Bank of Northampton v. Town of Jackson
| Decision Date | 04 January 1939 |
| Docket Number | 181. |
| Citation | 200 S.E. 444,214 N.C. 582 |
| Parties | BANK OF NORTHAMPTON v. TOWN OF JACKSON et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Halifax County; W. H. S. Burgwyn Special Judge.
Action by Bank of Northampton against Town of Jackson and the Maryland Casualty Company. From a judgment for plaintiff Maryland Casualty Company appeals.
Judgment affirmed.
Provision in contract with municipality that no right under the contract to any moneys or orders due or to become due thereunder should be asserted against city by reason of any so-called assignment unless assignment shall have been authorized by city covers assignment of proceeds of the contract.
This was an action to recover a fund in the hands of defendant Town of Jackson, claimed by defendant Maryland Casualty Company, heard upon agreed statement of facts, the material portions of which were incorporated in the judgment as follows:
"1. That (on the 9th day of March, 1936,) the Town of Jackson entered into a contract with Lackawanna Construction Company for the construction of a water and sewerage system in the Town of Jackson.
2. That the Maryland Casualty Company became the surety upon a performance bond required by Lackawanna Construction Company and in the application for the bond of suretyship it took an assignment from Lackawanna Construction Company of all sums due or to become due under said contract in the event there was a default on the Jackson job or any other job on which the Maryland Casualty Company was surety; that neither the Maryland Casualty Company nor the Lackawanna Construction Company ever gave notice to the Town of Jackson that it had such an assignment.
3. That on the 25th day of January, 1937, the Lackawanna Construction Company applied to the Bank of Northampton for a loan of $5,000, the proceeds of which were to be used in the construction of said water and sewerage system. The Bank of Northampton thereupon went to the proper Town authorities and made inquiry as to whether the Lackawanna Construction Company had made any other or prior assignment of funds due or to become due it under said contract, and also made inquiry of said Lackawanna Construction Company and was informed by the Town that it knew of none, and by the Lackawanna Construction Company that there was none. The Town then consented to the assignment of funds due and to become due to Lackawanna Construction Company by the Lackawanna Construction Company to the Bank of Northampton and agreed that it would pay to the Bank of Northampton all funds due or to become due the Lackawanna. Construction Company under the contract herein referred to. The Bank of Northampton then made the loan.
4. The Lackawanna Construction Company in due season completed its contract with the Town of Jackson, the same being duly approved by the engineer of the Town of Jackson and was accepted by the Town of Jackson.
5. That Maryland Casualty Company, co-defendant herein of the Town of Jackson, has not suffered and will not suffer any loss by reason of its contract of suretyship and all parties furnishing labor, material or work on the Jackson job who have provable claims against said job have been paid either by the Lackawanna Construction Company or funds were turned over to Maryland Casualty Company sufficient to take care of same, leaving a surplus of $5,600.00, which is the subject of this action.
It is therefore, ordered, considered and adjudged that the plaintiff recover of the Town of Jackson the sum of $5,000.00 with interest from the 22nd day of September, 1937, together with the costs of this action.
It is further ordered, considered and adjudged that the Maryland Casualty Company is not entitled to any part of the funds now held by the Town of Jackson, except that which remains after the payment of the sum of $5,000.00 with interest and the costs herein and after this has been done the Maryland Casualty Company is entitled to the surplus and the same is hereby awarded to it."
The agreement entered into by the contractor for the assignment to the Casualty Company of sums to become due under the contract, contained in the application for surety bond made at the time of the execution of the contract in March, 1936, referred to in the judgment, was in the following words:
"In the event of claim or default under the bond herein applied for, or in the event the undersigned shall fail to fulfill any of the obligations assumed under the said contract and bond, or in the event of claim or default in connection with any other former or subsequent bonds executed for us at our instance and request, all payments due or to become due under the contract covered by the bond herein applied for, shall be paid to the company, and this covenant shall operate as an assignment thereof and the residue, if any, after reimbursing the company aforesaid, shall be paid to the undersigned after all liability of the company has ceased to exist under the said bonds, and the company shall at its option be subrogated to all rights, properties and interest of the undersigned in said contract."
The assignment by the contractor to plaintiff Bank of sums due and to become due under the contract, as security for a loan of $5,000 for the purpose of carrying out the contract, was made after notice to and with the consent of the Town and was dated January 25, 1937. No notice of this assignment was given the Casualty Company.
It was also agreed
From judgment decreeing payment of the fund of $5,000 and interest to plaintiff Bank, defendant Casualty Company appealed.
Carr, James & LeGrand, of Wilmington, for appellant Maryland Casualty Co.
Gay & Midyette, of Jackson, and Geo. C. Green, of Weldon, for appellee.
Two parties claim the fund remaining in the hands of the Town of Jackson after the completion of the contract for the installation of a water and sewerage system. One of those parties is the plaintiff Bank of Northampton, claiming by virtue of an assignment to it by the contractor of sums due and to become due under the contract, as security for a loan for the purpose of carrying out the contract, made after notice to and with express consent of the Town. The other party is the defendant Casualty Company which claims by virtue of an agreement by the contractor to assign sums to become due under the contract, the agreement being contained in the original application by the contractor for the execution by the Casualty Company of its surety bond for the faithful performance of its contract. No notice of this agreement to assign was given to the Town or the plaintiff. The contract has been fully performed and all claims thereunder have been paid, but it is contended the agreement to assign contained in the contractor's application for bond covered not only any loss that might accrue under this contract, but also losses resulting from another contract of the contractor upon which the appellant was surety.
The decision of the court is sought for the determination of the question as to which of these two parties is entitled to preference. The trial court ruled in favor of the plaintiff Bank, and the appeal of the defendant Casualty Company brings this ruling here for review.
The assignment to the defendant, as contained in the clause in the application for bond, provided, in terms, that, in the event of default or failure of...
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