Filley Enterprises, Inc. v. Youngstown Sheet & Tube Co.

441 S.W.2d 509, 12 Tex. Sup. Ct. J. 413, 1969 Tex. LEXIS 237
CourtTexas Supreme Court
DecidedMay 21, 1969
DocketNo. B-1339
StatusPublished
Cited by1 cases

This text of 441 S.W.2d 509 (Filley Enterprises, Inc. v. Youngstown Sheet & Tube Co.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Filley Enterprises, Inc. v. Youngstown Sheet & Tube Co., 441 S.W.2d 509, 12 Tex. Sup. Ct. J. 413, 1969 Tex. LEXIS 237 (Tex. 1969).

Opinion

CALVERT, Chief Justice.

This suit originated as a garnishment proceeding by Youngstown Sheet & Tube Company, respondent, against Vaughn Petroleum Co., garnishee, and ancillary to a suit for debt by Youngstown against G. B. Burris, doing business as Burris Drilling Co. Vaughn answered, admitting that it possessed funds owing to Burris but asserting that it had been presented with numerous claims. Vaughn interpleaded the various claimants and tendered the funds, $15,310.46, into the registry of the court. After several pretrial dismissal orders, including one as to Vaughn, the case stood in its present posture. Only petitioner, Fil-ley Enterprises, an interpleaded defendant claiming a superior right to the funds by virtue of an assignment of accounts receivable, and Youngstown, claiming under the writ of garnishment, remained in the case. The trial court, without a jury, rendered judgment that Youngstown take the entire amount of the impounded fund and that Filley take nothing. The court of civil appeals affirmed. 435 S.W.2d 602. We reverse the judgments of the courts below and render judgment for Filley.

Burris and Filley executed an instrument labeled “Agreement and Assignment of Accounts Receivable” on March 31, 1965. In this instrument, Burris assigned to Filley, for consideration, “all and each of the accounts receivable set out, described or referred to in the Schedule of Assigned Accounts Receivable * * * attached hereto,” and also “all and each of such other [511]*511accounts receivable as shall hereafter, from time to time, be submitted by Assignor to and accepted by Filley, as shall be set out, described or referred to in one or more schedules and attached to this Agreement and made a part hereof, it being now contemplated that additional transactions of similar and related nature may be consummated between Assignor and Filley in the future.” The record does not reflect whether a schedule of accounts receivable was attached to this instrument at the time of its execution. However, the record does show that a “Schedule 12” was attached on June 25, 1965, and a “Schedule 14” was attached on July 9, 1965. These schedules were assignments of specific accounts receivable executed by Burris and accepted by Filley. Schedule 12 included an account receivable from Vaughn to Burris in the amount of $8,325.00, and Schedule 14 consisted solely of an account receivable from Vaughn to Burris in the amount of $6,-985.46. Youngstown’s writ of garnishment was served on Vaughn on July 7, 1965, two days before the execution of Schedule 14 but several days after the execution of Schedule 12.

Article 260-1,1 Vernon's Texas Civil Statutes, provides in Section 2 that:

“The assignment of any existing or future account or accounts may be protected by the execution and delivery by the assignor to the assignee of an instrument or instruments in writing, assigning such account or accounts and describing the account or accounts assigned with sufficient particularity to identify the same, and by the filing for record the ‘Notice of Assignment’ as hereinafter provided for.”

Filley duly filed a notice of assignment on April 30, 1965 in the office of the County Clerk of Midland County. This instrument is in the record and it complies in all respects with the requirements set out in Section 3 of Article 260-1. Thus, the relevant dates can be summarized as follows:

March 31, 1965 — Burris and Filley executed assignment agreement.
April 30, 1965 — Filley duly filed notice of assignment.
June 25, 1965 — Schedule 12 was executed, assigning a Vaughn account to Filley in the amount of $8,325.00.
July 7, 1965 — Youngstown caused a writ of garnishment to be served on Vaughn.
July 9, 1965 — Schedule 14 was executed, assigning a Vaughn account to Filley in the amount of $6,905.46.

The court of civil appeals resolved the question of priority between Filley’s assignment and Youngstown’s lien in favor of Youngstown by relying solely on Keeran v. Salley, 244 S.W.2d 663 (Tex.Civ.App.— San Antonio, 1951, writ ref’d). As in the case at bar, the assignee there filed a notice of assignment which recited that the assignor had assigned or intended to assign one or more accounts to the assignee, and that such notice would be effective for a three-year period. Nearly a year later, a writ of garnishment was served on one of the assignor’s debtors. Shortly thereafter, the assignor mailed an assignment of this same debtor’s account to the assignee. As between the garnishor and the assignee, the court held that the garnishor had the prior right to the indebtedness. The court held that Article 260-1 only protected a present or future right to “money presently due or to become due under an existing contract.” 2 244 S.W.2d 663, at 666. Since both the ac[512]*512count assigned and the contract creating the account were non-existent at the time of the execution of the agreement to assign, and since the writ of garnishment was served before the letter assigning the account, the court held that the garnishor had a prior right to the impounded fund.

The court of civil appeals in this case, paraphrasing the language in Keeran, held that the filing of the notice of assignment on April 30, 1965 could only protect assignments of accounts presently due or to become due under an existing contract. Because it is stipulated that the contract between Burris and Vaughn did not exist until after that date, the court held that the assignment was unprotected. We disagree. By our notation “refused” on the application for writ of error in Keeran, we approved the principles of law declared in the opinion by the court of civil appeals. Rule 483, Texas Rules of Civil Procedure. However, the Legislature amended Article 260-1 in 1955, in what appears to have been a direct attempt to alter the effect of the statute as required by Keeran. While we adhere to our view that Keeran correctly interpreted Article 260-1 as it read in 1951, we are now faced with an entirely new problem.

The definition of “account or account receivable” in Section 1 was amended to read (with the language added by the amendment emphasized):

“ * * * an existing or future right to the payment of money presently due, or to become due (a) under an existing contract or under a future contract entered into during the effective period of the notice of assignment hereinafter provided for * * *.”

Section 2, set out previously, provides that an assignment of an “existing or future account or accounts” can be protected. The words “existing or future” were added by the amendment. Section 3 provides that a notice of assignment will be effective for the time specified up to three years. We can conceive of no other reasonable interpretation but that the Legislature intended by the amendments to provide for protection of future accounts receivable due under future contracts even if they were not in existence or contemplated at the time of the original agreement to assign.

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441 S.W.2d 509, 12 Tex. Sup. Ct. J. 413, 1969 Tex. LEXIS 237, Counsel Stack Legal Research, https://law.counselstack.com/opinion/filley-enterprises-inc-v-youngstown-sheet-tube-co-tex-1969.