International Harvester Co. v. Peoples Bank and Trust Co.
| Citation | 402 So.2d 856 |
| Decision Date | 26 August 1981 |
| Docket Number | No. 52727,52727 |
| Parties | INTERNATIONAL HARVESTER COMPANY v. The PEOPLES BANK AND TRUST COMPANY. |
| Court | Mississippi Supreme Court |
F. M. Bush, III, Thomas D. Murry, Mitchell, McNutt, Bush, Lagrone & Sams, Tupelo, for appellant.
W. P. Mitchell, Mitchell, Eskridge, Voge, Clayton & Beasley, Tupelo, Gifford, Moore & Bolen, Booneville, for appellee.
Before PATTERSON, LEE and HAWKINS, JJ.
International Harvester Company, a Delaware corporation, appeals from a judgment rendered against it by the Circuit Court of Prentiss County in favor of The Peoples Bank and Trust Company, a Mississippi banking corporation, in the amount of $9,915.44. We affirm.
Walden Corporation (Walden) was a business in Booneville engaged in making truck bodies and extending chassis on trucks. Its president was Mrs. Mamie Cain. On July 6, 1977, Walden transmitted to International Harvester Company (International) on Walden's letterhead a Sales Proposal Contract in three copies, duly executed by Mrs. Cain, for the construction by Walden of two truck bodies for the total price of $12,267.32, including tax. Delivery date thereon was specified as three to four weeks.
In the lower part of the form is the following printed language:
The above described truck bodies are to be used for demonstration purposes and are to be paid for in full no later than six (6) months from date of delivery.
Just below this, the instrument contains the following:
"ACCEPTED BY," and following this is the handwritten signature of "R. A. Roy." A written contract was thus entered into between these corporations.
Following this, on July 13, 1977, International transmitted to Walden its purchase order, executed by representatives of International, for 2 "Walden Truck Bodies Model # 3918 per your quotation of July 6, 1977," thereby authorizing Walden to proceed. There is further typed on the purchase order:
180 days deferred billing, or at such time as the chassis has been sold to a retail customer. The 180 days to start upon completion of the body and chassis installation.
At that time Walden had an outstanding indebtedness due The Peoples Bank and Trust Company (Peoples Bank) on a note in the initial amount of $67,000.00, dated March 1, 1976, and on which Peoples Bank noted thereon it had security agreements and a financing statement. Neither the security agreements securing this note nor the financing statement are a part of the record, and the property secured thereby is therefore not shown.
To fulfill its contract with International it was necessary for Walden to borrow $8,500.00 from Peoples Bank. On July 18, 1977, Mrs. Cain as president of Walden executed a promissory note to Peoples Bank in the amount of $8,500.00, due January 18, 1978, with interest at 10 percent. The note contains the following language:
Maker has deposited with Bank, as collateral for payment of this and any and all other liabilities ... the following property listed below ... hereinafter called collateral....
Following this printed language is the typewritten notation:
Assignment of International Harvester Contract Mr. Rob Roy, International Harvester Co., Tucker, GA. 30084. Contract Amount, $12,267.32.
Walden also on July 18, 1977, executed a security agreement to Peoples Bank on Mississippi Bankers Association Form 5, under which "Contract Rights" is checked, and beneath this paragraph is typed:
Assignment of Contract with International Harvester Company, 1726 Montreal Circle, Suite 18, Tucker, GA. 30084 in the amount of $12,267.32.
At the time Walden secured the loan from Peoples Bank, Mrs. Cain also delivered to Peoples Bank the executed Sales Proposal Contract of Walden and International, and Purchase Order issued by International. As to these two instruments, Mr. John Smith with Peoples Bank testified:
Q. How did these two documents get into your possession?
A. They were brought to me by Mrs. Mamie Cain who is associated with Walden Corporation.
Q. Did when she brought them to you, did she take them back, or what happened?
A. No, sir, she left them with me and asked that we advance the funds with which she could obtain the materials to complete this job, and said that she had talked to International about assigning this to us and they were willing to do that.
On July 19, 1977, Mr. Smith wrote Mr. Roy the following letter:
Mr. Rod (sic) Roy
International Harvester Company
P. O. Box 2002
Tucker, Georgia 30084
Dear Mr. Roy:
Re: Walden Corporation
Re: P. O. Box 226
Re: Booneville, MS 38829
It is my understanding that Mrs. Cain, of Walden Corporation previously spoke with you about the fact that it would be necessary for her to use the contract between International Harvester Company and Walden Corporation for Walden Corporation to obtain the financing for the materials on the job. For such consideration, Mrs. Cain has assigned the interest of Walden Corporation in this contract to The Peoples Bank and Trust Company.
Therefore, we ask that any checks rendered to the Walden Corporation under this contract be made payable to both the Corporation and The Peoples Bank and Trust Company and mailed to the bank. Of course, since Walden Corporation will be named as a party to the payment order, it will be necessary that they be notified and endorse the item before it can be negotiated.
If it is permissible with your company, we would ask that you indicate your acceptance of this arrangement by signing in the space provided on the attached copy and returning it to us in the enclosed addressed postpaid envelope.
Sincerely yours,
/s/ John W. Smith
John W. Smith
Executive Vice President
and Manager ACCEPTED Rob A. Roy ACCEPTED (signed)
ACCEPTED Marketing Mgr.
ACCEPTED (handwritten)
This letter, showing it had been accepted by Mr. Roy as marketing manager was returned to Peoples Bank and received by it July 25, 1977. The letter had been received by International July 21, 1977.
On November 15, 1977, International received from the Internal Revenue Service on Government Form 668-A (Rev. 3-77) a Notice of Levy, dated November 7, 1977, notifying International there was due and owing to the United States from Walden $71,952.75, in unpaid taxes. The tax assessment against Walden was October 3, 1977. This form contains the following language:
You are further notified that demand has been made upon the taxpayer for the above amount, and the taxpayer has neglected or refused to pay, and such amount is still due, owing, and unpaid. Accordingly, you are further notified that all property, rights to property, moneys, credits, and bank deposits now in your possession and belonging to this taxpayer (or for which you are obligated) and all sums of money or other obligations owing from you to this taxpayer, or on which there is a lien provided under Chapter 64, Internal Revenue Code, are hereby levied upon for satisfaction of the aforesaid tax plus all additions provided by law, and demand is hereby made upon you for the amount necessary to satisfy this tax liability or for such lesser sum as you may be indebted to this taxpayer, to be applied as a payment on this tax liability. Checks or money orders should be made payable to the Internal Revenue Service. (emphasis added)
The date of final completion of the truck bodies is not shown in the record. Walden finished one truck body, and substantially completed the other, but Walden apparently closed its plant, and the remaining truck body was completed by Truck Center, Inc., of Tupelo. The cost of completing the one truck body was $2,351.88, and International was submitted an invoice on Walden's letterhead dated July 6, 1977, for the total amount of the two truck bodies, less $2,351.88 for completion of one body, leaving a balance due under the contract of $9,915.44. A dim copy of Truck Center's invoice is in the record, and as best the Court can determine, it is dated March 14, 1978.
There is nothing in the record indicating whether or not International, upon receipt of the notice of levy on November 15, 1977, ever informed either the Internal Revenue Service of the previous assignment of the contract with Walden to Peoples Bank or Peoples Bank of the notice of levy served upon it.
It appears to the Court it would be quite unusual for these facts not to appear of record had International in fact informed either the Internal Revenue Service of the previous assignment, or Peoples Bank of the levy made upon it. 1
In any event, after taking full advantage of the delay in making payment as it was authorized under the contract with Walden, International on October 23, 1978, upon advice of its legal department issued its check to the Internal Revenue Service in the amount of $9,915.44, with the notation
Failing to receive any payment under the contract, Peoples Bank on January 26, 1979, instituted suit against International in the amount of $10,000.00, setting forth the above facts pertaining to the contract between Walden and International, and the assignment to Peoples Bank, and notice to and acceptance by International of the assignment to Peoples Bank of the contract. 2
International's primary defense was an affirmative defense and plea in bar in its Answer that payment to the Internal Revenue Service pursuant to the levy upon International discharged International from any liability to Peoples Bank.
In a pre-trial hearing on a plea in bar documentary evidence was adduced together with the testimony of Mr. Charles Hesse, regional comptroller of International, and Mr. John W. Smith, vice-president of Peoples Bank. Following the hearing and argument of counsel, the trial court rendered the following succinct opinion:
Gentlemen, it appears to the Court that when the Defendant was served with the levy, it made a judgment that it had property "subject to levy" as the statute...
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