Lataif v. Commercial Indus. Const., Inc.

• Decision Date: 22 January 1982
• Docket Number: 791340,Nos. 790802,s. 790802
• Citation: 223 Va. 59,286 S.E.2d 159
• Parties: Lawrence P. LATAIF v. COMMERCIAL INDUSTRIAL CONSTRUCTION, INC., Douglas Cobb and Laurence O. Myers. Record
• Court: Virginia Supreme Court

Page 159

286 S.E.2d 159

223 Va. 59

Lawrence P. LATAIF v. COMMERCIAL INDUSTRIAL CONSTRUCTION, INC., Douglas Cobb and Laurence O. Myers.

Record Nos. 790802, 791340.

Supreme Court of Virginia.

Jan. 22, 1982.

Peter L. Sissman, Arlington, for appellant.

M. Patton Echols, Jr., Arlington (Joseph B. Hyman, Alexandria, on brief), for appellees.

No brief or argument for Laurence O. Myers, appellee.

Before CARRICO, C. J., COCHRAN, POFF, COMPTON, THOMPSON, and STEPHENSON, JJ., and HARRISON, Retired Justice.

POFF, Justice.

Lawrence P. Lataif, plaintiff in an action on an assignment of contract rights, appeals from judgments for defendants Commercial Industrial Construction, Inc. (CICI), and Douglas Cobb. The trial court sustained the defendants' motions to strike, and we summarize the evidence in the light most favorable to the plaintiff.

Laurence O. Myers owed Lataif, an attorney, $3500 for legal services rendered. Douglas Cobb, president and managing officer of CICI, had engaged Myers, a housepainter, to do some work at a construction site, and Myers had not been paid. At Lataif's suggestion, Myers agreed to assign his contract rights to Lataif in satisfaction of the legal fee. Myers was uncertain whether his debtor was Cobb or Cobb's corporation, so Lataif drafted the assignment identifying "Commercial Industries, Inc. and/or Doug Cobb" as obligors. Commercial Industries, Inc. (CII), the name supplied by Myers, was a misnomer and the name of a corporation with which Cobb was unassociated.

Myers executed the assignment on June 18, 1976. To protect Myers' business relationship with Cobb, Lataif agreed not to notify Cobb immediately. Myers was unable to raise the money he owed Lataif from other sources, and Lataif telephoned Cobb on July 12, 1976. Lataif testified that he told Cobb that the assignment was directed "to him personally and/or Commercial Industries, Inc." and that Cobb said "that was fine and that he would be willing to disperse [sic] the money to me." Later the same day, Lataif sent Cobb a copy of the assignment by certified mail. On August 5, Lataif telephoned Cobb again. "I suggested," Lataif testified, "that he make my check payable to me directly and solely and note on the bottom of it that it was for Larry Myers. He indicated that this was a good idea and would do it." By letter dated September 7, Lataif reminded Cobb of his promise and advised him that "I have held off taking any other action to collect this fee because of your kind agreement to disburse the funds in accordance with the assignment." Cobb returned this letter to Lataif with a handwritten note subscribed: "Larry Myers indicated the account had been settled, and we paid him, in full, on 13 August, 1976."

In his conversations with Lataif, Cobb raised no question about the accuracy of the corporate name used in the assignment, and, so far as the record reveals, the misnomer was not discovered until suit was instituted.

Myers filed a petition in bankruptcy in December 1976, and Lataif sued on the assignment. CICI moved to strike on the ground it was not one of the obligors named in the assignment. The trial court sustained the motion, and trial proceeded against Cobb alone. Cobb took the position that Myers and CICI were the only parties to the painting contract; that he, Cobb, was not personally indebted to Myers; and, hence, that he was not bound by the assignment to pay Lataif. Lataif countered that Cobb was estopped to deny personal liability by his assurances that the assignment would be honored.

The trial court found evidence of representations by Cobb and reliance by Lataif. However, the court found further that Lataif had not changed his position because of Cobb's representations but rather had merely "pursued the strategy that he adopted at the outset." Accordingly, the trial court rejected Lataif's estoppel theory, sustained Cobb's motion to strike, and entered final judgment for both defendants.

On appeal, Lataif questions the court's rulings on misnomer and estoppel. Preliminarily, we examine the relevant portions of the law of assignments.

"The assignee ... of any ... chose in action, not negotiable may maintain thereon in his own name any action which the original obligee ... might have brought ...." Code § 8.01-13. See Restatement (Second) of Contracts § 317(1) (1979) ("assignor's right to performance is extinguished ... and the assignee acquires a right to such performance." ) The assignee's right to performance is not conditioned upon a promise by the obligor to honor the assignment. Once the obligor receives notice of the assignment, its obligation runs to the assignee, and the obligor pays the obligee at his own risk. Southern Res. Corp. v. City Sup. Co., 160 Va. 660, 169 S.E. 579 (1933); cf. Evans v. Joyner, 195 Va. 85, 77 S.E.2d 420 (1953) (obligor may, before notice, pay obligee with impunity).

In construing an assignment, courts look to substance rather than to form, and an assignment may be actionable if it shows a clear intent to transfer an identified chose in action. Tatum v. Ballard, 94 Va. 370, 376, 26 S.E. 871, 873 (1897); Switzer and als. v. Noffsinger and als., 82 Va. 518, 521 (1886). See also, Nusbaum and Co. v. Atlantic Realty, 206 Va. 673, 681, 146 S.E.2d 205, 210 (1966); Hawes & Co. v. Wm. R. Trigg Co., 110 Va. 165, 65 S.E. 538 (1909). And the chose may be identified "with the aid of the attendant and surrounding circumstances." Fidelity Mut. Life Ins. Co. v. City Nat. Bank, 95 F.Supp. 276, 282 (N.D.W.Va.1950).

Guided by these principles, we first consider whether the corporate misnomer was fatal to the assignment. Clearly, Myers intended to transfer his rights under the painting contract to Lataif. The question is whether his chose in action was sufficiently identified. The defendants maintain that misnomer of the corporate obligor defeats the assignment. But a misnomer in a corporate name does not invalidate a contract when it is clear what corporation the parties intended, and "such a mistake may be ... shown in evidence, upon the general issue." Culpeper Agricultural and Manufacturing Society v. Digges, &c., 27 Va. (6 Rand.) 165, 167 (1828). See W. Fletcher, Cyclopedia of the Law of Private Corporations, § 2444 (1979). We believe the same rule applies to an assignment. As the evidence shows, the corporation Myers and Lataif intended was Cobb's corporation. Cobb, who was, or should have been, aware of the misnomer, knew what corporation was intended, for he acknowledged the debt owed Myers with no complaint or correction. Cobb's understanding and his words and deeds were those of his principal, CICI.

This evidence of...