South Main State Bank v. State

ARCHER, Chief Justice.

This appeal is from a judgment of the Trial Court in a garnishment proceeding, unfavorable to appellant.

The State filed suit on May 1, 1961 against Refinery Construction Company for delinquent unemployment taxes, and obtained a judgment on June 14, 1961.

On the same day the suit was filed the State instituted this garnishment suit against Rohm & Haas Company, which filed its answer admitting an indebtedness to Refinery Construction Company in an amount of $26,146.89, and impleaded the United Stat.es, South Main State Bank, W. D. Gunnels Company, and other named creditors no longer parties to the suit.

The Bank intervened, alleging that it had an assignment of accounts receivable *947from' Rohm- & Haas Company involving the same money garnished, and claimed the entire amount. The United States intervened by virtue of tax liens placed of record May 22, 1961. The Gunnels Company intervened on the basis of a judgment obtained against Refinery Construction Company. 1 !

The suit was tried before the Court without a jury and judgment was rendered' in favor of the United States for its full claim of $10,782.29, in favor of the State for its claim of $6,251.95, in favor of the Bank, for $6,057.47 and in favor of Gunnels for $1,-763.66 and an attorney’s fee of $850.00 to Rohm & Haas.

Findings of facts and conclusions', of, law were requested and made by the Trial Court. Briefly the fact findings at issue in this case are that the funds impounded is a sum of money accruing to Refinery Construction Company from Rohm & Haas Company, for labor performed or material furnished, on a private construction contract.

That the assignment executed by Refinery Construction Company in favor of South Main State Bank, as indicated, was an attempted assignment of “account”', or “account receivable” under Article 260 — 1, and does not describe the land upon which thé improvements were to be constructed.

The appeal is by the Bank alone, and is founded on seven points assigned as error, and are that the Court erred in failing to find that the appellant is entitled to a priority over the claims of appellees, in refusing to find as a fact that the accounts receivable assigned to the Bank by the Refinery Construction Company were accounts then due and owing from Rohm & Haas to Refinery Construction Company under the terms of a contract performed in Harris County, in holding as a matter of law that the Bank had no lien on the accounts, in finding as a matter of law that, even as between Refinery Construction Company and the Bank, the assignments were invalid, in holding as a matter of law that the Bank'was only a general creditor of Refinery Construction Company, in holding that the United States has a first and prior lien on the accounts by virtue of its tax lien, and in holding that the State as a matter of law by virtue of its Writ of Garnishment has a lien on the funds, secondary only to that of the United States.

Appellant contends that it is entitled to the entire fund now in the registry of the Court, originally in the hands of Rohm & Haas and was owed to Refinery Construction Company for work done in the latter’ part of 1960 and early part of 1961, and was due and owing as of March 25, 1961, and the right to all of such money was assigned to the Bank by Refinery Construction Company to secure its indebtedness to the Bank, by successive assignments executed on January 7, January 19, and Márch 25, 1961, and the specific invoices assigned were listed.

By the assignment of January 7, 1961 there was due the Refinery Construction Company under invoices to Rohm & Haas dated January 5 and 6, 1961, a total of $27,-002.63 and were assigned to the Bank as security for indebtedness of Refinery Construction Company to the Bank including $30,102.50 advanced on January 7, 1961. Subsequent assignments were made to the Bank, and additional advances were made, arid all were properly filed in the County Clerk’s office in Harris County.

On March 25, 1961, a note for $31,612.49 was executed by the Refinery Construction Company to the Bank. Some payments were made on this note before the State filed the suit and had secured the issuance of the Writ of Garnishment.

The appellees take the position that the judgment is correct and supported by the law and the facts in this case, and say that the controlling question is whether or not under Section 1 of Article 260 — 1, V.A.C.S., the appellant Bank has an assignment of the garnisheed funds.

*948Appellee, United States, says that the Federal Tax Lien arose from unpaid assessments made by the District Director of Internal Revenue, against the Refinery Construction Company for withholding taxes assessed for the 4th quarter in 1960 in the amount of $567.72, and for the 1st quarter in 1961 in the amount of $12,377.91, which amount was subsequently reduced by set off to the balance of $10,782.29, and that the liens were perfected and are entitled to priority over other adverse claims against the property of the delinquent tax payer as of the date they arose, and cite: United States v. City of New Britain, Conn., 347 U.S. 81, 74 S.Ct. 367, 98 L.Ed. 520. Glass City Bank of Jeanette, Pa. v. United States, 326 U.S. 265, 66 S.Ct. 108, 90 L.Ed. 56. Michigan v. United States, 317 U.S. 338, 63 S.Ct. 302, 87 L.Ed. 312. United States of America v. George F. Miller, et al., Tex.Civ.App., Austin, 331 S.W.2d 436, certiorari denied, 364 U.S. 880, 81 S.Ct. 168, 5 L.Ed.2d 102.

We will consider what is called the controlling question in this appeal, which is: Were the assignments of accounts receivable invalid because they failed to describe the land upon which improvements had been erected, and did not conform to the express wording of Article 260 — 1, requiring the description of the land to be in the assignment.

Article 260 — 1, V.A.C.S., Section 1, defines “account” or “account receivable” as meaning an existing or future right to the payment of money presently due, or to become due, and is followed by phrases (a), (b), (c) and (d) down to the word assign- or; and continues “account” or “account receivable” shall not include any sum of money accruing to a contractor for labor performed, or material furnished on any public or private construction contract unless the assignment properly describes the land upon which the improvements are to be constructed and such assignment filed in the office of the County Clerk of the County wherein the land lies, which assignment shall not be effective prior to such filing.

There can be no question but that the money sought to be assigned was money accruing to a contractor for labor performed or material furnished on a private construction contract.

Holland Howell, President of Refinery Construction Company, testified in part as follows:

"Q Mr. Howell, in what type of business was Refinery Construction Company engaged?
“A Industrial construction business.
“Q Can you tell us more about it, what that business was?
“A Construction work in the refineries, chemical and petrochemical plants in the Houston area.
“Q Well, what would your accounts receivable consist of?
“A Moneys due for payment of work performed at these industries.
“Q In other words, all your accounts receivable would be for labor or material ?
“A Yes.
“Q * * * How did this indebtedness of Rohm & Haas Company to Refinery Construction Company arise?
“A From services performed.
“Q What were the services?
“A Construction work in their plant at Deer Park.
“Q At Deer Park?
“A Yes.
“Q What type of construction work was that, was there performed?
“A Oh, setting equipment, installing pipe, digging and setting foundations. Work of that nature.
*949“Q And this construction was performed on property of Rohm & Haas ?
“A Yes.
“Q On land — •
“A * * * owned by Rohm & Haas Company, yes.
■“Q Was this construction a fixed installation ?
■“A Yes. Yes, it was a permanent installation.
■“Q Mr. Howell, I understand from your previous testimony here that all of the money evidenced by the assigned accounts offered in evidence by South Main State Bank was for labor performed or material furnished by Refinery Construction Company under its construction contract with Rohm & Haas?
•"A Yes.”
The assignments read in part:
“ASSIGNMENT AND NOTICE OF ASSIGNMENTS OF ACCOUNTS
(Pursuant to Article 260-1, Revised Statutes of Texas)
“* * * Assignor warrants that ■each of the said accounts receivable is an ‘account receivable’ within the mean- . ing of that term as set forth in Article 260-1, Revised Statutes of Texas.”

There were other warranties by the as-signor which we do not copy herein, the last line of which reads:

“Notice of this assignment is hereby given pursuant to Article 260-1, Revised Statutes of Texas.”

There was no description of the land involved in the construction contract in the assignments. The money sought to be assigned was not brought within the definition of an “account” or “account receivable” as defined in the 1957 amendment, and only by describing the land can such money be included as an “account” or “account receivable”, and be assignable under the Statute.

Seligmann v. Hill & Combs, a Partnership, et al., Tex.Civ.App., 338 S.W.2d 178, er. ref., n. r. e.

We do not believe that appellant’s assignment was protected under the statute and was ineffective to defeat the attachment of the fund in question by garnishment and subsequent interpleader through the actions of the parties, and appellant was merely a general creditor entitled to a pro rata share of funds disbursed to the impleaded general creditors.

We believe that the Trial Court’s judgment was correct, and in addition to the cases hereinabove mentioned we cite the case of Parker Square State Bank et al. v. Triangle Supply Company et al., Tex.Civ.App., 364 S.W.2d 418 and the authorities therein cited, in which case the Court reviewed the authorities and the development of the law of assignments and set out the amendments, and there is no need to restate such herein, and we believe such holding to be correct.

The judgment of the Trial Court is affirmed.

Affirmed.