McCallums, Inc. v. Mountain Title Co. , 60 Or. App. 693 ( 1982 )

THORNTON, J.,

concurring in part and dissenting in part.

I disagree with the majority’s conclusion that, as a matter of law, defendant cannot be bound by the assignment. The majority cites no authority, and I find none, which answers one way or the other whether a party other than the immediate obligor under an assigned contract or a party who is “merely a depository” or a “conduit” for assigned funds can be responsible for acting in accordance with an assignment of which it has notice.

Language contained in two cases cited by the majority suggests that this defendant can be bound by the assignment. In Alexander v. Munroe, 54 Or 500, 101 P 903, 103 P 514 (1909), the court said, with respect to equitable assignments:

“ * * * [A]n equitable assignment will not only reach the fund in the hands of the original depositary, but follow it or its proceeds in the hands of any one receiving it with notice. * * *” 54 Or at 509-10.

In State Farm Ins. v. Pohl, 255 Or 46, 50, 464 P2d 321 (1970), the court referred to “third persons” rather than “obligors” in describing those who can be bound by an assignment of which they have notice.

I do not suggest that that language in Alexander or Pohl is decisively inconsistent with the majority’s conclusion, although the language surely does not help the majority. However, in the absence of authority which squarely supports the conclusion of the majority, I think the reasons for reaching the opposite conclusion are compelling.

It is true that the buyers of the Howells’ house rather than defendant were the direct obligors of the assignment of purchase money from the Howells to plaintiff. But I see no reason why that should relieve this defendant, which had possession of the funds and notice of the assignment, from distributing the funds to the party lawfully entitled to receive them. It is clear that a direct obligor with notice of an absolute assignment is liable to the assignee if the obligor acts in accordance with a purported revocation of the assignment by the assignor. See 4 Corbin, Contracts, §§ 890, 891 (1951). I am at a loss to understand why a party whose relationship and ultimate claim to assigned funds in its possession is exactly the same as the obligor’s — save for the fact that the party’s original responsibility is to transmit rather than make the payment — should be any the less accountable for wilfully or negligently participating in the assignor’s conversion of the funds.

The majority states that defendant had no duty “to dispose of [the funds] except by direction of the principals to the escrow agreement.” (Slip opinion at 4.) If by that statement the majority means that defendant’s status as an escrow agent relieves it of liability to which it would otherwise be subject, I strongly disagree. In fact, the instructions of December 6 and December 21, 1978, purporting to require defendant to act inconsistently with the assignment, were executed only by the Howells and not by the purchasers of the house, who were the other principals to the escrow transaction. More fundamentally, those instructions, like the assignment they purported to revoke, did not pertain to the escrow relationship; they related to ultimate distribution of the funds after both principals had satisfied the escrow conditions for distribution and the buyers had no interest whether the funds they paid to defendant were disbursed to plaintiff or to the Howells. As of that time, the assignment was as binding on the Howells and on defendant as if there had never been an escrow — assuming arguendo that the escrow relationship would have affected the parties’ obligations under the assignment in the first place. See Foulkes v. Sengstacken, 83 Or 118, 128-29, 158 P 952, 163 P 311 (1917); Restatement (Second) Agency, § 14D, comment b (1958).

It is true that, as far as we find, whether defendant could be obligated under the assignment is a question of first impression and, as the divergence of views on this court illustrates, the answer is not free from doubt. However, that fact provides no excuse for defendant. Whatever the correct answer may be, defendant should have brought an interpleader action to ascertain what its obligations were, rather than acting in the irresponsible — and, in my view, incorrect — manner it did.

I therefore respectfully dissent from the conclusion of the majority discussed in this opinion. I agree with the majority’s disposition of the other issues, and with its holding that the existence of fact questions made summary judgment inappropriate.