Skobis v. Ferge

The following opinion was filed December 16, 1898: Dodge, J. The court having reached the conclusion that the defendant the board of regents is not liable beyond the balance of $2,833.69 remaining in its hands and by its answer offered to be paid into court; also, that the defendant Ferge is not entitled to any part thereof; there remains the question how the fund should be apportioned among the four assignees, viz., the plaintiffs Skobis Brothers and the defendants Rohde & Patelc Brothers, Stephens on & Studeman, and William Owens. This question, necessarily involved in directing final judgment, was not argued either in oral arguments or in the printed briefs. We have therefore concluded to order a reargument of the case upon that single question. By the Oowrt.— Ordered accordingly, that such reargument be set at the foot of the second assignment of the January, 1899, term. — 129 — The cause was reargued February 4,1899. F. A. Geiger, for the appellant. For the respondents there were separate briefs by Mc-Elroy <& Escfmeiler, attorneys for Skobis Bros.; Nath. Pór-eles <& Sons, attorneys for Bolide $ Patek Bros.; and B. M. La Follette and Gilbert E. Boe, attorneys for Owens and Stephenson & Studemcm; and the cause was argued orally by O. F. Blunter. The following opinion was filed February 21, 1899: Dodge, J. 1. The first question to be decided is whether the transactions had by Bentley with these several subcontractors were sufficient, as between themselves, to effect equitable assignments of portions of the fund to which he was to become entitled by the performance of his contracts. “ Any transaction between the contracting parties which indicates their intention to pass the beneficial interest from one to the other is sufficient for that purpose.” Chapman v. Plummer, 36 Wis. 265. “ It [the assignment], in the final analysis, all depends on the intention of the parties. If they intended it to be an assignment of the fund, equity will so treat it. In order to constitute an assignment in equity of a debt or chose in action, no particular form is necessary. Any order, writing, or act which makes an appropriation of the fund, amounts to an equitable assignment.” Baillie v. Stephenson, 95 Wis. 500-502. The acts themselves are not in much doubt, but the inferences to be drawn from them as to the understanding and purposes of the parties are; but, being doubtful, we yield to the finding of the circuit court that the delivery of the certificates was intended by the parties to be effective as assignments. This conclusion disposes adversely of the claim of the defendant Ferge, assignee for benefit of creditors of said Bentley, for he stands in the shoes of Bentley, and can claim no rights which Bentley could not have claimed at the time — 130 — of the assignment, February 11, 1897. Hawks v. Pritzlaff, 51 Wis. 160; Pease v. Landauer, 63 Wis. 20, 26; S. L. Sheldon Co. v. Mayers, 81 Wis. 627, 630. 2. The next and much more disputed question is whether or not the board of regents is liable to these assignees, or any of them. The authorities are overwhelming, and almost without dissent, that no assignment of a chose in action can have any effect upon the debtor or fund holder, or interfere with his dealing with the fund, until brought to his notice. Spain v. Hamilton’s Adm’r, 1 Wall. 604; Ward v. Morrison, 25 Vt. 593; Loomis v. Loomis, 26 Vt. 198; Schilling v. Mullen, 55 Minn. 122; Mowry v. Crocker, 6 Wis. 326. The substitution of a new creditor is in derogation of the rights of the debtor, and was strictly prohibited by the ancient rules of the common law. It is only by relaxation of those rules, in deference to the convenience of trade, that such assignments have been recognized at all, and now enable a direct suit where the entire claim is assigned to one assignee, which, formerly in equity, can now be at law by virtue of such statutes as sec. 2605, Stats. 1898. Nat. Exch. Bank v. McLoon, 73 Me. 498; Little v. Portland, 26 Oreg. 235; Chapman v. Plummer, 36 Wis. 262, 266. The fact, however, of such substitution of a new creditor must, in order to make the debtor liable to the assignee, be brought home to the debtor with much exactness and certainty before he has paid the debt. The rule of notice to him is much more stringent than that which may defeat the title of a purchaser of a chose in action or of real estate. The latter is free to purchase or refuse to purchase ás he chooses, and therefore it is his duty, before acting, to trace out any reasonable doubt and infoiun himself of the true facts as soon as anything arises to put him on inquiry. But the debtor is not so situated. He must pay to his original creditor when the debt is due, unless he can establish affirmatively that some one else has a better right. The notice to him, therefore, must be of so exact and specific — 131 — a character as to convince Mm that he is no longer liable to such original creditor, and to place in his hands the means of defense against him, or at least the information necessary to interplead the assignee. Christmas v. Russell, 14 Wall. 69, 84; Brady v. Loring, 70 Ill. App. 191; In re Tichener, 35 Beav. 317. In no case could general information that his creditor was likely to borrow on the credit of the debt, or that he had in other instances 'borrowed upon it, nor any mere suspicion that he might have made assignment to others, alone place the debtor in the predicament of paying his original creditor, at the peril of being held liable to any one who might prove to be an assignee. The conversation between Bentley and Bashford, in Milwaukee, in which request was made for the issue of architects’ certificates to be used in raising money, is claimed to have amounted to notice that Bentley expected to make assignments; but, even conceding such force to it, the regents could not thereby have been charged with such notice of any specific assignments as would hold them liable to an assignee under the rule just stated. Nor would the knowledge, if such they had, that Bentley had assigned other certificates to banks or others. With reference to an assignment of part only of a fund in the hands of one not a banker nor bound in advance to consent to partial assignments, the weight of authority is in favor of a still more stringent rule in protection of the debtor. While the prohibition of the ancient common law against the assignability of claims, so as to substitute a new creditor, has been relaxed, so that now an assignee of the whole fund may, by virtue of the Code provisions that the party in interest shall sue, maintain an action at law directly against the debtor, the relaxation has not been extended so as to take away the protection of the other rule that a debt cannot, at the will of the creditor, without consent of the debtor, be split up, and several suits maintained thereon, — 132 — whether by assignment or otherwise. The debtor has a right to pay his debt in solido, and to refuse to be subjected to suits by several claimants; and no notice of an assignment of a part of a debt, no matter how complete in equity as between the assignor and assignee, can destroy this right of the original debtor without his consent. Mandeville v. Welch, 5 Wheat. 277; James v. Newton, 142 Mass. 366; Bosworth v. Jacksonville Nat. Bank, 64 Fed. Rep. 615; Price v. The Elmbank, 72 Fed. Rep. 610; Leonard v. M., K. & T. R. Co. 68 Mo. App. 48. The question has not been definitely presented in Wisconsin, but the intimation of the previous cases in this court is to the effect that the assent of the debtor is essential to the existence of direct liability to the assignee of part of a fund. Leonard v. Burgess, 16 Wis. 41; Gundry v. Vivian, 17 Wis. 436; Pease v. Landauer, 63 Wis. 20, 28. Applying this rule to the case at bar, it is obvious that the fund holder, the board of regents, at the time of the final payment to Bentley, was under no liability to any of the assignees, unless to the assignee Owens by virtue of a special agreement claimed to exist in his behalf (which will be discussed later), for the reason that there had been no consent by the board to severance of the fund, or to liability to the individual assignees. True, it is apparently claimed by the plaintiffs and other assignees that the transactions between Bashford and Bentley in Milwaukee, before 'the signing of the written contract, had some such effect; such contention being predicated upon the argument that it was thereby agreed that the architects’ certificates to be issued were to be given a sort of currency, to pass from hand to hand as Bentley might choose to use them; and the court finds that it was agreed that they should be issued upon the understanding that Bentley was to use them in raising money. We do not think either the evidence or the finding establishes even an attempted agreement to the extent claimed, as the certificates could well have been “ used in raising — 133 — money ” otherwise than by assignment of the amounts certified to be due therein. The solvency of the fund holder, the regents, was of course beyond question; and the fact of an indebtedness, of which the certificates were some evidence, was a good basis of credit on which Bentley might have borrowed, especially if his reputation for financial integrity was reasonably good, to the contrary of which nothing appears. Whatever may have been the terms of that conversation, however, it constituted no agreement, binding on the board of regents, varying the terms of the written contract formally signed by Bentley and by the chairman, under authority of the board. This defendant is not a mere private corporation, but is an instrument for performing one of the functions of the' state government. Its powers are strictly limited by law, and all persons dealing with it have the same knowledge as its own members of the powers which it or any of its officers may exercise. The moneys which it handles are not corporate or private moneys, but moneys of the state of Wisconsin. BTo authority is shown to exist in Mr. Bashford to enter into any agreement which should modify the written contract the board had authorized. In the absence of such showing, no presumption or intendment can be entertained to support his authority. Further, the evidence discloses beyond dispute that all of the conversation upon which the above finding and argument are predicated took place before the signing of the written contract, and necessarily the latter must be conclusively taken to express the whole terms of the contract between the parties. The moneys remaining in the hands of the regents, and offered to be paid in court, are more than sufficient to satisfy the claim of Owens, and therefore the question whether there was any binding contract with him, giving peculiar rights as against the defendant regents, is not material to this branch of the'case. Eo obligation, duty, or equity, as against — 134 — the regents, is shown on behalf of any or all of the assignees which cannot be more than satisfied by the $2,833.69, which they tender into court. .The board cannot be held liable, therefore, beyond that balance. After reaching this point, a reargument was ordered, and had, as to the priorities, if any, between the several assignees in the fund so to be paid into court. It is claimed by defendants Rohde & Patek Bros, that they are entitled to priority, because they first gave notice to the regents. That notice was, however, immediately repudiated, and they were notified that the regents would pay only to Bentley. Owens claims priority both because he gave notice,— which need not be heeded, for the board made no consent to the assignment to him,— and also because of an agreement, which he claims to have had, either that the regents would pay him the amount of his subcontract, or that they guaranteed the payment thereof by Bentley. Both his testimony and the findings are quite ambiguous as to the terms of the agreement claimed to have been made, seemingly asserting both an original undertaking to pay him, and also an agreement to guarantee that Bentley would pay him. Their only support consists in Owens’s own testimony, from which it appears that Bentley objected to a separate contract for plumbing, because he could not control the time of its performance, whereupon a conversation was had between Mr. Stevens, a member of the board, Riley, Bentley, and Owens. Owens says: “ Then it was fixed that I should simply get the money through Mr. Bentley. I was given to understand that they would see me paid if I would take it through Mr. Bentley. I don’t know who made the suggestion that they would fix things that way. It was one or the other. . . . The reason I made the contract with Bentley was because I was assured that I should be paid by the regents. I believe Mr. Stevens said so, though I ain’t — 135 — sure he said. it. I believe it was one of the members of that committee. -. . . The understanding was I was to take my money from Bentley.” The resolution adopted by the board awarded the entire contract to Bentley, on condition that he give the preference to Mr. Owens, provided Owens did the entire plumbing for $3,800; otherwise, Bentley could make any other arrangements therefor. Thereafter Owens and Bentley entered into a written contract as follows: “I will furnish material, etc., for $3,800; gas fitting, $250, additional to above. The above proposition is subject to the same conditions as the general contract entered into by the regents and Thomas R. Bentley. Accepted April 22,1896.” (Signed by Owens and Bentley.) Owens’s conduct also is wholly inconsistent with original liability of the board to him. All of his applications for money pending the performance of the work were not to the regents, but to Bentley, who paid him $1,200 at one time, and $800 at another. After obtaining the $1,800 certificate in controversy, — which, it will be observed, was not a promise to pay to any one, but a certificate that that .amount of plumbing had been done under the contract, — he insisted on its transfer by Bentley to. him. As late as February, he was satisfied with the assurance that payment to Bentley had been ordered and he better see young Bentley, and, when Bentley made assignment for benefit of creditors, Owens made proof of his entire claim against his estate. On the other hand, both Riley and Stevens contradict any such verbal agreement as is testified to, asserting that the transaction was merely an effort to secure for Owens, to whom they were apparently friendly, the subcontract for plumbing. This evidence seems to us to fall far short of establishing .any understanding even on Owens’s part that the board assumed direct liability to him; but, whether that be so or not, the transactions related fail utterly to bind the regents — 136 — to any snob, undertaking as is claimed. The only act done by them was to award the entire contract to- Bentley and authorize its signature by the chairman of the. executive committee. No verbal explanations or assurances made by individual members could bind this corporation to an agreement either to pay or to guarantee the amount of Owens's subcontract, nor subject the public moneys under its control to liability in excess of that authorized by the board. While there is much conflict as to the rule governing successive assignments of an entire claim, some courts holding that the prior assignment in time is entitled to priority, while others hold that a subsequent assignee for value without notice gains priority by first notifying the fund holder, the holding as to partial assignments is, without much dispute, that notice to the debtor is ineffectual unless he consents — that it imposes upon him no duty or liability to the assignee. James v. Newton, 142 Mass. 366; Pease v. Landauer, 63 Wis. 20. In the present case, there seems, therefore, to be no superior equity in favor of any of the claimants. The board of regents did not consent to any of the assignments so as to become liable. They did not make any agreement with Owens either to pay or guarantee him. None of the assignees is a holder for value, for the assignments were all made to apply on existing debts; and, finally, there is no priority in time, for the assignments and deliveries are all found to have taken place “on or about September 1st.” We conclude, therefore, that the equities of the four assignees are equal, and that upon payment into court by the board of regents of the sum of $2,833.69, as tendered in their answer, judgment should be entered dismissing the complaint as to them, and dividing the fund between Skobis Bros., Rohde & Patek Bros., Stephenson & Studeman, and William Owens, in proportion to the architects’ certificates held by them respectively. The prayer of defendant Henry Ferge's answer should be denied. Appellant will recover its — 137 — taxable costs in this court and in the circuit court, to be paid out of the funds in its hands. No costs will be taxed for or against any of the other parties. By the Oourt.— Judgment reversed, and cause remanded with directions to enter judgment in accordance with this opinion.