50 N.J. Eq. 234 | New York Court of Chancery | 1892
This is a bill of interpleader. The defendants answered separately, claiming that the complainants should be charged with,
The contest is between the defendant William J. Forbes, of the one part, and divers creditors of the Wilson Boiler Company of the other part.
The boiler company erected upon the premises of the complainants a boiler and appliances for a contract price, of which the sum just mentioned was the balance due from the complainants, and' the defendant Forbes claims that balance by an assignment from, the Wilson Boiler Company to him, dated, executed and delivered in February, 1887. The other defendants- claim under an attachment issued out of the circuit court of the county of Monmouth on the 14th day of March, 1887, which proceeded to judgment,, and the auditor appointed in the proceedings demanded the amount of the complainants. Forbes also demanded the amount due-from the complainants, claiming under his assignment. The bill sets out that the auditor and creditors in attachment allege that the assignment to Forbes is defective because it was not executed, by the proper officer of the boiler company, but by some person, without authority to execute the same, and that it was not the-corporate act of the boiler company, but was executed without its-knowledge or consent and without consideration, and that it is not sufficient to transfer the claim of the boiler company to-Forbes, and was made for the purpose of defeating the creditors in the attachment suit and preventing them from collecting their claims.
The several answers of the several creditors to this allegation, of the bill is substantially as follows : The defendants say that they have no direct knowledge of the making of the assignment to said Forbes, and, therefore, neither admit nor deny the same,, and leave the said Forbes to make such proof thereof and of the-validity of the same as the court may direct in the premises.
The answer of Forbes, in answer to the allegations of the bill above set forth, sets out that the assignment was- duly made under-
Subsequently the Griffing Iron Company filed an amended answer, in which it set up that on the 23d of March, 1887, and pending the attachment proceedings, it had served a notice upon the complainants under the third section of the Mechanics’ Lien law, and such service was proved at the hearing.
No further issue was ever made up between the parties, and the cause came to hearing, when the defendant Forbes proved to my satisfaction the execution of an assignment by the Wilson Boiler Company to him, dated on the-day of February, 1887, but proved to have been actually executed and delivered before the 25th of that month, in consideration of $1,500, by which the Wilson Boiler Company assigned to Forbes
'all sums of money now due or hereafter to become due to the said Wilson Boiler Company from the Electric Sugar Refining Company and from the School Board of Education of Long Branch, New Jersey, for work done and to be done by the said Wilson Boiler Company, under their contracts with the .above-named parties.”
He further proved that the sum of $1,500 was paid to the boiler company on or about the 23d of February, 1887, and that it was advanced by a syndicate of four or five individuals, of whom he (Forbes) was one, and one York, since deceased, was another, and that he subsequently advanced, on the strength of this assignment, other moneys to the company in order to enable it to finish its contract with the complainants, which at that time was incomplete. The exact amount that was so advanced in addition to the $1,500 was not clearly proven. It further appeared that $550 had been collected from the Electric .Sugar Refining Company, and that the balance was still due. It further appeared that on the 19th of March, 1887, Mr. Forbes wrote two letters in duplicate, one addressed to the Long
“ Dear Sir—-The present serves to advise you that I have an assignment from The Wilson Boiler Company of their claim against your Board for all sums of moneys now due or hereafter to become due to the said Wilson Boiler-Company for work done or to be done on their contract with your Board. Kindly take notice, therefore, that all payments for such work should be-made to me, and that I hold you.liable for such sums. Very truly- yours.”
These letters were enclosed in envelopes, endorsed -with a request to return to the writer, and neither of them was returned. I am satisfied from this and other circumstances that the letters-reached their destination.
I held at the hearing that though the assignment was absolute-on its face, yet under the circumstances it was a mere mortgage,, and that Mr. Forbes, if entitled to anything, was entitled to only so much of the fund as would repay him the amount due, with interest.
The principal objection made at the argument to this assignment was, that no sufficient notice of it had been given to the complainants; and it was argued that, without notice being served prior to the issuing of the attachment, or to the service of the notice under the third section of the Mechanics’ Lien law, it was inefficient to pass the title to the fund as against the attachment or the notices under the third section; and for this position reliance was placed on the opinion of Chancellor Green, in The Superintendent of Schools v. Heath, 2 McCart. 22, and of Vice-Chancellor Van Fleet, in Shannon v. Hoboken, 10 Stew. Eq. 123 and of Vice-Chancellor Green, in Bank v. Bayonne, 3 Dick. Ch. Rep. 246.
With regard to the claim to the notice served under the third section of the Mechanics’ Lien law, I think that the letter of' March 19th is quite sufficient to protect Mr. Forbes. But, further, I think notice of this assignment was unnecessary in order ( to vest the title to this fund in the assignee. The document worked a complete transfer by the direct force of the language
I do not understand the learned vice-chancellor to have deckled that notice to the depositary was an essential part of the assignment, any more than the registry of a deed of conveyance .absolute, or by way of mortgage, of lands, is an essential part of those instruments; but as their registry is, in the absence of notice by possession or other means, necessary in order to prevent .the title from passing to a bona fide purchaser without notice, so
Under the English Bankrupt and Insolvent laws (21 James I. ch. 19 § 11, re-enacted in 6 Geo. IV. ch. 6 § 72) all personal property and choses in action in the possession, order or disposition of the bankrupt or insolvent by permission of the true owner passed to his assignee; and, hence, it was held that assignees of choses in action must do all in their power, which the nature of the cases admitted of, to reduce the thing assigned into possession, in order to prevent it passing to the assignee in bankruptcy or insolvency, and it was held that notice to the debtor was one thing that they might do, and that it was sufficient to prevent the title vesting in the assignee in bankruptcy or insolvency. “And,” says the learned author, “the same principle holds as between a prior and subsequent purchaser or incumbrancer.” This necessity to give notice arising out of the English Bankrupt law led to a practice in England of giving immediate notice to "the depositary or debtor of assignments of choses in action, and parties before taking them were in the habit of inquiring of the debtor or assignee whether any notice had been served upon him, and if no notice had been served they felt safe in making the purchase. The effect of this practice was that the courts held that the party who bought without notice of a previous assignment, and after inquiring of the debtor or depositary, got a better title than a prior assignee who had not taken the precaution to give notice. This giving notice to the debtor or depositary came to take the place of a public registry of the assignment. This is illustrated by the cases of Dearie v. Hall and Loveridge v. Cooper, 3 Russ. 1. The head-note of these cases is this: “A person having a beneficial interest in a sum of money, invested dn the names of trustees, assigns it for valuable consideration to
And in accord with this doctrine is the language of Mr. Spence on p. 858; and see Jones v. Gibbons, 9 Ves. 407 fat p.410), where Sir William Grant, master of the rolls, in discussing this question and the necessity of an assignee of a chose in action doing everything practical to reduce it into possession in order to avoid the effect of the bankrupt act, says: “ It might, perhaps, have been a question whether after assignment and delivery of the security to the assignee, the bankrupt could be said to have the order and disposition, merely because there was no notice to the debtor of the assignment. Probably that requisite was added, as otherwise the debtor might safely pay the money to the person who had without his knowledge eeased to be his creditor. The debtor would be bona fide in making the payment; and it would be impossible to make him pay again. Sir Thomas Parker lays it down, certainly, that there must be that notice.”
The result is that the whole value of notice to the debtor or depositary of the assignment of the fund or chose in action is— first, under the English Bankrupt law, to prevent the subject of the assignment being considered as in the possession or under the Order or disposition of the assignor with the permission of the assignee; and, second, to prevent the debtor, depositary or trustee and innocent third parties from dealing with the original assignor as still the creditor, owner or beneficiary.
Our attachment act is in the nature of an involuntary insolvent or bankrupt law, and in that respect resembles the English Bankrupt law, but it has never been held that the attaching creditor or his representative, the auditor in attachment, occupies the position of a bona fide purchaser without notice, or can have any better title than the debtor himself had. Thus title under an attachment is taken subject to an unrecorded mortgage. Campion v. Kille, 1 McCart. 229 ; 2 McCart. 500 ; Lanahan v. Lawton, 5 Dick. Ch. Rep. 276.
Two questions occupied the attention of the court—-first, Did an unaccepted order operate as an assignment in equity, and would it be enforced for a portion only of the fund ? This was decided in the affirmative. Second. Was 'an order drawn in favor of a materialman or laborer, who was entitled to serve a notice under the third section of the act, entitled to preference over an order drawn in favor of a person who had not such right under the third section ? This question was decided in the negative. The order of priority among those who had served notices under the third section was fixed according to the date of the service of their several notices (p. 25), and necessarily so, since the statute makes the service the very essence of the right. It is a proceeding quite in invitum the contractor, and has no analogy to an assignment by means of an order. But, as before remarked, the question of the value of the mere presentation to the drawee of an order actually drawn and delivered against either a notice served under the third section, or another order, does not appear to have been either raised or cansidered. The chancellor at the end of his opinion merely says: “ Each creditor is entitled to be paid in the order in which his notice or order was presented to the complainants.” I cannot believe that he had in mind the question here involved. The same may be said of what was said in Shannon v. HoboJcen.
Forbes’ assignment is therefore good as against the attaching creditors, and it is also good as against the notice served under the third clause of the Mechanics’ Lien law, not so much by reason
Unless counsel can agree upon the amount due upon the assignment there must be an order of reference to a master to take an account of it. In taking such account the master will allow Forbes for all advances actually made before the date of the attachment and all those made afterwards which were applied in-good faith to the completion of the contract of the boiler company.