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
3
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
4
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
6
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
8
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.
9
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
13
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
14
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.
15
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
16
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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