In re Robert T. Noel Coal, Inc.
| Citation | 82 BR 778 |
| Decision Date | 17 February 1988 |
| Docket Number | Adv. No. 85-537.,Bankruptcy No. 84-0285 |
| Parties | In re ROBERT T. NOEL COAL, INC., Debtor. DOYLE EQUIPMENT COMPANY formerly Dravo Doyle, Plaintiff, v. ERICKSON OF JOHNSTOWN, INC. and Joseph Colavecchi, Esq., Defendants. |
| Court | United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania |
Gary L. Costlow, Johnstown, Pa., for Erickson.
Joseph Colavecchi, Clearfield, for himself & Debtor.
Charles E. Bobinis, Pittsburgh, for Doyle.
Robert E. Thomas, Johnstown, Pa., for Creditors' Committee.
Before the Court is Assignee, Doyle Equipment Company's ("Doyle") Complaint for Judgment against Erickson of Johnstown, Inc. ("Erickson") and Joseph Colavecchi, Esq. ("Colavecchi") counsel to the Assignor, Robert T. Noel Coal, Inc. ("Noel"). Doyle alleges that Erickson improperly transferred funds to Noel, in violation of a Court Ordered assignment, and therefore must repay the funds to Doyle. Doyle further asserts that Colavecchi assumed responsibility for notifying Erickson of the assignment; having failed to do so, Doyle charges Colavecchi with joint and several liability.
In response thereto Erickson avers a lack of knowledge regarding the Court Order until May 13, 1985. Thereafter, it avers it contacted Noel's principal, a non-defendant herein, and acted upon this layman's legal advice.
Colavecchi denies any duty to Doyle, and to the contrary avers that Doyle was represented by legal counsel. Colavecchi continues that if anyone breached a duty to Doyle, said failure is that of Doyle's counsel.
The parties have consented to this Court's exercise of jurisdiction; we enter this Memorandum Opinion and Final Order of Court, wherein we find liability as to Erickson in the amount of $6,172.33, but no liability as to Colavecchi.
Noel, a coal producer, filed a Chapter 11 bankruptcy petition on February 9, 1984. Doyle, a secured creditor, sought and received relief from the automatic stay on December 10, 1984, in order to repossess its security, a certain D-9 bulldozer. Thereafter, in private negotiations, Noel asserted that possession and use of said bulldozer was necessary for the continued operation of his business, and accordingly the parties entered into a written agreement, codified by Court Order dated March 11, 1985. That Order states in part as follows:
Erickson was and is a coal broker, which would receive orders for coal. Noel would produce said coal and transport it to its destination. The purchaser would pay Erickson, which would deduct its commission and then transmit the balance to Noel.
Colavecchi agreed to present and in fact presented the above Order to the Court for signature. Doyle asserts Colavecchi additionally assumed responsibility for serving the signed Order upon Erickson; Colavecchi denies same. Apparently no one served Erickson with notice of the assignment until May 13, 1985, when Doyle, through its counsel, sent a letter to Erickson, with an enclosed copy of the March 11, 1985 Order, and demanded past and future payments. Erickson called Noel to inquire about the arrangement and was advised by Noel that the bulldozer was not in good working order and had already been offered to Doyle for repossession; Noel, a layman and principal of a bankrupt business, advised Erickson that the assignment had no continuing effect and that any and all funds due and owing were to be paid to Noel. During the week that followed Doyle's letter, Erickson paid Noel at least $16,000.00 for coal shipped in May.
The bulldozer was repossessed by Doyle in September of 1985. It was sold for substantially less than the outstanding debt, leaving a deficiency of $12,973.72.
A legal assignment is often defined as a transfer of property or of a right or interest in such property, from one person to another. See In re Purman's Estate, 358 Pa. 187, 56 A.2d 86 (1948). The right to receive money due or to become due, is generally assignable. P.L.E. Assignments § 4 p. 143. Therefore, Noel was fully capable of executing a legal assignment to Doyle of money due from Erickson.
An assignment made for consideration is irrevocable. Brager v. Blum, 49 B.R. 626 (E.D.Pa.1985). Pennsylvania Courts have held that even a preexisting debt can constitute sufficient consideration. Beechwood Improvement Co. v. City of Farrell, 123 Pa.Super. 544, 187 A. 306 (1936). In the case at bar, Noel assigned the funds to Doyle as security for the continued use and possession of Doyle's bulldozer. Therefore, the assignment is irrevocable.
While notice to Erickson is not essential to the assignment's validity, it is necessary in order to charge a third-party (Erickson) with the duty to make payment to the Assignee (Doyle). Commonwealth v. Baldassari, 279 Pa.Super. 491, 421 A.2d 306 (1980). In Pennsylvania, notice is sufficient if it is such as would put a reasonable person on inquiry. Commonwealth v. Pressley, 331 Pa.Super. 43, 479 A.2d 1069 (1984); Draper Paper Mill, Inc. v. Huff, Barnes & Opie, 110 Pa.Super. 336, 168 A. 372 (1933...
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