Third Nat. Bank v. Atlantic City

• Decision Date: 07 December 1903
• Citation: 126 F. 413
• Parties: THIRD NAT. BANK OF PHILADELPHIA v. ATLANTIC CITY et al.
• Court: U.S. District Court — District of New Jersey

126 F. 413

THIRD NAT. BANK OF PHILADELPHIA v. ATLANTIC CITY et al.

United States Circuit Court, D. New Jersey.

December 7, 1903

Augustus B. Repetts, for complainant.

Clarence L. Cole, for Joseph Miller.

Joseph R. Embury, for Saml. A. Stoneback and National Security Bank.

Godfrey & Godfrey, for Atlantic City Lumber Co.

KIRKPATRICK District Judge.

It appears from the record in this case that on the 2d day of July, 1900, Mark P. Wells and Edward P. Young, then partners under the name of M. P. Wells & Co., entered into a contract with commissioners appointed by the mayor and common council of the city of Atlantic City for the erection of a new city hall, whereby it was agreed that the firm of M. P. Wells &amp Co., in consideration of $74,873, should build a certain building to be used as a city hall in Atlantic City; that the said contract was satisfactorily performed; that the work was approved by the said commissioners, and accepted by the city of Atlantic City, which entered into possession thereof on the 7th day of August, 1901; and that by the terms of said contract the final installment of the contract price, viz $18,692, was payable on the fulfillment of said contract. Some controversy arose between the contracting parties in regard to the character of the work done, so that the amount to be paid M. P. Wells & Co. in final settlement was not agreed upon until November 20, 1902. As has been said, the balance due from the city is $18,692, and is being held by the city to await the determination of the validity and priority of various claims which have been filed against the fund. It also appears that M. P. Wells & Co. became indebted to the various parties, and, desirous of raising funds for the completion of the work or other purposes, in consideration of such indebtedness or advances, executed and delivered at various times orders upon the comptroller of the city of Atlantic City to pay to said creditors or other parties certain sums of money, out of the balance in his hands, due or to become due on said contract, which orders were accepted by said comptroller by a qualified indorsement thereon. These orders make an appropriation of so much of the fund on which they are drawn as will be sufficient to satisfy them, and amount to an equitable assignment thereof pro tanto, which a court of equity will enforce when made for a good and valuable consideration. Nesmith v. Drum, 8 Watts & S. 10, 42 Am.Dec. 260. While as between the parties the assignment may be valid from its date, yet, to protect his claim and perfect his title against the debtor, it is necessary for the assignee to give notice to the debtor that the obligation has been transferred. Laclede Bank v. Schuler, 120 U.S. 516 7 Sup.Ct. 644, 30 L.Ed. 704. Such 'giving notice is equivalent to the act of taking possession.' 2 Pomeroy's Eq.Juris.p. 695.

There has been much conflict of authority in the state courts with reference to the priority existing between successive assignees of the same fund--whether the one whose assignment is prior in time, or the one who first gives notice to the debtor, is entitled to be first paid-- but, so far as this court is concerned, it feels itself concluded by the judgments rendered in the Supreme Court of the United States in Judson v. Corcoran, 17 How. 612, 15 L.Ed. 331, and Spain v. Hamilton's Adm'r. 1 Wall. 604, 17 L.Ed. 619. These cases were considered by the Circuit Court of Appeals for the Second Circuit in Methven v. Staten Island Light, Heat & Power Company, 66 F. 113, and, in accordance with the principle therein laid down, the court find that:

'Where two assignments of a chose in action, for valuable consideration, are made to different persons, the assignee who first gives notice of his claim to the debtor has prior right, though the assignment to him is later in date than that to the other assignee.'

These holders of these equitable assignments, then, as between themselves, are entitled to payment from the fund in the order in which they gave notice thereof to the debtor, and to the extent which they had given consideration therefor.

The only assignment concerning which there is any question of the date upon which notice was given to the debtor is that of the Third National Bank. As to this assignment, the record shows that on May 31, 1901, M. P. Wells & Co. addressed A. M. Heston, comptroller of Atlantic City, a letter, of which the following is a copy:

'Dear sir: Please draw a warrant for seven thousand and five hundred dollars to Third National Bank Philadelphia and deduct the same from the amount of my warrant per City Hall contract due M. P. Wells & Co. $7,500.'

Indorsed ...