broome "you have got no business trying to pay fifty per cent of your gross earnings to pay for the purchase price of your machines. You should have agreed to pay fifty per cent after deducting your labor, including an allowance to yourself for your own labor, and after deducting your gas and oil and repair bills, etc." Apparently the payment was made to Broome for his own labor on the theory that it was necessary under the Federal law that the laborer in charge of the trucks be paid for his labor.
After a very diligent search of the authorities, we are unable to find any case in which it is even suggested in any way that the assignment of a part of the proceeds becoming due under the contract would leave the assignee without a remedy, if the assignor is unable to carry out the contract by reason of his having made the assignment. The court suggests that the appellant, the R.B. Tyler Company, could have been deprived of the benefits of the contract on account of the assignment. We are venturing to suggest to the court with all deference that the pleadings in the case do not raise the question that the court has raised.
To hold that an assignment is bad because it would possibly deprive the assignor of a contract when that very assignment furnishes to the assignor the very life blood of the contract and enables him to comply with the contract, it seems to us is to rewrite the law appertaining to assignment and establish a very inequitable principle.
To be valid an assignment of a fund becoming due to the assignor, it is only necessary that the assignment be supported by sufficient consideration and must be fairly made and must not contravene any recognized rule of public policy.
4 Am. Jur. 230.
The contract in question was not one involving personal skill or service of a relation of personal confidence and, therefore, we think the contract would have been assignable. However, it was not the contract that was assigned, but money to become due under the contract.
4 Am. Jur. 240-241; A. S. Spengler v. Stiles-Tull Lbr. Co., 94 Miss. 780, 48 So. 966, 19 Ann. Cas. 426; Peoples Bank v. Attala County, 156 Miss. 560, 126 So. 192; First National Bank of Aberdeen v. Monroe County, 131 Miss. 828, 95 So. 726; Canton Exchange Bank v. Yazoo County et al., 144 Miss. 579, 109 So. 1; So. Surety Co. v. Greenville Bank and Trust Co., 154 Miss. 512, 122 So. 529.
To deny the Laurel Equipment Company the right to recover in this case, is to penalize the company for being prudent and for taking an assignment of the pay. To deny the Laurel Equipment Company the right to recover is vesting in R.B. Tyler Company the right to say which of the creditors of Broome shall suffer.
A.L.I. Restatement, Contracts, Sec. 151; 5 C.J. 849, Sec. 9.
With reference to the precise question here, to-wit, the assignment of money due or to become due under a contract, the general rule as stated in Corpus Juris is as follows: "Money due or to become due. — The right to receive moneys due or to become due under a contract is not personal in nature and as a general rule is assignable. A contract to pay money may be assigned by the person to whom the money is payable if there is nothing in the contract manifesting a different intention of the parties. But the fact that a contract is not itself assignable does not prevent a debt matured under it from being assignable."
5 C.J., page 864, Sec. 31, and page 885, Sec. 51.
Beyond doubt, a chose in action is assignable in this state.
Secs. 505, 506, 507, Miss. Code of 1930; A.T. S.F. Ry. v. Bradley, 136 Miss. 467, 101 So. 577.
The assignment was not of all of the proceeds of the contract but of one half of the gross proceeds. This was not objectionable.
Ross v. Morrimac Veneer Co., 129 Miss. 693, 92 So. 823.
We respectfully urge that there is not a word in the rule with reference to assignments as announced by the several authorities on the subject that would make ineffective the assignment on account of the possibility of injury to the other party to the contract.
2 R.C.L., pages 598, 599 and page 625, Sec. 34.
There is no hint in any of the authorities to indicate that an assignment would not be enforced in the event the same worked to the detriment of the other party to the contract except the statement found in Section 151 of the Restatement.
There is nothing in the record in this case in the way of testimony to indicate that the assignment by Broome of a part of the proceeds of the contract would increase materially the burden or risk imposed upon the other party to the contract, or impair materially his chance of obtaining return performance.
Appellant at the times mentioned herein was a general road contractor, and appellee was a dealer in motor trucks. Appellant had a contract with the State Highway Commission to do certain road work at McLain, in Greene County, among which was the hauling of what was estimated to be about 52,000 yards of sand. Appellant had made an arrangement with one J.J. Broome to perform this particular work, but Broome had no motor trucks with which to do it, nor any money with which to buy them, although he had arranged to borrow from a friend $800 with which to make the first or down payment on the necessary trucks and equipment.
In order to aid Broome in obtaining the trucks, appellant gave him the following letter:
"McLain, Miss. June 19, 1937
"To Whom It May Concern:
"We, R.B. Tyler Co. have approximately fifty two thousand yards of sand to put on our project in McLain, Miss. We figure this between sixty and ninety days work for approximately ten trucks. Furthermore, we are willing to pay fifty per cent of the amount due the party furnishing, to the party selling the trucks, and the other fifty per cent to the party furnishing the trucks.
"R.B. Tyler Co. "Per: J.B. Carrington."
With this letter in his hands Broome went to appellee, who, relying on the letter, made a contract with Broome, dated June 24, 1937, by which contract appellee agreed to sell to Broome, with delivery on or about June 26, 1937, eight used motor trucks, together with some additional motor truck equipment, the purchase price aggregating $3,875, on which Broome paid the $800 already mentioned, and gave a series of weekly installment notes due from and including July 3, 1937, down to and including October 16, 1937.
After the delivery date of the trucks, as mentioned in the sales contract, Broome gave to appellee the following formal assignment:
"Laurel, Mississippi, June 29, 1937
"R.B. Tyler Company, "McLean, Mississippi.
"Gentlemen:
"I hereby assign to Laurel Equipment Company 50% of my weekly gross earnings until my indebtedness to them and to the Mississippi Truck Equipment Company for 8 used trucks and new hydraulic dump bodies has been entirely discharged.
"This is in accordance with your letter of June 19th signed by Mr. Carrington.
"Yours truly,
"J.J. Broome."
This assignment was sent down to McLain, after seven of the trucks had been delivered to Broome, and had been put to work, the testimony of appellee's general manager being that the assignment went down about the time the last truck was taken down there. When the assignment reached the office of appellant at McLain, it was endorsed at the bottom: "Accepted, J.B. Carrington."
No person was introduced as a witness who testified as to the terms of the contract between appellant and Broome. Apparently, it was not in writing. What was actually done by them, however, was that appellant at the end of each week paid all the payrolls of Broome for his truck drivers and other help; paid for the gasoline and oil used in operating the trucks; paid for the repairs thereon, and deducted this from the total truck time for the week, and thereupon paid the entire balance to appellee, the Laurel Equipment Company. We must assume that the terms of the contract between appellant and Broome provided for this course of procedure; for what the parties to a contract consistently do thereunder throughout is evidence, indeed is often the best evidence, of what the contract between them required that they should do. And besides this, the proof discloses that appellee knew, or had knowledge sufficient to put it on notice, that Broome was without means to pay these necessary operation expenses except out of the current proceeds of the contract, and that without its being handled in the manner stated Broome could not have done the work at all.
The gross amount of the so-called truck time earned under the contract was $5,126.27. The total amount due Broome, after deducting the amounts paid for labor, oil, gasoline, repairs, etc., was $1,638.13, which latter amount, as already stated, was paid over in full to appellee. But appellee insisted that it should receive one half of the gross amount, or $2,578.13, it being the contention of appellee that the quoted letter of June 19th meant this, or if mistaken in that contention, then the quoted assignment of June 29th did expressly so state. Broome failed to pay the balance due on the trucks, appellee repossessed them under its retention of title contract, sold them at public sale, credited Broome with the proceeds; and the remainder of the debt being in excess of the difference between $2,578.13 and $1,638.13, appellee sued appellant for that difference and recovered in the trial court.
We do not agree that the letter of June 19th is properly to be interpreted as promising to pay to the seller of the trucks one half the gross proceeds of the work. The letter stated that appellant would pay to the party selling fifty per cent of the amount due the party furnishing them. Broome was the party who was furnishing the trucks; appellee was the party who was selling them to him. And we have already shown that the amount due Broome under the contract was subject to the deduction, before being due at all, of what was paid out by appellant for labor, gasoline, oil repairs, etc.
This leaves to be considered what were the rights of appellee under the assignment of June 29th.
We think the rule must be accepted as well settled under the authorities, that, so far as the assignment itself is concerned, one to whom a contractual right is assigned, takes such right subject to the burden of the provisions of the contract by which, and under which only, the assigned right would accrue to the assignor, or as otherwise some times expressed, the assignee is bound by the term of the contract to the same extent as the assignor. 4 Am. Jur. pp. 234, 235, 311, 312. The assignment of a contractual right confers only the right which the assignor has therein, and no more. 6 C.J. 5, p. 1156. All this is upon the obvious proposition that a party may not transfer to another something which the transferrer does not own or to which he has himself no ultimate right.
In fact, a right under a contract may not be assigned at all if the substitution of a right of the assignee for the right of the assignor would (1) vary materially the duty of the obligor, or (2) increase materially the burden or risk imposed upon him by his contract, or (3) impair materially his chance of obtaining return performance. Section 151, A.L.I. Rest. Contracts. From which it follows that to uphold an assignment as valid it must be construed so as not do any of the three things next above mentioned.
The above statements of the rule may have simple illustrations. Thus where the contract between a railway company and its employee provided that the company might deduct from the wages of the employee any sums paid out by the company for board, meals and lodging of the employee, the right of the company to deduct such payments is upheld as against an assignee of the employer's wages. Steltzer v. Chicago, etc., R. Co., 156 Iowa 1, 134 N.W. 573, L.R.A. 1915E, 1017. Or we may take an every-day illustration. An owner contracts with a builder for what is commonly called a lock and key job in the building of a residence, the gross contract price to be $3,000 on completion; but the contract provides also that the owner shall pay or advance the weekly payroll of the carpenters and laborers employed in the work during its progress. There the owner would be entitled to deduct the payments so made by him, as against an assignee of the contractor, although the latter had attempted to assign the entire gross contract sum of $3,000.
Nor does the acceptance of the assignment aid appellee under the facts here presented. The acceptance of the assignment by the obligor in the simple terms used in this case does not of itself create a new debt between him and the assignee, Carozza v. Boxley, 4 Cir., 203 F. 673, 122 C.C.A. 69; and with no more in the facts than a formal acceptance, the rights of the assignee in the proceeds of a contract are still limited to the rights which the assignor had in those proceeds. 6 C.J.S., Assignments, Sec. 100, pages 1156, 1157. If, however, in the case before us, the assignee, first before making the sale and delivering the trucks to the assignor, had obtained the acceptance of the obligor to pay the assignee one half the gross proceeds of the contract — had the assignee in making the sale and deliveries acted in reliance upon the acceptance of the assignment rather than upon the assignment itself. — a different question would be presented; but the evidence shows that the sale and deliveries were made to the assignor before the acceptance, appellee's chief witness having testified, as already stated, that the last of the several trucks went down about the time the assignment was sent down. Reliance not having been placed on the acceptance and delivery having been made before the acceptance, the legal effect of the acceptance was but an acknowledgment of notice of the assignment, and created no new or independent obligation.
In fact, appellee expressly averred in its bill, and the proof shows that it relied on the letter of appellant, dated June 19th, in making its sale of the trucks and equipment to Broome and on its insistence that the letter implied by its terms that the payments made by appellant to the seller of the trucks would be fifty per cent of the gross proceeds of the work, and interpretation which we have rejected. Appellee does not mention in its bill that in making the sale and delivery of the trucks and equipment to Broome, it relied on appellant's formal acceptance of the assignment; and if it had so averred the proof would not sustain that averment.
Applying the pertinent rules of law to the facts disclosed by the record, we are of the opinion that appellee was not entitled to recover anything of appellant, and that the bill should have been dismissed.
Reversed, and decree here for appellant.