Edmunds v. CBC Enterprises, Inc.

Present: All the Justices

RICHARD C. EDMUNDS, JR.
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. Record No. 001079 April 20, 2001

CBC ENTERPRISES, INC.

FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
Junius P. Fulton, III, Judge

In this appeal, we consider whether the plaintiff

presented sufficient evidence to establish that he had

received an equitable assignment of certain contract payment

obligations.

Richard C. Edmunds, Jr., filed his motion for judgment

against CBC Enterprises, Inc. (CBC). Edmunds alleged that CBC

had executed two separate subcontracts with Abatement

Controllers/JWG, Inc. (Abatement), and that Abatement assigned

its rights to receive payments due under the subcontracts to

Edmunds. Edmunds alleged that CBC failed to pay him in

accordance with the purported equitable assignment.

At a jury trial, CBC made a motion to strike Edmunds'

evidence. The circuit court took the motion under advisement

and at the conclusion of its case, CBC renewed the motion.

The circuit court held that Edmunds failed to present

sufficient evidence which would permit a jury to find that an

equitable assignment existed, granted the motion to strike,

and entered a judgment in favor of CBC. Edmunds appeals.
 Because this case was decided upon a motion to strike, we

will state the evidence and all reasonable inferences fairly

deducible therefrom in the light most favorable to Edmunds.

Rizzo v. Schiller, 248 Va. 155, 157, 445 S.E.2d 153, 154

(1994). CBC, a general contractor, entered into a contract

with the United States Department of the Navy to perform

certain construction work at the United States Naval Station

in Norfolk. CBC subsequently executed two subcontracts with

Abatement. Robert L. Snow, Abatement's president and owner,

signed the subcontracts on behalf of Abatement. Edmunds, an

individual engaged in numerous business activities, provided

operating capital to Abatement in connection with the

subcontracts that Abatement had with CBC.

Abatement had performed demolition work for CBC on prior

construction projects, and Edmunds had provided operating

capital to assist Abatement on those projects. During each of

those projects, CBC forwarded a letter to Abatement which

stated that payments due Abatement for work performed under

its subcontracts would be made directly to Edmunds at his home

address in Richmond.

In the summer of 1995, Snow apparently informed Edmunds

that Abatement had planned to execute two subcontracts with

CBC to perform demolition services at the United States Naval

Station in Norfolk. Edmunds agreed to provide operating

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capital to Abatement on this project. Edmunds contacted

Richard Jakobowski, a vice president with CBC. Edmunds

informed Jakobowski that Edmunds had an agreement to provide

operating capital to Abatement and requested that CBC forward

to Edmunds a written acknowledgment that it would pay funds

from the subcontract that were owed to Abatement directly to

Edmunds as CBC had done on former projects. Jakobowski

responded that he was "extremely busy" and that "he would get

on it when he could."

In October 1995, Jakobowski informed Edmunds that CBC had

changed its policy, and that CBC would not send checks for

work performed by Abatement to him. Edmunds requested a

meeting with Jakobowski and during the meeting, which was

attended by Edmunds, Jakobowski, and Snow on November 6, 1995,

Jakobowski explained again that CBC had changed its policy,

and it was unwilling to issue checks payable to Edmunds for

work that Abatement had performed on the project. Edmunds

responded by asking Jakobowski to approach CBC's management

and request written acknowledgment of an assignment as had

been provided during previous projects. If CBC was unwilling

to issue a written acknowledgment, Edmunds asked that CBC

issue joint checks payable to Edmunds and Abatement. If CBC

was unwilling to issue joint checks, then Edmunds requested

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that the checks be made payable to Abatement and forwarded to

Edmunds at his Richmond address.

On November 6, 1995, Snow delivered a letter to

Jakobowski which stated in part:

"Please send all future payments for the Camp-Allen
Project, [sic] to Mr. R. C. Edmunds Jr. [sic] 6014
St. Andrews La. Richmond, Va. 23326. Please make
these joint checks to R. C. Edmunds an [sic] JWG
Inc."

On November 7, 1995, CBC and Abatement executed a change

order, described as Change Order No. 2, which stated:

"In accordance with . . . our Agreement, be
advised that your Subcontract for performing the
exterior site work demolition required by the
project plans and specifications . . . is hereby
administratively modified to accommodate your
request relative to where the check is mailed. The
new mailing address will be as follows:
Abatement Controllers
c/o Mr. R. C. Edmonds [sic]
6014 St Andrews Lane
Richmond, VA 23326"

Apparently unbeknownst to Edmunds, on December 8, 1995,

Snow delivered a memorandum to Jakobowski which stated in

part:

"Void Change Order No. 2 dated Nov. 7-95.
Please pay all checks directly to Robert Snow to
pick up by him only. Thank you for your co-
operation [sic]."

Edmunds did not receive any payments directly from CBC

after Change Order No. 2 was executed. On December 12, 1995,

CBC issued a check in the amount of $34,913 payable solely to

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Abatement for work it had performed on the project. Snow died

in 1998, and the trial of this case commenced on February 8,

2000.

Edmunds argues that the circuit court "erred in ruling

that there was insufficient evidence to establish that

Abatement had assigned to Edmunds funds due it for work it

performed under subcontracts with CBC." We disagree with

Edmunds.

Our resolution of this appeal is governed by familiar and

well-established legal principles within the jurisprudence of

this Commonwealth. "It is settled law that as a general rule

the obligation arising under a contract may be assigned to a

third party, the assignment or transfer may be made to appear

by oral statements of the parties, or by their acts and

conduct." Dove Co. v. New River Coal Co., 150 Va. 796, 826-

27, 143 S.E. 317, 327 (1928).

An assignment is a transfer, but every transfer does not

constitute an assignment. Kelly Health Care v. Prudential,

226 Va. 376, 379, 309 S.E.2d 305, 307 (1983). "To constitute

an equitable assignment there must be an assignment or

transfer of the fund or some definite portion of it, so that

the person owing the debt or holding the fund on which the

order is drawn can safely pay the order, and is compellable to

do so, though forbidden by the drawer." Hicks v. Roanoke

5
Brick Co., 94 Va. 741, 745-46, 27 S.E. 596, 598 (1897).

Additionally:

"It is well settled in this jurisdiction that
since equity disregards mere form, no particular
words or acts are necessary to effect an equitable
assignment. The intention of the assignor is the
controlling consideration. The intent to transfer a
present ownership of the subject matter of the
assignment to the assignee must be manifested by
some word, written or oral, or by some act
inconsistent with the assignor's remaining as owner.
This has sometimes been called a 'present
appropriation.' The assignor must not retain any
control over the fund or property assigned, any
authority to collect, or any form of revocation.
See Switzer v. Noffsinger, 82 Va. 518; Chesapeake
Classified Building Association v. Coleman & Others,
94 Va. 433, 26 S.E. 843; Rinehart & Dennis Co. v.
McArthur, 123 Va. 556, 96 S.E. 829; Va. Machinery &
Well Co. v. Hungerford Coal Co., 182 Va. 550, 29
S.E.2d 359 . . . ."

Nusbaum & Co. v. Atlantic Realty, 206 Va. 673, 681, 146 S.E.2d

205, 210 (1966).

In Kelly Health Care, 226 Va. at 379, 309 S.E.2d at 307,

we emphasized that to establish a valid assignment, the

assignor must not retain any control over the fund or property

assigned, any authority to collect the fund or property, or

any form of revocation of the fund or property. Simply

stated, if the assignor retains any control whatsoever over

the fund or property to be assigned, then an assignment has

not been effected.

Applying the aforementioned principles, we hold that the

circuit court did not err in granting CBC's motion to strike

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Edmunds' evidence. Edmunds failed to present sufficient

evidence which would have permitted the jury to find that

Abatement relinquished control of the funds that CBC owed

Abatement for the demolition work Abatement had performed.

The uncontroverted evidence of record indicates that Snow had

directed CBC to issue checks jointly payable to Abatement and

Edmunds. Edmunds failed to present evidence that Snow, acting

on behalf of Abatement, intended to relinquish all control of

the funds, and Abatement's directive that CBC issue joint

checks demonstrates that Abatement intended to retain some

degree of control over the property that was purportedly

assigned. For example, Code § 8.3A-110(d) provides: "If an

instrument is payable to two or more persons not

alternatively, it is payable to all of them and may be

negotiated, discharged, or enforced only by all of them."

We recognize that in Virginia Machinery & Well Co. v.

Hungerford Coal Co., 182 Va. 550, 29 S.E.2d 359 (1944), we

held that a transfer constituted an equitable assignment even

though the assignor had directed the holder of the assigned

fund to issue a joint check payable to both the assignor and

assignee. In Virginia Machinery & Well Co., the assignor

testified without contradiction that he intended to give

absolute control and absolute ownership of the money that

would be owed to him under a contract to the assignee and that

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the assignor requested checks payable jointly because the

holder of the fund, a financial institution, wanted a receipt.

Id. at 554-55, 29 S.E.2d at 362. The assignee also testified,

through its president, that it would have complete control

over the fund. Id. at 555, 29 S.E.2d at 362. We held that

the assignment at issue in Virginia Machinery & Well Co.,

"according to the undisputed evidence, transferred
absolutely and unconditionally all of the interest
of the assignor in the fund and [the assignee]
testified that such was his intention. The method
for making the payment by a joint check was only for
the purpose of providing a receipt to [the holder of
the fund] and giving information to [the assignor]
of the amount received by [the assignee]."

Id. at 557, 29 S.E.2d at 363. *

Unlike the assignee in Virginia Machinery & Well Co.,

Edmunds failed to present sufficient evidence that Abatement

had relinquished control of the fund that CBC would owe to

Abatement after it had performed the work. Indeed, Snow's

memorandum which "voided" the change order directing CBC to

forward checks to Edmunds' Richmond address suggests that

Abatement had not intended to relinquish control of the

payments owed to it by CBC.

*
Former Code § 5603, which was in effect at the time this
Court decided Virginia Machinery & Well Co. stated: "Where an
instrument is payable to the order of two or more payees or
indorsees who are not partners all must indorse unless the one
indorsing has authority to indorse for the others." We did
not discuss what effect, if any, this former statute had upon

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 Edmunds, relying upon Alexander Building v. Richmond

Plumbing, 213 Va. 470, 193 S.E.2d 696 (1973), argues that this

Court has held that an equitable assignment existed when an

assignor requested a debtor to issue checks jointly payable to

the assignor and the assignee. In Alexander Building, a

general contractor was retained to construct an apartment

project. W. G. Satterwhite was a subcontractor employed by

the general contractor, Alexander Building. Satterwhite

purchased supplies from Richmond Plumbing. Richmond Plumbing,

concerned about Satterwhite's credit, advised him that it

would not supply materials unless he could give assurance of

payment.

Satterwhite requested in a letter to Alexander Building

that it issue checks for all further payments due Satterwhite

jointly to Richmond Plumbing and Satterwhite. Alexander

Building's authorized agent signed the letter "accepted," and

the letter was returned to Richmond Plumbing's agents.

Alexander Building issued a check payable to Richmond Plumbing

and Satterwhite as joint payees and after Satterwhite endorsed

the check, Richmond Plumbing deposited the check in its

account. Subsequently, upon Satterwhite's representation that

he had "settled" with Richmond Plumbing, Alexander Building

the equitable assignment at issue in Virginia Machinery & Well
Co.

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delivered to Satterwhite a check made payable solely to

Satterwhite for the balance due on his subcontract with

Alexander Building. Richmond Plumbing later discovered that

Alexander Building had made the final payment to Satterwhite

even though Satterwhite was still indebted to Richmond

Plumbing in the amount of $2,494.82, the balance owed for

certain materials that Richmond Plumbing had supplied to

Satterwhite for the project. We held that the circuit court

did not err by ruling that an equitable assignment existed.

Id. at 471-72, 193 S.E.2d at 697-98.

Alexander Building, however, is not controlling here. We

did not discuss in Alexander Building whether Satterwhite, the

assignor, had relinquished his control over the property

assigned. That issue was simply not discussed in the opinion.

Additionally, Alexander Building's authorized agent agreed in

writing that Alexander Building would make further payments

that it owed to Satterwhite jointly to Richmond Plumbing and

Satterwhite. By contrast, in this appeal, Edmunds admitted

that CBC did not agree to issue joint checks for amounts due

Abatement for work performed under the subcontracts.

Additionally, the change order executed by CBC and Abatement

on November 7, 1995, did not include a provision for the

issuance of joint checks.

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 Accordingly, we will affirm the judgment of the circuit

court.

Affirmed.

JUSTICE LACY, with whom JUSTICE KINSER and JUSTICE LEMONS
join, dissenting.

The majority concludes that plaintiff's evidence of an

equitable assignment was properly struck by the trial court

because Edmunds "failed to present evidence that Snow, acting

on behalf of Abatement, intended to relinquish all control of

the funds." To reach this result, the majority attempts to

distinguish controlling case law and claims to apply well-

established standards of appellate review, but fails on both

counts.

To strike Edmunds' evidence, the trial court in this case

had to conclude that the evidence was insufficient to support

a jury verdict in his favor. The trial court was required to

accept as true all the evidence favorable to Edmunds as well

as any reasonable inference a jury might draw therefrom which

would sustain his cause of action. The trial court was not to

judge the weight and credibility of the evidence or to reject

any inference from the evidence favorable to Edmunds unless it

would defy logic and common sense. Austin v. Shoney's , Inc.,

254 Va. 134, 138, 486 S.E.2d 285, 287 (1997). On appellate

11
review, we apply these same principles. Waters v. Safeway

Stores, Inc., 246 Va. 269, 270, 435 S.E.2d 380, 380 (1993).

While the majority recites much of the evidence produced

at trial, it ignores additional evidence that had been

introduced. Beginning in 1989, Edmunds and Snow developed a

business relationship whereby Edmunds would provide Snow with

working capital for projects performed by Abatement. In 1993

or 1994 when Abatement first performed work for CBC, Edmunds

and Snow had an agreement that Edmunds "would provide the

operating capital and when the funds came in from [Snow's]

customer they would come to [Edmunds]." Six or seven projects

were undertaken this way. In each of these projects, Edmunds

received a copy of a letter sent from CBC to Snow referencing

an agreement between Snow, CBC, and Edmunds that payments for

the work done by Snow would be made directly to Edmunds.

Prior to the execution of the CBC contract at issue here,

Edmunds and Snow discussed what their business relationship

would be if Abatement got the contract. Edmunds again agreed

to provide Abatement operating capital for the project, and,

in return, Edmunds was to get the "assignment of monies" to

him. Edmunds testified that in August, "Mr. Snow had assigned

the proceeds to me like we had previously been doing on all

other contracts." The contract was executed between Abatement

and Snow on August 18, 1995. Edmunds informed CBC of his

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agreement with Snow and asked CBC for a letter like the

previous ones confirming the assignment. CBC, however, did

not send a letter confirming the assignment for this project

because there was a change in company policy.

At a meeting between CBC, Edmunds, and Snow, Edmunds

suggested three solutions in the order of his preference: (1)

that the former procedure be followed, (2) that the checks be

made jointly payable to Edmunds and Abatement, or (3) that

Abatement's checks be mailed to Edmunds in Richmond. With

regard to the last option, Edmunds explained that because

Abatement was a Tidewater company, by sending the checks

directly to Richmond "there's no chance of it being mishandled

by anybody." Edmunds could then deposit the checks into an

already-existing bank account in Richmond set up by Snow in

the name of Abatement Controllers/JWG, Inc. Edmunds "was the

only authorized signature to write checks on this account for

Abatement . . . ." Likewise, statements for the account were

sent only to Edmunds' address.

Following this meeting, Snow sent a letter to CBC asking

that the checks be made jointly payable to Edmunds and

Abatement and that the checks be sent to Edmunds at his

address in Richmond. Change Order No. 2 was entered,

directing that Abatement's checks be sent to Edumunds.

However, Edmunds never received any checks from CBC because

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CBC complied with Snow's subsequent request to void Change

Order No. 2 and to pay Snow directly.

The majority acknowledges that the following principles

apply to the creation of equitable assignments, but fails to

apply them properly to the evidence presented. Equitable

assignments need not be written; they may be shown by the

parties' oral statements, acts, or conduct. Va. Mach. & Well

Co. v. Hungerford Coal Co., 182 Va. 550, 556, 29 S.E.2d 359,

362 (1944). Although it is true that the assignor must not

retain control over the funds assigned, the intent of the

assignor is the controlling consideration in determining

whether control has been relinquished. S.L. Nusbaum & Co. v.

Atl. Va. Realty Corp., 206 Va. 673, 681, 146 S.E.2d 205, 210

(1966).

The majority points to four pieces of evidence in support

of its conclusion that the evidence was insufficient to

support a jury verdict finding the existence of an equitable

assignment: Snow's instruction to CBC to issue jointly

payable checks; Edmunds' admission that "CBC did not agree to

issue joint checks for amounts due Abatement"; the failure of

Change Order No. 2 to provide for the issuance of joint

checks; and Snow's directive to CBC to void Change Order No. 2

and pay Snow directly. Under our existing case law, none of

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these facts defeats the creation of an equitable assignment as

a matter of law.

According to the majority, ordering the issuance of joint

checks showed that Snow intended to retain "some degree of

control over the property that was purportedly assigned,"

(Maj. op. Pg. 7.) thereby defeating the creation of an

equitable assignment. However, in both Virginia Machinery &

Well Co., and Alexander Building Construction, Inc. v.

Richmond Plumbing & Heating Supplies, Inc., 213 Va. 470, 193

S.E.2d 696 (1973), we held that an equitable assignment had

been created, even though the payments by the debtor were made

jointly to the assignor and assignee. "The form in which the

checks were requested to be drawn neither legally nor

equitably affected the ownership or control of the funds

represented." Va. Mach. & Well Co., 182 Va. at 557-58, 29

S.E.2d at 363.

Though other evidence may prove or disprove the creation

of an equitable assignment, jointly payable checks are, at

most, equivocal evidence of an absence of intent to relinquish

control over the funds and create an equitable assignment.

For instance, in Virginia Machinery & Well Co., we noted that

paying by joint check may be done for the purpose of providing

a receipt to the assignor's debtor and giving information to

the assignor of the amount received by the assignee. 182 Va.

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at 557, 29 S.E.2d at 363. In the context of this case, where

checks had been made payable solely to the assignee, but the

drawer now wished to make them payable only to the assignor,

Snow's request for joint checks can be seen as an intent to

ensure payment to the assignee in a manner acceptable to the

drawer. When more than one inference can be drawn from the

facts, the inference favoring the position of the plaintiff

must be adopted when considering whether a motion to strike

should be granted. The majority ignores this principle when

it opines that Abatement's directive to issue jointly payable

checks demonstrated an intent to maintain control over the

funds.

Next, the majority points to Edmunds' admission that CBC

did not agree to issue joint checks for the funds due

Abatement on the project. However, written confirmation of an

assignment by the assignee's debtor does not create the

equitable assignment; it "merely evidence[s] notice of the

assignment." Va. Mach. & Well Co., 182 Va. at 557, 29 S.E.2d

at 363. Thus the "admission" relied upon by the majority,

while evidence in the case that CBC did not wish to issue

joint checks, does not defeat the creation of the equitable

assignment between Edmunds and Snow.

The final two pieces of evidence supporting the

majority's conclusion are equally deficient. The majority

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cites not including joint payment of checks in Change Order

No. 2 as showing a lack of intent to relinquish control over

the funds and to create an equitable assignment. First, that

decision appears to have been made by CBC and does not provide

evidence of Snow's intent. Second, this position is in direct

conflict with the majority's earlier assumption that seeking

joint payment shows a lack of such intent. Thus, the value of

this evidence in supporting a conclusion that Snow did not

intend to relinquish control over the funds and create an

equitable assignment is suspect.

Finally, Snow's duplicity in subsequently voiding his

previous request to CBC regarding the joint payment and

delivery of the checks should not be rewarded by considering

it as proof positive that Snow never agreed to the equitable

assignment. Of course, the posture of this case requires that

any inferences from this evidence flow in favor of Edmunds.

The inference here is that Snow wanted to avoid honoring his

agreement with Edmunds.

In both Virginia Machinery & Well Co. and Alexander

Building, the evidence was found to be sufficient to support a

conclusion that an equitable assignment was created. In this

case, we need not decide whether an equitable assignment was

created. We must determine only whether the evidence was

sufficient to support such a finding. Whether evidence exists

17
to support a contrary finding is immaterial at this juncture.

The pattern of prior assignment agreements between Edmunds and

Snow, the oral agreement testified to by Edmunds regarding the

assignment of the funds on the project at issue, the presence

of Snow at a meeting with Edmunds and CBC regarding Edmunds'

request to CBC for direct payment, joint payment, or direct

delivery of the checks to Edmunds, Snow's acquiescence in

those requests reflected in Snow's subsequent letters and

meetings with CBC, and the bank account established by Snow

for Abatement's checks with Edmunds as the only authorized

signatory all constitute sufficient evidence of Snow's intent

to assign the proceeds of Abatement's contract with CBC to

Edmunds. Therefore, this issue should not be decided by this

Court or by the trial court, but rather should be submitted to

the jury for determination. Accordingly, I would reverse the

judgment of the trial court and remand the case for further

proceedings.

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