Case Title: Edmunds v. CBC Enterprises Inc.

Citation: 

Docket Number: 001079

State: virginia

Court: Virginia Supreme Court

Date: 2001-04-20T00:00:00Z

Document:
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 
 
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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 
 
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.
 
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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 
 
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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. 
 
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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