Court Opinion

ID: 4718461
Source: CourtListenerOpinion
Date Created: 2021-08-12 02:34:26.308556+00
Date Added: 2024-06-11T08:07:32.971920
License: Public Domain

*377On Behearing.
[En Banc. June 22, 1918.]
Tolman, J.
This case was heretofore before this court, and a departmental decision was rendered, to which reference is made for a fuller statement of the facts. After the filing of that opinion, a petition for rehearing En Banc was filed, which was granted, and the case was reargued before the court En Banc.
A sufficient statement of the facts for present purposes is: That the appellant became the owner and holder of seven checks which it purchased from seven different payees. These checks were drawn by C. W. Coit & Company, and by them delivered to workmen employed upon a public contract which they were engaged in fulfilling. The Maryland Casualty Company* the respondent, furnished the surety bond upon such contract. The checks were the ordinary bank checks, drawn by the contractor in favor of the various laborers, on the Guardian Savings Bank of Seattle. There was nothing on the face of the checks to show what they were issued for, or differentiate them in any way from ordinary bank checks. These checks were indorsed by the various payees and delivered to the appellant, who paid value therefor in cash or merchandise. Appellant alleges knowledge on its part at the time of the purchasing of the checks that the same were issued to the various laborers for work done by them for Coit & Company under their contract. It is stipulated, however, that no assignment has ever been made of the laborers’ claims other than the ordinary indorsement and delivery of the checks.
The respondent, Maryland Casualty Company, demurred to appellant’s complaint setting up these facts, upon the ground that the complaint did not state facts sufficient to constitute a cause of action. The trial court sustained the demurrer, appellant elected to *378stand upon its complaint, and judgment was entered, from which this appeal is taken.
We have repeatedly held that a labor claim assert-able against the bond of the contractor engaged in a public work is assignable, and that the assignment of such a claim carries with it all of the laborer’s right of action against the contractor, and operates as an equitable assignment of the laborer’s right to assert his claim against the bond (Northwestern Nat. Bank v. Guardian Casualty & Guaranty Co., 93 Wash. 635, 161 Pac. 473; Gilmore v. Westerman, 13 Wash. 390, 43 Pac. 345); which leaves the only question to be decided here the effect of the issuance of ordinary bank checks by a contractor to a laborer, and whether the indorsement of such checks carries with it an assignment of the laborer’s claim against the contractor and the right of lien, or to protection under the bond.
In Northwestern Nat. Bank v. Guardian Casualty & Guaranty Co., supra, it was held that the time checks there under consideration were certificates evidencing that each of the laborers had worked a certain time upon the public work at a certain rate, and were entitled to a certain amount of money in payment from the contractor. And each time check bore the indorsement: “For value received I hereby assign to the Northwestern National Bank all my right, title and interest to the within time check. ’ ’ The court, having these facts in mind, said:
“It is only by virtue of his right to receive his pay from the contractor that the laborer or materialman has any right assertable against the bond as a contract made for his benefit. His right against the bond is ancillary to and dependent upon his right against the contractors. The first right is dependent upon the second. An assignment of the second, therefore, operates as an equitable assignment of the first.”
*379A doctrine which we in nowise modify, but which is clearly distinguishable, we think, from the case under consideration. In Small v. Smith, 120 Minn. 118, 139 N. W. 133, it is held that time checks are not negotiable under the law merchant, but are the “evidence and symbol” of the claim for labor of the person therein named.
It needs no argument to show that a time check bearing on its face such facts as are referred to in the Northwestern National Bank case, supra, is indeed the “evidence and symbol” of the claim of the laborer, and that the assignment thereof is properly held to be an assignment of the laborer’s claim, carrying with it all of the equitable rights. It seems to us equally clear that a time check bearing the evidences before referred to is in nowise a negotiable instrument, does not confer upon the payee or the indorsees any of the rights which would flow from a negotiable instrument, and that the purchaser of such a time check must know that he is taking by assignment the laborer’s claim and nothing more, with no right whatever of recourse upon the laborer in any event.
A bill of exchange or negotiable instrument is defined by our negotiable instruments law substantially as follows :
“A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand ... a sum certain in money to order or to bearer.” Eem. Code, § 3516.
Such an instrument is negotiated by indorsement and delivery, is indorsed by writing the signature of the payee thereon, and, as provided in the negotiable instruments act, Eem. Code, § 3457, every indorser who indorses without qualification warrants to all subsequent holders in due course: (1) That the instrument *380is genuine; (2) that he has good title to it; (3) that all prior parties had capacity to contract; (4) that the instrument is valid and subsisting; and in addition, he engages that it will be paid on presentation, and if it be dishonored and the necessary proceedings be duly taken, he will pay the amount thereof to the holder or any subsequent indorser.
The fundamental error in our former opinion was the holding that the indorsement and delivery of the check was the assignment of the debt, instead of its being simply and only what the negotiable instruments law provides it shall be. The ordinary bank check is not, either in law or in equity, an assignment of the fund upon which it is drawn (Eem. Code, § 3579), but is purely and simply an order for the payment of money, which in nowise affects the debt for which it is given until the order is paid; and being dishonored, leaves the drawer still indebted to the payee, the same in all respects as though the check had never been drawn and delivered. Moreover, such a check is revocable by the drawer at any time before it is paid. Peoples’ Sav. Bank & Trust Co. v. Lacey, 146 Ala. 688, 40 South. 346; Pease & Dwyer v. State Nat. Bank, 114 Tenn. 693, 88 S. W. 172; Kaesemeyer v. Smith, 22 Idaho 1,123 Pac. 943, Ann. Cas. 1914C 665, 43 L. R. A. (N. S.) 100.
The equitable doctrine that the assignment of the debt will carry with it the security, which, of course, cannot be applied here because there was no assignment of the debt, has grown up for the purpose of protecting the assignee of the debt, who otherwise would have no means of protecting himself from certain loss. It is in nowise applicable in this case, first, because the debt'was not assigned, and second, because the appellant purchased and accepted negotiable instruments, and its rights were fully fixed by the negotiable instru*381ments law. It had full aud clear legal right, upon the dishonor of the checks, to return them to the payees, who indorsed them and delivered them to it, and receive back its money. Or, if it be urged that the payees and indorsers were execution proof and could not respond in money, there seems to be no reason why they could not, and would not, upon request, have assigned to the appellant their claims against the contractor, which had been in nowise impaired by the giving of the checks, and which were then still enforceable under the bond. And, in such an event, there could have been no question of double liability on the bond, and no doubt the claims would have been paid without litigation.
We have examined with great care all of the cases to which the industry of counsel has directed our attention, and have made independent search of the authorities, but have found no case wherein any court has held that the indorsement of an ordinary bank check by the payee carries with it to the indorsee title to the claim which the check would have paid had it been honored, or any rights, legal or equitable, under such claim.
It follows from what has been here said that the judgment of the trial court was right, and it is accordingly affirmed.
Main, C. J., Mitchell, Holcomb, and Chadwick, JJ., concur.