Harvin v. Galluchat , 28 S.C. 211 ( 1888 )

The opinion of the court was delivered by

Mr. Chief Justice Simpson.

The plaintiff, appellant, brought the action below against the respondents, alleging the following-facts in his complaint, to wit: That the respondent, Rosa C. Galluchat, owning an unimproved lot in the town of Manning, and desiring to erect a brick store house thereon, borrowed from respondent, McFaddin, $1,025, the payment of which she secured by a mortgage of the premises, covenanting therein that said sum would be expended in the construction of the proposed building; that the said Rosa C. employed one Joshua T. Carr to put up this building for the said $1,025, the said Carr to furnish all necessary material; that Carr, with the knowledge of the said Rosa C. Galluchat, purchased from the appellant brick and lumber and other material to the amount of $346.48, which went into the house, and for which Carr gave to appellant an order on Mrs. Galluchat for $325, requesting the said Mrs. Galluchat to pay the same to appellant “out of the next payment when due on the brick building which he was then building” ; that notice of said order was immediately given to the said Mrs. Rosa C. Galluchat and to respondent, McFaddin, and demand made for the sum assigned, and also notice that said sum was for material, brick, lumber, &c., furnished by the appellant to Carr in the erection of the store house mentioned. Upon which allegations he demanded judgment for the sum of $325, with interest from October 21, 1886, date of the order against the said Rosa 0., and that the brick house and lot be sold, the proceeds to be applied to the payment of the said order, the appellant claiming a first lien in preference to any other lien or mortgage on the premises.

The respondents answered separately, Mrs. Galluchat denying the main allegations in the complaint, especially as to knowledge on her part that the appellant had furnished the materials claimed', and as to notice to her of the order mentioned, or that plaintiff intended to claim a lien on the building, averring that at the date of the order she owed nothing to Carr, and that at the commencement of the action she owed nothing, having, previous to that time, paid the said Carr in full. Also stating that she had understood that such an order had at one time been presented to her husband, “but had been withdrawn to add something to it, or to amend it.” McFaddin answered, admitting that shortly after the date of the order in favor of plaintiff, notice thereof was given to Col. J. D. Blanding, his attorney, and in whose hands, by agreement with Rosa C. Galluchat-, the $1,025 lent her had been placed, to be paid out on her contract with Carr, the builder; and that at the time of said notice Col. Blanding had the sum of $325 on hand, but that he had been advised that Mrs. Rosa C. Galluchat refused to give an order on Col. Blanding to the plaintiff; on the contrary, had given an order to Carr herself for said sum, which Col. Blanding had paid, and he denied that the plaintiff had any superior lien to his mortgage.

The ease was heard by his honor, Judge Witherspoon, upon testimony taken at the trial. During the hearing, appellant’s counsel announced that appellant did not rely upon a mechanic’s lien, as provided by statute. The case, therefore, was tried upon the other questions involved. His honor found that at the time of the order from Carr to appellant, Mrs. Galluchat was indebted to Carr in the sum of $325, the amount of the order under the building contract, and he held that said order was an equitable assignment to appellant of said sum. He further found that Mrs. Galluchat did not have actual notice of the order to appellant before she ordered said sum to be paid to Carr himself, which he held was necessary to make her liable to the appellant in this action, and, therefore, he ordered and adjudged, that the complaint be dismissed as to each of the defendants, with costs.

The appellant does not distinctly question in his exceptions the correctness of his honor’s holding, that Mrs. Galluchat did not have actual notice in the sense of positive personal notice of the order from Carr to the appellant before directing payment to Carr himself, but he contends that notice was given to her husband, also to Col. Blanding, attorney, -who held the money, and that such notice was mailed to Mrs. Galluchat in time, which was received by her said husband; and that these notices amounting, as he claims, to notice to Mrs. Galluchat, w'ere sufficient to fix her liability. And he alleged error to his honor, because he held, that in order to hold Mrs. Galluchat liable to plaintiff, he should make it appear affirmatively that she had received actual notice of the order to plaintiff before she paid the debt to Carr, doubtless understanding the term, actual notice, as used by his honor, to mean personal notice, as contradistinguished from notice to the parties mentioned above.

The single question in the case, then, is, was it error in his honor to rule, as matter of law, that personal notice to Mrs. Galluchat was necessary, and, consequently, that the notices to the other parties mentioned were insufficient, there being no evidence that said notices had ever reached Mrs. Galluchat? It is laid down in all the authorities upon the subject of assignment of unnegotiable paper (Story, Pomeroy, and in numerous cases), that in order to protect his rights under an assignment, the first duty of the assignee is to give notice to the debtor. A failure to do this is at the peril of losing the debt, either by a subsequent assignment to another party, or new defences arising between the assignor and the debtor, or a payment by the debtor to the assignor.

It is true the term “actual” is not used in the authorities as qualifying the notice, but it is said that notice must be given to the debtor, and when the purpose and object of the notice is considered, we are forced to the conclusion that actual personal notice is what is meant. The object of the notice is not only to protect the assignee, but the debtor also. The debtor has contracted to pay a certain party, and at common law he could not, by assignment of his contract, be made the debtor of another with whom he did not contract, and to whom, perhaps, he would not have voluntarily assumed the relation of debtor. Equity, however, has practically repealed the common law on this subject, in enlarging the rights of the credjtor, by recognizing his assignment; but at the same time the debtor is protected by the principle, that the assignee shall stand in the shoes of the original creditor, assignor, and that the assignment shall be subject to all the equities existing between the original parties, not only at the time of the assignment, but up to the time of notice to the debtor, w'hich notice the assignee must give to the debtor.

Such being the object of the notice, it seems to us that anything less than actual notice would fail to accomplish it, and that it would be a short measure of justice to hold that constructive notice would be sufficient. This is not a case like recording a deed or other paper required to be recorded, which is notice to the world, whether known or not, for the reason that knowledge is within the reach of all by proper diligence and inquiry; but it is a case where knowledge can only come by being imparted, and which the debtor can, by no diligence required of him, ascertain; knowledge, too, which it is the especial duty of the assignee to impart. His claim is but an equity at best, and when he comes into court to enforce it, he must come recognizing the equity of the other side, to have been informed by an actual and not a mere constructive notice of the existence of his claim, and of the time when it was acquired, because no other notice except actual notice can protect the debtor; constructive notice being wholly insufficient, inasmuch as in its last analysis it is really the absence of actual notice.

Concurring then, as we do, with the Circuit Judge upon this question, and also upon his finding that Mrs. Galluchat did not receive actual notice of the order to the plaintiff, before the money was paid to Carr, it is unnecessary to consider the respective rights of defendant, McFaddin, and plaintiff.

It is the judgment of this court, that the judgment of the Circuit Court be affirmed.