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BELL FINANCE COMPANY v. JOHNSON; HALL v. BELL FINANCE COMPANY

Supreme Court of Georgia1935-04-11No. Nos. 10608, 10737
180 Ga. 567

Summary

Holding. A partial assignment of wages vests an equitable interest in the assignee, and if the assignor collects those wages without assignee consent and converts them, the assignee may sue at law for conversion or money had and received. The ruling in Wilson v. Etheredge, which had barred such direct suits, will not be followed as precedent for cases involving only rights between assignee and assignor.

When an employee assigns part of wages owed by an employer without the employer's consent, the assignee receives an equitable interest in the entire wage amount. If the employee then collects those wages without the assignee's permission and uses the money for himself, he commits a wrongful conversion. The employee becomes a trustee of the assigned amount for the assignee's benefit upon collection.

The assignee may pursue either a contract remedy (money had and received) or a tort remedy (conversion) against the employee. Importantly, the court overruled prior precedent from Wilson v. Etheredge that had prohibited such direct lawsuits between assignee and assignor. The court clarified that Wilson applied only to cases involving multiple creditors or assignees, not to cases involving solely the rights between the assignee and assignor themselves.

Even if the employee-assignor enters bankruptcy before accounting to the assignee, the assignee's claim is treated as a fiduciary claim unaffected by the assignor's discharge in bankruptcy.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Effect of partial wage assignment on assignee's rights
  • Wrongful conversion by assignor who collects assigned wages
  • Assignee's remedies: contract versus tort claims
  • Fiduciary status of assignor upon collection and treatment in bankruptcy

Procedural posture

The court answered questions propounded regarding the legal rights and remedies available to an assignee of wages.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Atkinson, Justice.

A partial assignment of an amount owed to the assignor, as distinguished from an assignment of the entire debt, vests in the assignee an equitable interest in the entire fund. Fidelity & Deposit Co. v. Exchange Bank, 100 Ga. 619 (28 S. E. 393); Western & Atlantic Railroad Co. v. Union Investment Co., 128 Ga. 74 (57 S. E. 100); King v. Central of Georgia Railway Co., 135 Ga. 225 (69 S. E. 113, Ann. Cas. 1912A, 672).

If after an employee executes a partial assignment of wages owed to him by his emploj^er, to which the employer has not assented, such assignor without consent of the assignee collects the amount so assigned and converts the same to his own use, he commits a wrongful conversion (Covington v. Rosenbusch, 148 Ga. 459, 97 S. E. 78), for which he may be sued at law by the assignee. Code of 1910, § 5406; Code of 1933, § 37-901. See Fidelity & Deposit Co. v. Exchange Bank, supra, holding that such partial assignment will support a statutory claim interposed to a garnishment proceeding in a court of law instituted after the assignment, seeking to subject the fund to a prior judgment obtained by a general creditor.

“Private duties may arise from statute or flow from relations created by contract, express or implied. The violation of any such specific duty, accompanied with damage, shall give a right of action.” Code of 1910, § 4406, Code of 1933, § 105-104. “When a transaction partakes of the nature both of a tort and a contract, the party complainant may waive the one and rely solely upon the other.” § 4407 (1933, § 105-105). The assignee under such circumstances has an option to sue-the assignor for money had and received (Bates-Farley Savings Bank v. Dismukes, 107 Ga. 212, 33 S. E. 175), or to sue him in tort for the conversion of the money assigned.

Where the assignor collects the money from his employer after his equitable assignment as indicated above, such collection will ipso facto make him a trustee of the entire interest in the amount assigned, for the benefit of the assignee.

In the event of bankruptcy of the assignor before he has accounted to the assignee for the money so collected, the claim of the assignee is such a fiduciary claim as will not be affected by the discharge in bankruptcy of the assignor. See Covington v. Rosenbusch, supra.

In Wilson v. Etheredge, 174 Ga. 386 (162 S. E. 707), two of the Justices dissenting, the majority failed to give effect to the distinction between a case instituted by the assignee directly against Ms assignor, involving only rights between those parties, and other cases where the rights of the creditor of the assignor and other assignees were involved, and erroneously held tha/fc the assignee could not sue the assignor at law for the conversion. The ruling there made was application of principles generally applied in the class oE cases last mentioned. Rivers v. Wright, 117 Ga. 81 (43 S. E. 499); Western & Atlantic Railroad Co. v. Union Investment Co., supra; King v. Central of Georgia Railway Co., supra; Lawson v. Lyon, 136 Ga. 214 (71 S. E. 149); Southern Printing Co. v. Potter, 136 Ga. 869 (72 S. E. 427); Shearer v. Shearer, 137 Ga. 51 (72 S. E. 428); Brown v. Southern Ry. Co., 140 Ga. 539 (79 S. E. 152); West v. Brown, 165 Ga. 187 (140 S. E. 500); Graham v. Southern Ry. Co., 173 Ga. 573 (161 S. E. 125, 80 A. L. R. 407, 414). The ruling will not be followed as a precedent to be applied to the facts of the instant case.

The foregoing answers the questions propounded.

All the Justices concur, except Russell, O. J., who dissents.