National Sur. Corp. v. Algernon Blair, Inc., 41826

• Decision Date: 14 June 1966
• Docket Number: No. 41826,No. 3,41826,3
• Citation: 150 S.E.2d 256,114 Ga.App. 30
• Parties: NATIONAL SURETY CORPORATION v. ALGERNON BLAIR, INC
• Court: Georgia Court of Appeals

Page 256

150 S.E.2d 256

114 Ga.App. 30

NATIONAL SURETY CORPORATION v. ALGERNON BLAIR, INC.

No. 41826.

Court of Appeals of Georgia, Division No. 3.

June 14, 1966.

Rehearing Denied July 6, 1966.

Syllabus by the Court

The trial court erred in granting summary judgment for defendant and in denying summary judgment for plaintiff.

National Surety Corporation brought this action against Algernon Blair, Inc. Both parties filed motions for summary judgment on stipulated facts. Upon appeal to this court plaintiff enumerates error upon judgments of the trial court granting summary judgment for defendant and denying plaintiff's motion for summary judgment.

The evidence shows that defendant was general contractor upon a construction project in Cullman, Ala., and subcontracted certain work upon the project to Stauffer Plastering Company. On July 31, 1962, Stauffer's subcontract on the Cullman project was fully performed, but final payment then due had not been made. At that time Stauffer was engaged in performance of work required by two other subcontracts under defendant, one upon a project at Biloxi, Miss., and one upon a project at Tuskegee, Ala. On August 28, Stauffer assigned to plaintiff 'all sums now due or to become due' to Stauffer upon the Cullman contract. Plaintiff gave defendant notice of the assignment on August 31, 1962.

On the latter date, under the Biloxi and Tuskegee contracts, respectively, Stauffer had earned, less retainage, $32,097.81 and $5,580.00; had been paid $30,869.61 and $9,382.89; and was indebted to defendant under these contracts in the net amounts of $2,981.25 and $5,784.46.

On April 30, 1963, there were no claims against Stauffer under the Cullman contract, and the net amount then payable for Stauffer's work was $4,189.42. Plaintiff seeks to recover in this amount. On September 30, 1963 (and, it is presumed, when suit was commenced) the status of accounts on other contracts between defendant and Stauffer was as follows: Under the Biloxi and Tuskegee contracts, respectively, Stauffer had earned, less retainage, $42,854.12 and $37,743.58; had been paid $42,905.59 and $40,094.20; and was indebted to defendant in the net amounts of $51.47 and $2,373.95. On two other contracts, one upon a project at Huntsville, Ala., and one upon a project at Fayetteville, Tenn., the performances of which were begun after August 31, 1962, Stauffer was indebted to defendant in the amounts of $854.12 and $2,414.88, respectively.

Against plaintiff's claim as assignee under the Cullman contract, defendant asserts by way of setoff Stauffer's indebtedness to defendant under the Biloxi, Tuskegee, Huntsville and Fayetteville contracts. The contract between defendant and Stauffer, partially assigned to plaintiff, for work upon the Cullman project contained the following provision: 'Final payment shall be made within 30 days after the completion of the work included in this subcontract, written acceptance by the owner or owner's representative and full payment therefore by the Owner; except that contractor may deduct from such final payment any sums due to contractor under this subcontract or otherwise.'

Nall, Miller, Cadenhead & Dennis, James W. Dorsey, Atlanta, for appellant.

Powell, Goldstein, Frazer & Murphy, Eugene Partain, Wayne Shortridge, Atlanta, for appellee.

BELL, Presiding Judge.

Here, neither the defendant nor Stauffer, in the absence of assignment of the indebtedness owing Stauffer under the Cullman contract, would have had any greater or lesser rights by virtue of the contractual provision relating to setoff against final payment. Even with that provision a part of the contract, those rights between the original parties would have been the same with respect to setoff as they would have been without the provision. It is common knowledge that payments under construction contracts are frequently the subject of assignment by one to whom payment is forthcoming. Under these circumstances it is clear that the provision was inserted in the contract for the purpose of protecting defendant's right to setoff in the event of an assignment.

Code § 85-1803 provides: 'All choses in action arising upon contract may be assigned so as to vest the title in the assignee, but he takes it, except negotiable instruments subject to the equities existing between the assignor and debtor at the time of the assignment, and until notice of the assignment is given to the person liable.' This section, together with Code §§ 20-1301-20-1310, ordinarily determines what claims the debtor may set off against the assignee's claim. In this connection see: 3 Williston, Contracts (3rd Ed.) § 432, p. 177, § 433, p. 206; 4 Corbin, Contracts (1951) §§ 896-897, p. 594; 20 Am.Jur.2d Counterclaim, Recoupment, and Setoff §§ 87-95, p. 306; 80 CJS Set-Off and Counterclaim § 54, p. 98.

'Equities existing between the assignor and debtor,' of course, include the terms and conditions of the contract under which the indebtedness arose. The original parties to the agreement, Stauffer and the defendant, had it within their power to contract as to what claims the debtor could set off. 'It would seem very clear that parties may, by agreement, make any debt a setoff. If the agreement be for a consideration, it is binding on the same terms as any other agreement; and if it be executed, it needs no consideration.' Threlkeld v. Dobbins, 45 Ga. 144, 145; Long v. Cash, 54 Ga.App. 764, 768, 189 S.E. 73. The assignment to plaintiff of sums due and to become due under the contract was subject to the terms of the contract between Stauffer and defendant, which notice of which the plaintiff assignee was chargeable. Fulton Nat. Bank v. Fulton County, 144 Ga. 691(1), 87 S.E. 1023. On other points, the Fulton National Bank case is distinguishable from the instant case in that there the defendant's claim arose under the original transaction, while here defendant seeks to set off claims arising under separate and different transactions.

The cardinal rule of construction is to ascertain the intention of the parties. Code § 20-702. In construing a contract it is the duty of the court to give it a fair and reasonable construction. Witney v. Hagan, 65 Ga.App. 849, 850, 16 S.E.2d 779. "The words of a contract will be given a reasonable construction, where that is possible, rather than an unreasonable one, and the court will likewise endeavor to give a construction most equitable to the parties, and one which will not give one of them an unfair or unreasonable advantage over the other. * * *" Hutto v. Snap-On Tools Corp., 71 Ga.App. 245, 247, 30 S.E.2d 510, 511. A contract will not be so construed as to authorize one of the parties to take advantage of his own wrong, unless it is plain and manifest that such was the intention of the parties. Finlay v. Ludden & Bates &c., 105 Ga. 264, 267, 31 S.E. 180; Milledgeville Cotton Co. v. Cary, 9 Ga.App. 391, 393, 71 S.E. 503; C. V. Hill & Co. v. Weinberg, 67 Ga.App. 44, 48, 19 S.E.2d 430.

The term 'final payment' as used in the provision 'except that contractor may deduct from such final payment any sums due to contractor under this subcontract or otherwise,' must be construed to mean final payment when due. Thus, it could not have been within the contemplation of...