Canton Exchange Bank v. Yazoo County

• Decision Date: 15 June 1926
• Docket Number: 25395
• Citation: 109 So. 1,144 Miss. 579
• Court: Mississippi Supreme Court
• Parties: CANTON EXCHANGE BANK v. YAZOO COUNTY et al. [*]

109 So. 1

144 Miss. 579

CANTON EXCHANGE BANK v. YAZOO COUNTY et al. ^[*]

No. 25395

Supreme Court of Mississippi

June 15, 1926

Division A

Suggestion of Error Overruled July 12, 1926.

APPEAL from chancery court of Yazoo county, HON. V. J. STRICKER Chancellor.

Bill of interpleader by Yazoo county against the Canton Exchange Bank and others, wherein defendant bank filed a cross-bill. Decree in favor of defendant United States Fidelity & Guaranty Company and defendant Bank appeals. Affirmed.

Affirmed.

H. B. Greaves and Green, Green & Potter, for appellant.

The appellee, the United States Fidelity and Guaranty Company undertook to set up an assignment to it conveying all moneys to be earned by J. R. Parker, embodied in the application for bond, which assignment never came to light until after the contract was finished and after the Canton Exchange Bank had requested the board of supervisors of Yazoo county, Mississippi, to comply with their agreement and pay to said bank the balance (retainage) in their hands due J. R. Parker.

This assignment was hid away in the private vaults of the appellees from September, 1921, until September 24, 1923, and until the road had been completed by J. R. Parker with appellant's money, and accepted by the road commissioners and the board of supervisors.

I. The validity and effect of the assignment to the bank. The validity of this assignment has not been questioned by any party to this suit in argument; neither has there been any question raised as to what funds were covered by it; and the only point pressed in argument in the court below was as to its effect on appellee's rights. As to successive assignments, Judge WHITFIELD states the rule in Lumber Co. v. Newcomb, 79 Miss. 462 at 466. This rule has been repeatedly approved by this court. Spengler v. Lumber Co., 94 Miss. 780; Peck-Hammond Co. v. Williams, 77 Miss. 824.

In the Spengler case, at page 814, Judge WHITFIELD said, "If, as said by the New York Court of Appeals, the legislature intended to forbid assignments in cases of this sort . . . nothing was easier than for the legislature to put in the Mechanic's Lien Law that sort of prohibitive provision."

We find no such provision as this in the law requiring a bond in cases of the kind there considered, but we do now find such a provision in the Mechanic's and Materialmen's Lien Statute, Laws of 1918, ch. 128; sec. 2434 A, Hemingway's Code Supplement.

The Spengler Lumber Co. case is cited and approved as the law in Strickland Lumber Co. v. Rheinhardt, 115 Miss. 749, 76 So. 643; Enochs Lumber Co. v. Garber, 116 Miss. 229, 76 So. 730; First Nat'l Bank v. Monroe County, 131 Miss. 828, at 852, 95 So. 727; Delta Lumber Co. v. Greenwood Bank & Trust Co., 123 Miss. 772, 86 So. 590.

II. The Canton Exchange Bank, appellant, had a right to mandamus the board of supervisors of Yazoo county to issue its warrants to it. See McGraw v. Board of Supervisors, 125 Miss. 420. From the authorities named we can conceive of no law better established in this state than: (1) That an assignment of money due and to become due is good; and (2) that where two assignments are made of the same funds, that assignment takes precedence, notice of which is first given to the debtor.

On the question of priority of assignments of choses in action, the supreme court of the United States and the supreme court of Mississippi hold directly conflicting views. See Salem Trust Co. v. Manufacturers Finance Co., 68, L.Ed. (U.S.), 634.

Although it is true that our court holds that while the consent of the debtor to the assignment is not necessary, yet it is well established in this state to be the law that the first one to notify the debtor of his assignment takes precedence over any other assignment and this holding of the Mississippi court is in full accordance with the rule as established by the English courts. 31 A. L. R. at 876. The states holding with Mississippi are California, Iowa, District of Columbia, Maine, Maryland, Missouri, Oklahoma, Tennessee, Virginia, New Jersey, Pennsylvania and Vermont. See 31 A. L. R. 876 and the cases there cited.

The minority view holding that the first assignment takes precedence, regardless of notice is held by the United States and Kentucky, Massachusetts, Minnesota, New York, Oregon, Texas, and West Virginia.

III. We will now consider the question of subrogation. The lower court construed Bank v. Monroe County, 131 Miss. 828, 95 So. 727, as holding that the fifteen per cent "retainage" was for the protection of bondsman and could not be assigned by Yazoo county.

We have carefully read and re-read this contract from cover to cover, and find no provision in the contract which requires the contractor to pay labor or material before completing his contract and receiving his retainage. There is no reference to paying for any labor or material as a condition precedent to completing this contract, the completion of which is required, refers to plans and specifications for building the road and simply states at the end that the bond shall be made on form hereto attached. This contract does not say "provided debts due for labor and material are paid." A similar provision to this, however, has been repeatedly held by the New Jersey supreme court to be for the benefit of the municipality. See U. S. F. & G. Co. v. Mayor of the City of Newark, 81 A. 758, 37 A. L. R. (N. S.) 576. The opinion goes into this and like provisions fully and sustains our contention. See, also, Sullivan v. Visconti, 68 N. J. 543; Miller v. Stockett, 64 N. J. 614, 64 A. 619.

The next reference to this fifteen per cent retainage is under the heading of "Maintenance," page 14 of the contract. This provision especially states, "fifteen (15) per cent of the final estimate will be retained by the county or district to enforce this requirement."

This court has already decided that there is nothing in this contract which requires payment for labor and material. See First Nat'l Bank v. Monroe County, 131 Miss. 853.

Many countless thousands of contracts have been completed and labor and materialmen left unpaid. It is an idle indulgence in speculation to insist or suggest that payment for labor and material is a part of this contract under review and a condition precedent to receiving final settlement. The bond was given for the purpose of protecting labor and materialmen, among other things. Bonding companies make these bonds for a premium which they consider ample protection for the risk they incur.

The bond was given and was to be held by the county to indemnify it against loss, damage, or a failure to complete the road as directed by the contract, as additional security to the fifteen per cent reserved by the county, and in addition to protest labor and materialmen. Statutes of 1918, ch. 217; sec. 447 et seq., Hemingway's Supplemental Code.

This question was pressed on this court in Bank v. Monroe County, 131 Miss. 828, and the court in answer stated: "Since the county was under no obligations either by law or contract to the furnishers of labor or materials, it is not clear that insofar as the right of the county is concerned, performance of the contract included the payment of these claims."

The very purpose of this provision of the bond was to guarantee that after Parker was paid in full by the county, he, Parker, would liquidate his debts, for both labor and material, set out in the bond, in full view of the fact that laborers and materialmen can acquire no lien against the state or any sub-division thereof.

IV. Equitable Subrogation. While we do not think the question of equities of subrogation has any bearing on the rights of the parties here, under the holding of our court with regard to assignments of choses in action, as long established, however, since appellees now base their entire right to recover here on the doctrine of equitable subrogation giving appellees a right to be preferred to the bank, we submit that the cases appellee relied upon, even if appellant had no assignment, would not justify this court in sustaining appellees' contention, because if equities are to govern, appellant's equities are greater than appellees'.

Appellees base their case on the United States supreme court opinion in Prairie State National Bonk v. U.S. 164 U.S. 227, 41 L.Ed. 412. However, the court will observe that there the contractor abandoned the contract and the surety was compelled to complete the contract at a loss of over fifteen thousand dollars, more than payments due by the government. In the instant case, Parker completed the contract in every detail with money furnished by the appellant. Had the surety completed the contract, a different question would have been presented.

Again, the appellees executed this bond with the full knowledge that the county could pay this retainage to the contractor, Parker, even though Parker had paid none of his employees. Also, appellants knew Parker could assign his retainage and knew that the legislature did not prohibit such an assignment. If so desired, the legislature could have so stated as they did with regard to laborers' lien when no bond was given, and further that the legislature provided in cases of laborers' liens when bond was given, the contractor could assign the money due him under such contract. See Acts of 1918, chapter 128, page 126, and also Hemingway's Supplemental Code, section 2434a and b.

Prairie State National Bank is quoted by Justice BREWER in Henning v. U. S. F. & G. Co., 52 L.Ed. 547; but in the statement of the case by Justice BREWER, we read "The moneys so lent were paid directly by the bank to Henning, and handled and disbursed by him, without any supervision or control upon the part of the Bank of Spencer." The...