Huff v. Trent Academy of Basic Ed. Inc.

280 S.E.2d 17 (1981)

John W. HUFF, Individually and as Executor for the Estate of Eslie Holton Huff v. TRENT ACADEMY OF BASIC EDUCATION INC., and James Paden, John C. Tayloe, Cooper Kunkel, James Earl Jones and Walter Jones, d/b/a Trent Associates, a general partnership.

No. 803SC660.

Court of Appeals of North Carolina.

July 7, 1981.

*18 Sanford, Adams, McCullough & Beard by E. D. Gaskins, Jr. and Charles C. Meeker, Raleigh, for plaintiffs-appellants.

Dunn & Dunn by Raymond E. Dunn and Raymond E. Dunn, Jr., New Bern, for defendants-appellees.

WEBB, Judge.

We hold that it was error to grant the defendants' motion for a directed verdict. In the light most favorable to the plaintiffs the evidence shows that James Huff embezzled $59,947.50 from the Bank and deposited the money in the account of the Academy. Although the Academy might have been an innocent party to the transaction, it was unjustly enriched at the expense of the Bank, and it would be inequitable to allow it to retain these funds. See American Surety Co. v. Baker, 172 F.2d 689 (4th Cir. 1949); Allgood v. Trust Co., 242 N.C. 506, 88 S.E.2d 825 (1955); Cheek v. Squires, 200 N.C. 661, 158 S.E. 198 (1931). The claim was assignable. See Amusement Company v. Tarkington, 247 N.C. 444, 101 S.E.2d 398 (1958); Allgood v. Trust Co., supra; Cheek v. Squires, supra; and Railroad v. Railroad, 147 N.C. 368, 61 S.E. 185 (1908). The defendants contend the claim was not assignable because the plaintiffs *19 were volunteers, that the claim was extinguished when John Huff and Eslie Holton Huff paid U.S.F. & G. and that any attempted assignment was void as being against public policy. We do not believe the fact that John Huff and Eslie Holton Huff may have been volunteers affects their rights as assignees. When they paid U.S.F. & G. the evidence showed the claim was not cancelled but assigned to them. The appellees have cited no cases and we can find none that hold the assignment is against public policy. They have cited cases which hold that assignments for the purpose of bringing a law suit with the assignor and assignee to share in the proceeds are champertous and will not be allowed. That is clearly not the situation in the case sub judice. For a discussion of what claims are assignable, see 6 Am.Jur.2d Assignments § 29 (1963) and 6A C.J.S. Assignments § 35 (1975).

The testimony of James Huff was to the effect that he embezzled the money from the Bank because the building program at the Academy was not sufficient for the construction of buildings on the Academy's property. The jury could conclude from this that the embezzled funds were used to construct buildings on the property of Trent Academy. If the jury should so find, the plaintiffs would be entitled to have a constructive trust impressed on the property. See Peoples National Bank v. Waggoner, 185 N.C. 297, 117 S.E. 6 (1923) and Dobbs, Remedies, Ch. 4 (1973). The evidence was that a notice of lis pendens had been filed at the time the individual defendants purchased the property. This put them on notice as to the plaintiffs' claim. G.S. 1-118.

We believe there was evidence in this case from which the jury could find that James Huff embezzled money from the Bank and put the money in the account of the Academy; that the money was used to construct buildings on the Academy's property; that U.S.F. & G. paid the Bank and was subrogated to the Bank's claim; that John Huff and Eslie Holton Huff paid U.S.F. & G. and took an assignment of the claim from them; and that the defendants were on notice as to the plaintiffs' claim. If the jury should so find the facts, the plaintiffs would be entitled to a judgment impressing a constructive trust on the property of the defendants for their claim.

We note that in their answer the individual defendants alleged they took a fee simple title when the property was sold under the deed of trust which had been given to First Citizens Bank and Trust Company. The question of the plaintiffs' claim for a constructive trust being cut off by the sale under the deed of trust which was recorded prior to the filing of the notice of lis pendens was not discussed by the parties in their briefs, and we do not go into that question in this opinion. The record does not disclose what was done with the surplus from the sale, but we assume it was paid into the office of the clerk of superior court pursuant to G.S. 45-21.31, and if the plaintiffs are successful, they may have a constructive trust imposed on this fund. The parties have also not raised any question as to whether the individual defendants allowed the foreclosure in order to cut off the plaintiffs' claim. See Paccar Financial Corp. v. Harnett Transfer, 51 N.C.App. 1, 275 S.E.2d 243 (1981). We do not pass on this question.

Reversed and remanded.

HARRY C. MARTIN and WHICHARD, JJ., concur.