Dill v. Blakeney

Citation568 So.2d 774
PartiesJohn C. DILL v. Billy BLAKENEY, d/b/a Blakeney Construction Company. 89-28.
Decision Date14 September 1990
CourtSupreme Court of Alabama

William J. Donald III of Donald, Randall, Donald & Hamner, Tuscaloosa, for appellant.

Ralph I. Knowles, Jr. of Drake, Knowles & Pierce, Tuscaloosa, for appellee.

KENNEDY, Justice.

The defendant, John C. Dill, appeals from a summary judgment entered in favor of the plaintiff, Billy Blakeney, d/b/a Blakeney Construction Company.

Dill Company, Inc., a plumbing contractor, purchased its materials on open account from Central Supply Company, Inc. The terms of the account provided that Dill Company would pay Central Supply interest at 1 1/2% per month on any unpaid balance and reasonable attorney fees incurred in the collection of any unpaid balance. On December 29, 1986, Dill Company owed Central Supply a balance of $102,804.29, and, at Central Supply's request, John C. Dill, president of Dill Company, executed a guaranty agreement with Central Supply, wherein he wrote:

"Please accept my personal guarantee of payment on the Dill Company, Inc., account. Amounting to $102,804.29."

Earlier in 1986, Blakeney had contracted with the State of Alabama to perform a construction project at Partlow State School and Hospital; Blakeney was to provide all the materials for that contract. Blakeney subcontracted with Dill Company to provide plumbing materials and to install the plumbing system. Dill Company purchased the materials it used in the Partlow project on its account with Central Supply. Blakeney paid Dill Company a total of $62,481.41 for the materials used in installing the plumbing system. Money paid by Blakeney to Dill Company for materials purchased from Central Supply was to be paid to Central Supply in satisfaction of Dill Company's debts incurred in regard to the Partlow project. Instead, Dill Company applied the payments to its longest outstanding bills on its open account. Pursuant to his obligations under Ala.Code 1975, § 39-1-1, Blakeney paid Central Supply the $62,481.41 in November 1987. In return, Central Supply executed the following agreement:

"To the extent of the payment made by Blakeney to Central Supply on this date, Blakeney is subrogated to the rights of Central Supply Company, Inc. against John C. Dill as evidenced by the letter agreement dated December 29, 1986, a copy of which is attached hereto. As evidence of this subrogation right Central Supply Company, Inc. hereby assigns without recourse the non-exclusive right for Blakeney to proceed against John C. Dill. It is however expressly agreed and understood that Central Supply Company, Inc. shall retain the right to collect from John C. Dill the remaining balance of the account of Dill Company, Inc. now known as JTC, Inc."

In December 1987, Central Supply sued Dill on his personal guaranty to collect the remaining balance owed it on the Dill Company account, $56,894.73, plus attorney fees and costs. In June 1988, Blakeney filed an action against Dill; counts one, two, and three alleged fraud; count four demanded that Dill pay $62,481.41, plus costs, on the personal guaranty. In January 1989, the trial court entered a consent judgment in favor of Central Supply and against Dill, in the amount of $60,000 plus costs if paid on or before May 8, 1989, or $75,000 plus costs if paid thereafter. 1 In the action brought by Blakeney, the parties settled as to the fraud claims, and the trial court granted Blakeney's motion for summary judgment on count four, awarding him the principal amount of $62,481.41, $15,899.37 in interest, and $11,757 in attorney fees. This appeal followed.

Dill first argues that a partial assignee to the rights of the assignor must join with the assignor to enforce the assignee's rights and that Blakeney's failure to intervene in Central Supply's action against Dill bars Blakeney from relief because of the doctrine of res judicata, the rule against splitting a cause of action, and the principles of bar and/or merger.

Dill relies chiefly on Kansas City, Memphis & Birmingham R.R. v. Robertson, 109 Ala. 296, 19 So. 432 (1895), in which an employer owed an employee for 21 1/2 days of work and the employee assigned part of that right to Robertson. There was no evidence that the employer consented to the assignment. This Court wrote:

"It is well settled that a single contract, unless it is payable in installments, cannot be split up, without the consent of the debtor, and become the foundation of a plurality of suits. The debtor has a right to stand upon the singleness of his original contract, and decline any assignment by which it may be broken into fragments. In such case, it is no part of his contract that he shall be obliged to pay in fractions to any other persons. The assignment of a part of the entire debt in this instance by [the employee's] giving an order to [Robertson] on [the employer] for a part of what was due him on the entire account, without [the employer's] consent, and without its acceptance of the same, did not give or authorize this suit upon such assigned part by [Robertson], against the [employer]."

109 Ala. at 298-99, 19 So. at 433.

Dill also relies on O'Barr v. Turner, 16 Ala.App. 65, 75 So. 271 (1917), in which the Court of Appeals discussed the rule against splitting a single cause of action, where part of a right has been assigned:

"The rule, in so far as it is for the protection of the state, is embodied in the doctrine of res adjudicata ... and the person liable can only assert the doctrine when sued the second time on the same cause of action by the holder, or when he has not given his assent to the assignment of a part of the cause of action and is sued by the assignee."

16 Ala.App. at 68, 75 So. at 274.

Blakeney relies on In re Fine Paper Litigation State of Washington, 632 F.2d 1081 (3d Cir.1980). In that antitrust action, a certified class of plaintiffs, which had agreed to a settlement with the defendants, executed an assignment of some of its antitrust claims to the State of Washington, which represented a class of plaintiffs denied certification. Washington attempted to opt out of the settlement agreement and to pursue its claims separately; the settling defendants objected on the ground that the assignments were invalid attempts to split a cause of action. The Court of Appeals, in holding that the partial assignment did not improperly fragment the claims, stated:

"The splitting of a cause of action principle is important in the application of res judicata. That doctrine teaches that a valid judgment on the merits is a bar in another action between the same parties or privies not only in respect to matters that were actually offered to support the judgment but also as to every ground that might have been presented. 1B Moore's Federal Practice 0.410 (2d ed. 1974). The earlier judgment, however, must be invoked as an affirmative defense in the second action, see Fed.R.Civ.P. 8(c), and is waivable by the defendant. Moreover, to have res judicata effect the initial judgment must be on the merits.

"Given these precepts, the settling defendants could not properly invoke the splitting of a cause of action theory to prevent Washington from opting out of the first suit. That plea was premature and, in addition, the judgment in the first suit would have been based on settlement rather than on the merits. Finally, we note that the settlement would have taken place after the defendants were aware of the assignments. When the obligor has notice of an assignment by the plaintiff--and the assignee is not joined--a judgment for or against the obligor will not bar a later suit by the assignee. Restatement (Second) of Judgments § 104 (Tent.Draft No. 3, 1976).

"Although the theory of splitting a cause of action is somewhat analogous to the present situation, we think the sounder approach to this problem is to analyze the relationship between the parties when a partial assignment of claims is outstanding. The general law applicable is in accord with that found in § 156 of the Restatement of Contracts. An assignment of a fractional part of a single and entire right against an obligor is operative as if the part had been a separate right. But unless the obligor has consented, the partial assignee may not maintain the original suit against the obligor unless all parties...

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