Dixie Wood Preserving Co. v. Albert Gersten & Associates, 18185
| Decision Date | 17 March 1964 |
| Docket Number | No. 18185,18185 |
| Parties | DIXIE WOOD PRESERVING COMPANY, Inc., Plaintiff-Respondent, v. ALBERT GERSTEN AND ASSOCIATES et al., Defendants-Respondents. The CITIZENS AND SOUTHERN NATIONAL BANK, Plaintiff-Appellant-Respondent, v. ALBERT GERSTEN AND ASSOCIATES, Screven Lumber Industries, Inc., South Carolina Tax Commission, Dixie Wood Preserving Company, Inc., Appellants, and T. Legare Rodgers, Individually and as Clerk of Court for Beaufort County, Defendants-Respondents. |
| Court | South Carolina Supreme Court |
Hagood, Rivers & Young, Charleston, Levin & Sams, Beaufort, for plaintiff-appellant-respondent.
Thomas & Thomas, Felix B. Greene, Jr., Beaufort, Knox & Neal, Thompson, Ga., for plaintiff-respondent, appellant.
James M. Windham, Asst. Atty. Gen., Columbia, for defendant-respondent, appellant.
Dowling, Dowling, Sanders & Dukes, Beaufort, for defendants-respondents, appellant.
The only question arising on this voluminous record which we find it necessary to decide is whether The Citizens and Southern National Bank, Augusta, Georgia, is entitled to recover a money judgment against Albert Gersten and Associates, a foreign corporation.
During 1958 and 1959 Gersten was prime contractor in the construction of large housing projects on land belonging to the United States in Beaufort County, South Carolina. Gersten contracted with Screven Lumber Industries, Inc. to furnish the lumber needed for the construction of these projects, delivered at the work sites, at $85.50 per thousand for untreated lumber, $108.50 per thousand for pressure treated lumber, deliveries to be made as scheduled, terms: Cash 30 days after delivery.
Screven, in turn, contracted with Dixie Wood Preserving Company, Inc., that Dixie would treat with wood preservative such lumber as was required to be treated under the terms of Screven's contract with Gersten, and that Dixie would deliver the treated lumber to Gerston's work sites, receiving for its services and for the material expended the sum of $24.00 per thousand. As an inducement to Dixie to undergo the expense of establishing a plant near the work site, Dixie was given the exclusive right to treat all lumber required to be treated under the Screven-Gersten contract, which was estimated to amount to at least 4,000,000 feet. The construction contract was executed in January, 1958, and the subcontract for lumber was executed in February following.
Purchase orders were issued by Gersten to Screven from time to time ordering an approximate quantity of lumber in millions of feet. Apparently, most of the deliveries involved here were made under an order dated March 21, 1958, for 'approximately 3,000,000 board feet,' which, in common with other such purchase orders, contained the following paragraph over the signature of a Gersten representative:
On August 18, 1958, Screven executed a formal assignment of this purchase order to the Bank.
The contract between Screven and Dixie, which was entered into some six months before the assignment of August 18, provided: 'First Party (Screven), by the execution of this agreement, hereby authorizes and directs Gersten to pay all treating fees of the Second Party (Dixie) determined as aforesaid and to deduct the amounts so paid to the Second Party from the amount to be paid to the First Party by Gersten under their contract hereinabove mentioned.' However, the practice actually followed was for Screven to bill Gersten for the full contract price for treated lumber and for Screven to make periodic remittances to Dixie.
Screven financed its operation during the thirty day period between delivery and payment by borrowing from the Bank, as deliveries of lumber were made, on notes secured by assigned invoices. Gersten paid the invoices when due by checks to Citizens and Southern National Bank account Screven Lumber Industries, Inc. An officer of the Bank testified that many thousands of dollars were advanced and repaid in this fashion.
During the period of performance under these contracts, Screven had to meet two obligations from remittances for lumber delivered to Gersten, i. e., its notes to the Bank for advances against assigned invoices, and the treatment and delivery fees due Dixie, which were included in the invoice price. Both were in the nature of running accounts on which a balance was always due by Screven. Likewise, a balance was always due it from Gersten. By mid-December, 1958, the sum of the accounts payable by Screven on the obligations to Dixie and to the Bank exceeded the total of accounts receivable by it from Gersten, even as reflected by the face of unpaid invoices of $35,022.54, which Screven claimed to be due. Gersten disputed this figure, contending that it included duplicate charges and other mistakes and that it (Gersten) was entitled to certain setoffs against Screven arising out of the contract. Consequently, Gersten withheld payment of the invoices. These had been assigned to the Bank as security for nine notes executed by Screven between December 2, 1958, and January 2, 1959, inclusive, in the aggregate amount of $17,859.54 and Gersten had notice of the assignments, which were endorsed on the respective invoices prior to delivery.
In the litigation that a developed, Gersten admitted that it owed a balance of $25,420.33 (the correct figure as determined at the trial was $25,642.79) for deliveries of lumber under its contract with Screven. It paid this amount to T. Legare Rodgers, Esq., Clerk of Court for Beaufort County, and prayed that it be exonerated from further liability on account of the claims of other parties, including Dixie...
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...of the claim. At common law, an assignee's rights can be no greater than those of his assignor. Dixie Wood Preserving Co. v. Albert Gersten & Associates, 244 S.C. 57, 135 S.E.2d 368 (1964). Consequently, the assignee of a debt takes the obligation subject to all claims and defenses the obli......
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