1. It appearing that no valid liens existed against the property of the owner, who had not paid the full contract price, a partial assignment by the contractor to one who furnished labor or materials was enforceable in a court of equity.
2. It was not error to dismiss the claim of a creditor, filed in an action for interpleader, which was not sustained by any evidence.
The John W. Whatley Company (hereafter referred to as the petitioner), as assignee of P. & W. Construction Company (hereafter referred to as the assignor), filed an action against The Alto Corporation (hereafter referred to as the owner), as debtor, and the assignor, and alleged: The owner is a resident of the state and county, upon whom service may be perfected. The assignor is a resident of Fulton County, Georgia. The owner entered into a contract with the assignor on or about July 17, 1953, to furnish materials and labor for the construction of a shopping center in Rome, Georgia. The petitioner, as a subcontractor, furnished and installed certain flooring materials. The assignor completed the furnishing of materials and the doing of work for the owner. The owner owes the petitioner, as assignee, a balance of $1,683.98, and demand has been made upon the owner and the assignor for the payment of this sum. On July 1, 1954, the assignor made a partial assignment of its claim against the owner, which was based on a present consideration, to wit, the satisfaction of the debt owed by the assignor to the petitioner. On July 1, 1954, the assignor gave notice in writing to the owner of the assignment, and again gave notice on July 30, 1954. At the time of the assignment, the owner was indebted to the assignor in excess of the assignment. On July 28, 1954, the owner acknowledged receipt of notice of the assignment and refused to pay it. Equity should take jurisdiction in order to avoid a multiplicity of suits. The prayers were for process and service, that the petitioner recover of the owner a judgment in the amount of its debt, that a decree be entered establishing the assignment as valid, and for other relief.
The owner filed its answer admitting substantially the allegations of the petition, and by way of interpleader alleged: The assignor has outstanding obligations in the construction of the shopping center in the amount of $26,457.71, due some seventeen named creditors. The owner has on hand $4,092.12 that is due the assignor, but it is doubtful that the assignor can comply with its contract in so far as furnishing evidence of the payment of all bills for labor and materials is concerned, and the owner desires to pay the balance due into court, and that the court adjudicate the rights and merits of the claimants to the sum. The owner has been served with a summons of garnishment by one of the creditors of the assignor, and another has filed a lien on its property in a stated sum. Other persons claiming to have furnished materials are threatening the owner with suit. It is not indebted to any of the persons, firms or corporations who may have furnished labor or materials, and it will act at its peril if it pays out any sum in its hands to the petitioner in this case. The owner has no adequate remedy at law, and is not in collusion with any of the parties or persons named as creditors of the assignor. A multiplicity of suits may be avoided by the court taking jurisdiction and requiring all interested parties to interplead and set up their claims. The prayers were that the court by appropriate order require all persons having claims to interplead; that the court restrain all suits and claims against the owner, that it be directed to pay into court the amount due by it to the assignor, and for other relief.
The court issued an order on August 27, 1954, that all parties named as creditors of the assignor, and the assignor, be served with a copy of the answer and interpleader, and that they show cause at the courthouse in Rome, Georgia, on a certain date, why they should not be required to interplead and set up their claims, and why the owner should not be allowed to pay into court the sum set out in its answer, and be dismissed from further liability. The court ordered that service be perfected on the resident parties by the sheriff, that service on residents of the State, not residents of the county, be perfected by second original, and that service upon nonresidents be perfected by the publication of a notice sixty days prior to the hearing set, copies of the published notice to be sent by registered mail to nonresident creditors. In the meantime the creditors of the assignor were restrained and enjoined from making demands upon the owner for the payment of their claims.
On March 8, 1955, the judge issued an order reciting that two of the named creditors filed objections to the discharge of the owner, which objections were demurred to by the owner; the demurrers were sustained, the owner having deposited with the clerk the sum of $4,092.12, as directed. The owner was dismissed from further liability in the premises. There is no exception to the order dismissing the owner.
In the final order the trial judge ruled that a claim of lien by J. R. Ledbetter Roofing Company was invalid, it not having been filed within the time provided by law; and that the assignment of the petitioner was not valid, for the reason that the assignor could not have brought suit against the owner, it not having complied with Article V of its contract, by submitting "evidence satisfactory to the architect that all pay rolls, material bills, and all other indebtedness connected with the work had been paid." It was ordered that the funds in court, after the payment of court costs, be distributed pro rata to the petitioner, Thomson King Company, and J. R. Ledbetter Roofing Company, they being the only claimants whose claims had been prosecuted according to law. Claims of other creditors were dismissed for want of prosecution.
The petitioner excepted to the judgment that its assignment was invalid. Rosslyn Steel & Cement Company, by cross-bill of exceptions, assigned error on the order dismissing its intervention for want of prosecution.
Counsel for the petitioner contend in their brief filed in this court that: (1) the assignment was valid and legal in form and substance; (2) it was supported by a lawful consideration; (3) it was timely made; and (4) the parties attacking the assignment are general open-account creditors of the assignor, and the provisions of the contract under which the attack was made do not confer any rights upon them. Counsel for the other claimants admit the first three contentions above stated, but assert that the assignment conferred no greater right upon the assignee than the assignor had, and contend that on the date of the assignment the assignor had not fully complied with the contract with the owner, in that "evidence satisfactory to the architect that all pay rolls, material bills, and other indebtedness connected with the work have been paid" had not been furnished. The admissions that the assignment was valid and legal in form and substance, was supported by a lawful consideration, and was timely made, reduce the issues between the parties to but one question.
From the allegations of the owner in its interpleader, it appears that the assignor had not paid all obligations for material and labor. It would follow as a matter of course that the assignor could not truthfully make the affidavit provided for in Article V of the contract, that all bills for materials and labor had been paid. There is no contention by the owner that the contract otherwise was not completed pursuant to all of its terms and provisions.
The affidavit required by Article V of the contract is not that provided for in Code 67-2001 (2), relating to materialmen's liens, which provides that the lien authorized shall attach to the real estate of the true owner for the amount of work done or material furnished, unless the owner "shall produce the sworn statement of the contractor or other person, at whose instance the work was done or material was furnished, that the agreed price or reasonable value thereof has been paid."
In construing this provision of the Code, this court in Green v. Farrar Lumber Co., 119 Ga. 30, 31 (46 S. E. 62), stated the rule to be: "The owner is not in any event required to pay more than the contract price of the improvement to materialmen and laborers, but it is incumbent upon him to see that payments to the contractor are, to the full amount of the contract price, appropriated to materialmen and laborers, if there are valid claims to this extent." See also Prince v. Neal-Millard Co., 124 Ga. 884 (2) (53 S. E. 761, 4 Ann. Cas. 615); Tuck v. Moss Mfg. Co., 127 Ga. 729, 731 (56 S. E. 1001); Jones Brick Co. v. Seagler Brothers, 146 Ga. 19 (90 S. E. 473).
The owner paid the money due the assignor into court. The claim of a lien of one of the materialmen against the owner was declared by the trial judge to be invalid, as not having been filed within the time provided by law, and there was no exception to this ruling. This case, therefore, falls within the rule stated in Green v. Farrar Lumber Co., supra, wherein this court said: "When no claims of lien have been filed, the materialmen and laborers may be paid in such order as the contractor determines. If a claim of lien has been filed and recorded, then the owner must see that such materialman or laborer is satisfied out of the money paid by him to the contractor, or he will be held liable for the amount in the event, upon suit brought, it should be determined that the claim was valid." (Italics ours.)
At the time of the assignment, and at the time the owner paid the balance due the assignor into court, there was no valid claim of lien and the time had passed for declaring and recording liens upon the property of the owner. The assignor, therefore, had the right to prefer one creditor to another, and especially is this true since such preference could in no wise injure or endanger any rights of the owner. Gilmore v. Bangs, 55 Ga. 403. The open-account creditors of the assignor could urge no matter of defense as against the assignment that was not available to the owner. Code 85-1803.
2. The trial judge did not err in dismissing the claim of Rosslyn Steel & Cement Company, the plaintiff in error in the cross-bill of exceptions. It appears from its response that its claim was filed pursuant to notice of the proceedings. The claim was not verified, and there was no evidence before the court as to the correctness of its claim.
As stated by Justice Bleckley in Andrews v. Halliday, 63 Ga. 263, 271, "the complainant in a bill of interpleader merely stirs up a war and then leaves the real belligerents to fight it out, he retiring from the scene to repose in dignified ease." In the present case the plaintiff in error having filed its claim, it was in a "position similar to that of plaintiffs in other possessory actions, where the recovery must be on the strength of their own title rather than on the weakness of their adversary's title." Conway v. Caswell, 121 Ga. 254, 259, 260 (48 S. E. 956, 2 Ann. Cas. 269). See also Johnson v. Harbison-Walker Mining Co., 181 Ga. 630, 638 (183 S. E. 791); Smith v. Folsom, 190 Ga. 460 (9 S. E. 2d 824).
In Estill v. Estill, 147 Ga. 358, 362 (94 S. E. 304), it was said that, when the court requires defendants to interplead and litigate their respective rights to a fund in dispute, each defendant then occupies the position of a plaintiff as against the others, and should state his claim plainly, clearly, and distinctly, and as far as he can, take issue with the claims of others.
There being no appearance by the plaintiff in error in the trial court, and no evidence offered by it in support of its intervention, its claim was properly dismissed for want of prosecution.
Judgment reversed on the main bill and affirmed on the cross-bill of exceptions. All the Justices concur.