Johnson v. Vickers , 139 Wis. 145 ( 1909 )

Barnes, J.

The disposition of this appeal necessitates the consideration of the following questions: (1) Was the contract sued on assignable? (2) Was the question of its nonassignability raised by the pleadings? (3) Was the defendant precluded from insisting upon thé defense of nonassignability ?

1. It is established that the Industrial Construction Company attempted to make an absolute assignment of its contract two days after its execution and .before any work was done thereunder. The assignment is unqualified in its terms and is made without recourse, and the plaintiffs are suing as assignees claiming to have performed the work and furnished the materials used in the construction of the factory by virtue of the assignment and not as subcontractors. This contract obligated the Industrial Construction Company to build and equip a canning factory according to specifications attached to the contract that seem to be complete as to details. The-performance of the work undoubtedly required skill and experience, and upon its proper execution the success of the enterprise might well depend. The assignees were wholly inexperienced in constructing plants of this character, while the assignor apparently followed the business of so doing. This contract manifestly imposed a liability upon the assignor of the plaintiffs, and involved a relation of personal confidence which the subscribers must have intended would be exercised by the party in whom they confided. In the construction of a complex plant, subscribers having no knowledge themselves as to how such a plant should be constructed would naturally prefer to make their contract with a party having the requisite knowledge and experience rather than with persons having neither. Good business judgment would dictate that such a course should be pursued. They had the right to select the'party with whom they would deal, and, when the selection was made and the contract was executed, there could be no substitution of contractors in the case before us without the assent of the subscribers. The authorities are quite uniform in holding that such a contract is not assignable by the contractor without the consent of the other party thereto. Ark. Valley S. Co. v. Belden M. Co. 127 U. S. 379, 387, 8 Sup. Ct. 1308; Boston Ice Co. v. Potter, 123 Mass. 28; Swarts v. Narragansett E. L. Co. 26 R. I. 388, 59 Atl. 77; Campbell v. Sumner Co. 64 Nan. 376, 67 Pac. 866; Edison v. Babka, 111 Mich. 235, 69 N. W. 499; Winchester v. Danis P. Co. 67 Fed. 45; Worden v. C. & N. W. R. Co. 82 Iowa, 735, 48 N. W. 71; Graig v. Miller, 6 Ky. 440; 4 Cyc. 22, 23.

2. It is urged that the question of assignment is not before the court because it is not put in issue by the pleadings. The •complaint alleged the assignment of the contract sued upon. This was a necessary allegation because the plaintiffs depended on such assignment for their right to recover. The .answer put this allegation in issue by a general denial. Since the plaintiffs relied upon the fact of assignment to prove any •cause of action at all, the general denial put the averment of assignment in issue.

“The general rule under the Code is that any matter of fact alleged in the complaint which the plaintiff must establish to make out his cause of action may be disproved under a general denial.” Hilliard v. Wis. L. Ins. Co. 137 Wis. 208, 117 N. W. 999, 1000, and cases cited.

It was incumbent upon the plaintiffs to prove a valid assignment in order to show that they had a cause of action, unless the assignment was admitted, which it was not. Their proof failed to show that they had a cause of action, because no valid assignment was shown. If it be claimed that the •complaint itself failed to show a valid assignment and therefore did not state a cause of action, such defect is not waived by failure to demur. Sec. 2654, Stats. (1898).

3. No facts were shown which would establish a ratification of the assignment by the defendant- or an estoppel which would preclude him from denying liability. The defendant •did not know that the contract had been assigned until after the plaintiffs claimed that the work had been completed and had secured a certificate from the executive committee to that effect. Neither did the other subscribers generally know of •such assignment, and what evidence there is on the subject lends to show that even the executive committee did not know of the assignment until the certificate to the effect that the contract bad been completed was given. Were tbis otherwise, tbe result would not be different. Tbe authority given by tbe contract to tbe committee was not broad enough to empower it to make a substitution of parties thereto. Its powers do not seem to have been enlarged by tbe subscribers at any of tbe meetings held. It might be an interesting question whether such power could be conferred except by all parties in interest, but there does not appear to have been any attempt to confer it. Indeed, tbe right of tbe executive committee to act at all is, to say tbe least, doubtful. It was chosen by a minority of tbe shareholders at a meeting called under such circumstances tbat many of tbe subscribers were debarred from attending it by reason of tbe short time tbat elapsed between tbe date of tbe meeting and tbe mailing of tbe notice announcing it. Tbe question, however, is not material to a disposition of tbe appeal.

It is unnecessary to consider other errors discussed.

By the Court. — Tbe judgment of tbe circuit court is reversed, and tbe cause is remanded with directions to set aside tbe order directing a verdict in plaintiffs’ favor, and to grant tbe defendant’s motion for a directed verdict in bis favor, and for judgment dismissing tbe complaint.