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Saint Francis Hospital v. Vaughn11/20/1998
Appellant, W. Allen Vaughn, appeals the judgment of the trial court which was entered after the court sustained a motion for summary judgment in favor of Appellee, Saint Francis Hospital, foreclosing its hospital lien against Vaughn. Vaughn was the attorney for Charlotte Brown, who was injured on December 29, 1994, by a third party tortfeasor. Hospital treated Brown and provided medical goods and services for her in the amount of $6,064.80. A settlement was reached between Brown and the tortfeasor's insurer. The insurance company issued a check, payable to Brown and Vaughn. Vaughn deposited the check in his firm's trust account and then distributed the proceeds to Brown. Hospital contends it filed its hospital lien prior to the receipt of the insurance proceeds. Vaughn contends the lien was not timely filed and was not filed in accordance with statutory requirements. The check was mailed on March 26, 1997, and received by Vaughn "on or about April 1, 1997". Hospital filed its lien on March 29, 1997.
Hospital asserts its lien against the insurance proceeds pursuant to 42 O.S. 1991 §43. The requirements for filing and enforcement of hospital liens are found at 42 O.S. Supp. 1994 §44.
In his objection to Hospital's motion for summary judgment, Vaughn stated that while the actions constituting the uncontroverted facts are largely in agreement, the legal inferences to be drawn from them are strongly controverted. He alleged the following in his "Uncontroverted Material Facts":
5. Both Plaintiff and Defendant agree that, after Charlotte Brown's attorney, W. Allen Vaughn, received Plaintiff's purported Hospital Lien Statement, he received funds previously disbursed by Prudential Insurance Company, and agree that he thereafter discharged his duties as trustee to his client, Charlotte Brown, by distributing her portion of the insurance settlement funds to her after honoring all validly created hospital liens and settlement agreements.
Vaughn also argued that under the "mailbox rule", (i.e., acceptance is made when mailed), the payment had already been made when the lien was filed. The trial court ordered the parties to supplement their briefs with authority on the issue of "payment" by check. The trial court subsequently entered judgment in Hospital's favor pursuant to District Court Rule 13(e), finding there was no substantial controversy as to any material fact and that Hospital was entitled to judgment as a matter of law. This appeal followed.
The trial court ordered the parties to consider the case of Liberty Nat. Bank of Weatherford v. Simpson, 102 P.2d 844 (Okl. 1940), in their supplemental briefs. Simpson deals with whether payment on a promissory note by a check, which was dishonored, was sufficient to constitute payment of a note secured by a chattel mortgage. Relying on other Supreme Court cases, the Court quoted the following rule:
A check, without regard to whether that of the debtor or of a third person, does not constitute payment, unless it is agreed that it shall be taken as an absolute payment.
The Court held that since the burden was on the defendant to establish his plea of payment, and there was no evidence of payment other than the dishonored check, a verdict should have been directed in favor of the plaintiff for possession of the property to satisfy the balance due. The syllabus of the court includes the following:
2. A check, except where expressly given and accepted as such, does not operate as payment of a debt until it has been accepted and honored by the bank on which it is drawn.
This rule of law is in line with 12A O.S. Supp. 1992 §3-310(b)(1):
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