Court Opinion

ID: 6709305
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:34:05.178348+00
Date Added: 2024-06-11T09:06:40.372930
License: Public Domain

Justice WHICHARD
dissenting.
Under the common law governing assignments, a litigant may, while an action is pending, assign any recovery he may obtain. The assignee becomes the equitable owner of the claim and is entitled to an assignment of the judgment when it is entered. Fertilizer Works v. Newbern, 210 N.C. 9, 185 S.E. 471 (1936). A debtor with notice of an assignment has a duty to make payment to the assignee. Lipe v. Bank, 236 N.C. 328, 331, 72 S.E. 2d 759, 761 (1952).
A valid assignment may be made by any contract between the assignor and the assignee which manifests an intention to make the assignee the present owner of the debt. . . . The *540assignment operates as a binding transfer of the title to the debt as between the assignor and the assignee regardless of whether notice of the transfer is given to the debtor. . . . Notice to the debtor is necessary, however, to charge him with the duty of making payments to the assignee. . . . This duty arises whenever the debtor receives notice of the assignment, irrespective of who gives it.
Id. (citations omitted) (emphasis added).
The record here establishes the following undisputed facts:
For a valuable consideration recited in the document, defendant’s client assigned to plaintiff, a health care provider, all sums he might receive as a result of the injuries that caused his hospitalization, up to the full amount necessary to discharge his indebtedness. The assignment “authorize[d] and directe[df any person with notice of it to pay such sums directly to plaintiff. (Emphasis added.) When defendant received proceeds from her client’s claim for personal injuries that were less than the client’s indebtedness to plaintiff, she had notice of the assignment.
Applying the foregoing common law principles governing assignments to these undisputed facts, defendant had a duty to pay the funds in question to plaintiff, and plaintiff is entitled to recover from defendant any loss it has incurred on account of plaintiffs breach of this duty. See Brinkman v. Moskowitz, 38 Misc. 2d 950, 238 N.Y.S. 2d 876 (Sup. Ct. 1962) (attorney with notice of assignment to plaintiff, for medical services rendered, of a portion of proceeds of client’s claim for personal injuries, liable to plaintiff health care provider for loss resulting from payment of sums in disregard of assignment); Bonanza Motors, Inc. v. Webb, 104 Idaho 234, 657 P. 2d 1102 (Ct. App. 1983) (law firm liable to client’s creditor for funds relinquished to client in violation of assignment to creditor).
The Court of Appeals opinion, in effect, subordinates the foregoing common law principles governing assignments to the principle that rights of action for torts causing personal injuries are not assignable. See 6 Am. Jur. 2d Assignments § 37 (1963). The Court of Appeals “believe[d] that the more reasoned view is that such proceeds are not assignable before judgment.” N.C. Baptist Hospitals, Inc. v. Mitchell, 88 N.C. App. 263, 266, 362 S.E. *5412d 841, 843 (1987). I disagree. I believe the more reasoned view distinguishes an assignment of the cause of action itself from an assignment of the proceeds of whatever recovery is obtained in an action, and holds the latter enforceable. See Annot. “Assign-ability of Proceeds of Claim for Personal Injury or Death,” 33 A.L.R. 4th 82 (1984), and cases collected therein. An assignment of settlement proceeds is an assignment of future property, not an assignment of an existing cause of action. The reasons underlying the common law rule against assignment of tort claims —viz, the prevention of champerty and maintenance, or “trafficking in litigation,” and the desirability of allowing the injured party to retain control of the lawsuit and any settlement thereof — thus are not implicated. See In Re Musser, 24 Bankr. 913 (W.D. Va. 1982). Nothing else appearing, I would reverse the Court of Appeals for these reasons.
The majority here affirms the Court of Appeals, not on the basis of the common law principle against assignment of tort claims, but on the basis of N.C.G.S. § 44-50. This statute limits the lien established for health care providers in N.C.G.S. § 44-49 to fifty percent of the damages recovered in the settlement of a claim for personal injuries, exclusive of attorneys’ fees. N.C.G.S. § 44-50 (1984). The majority bases its decision on the speculative assumption that the manifest purpose of this statute is to insure consumers of health care services a sufficient portion of tort claim recoveries that they will retain the incentive to pursue their claims. I again disagree.
“[N.C.G.S. § 44-49, 50] provide rather extraordinary remedies in derogation of the common law, and, therefore, they must be strictly construed.” Ellington v. Bradford, 242 N.C. 159, 162, 86 S.E. 2d 925, 927 (1955). “By the rule of strict construction ... is not meant that the statute shall be stintingly or evenly narrowly construed . . . but it means that everything shall be excluded from its operation which does not clearly come within the scope of the language used. ” Seminary, Inc. v. Wake County, 251 N.C. 775, 782, 112 S.E. 2d 528, 533 (1960) (quoting State v. Whitehurst, 212 N.C. 300, 303, 193 S.E. 657, 659 (1937) (emphasis added). See also Harrison v. Guilford County, 218 N.C. 718, 722, 12 S.E. 2d 269, 272 (1940); Biddix v. Henredon Furniture Industries, 76 N.C. App. 30, 34, 331 S.E. 2d 717, 720 (1985). N.C.G.S. § 44-50 does not, by its express terms, require its application to the exclusion of *542more extensive common law contractual rights of assignment. By holding, in effect, that it does, the majority reads into the statute a prohibition that does not “clearly come within the scope of the language used.” Seminary, Inc., 251 N.C. at 782, 112 S.E. 2d at 533. This is a marked departure from the strict construction of the statute this Court has mandated. Ellington v. Bradford, 242 N.C. at 162, 86 S.E. 2d at 927.
Further, while the majority correctly asserts that “[t]he intent of the legislature controls the interpretation of a statute,” I am convinced that its interpretation of N.C.G.S. § 44-50 is contrary to the actual legislative intent. “In seeking to discover [legislative] intent, the courts should consider the language of the statute, the spirit of the act, and what the act seeks to accomplish.” Stevenson v. City of Durham, 281 N.C. 300, 303, 188 S.E. 2d 281, 283 (1972). The statute in question was a Depression Era enactment, passed in 1935. It was entitled “An Act To Create A Lien Upon Recoveries In Civil Actions For Personal Injuries In Favor Of Sums Due For Medical Attention And/Or Hospitalization.” 1935 N.C. Sess. Laws ch. 121 (emphasis added). The words “in favor of’ strongly suggest that the intent of the General Assembly was to provide a new remedy to aid health care providers engaged in the then difficult task of collecting their accounts, not to remove an existing common law right that offered benefits more extensive than those established by the statute. Health care providers almost certainly sought the legislation to establish a floor — not a ceiling — on their recovery from settlement or litigation proceeds in personal injury claims.
I thus am unpersuaded by the reasoning of either the Court of Appeals or the majority here. Because the statute does not expressly abrogate' the common law principles governing assignments, I would hold that those principles apply. Those principles, applied to the undisputed facts here, entitle plaintiff to a judgment against defendant as a matter of law. N.C.G.S. § 1A-1, Rule 56 (1983). I thus would reverse the Court of Appeals and remand the case to that court for further remand to the District Court, Forsyth County, for entry of judgment for plaintiff.
I am not unsympathetic with the plight of an attorney caught between the conflicting demands of a client and the client’s creditor. When a holder of funds is in doubt as to the validity of con*543flicting claims on those funds, however, the interpleader remedy is available. N.C.G.S. § 1A-1, Rule 22 (1983).
For the reasons expressed, I respectfully dissent.
Justices Meyer and WEBB join in this dissenting opinion.