ORDER ON MOTION FOR SUMMARY JUDGMENT
The Small Business Administration, an agency of the United States of America, made a loan of $40,000 in 1963 to Ruth B. Johnson (hereinafter styled Transfer Company.) It was evidenced by a monthly installments note and was secured in part by assignment of all sums to become due to Transfer Company by the defendant Mercury Motor Express, Inc. (hereinafter styled Mercury) under an agreement entered into in 1964. Thе contract provided that the Transfer Company would handle pick-up and delivery operations of Mercury in the Augustа area.
The Bank acknowledged the assignment in writing.
The complaint alleges that between December 14, 1964, and December 31, 1965, Mercury paid directly to the Transfer Cоmpany amounts totalling $7,307.28 of which only $662.94 was paid by it to the Small Business Administration.
The United States sues Mercury for the difference and the defendant has set up various defenses, including partial assignment as distinguished from complete assignment; waiver based on the claim that the Bank was the agent of plaintiff; laches; lack of consideration, etc.
The Government has moved for a Summary Judgment, contending that under the Uniform Commercial Code the liability of Mercury is established as a matter of law by the plеadings.
At the hearing Mercury contended that the assignment in question was not a Commercial Code transaction. Section 109A-9-104 excludes “assignments of accounts and contract rights for the purpose of collection only”. Mercury further argued thаt irrespective of whether the assignment was a Commercial Code •or a non-Code transaction the result ■would be thе same.
In any event, it is necessary at the outset to determine what law applies in this litigation, that is, the Commercial Code or the general law as to assignment of funds.
Georgia has no case law under the assignment - of - accounts - for - collection - only exclusion. That exception has had judicial consideration in Pennsylvania and-Kentucky. In Lyon v. Ty-Wood Corporation,
In Spurlin v. Sloan et al. (Court of Appeals, Ky.),
The assignment by Mercury of monies due by it under its contract with the Transfеr Company was, in my opinion, as assignment of accounts for collection only and is excluded from the Commercial Code, 9-104 (f).
Where does this leave us? The Georgia cases do not make it plain. Under general law a debtor who, with notice of an assignment, pays out money due to one other than to the assignee is liable to the latter. See Am.Jur.2d, Assignments, Sections 96 and 112.
Under Georgia law notice to a debtor of either a partial or equitable assignment creates a duty resрecting payment by a debtor which may result in liability to the assignee of the amount due by the debtor. See United Engineers & Constructors Inc. v. Fiat Metal Manufacturing Company,
In this view of the case Mercury would be without a substantial defense except for the matter of waiver as set forth in its Third Defense.
It is clear from the рleadings that for a period of about a year Mercury ceased to comply with its agreement to make remittances of amounts owing in the manner contemplated by the assignment. Payments were made by defendant directly to the Transfer Company instead of by check jointly payable to the assignee and the Bank.
In its answer Mercury contends that the Bank wаs the agent of the SBA and knew that checks were not being issued in the manner contemplated by the loan agreement. It is alleged that the Bank allowed cheeks to be deposited payable solely to the Transfer Company. All of this amоunted, it contends, to a waiver.
I know of no relevant Georgia cases. A written assignment of moneys due or to become due by another is a valid assignment in this State. Cleary & Company v. Fawcett,
One may well doubt whether the Bank was anybody’s agent and least of all an agent of the United Statеs. Equally doubtful is whether the Bank had any duty except to handle and remit the proceeds of jointly payable cheeks. I hаve large reservations as to whether mere acknowledgment of the assignment obliged the Bank to distinguish between cheсks so payable and checks drawn solely to the order of the Transfer Company. It seems unlikely to me that the United Statеs is bound under the circumstances by the action or non-action of the Bank in respect to Mercury s checks made payable to the assignor.
However, as the pleadings stand a waiver has been asserted and, on the whole, I think it is better to decide whether a verdict should be directed on the trial rather than to determine the disputed point upon motion for summary judgment. Accordingly, it is denied.