York v. Conde

Headnote

Equitable Assignment—Evidence.

Plaintiffs claimed title to a certain fund in defendants’ possession, under a written assignment thereof, to secure an indebtedness for building materials furnished by them to the assignor, a contractor. Defendants gave testimony to show that prior to the assignment to plaintiffs the assignor had agreed with defendants that the fund in question should be applied to certain notes indorsed by defendants for the assignor’s accommodation, and that they should have a lien on the same for that purpose. Held, that defendant’s testimony, if sufficient, showed an equitable assignment of the fund in controversy, and that it was error for the court to hold as a matter of law that defendants acquired no right to the fund under this agreement, and to direct a verdict for plaintiffs.

Appeal from circuit court, Jefferson county.

. Action by Anson E. York and Wallace W. Starkweather against William Conde and John C. Streeter. In September, 1889, the firm of Witherby & Gaffney, who were contractors and builders, entered into a contract witii the government of the United States to construct certain buildings known as “Officers’ Quarters at Madison Barracks, Sackets Harbor, H. Y.” Subsequently the plaintiffs, at the request of Witherby & Gaffney, sold and delivered to them on credit large quantities, of lumber and building material, which was used in the construction of such buildings, and was of the value of more than $3,000. Witherby. & Gaffney, being thus indebted to the plaintiffs, before the completion of their contract, and on March 27, 1890, executed to them an assignment of $3,000 of the money which should thereafter become due and owing them from the government, to be applied in part payment of their indebtedness. The moneys due Witherby & Gaffney were afterwards paid to the defendants, with notice of the plaintiffs’ assignment. The defense interposed was that, prior to the assignment to the plaintiffs by Witherby & Gaffney, the defendants had become accommodation indorsers for Witherby & Gaffney to the extent of upwards of $4,000; that the defendant Conde was a surety to the government on the contractors’ bond; and that these indorsements were essential to enable the contractors to carry on their work, and the proceeds thereof went into the buildings; that before such indorsements were,, made, Witherby & Gaffney promised the defendants that they would devote the moneys realized from the government on the contract to the payment of the notes thus indorsed, and would transfer and assign the evidences of the government’s indebtedness to the indorsers, to be devoted to that purpose; that thereafter, in pursuance of that purpose, and on April 18,1890, Witherby & Gaffney, who at that time were getting a further indorsement of $500, assigned the same moneys in writing to the defendants; that afterwards, and on May 15, 1890, the government having delivered to Witherby & Gaffney a draft for the moneys due on the contract, less $110 penalties for non-perform-once as to time, they transferred the same to the defendants, who discharged the indorsed notes therewith. On the trial the defendants also insisted that the assignment by Witherby & Gaffney to the plaintiffs, as well as the assignment to themselves, was void, under section 3477, Rev. St. U. S. The defendant Streeter testified that at the time of the first indorsement Mr. Gaffney said “that under no circumstances would anything step in or interfere with the payment of these notes; that we should have the avails at the closing up,— the payment from the government; that when it was transferred or delivered to him it would be transferred to us, to wipe out these notes, and that he regarded it as a sacred matter. It would be the first liability that would be cancelled. There were several talks of that character from September on, as the indorsements were made; and these talks were had before March 27,1890. Mr. Gaffney Indorsed the check or draft, and turned it over to Mr. Conde in my presence. Conde and I indorsed this paper jointly, by arrangement be

tween us three. He had to have help or he could not complete the job.” Mr. Conde testified: “Mr. Gaffney repeatedly told me that if it should become necessary he would assign the contract with the government at any time I desired it; that he would assign over all right and title that he had in the property. I replied that I didn’t want the contract. The understanding between us was that at the final settlement,—that out of the final moneys which he got there was enough percentage kept back,—and that, when that was paid, these notes would be retired. He promised to turn over the check or draft, after he got it, to me. That was at the time the indorsements, or some of them, were made. It was stated that it was to be turned over for the retiring of these notes indorsed by me and Mr. Streeter. Those notes were made before March 17, 1890. There were several talks like that before March 17, 1890, and Mr. Gaffney did so turn over the draft tome when he received it on financial settlement from the government.” The trial judge held that section 3477, Kev. St. U. S. did not apply to the assignment in question; that the plaintiffs’ assignment was, therefore, not void, but gave them an equitable lien on the moneys in question; that such equitable lien could be enforced in an action at law; that what took place between the defendants and Gaffney at the time they commenced to indorse their paper did not operate to create a lien upon the fund, or any right to have the fund applied to the payment of the notes indorsed by the defendants; that their rights to have the fund applied to the payment of such notes was first created at the time of the first transfer in writing to the defendants. The defendants duly excepted to the direction of a verdict by the court, and also duly excepted to each of the propositions stated by the court in arriving at the conclusion to direct a verdict. From a judgment for plaintiffs, defendants appeal.