Court Opinion

ID: 6779965
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:54:58.103645+00
Date Added: 2024-06-11T16:02:51.110443
License: Public Domain

Lundberg Stratton, J.,
concurring. I completely agree with the majority and write only to address some issues raised by Roslovic.
The law is clear. Roslovic, as an account debtor, should have made the payments to First Bank of Marietta once it received proper notice of the assignment. However, Roslovic argues that since the payments actually went to pay labor, it should be absolved of all liability. Further, Roslovic argues that it was merely protecting its own interests. Roslovic claims that the bank was being unreasonable and, if laborers and materialmen had not been paid, the job would have folded. But, although we are sympathetic to these arguments, none of them constitutes a legal defense to a failure to honor the assignment.
First of all, the lender might never have been willing to make this risky loan without the security and control of an assignment as provided by R.C. 1309.37(C). Therefore, Roslovic needed Mascrete to secure financing in the first place to complete the job. Otherwise, the job would simply have folded earlier.
Second, the contract, as well as R.C. 1311.15, made specific provisions for payment directly to labor and materialmen. Roslovic initially followed this procedure but then abandoned the effort. Had Roslovic continued to follow the procedure, Roslovic would have been protected. But Roslovic gambled and, for its own convenience, decided simply to pay Mascrete directly.
Third, strict construction of this statute preserves the goals of commercial stability and reliability. Lenders are willing to enter riskier deals if a good assignment is in place that creates solid incentives for an account debtor to comply with its terms. To judicially carve out an exception that permits an account debtor to ignore the assignment if it believes or trusts that the assignor will use the money as promised throws assignments into a gray area where litigation will be required to prove how the money was eventually used. This case is a good example. A full trial was necessary to establish where the payments went. Most of Mascrete’s records, however, had been destroyed. So, the only proof was Mascrete’s word. Lenders will not lend in such an uncertain climate that depends on litigation for resolution. Such an exception for actual payment to laborers, even if it is desirable, should be created by the legislature, not the courts.
The incentive for the account debtor to honor the assignment is the penalty that the account debtor will be assessed for payments made directly to an assignor. Equity and quantum meruit are not defenses to payments made in violation of the notice, nor is the difficulty of compliance or the demands of the *121assignee a defense. While this may appear to place a heavy burden on Roslovic to pay twice (as Mascrete is presumably insolvent), it was Roslovic that decided to take the risk of direct payment to avoid a difficult situation despite the language of R.C. 1309.37(C) and proper notice. The statute allows no exceptions. Therefore, Roslovie’s justifications do not rise to the level of a legal defense. Sympathetic as its position may be, the law requires Roslovic’s accountability. Therefore, I concur and join the majority’s decision.