Craig v. Gudim
| Decision Date | 24 August 1971 |
| Docket Number | No. 3960,A,No. 60964,60964,3960 |
| Citation | 488 P.2d 316 |
| Parties | 9 UCC Rep.Serv. 741 Eugene J. CRAIG, Trustee in Bankruptcy for Lynn George Garriosn, Bankruptppellant (Plaintiff below), v. Claire J. GUDIM et al., Appellees (Defendants below). |
| Court | Wyoming Supreme Court |
Gerald R. Mason, of Sievers & Mason, Pinedale, for appellant.
James A. Tilker, of Kline, Tilker & Lynch, Cheyenne, Robert B. Ranck, of Simpson, Kepler, Simpson & Ranck, Jackson, for appellees Gudim.
Floyd R. King, of King & Mackey, Jackson, for appellee The Jackson State Bank.
No appearance for appellee Farmers Home Administration.
Before McINTYRE, C. J., and PARKER, Mc,EWAN, and GRAY, JJ.
Eugene J. Craig, trustee in bankruptcy for the creditors of Lynn Garrison, sued Mr. and Mrs. Claire Gudim and The Jackson State Bank, Jackson, Wyoming, to collect a balance of proceeds on a building contract. Garrison, as contractor, had built a home for the Gudims. Funds to pay for construction costs had been deposited with The Jackson State Bank, and the bank claimed Garrison had assigned to it all moneys due on his construction contract.
The trustee's complaint alleged there was due to the bankrupt, Garrison, the sum of $5,559.89; that this sum was on deposit with the bank in a joint account of the Gudims and Farmers Home Administration; that the bank claimed a security interest in the account; and that the bank's security interest had not been perfected and was void as against the trustee.
The bank's answer admitted the deposit as alleged and that the bank claimed an interest in the account. The bank then alleged Garrison had assigned to it all moneys due or to become due under the terms of a contract made by and between Garrison and the Gudims; and that all moneys due under such contract were due and payable to the bank.
The trial court found the bank had an absolute right to the funds on deposit, by virtue of its assignment, subject only to an offset of $1,475 on the part of the Gudims for damages stemming from a delay in completion. Judgment was entered for the bank and for Mr. and Mrs. Gudim. Craig, the trustee in bankruptcy, has appealed.
The Gudims had arranged for a loan from the Farmers Home Administration for the building of their home. The construction contract between them and Garrison was on a form supplied by Farmers Home Administration but the government agency was not a party to this contract. It was between the owners and the builder. One of the provisions of the contract was that partial payments would be made each two weeks in the amount of 60% of the value of the work completed. All estimates were to be approved by the owners and the lending agency, and likewise final acceptance upon completion was to be by both the lender and borrowers.
Funds to pay for the work as it was accomplished were deposited in The Jackson State Bank and a deposit agreement was executed by the borrowers, by the lending agency and by the bank. Garrison was not a party to this agreement. It was provided in the deposit agreement that funds could be withdrawn only on the order of the borrowers with a counter-signature of the lending agency; or upon written demand of the lending agency the balance on hand was to be paid as demanded. The bank agreed not to assert any right of off-set except for service charges.
Two months after the construction contract and the deposit agreement were executed, the bank loaned Garrison $6,000 and took from him an instrument entitled ASSIGNMENT OF CONTRACT TO SECURE BANK LOAN. The purported assignment is on a form which has the bank's name and address printed. The form indicates it was intended for use when an assignor had a contract with the Department of Agriculture, United States Forest Service. We are attaching as an appendix, at the end of this opinion, a copy of the assignment contract.
According to the language used in the assignment, Garrison assigned and transferred to The Jackson State Bank all moneys due or to become due to the assignor under the terms of 'contract #5920997814 made by and between the Assignor and the Department of Agriculture, Farmers Home Administration,' as collateral security for whatever was owed by Garrison to the bank.
Although the loan number, for the loan being made to Mr. and Mrs. Gudim, was the number used in the assignment, it does not appear it was a number which identified any particular contract or instrument connected with the Gudim loan. Supposedly, according to the assignment, moneys were assigned which became due under a contract between Garrison and Farmers Home Administration. However, there was no contract between those parties.
The bank's answer to plaintiff's complaint alleges an assignment of a contract between Garrison and Mr. and Mrs. Gudim. There has been no showing of any assignment with respect to the construction contract between those parties. Our concern therefore becomes this: Can we say Garrison intended to assign moneys due under his construction contract with Gudims and the bank intended to take such assignment? If so, can we then read and interpret the assignment given as if every reference to Department of Agriculture, Farmers Home Administration, would be understood to mean Claire J. Gudim and Thelma E. Gudim?
We adhered to the following rule in Chandler-Simpson, Inc. v. Gorrell, Wyo., 464 P.2d 849, 851: Where the terms of a contract taken as a whole are plain and unambiguous, the meaning of the contract is to be deduced from its language alone; and where the language is ambiguous, the intent of the parties may be searched out by resort to extrinsic inquiry.
In the instant case the language used is clear and unambiguous. There is no doubt about what has been said. However, it would appear there was a mutual mistake in the description of what was assigned. In the absence of amendment or reformation prior to the acquiring of rights by other parties, it would be difficult for us to make the assignment in question apply to moneys due under the construction contract between Garrison, the assignor, and the Gudims, who were the parties obligated to pay all construction costs.
Although the parties in this litigation joined issue on the validity of the assignment claimed by The Jackson State Bank, it appears they concerned themselves primarily with the question of whether the bank's assignment was subordinate to rights of the trustee in bankruptcy because the bank did not take steps to perfect its security interest by filing a financing statement as required by § 34-9-302, W.S.1957, 1971 Cum.Supp.
The bank admits it did not file a financing statement or take steps to perfect its security interest. It...
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