Opinion
No. 70-290 (Supreme Court No. 23901)
Decided November 17, 1970. Rehearing denied December 8, 1970.
Trial court allowed claim against estate of missing person based on certain promissory notes, the notes being secured by assignment of insurance commissions due the missing person. Conservator and other claimants appealed.
Affirmed
1. ASSIGNMENTS — Renewal Commissions — Secure — Promissory Note — To Agent of Lender — Not Affect — Efficacy. Where it is clear that assignment of insurance renewal commissions by insurance salesman was given to lender to secure promissory note, the fact that assignment ran to bank which acted as agent of lender for purposes of collection and distribution of assigned commissions does not affect the efficacy of the assignment.
2. Manifestation — Intention — Transfer — Other Person — Or — Third Person. Assignment of a right is "a manifestation to another person by the owner of the right indicating his intention to transfer, without further action or manifestation of intention, the right to such other person or to a third person."
3. For Value — As Security — Right — Assignee — Acquires. Assignment for value is one given "as security for a right which the assignee, induced by the assignment, thereafter acquires."
4. Valid — Assignor — Also — Conservator — Same Rights. Since assignment was valid as to assignor it was also valid as to conservator of assignor's estate, the conservator having only the rights to the assigned property that the assignor had.
5. Statute — Accounts Receivable — Failure to Comply — Validity Unaffected. Failure to comply with the Assignment of Accounts Receivable Act, C.R.S. 1963, 11-2-1, et seq., does not affect the validity of an assignment since compliance with the act merely gives an assignee a "protected" status.
6. Assignee — Failed — Timely Filing — Notice — Statute — Not Deprived — — Rights — General Creditors — Assignor. Although assignee failed to comply strictly with the Assignment of Accounts Receivable Act in that it failed to file a Renewal of Notice of Assignment of Accounts until one day after the end of the statutory period, such failure did not deprive the assignee of its rights under the assignment, as against the claimants, who were general creditors of the assignor.
7. INSURANCE — Insurance Agent — Employee — Independent Contractor — Terms of Contract. Whether an insurance agent is an employee or an independent contractor depends upon the terms of his contract.
Error to the District Court of Arapahoe County, Honorable Robert B. Lee, Judge.
Victor F. Crepeau, Conservator, pro se, Lawrence A. Long, George G. Johnson, Jr., for plaintiff in error Victor F. Crepeau.
Richard L. Eason, for plaintiffs in error Kenneth A. Jankovsky and First National Bank of Denver, Trustee.
Dawson, Nagel, Sherman Howard, John W. Low, W. David Pantle, for defendant in error.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
Plaintiffs in error, Crepeau, as Conservator of the estate of a missing person (Conservator), and The First National Bank of Denver, Trustee, and Jankovsky (Claimants) assert error by the trial court in allowing the claim of defendant in error, Renewal Guaranty Corporation (RGC), as a secured claim against the estate of the missing person (Mogan).
RGDC's claim against the estate is based on the following facts, which are not disputed. On July 19, 1966, Mogan disappeared and on September 14, 1966, the Conservator was appointed. At that time Mogan owed RGC approximately $21,000. The indebtedness was evidenced by a note dated November 30, 1965 payable in installments of $526 per month. This note was the last of a series of several renewal notes covering a period of about eight years. RGC had a line of credit with the First National Bank of Denver (Bank) which it secured by the endorsement of Mogan's notes, among others, to the Bank. The Bank also acted as RGC's agent for collection of the notes thus endorsed.
On October 17, 1957, Mogan had executed a "Collateral Assignment of Renewal Commissions" which assigned to the Bank all policy renewal commissions due and to become due Mogan from The New York Life Insurance Company (NYLIC), for which company Mogan was a sales agent. This assignment provided, in part,
"This assignment is given as security for the payment of any and all present and future indebtedness now or hereafter owing by assignor to assignee, whether such indebtedness be direct or contingent and howsoever arising, and shall remain in full force and effect until all said indebtedness (including any renewal notes therefor) with interest is paid in full."
Consent to this assignment was executed by NYLIC on October 29, 1957, and on October 30, 1957, the first note to RGC was signed by Mogan. That note was endorsed to the Bank, as were all notes in the series. All the notes, including the note on which the claim is founded, stated, "This note is secured by an Assignment of Renewal Commission, from: New York Life Insurance Company."
At the time the final note was signed Mogan also executed a Notice of Assignment of Accounts Receivable, naming the Bank as assignee. This was duly filed with the Secretary of State on December 6, 1965. Mogan also signed, in blank, a Renewal of Notice of Accounts Receivable. This was completed and filed on December 7, 1966. Also signed at the same time by Mogan was a letter addressed to RGC requesting that $526 be applied to his indebtedness out of the renewal commissions which RGC might receive each month from NYLIC. The excess was to be refunded to Mogan.
Pursuant to this letter the Bank deposited the excess received from NYLIC each month to Mogan's account in the Bank, and credited the $526 to the note.
After Mogan's disappearance, a default occurred in the monthly payments and the Bank called on RGC to pay the note, which it did. The Bank thereupon endorsed the note and assignment over to RGC which thereafter filed its claim herein.
The Conservator and Claimants admit the indebtedness to RGC but assert that it can only be allowed as an unsecured claim. They claim that the assignment to the Bank does not secure the note to RGC and, further, that even if it does secure the note, the failure to file the Renewal of Notice of Assignment of Accounts until December 7, 1966, instead of by December 6, 1966, rendered the assignment "unprotected" and therefore unenforceable.
The trial court found that the assignment was valid as to Mogan, that the Conservator had no rights superior to those of Mogan and therefore the assignment was valid as to the Conservator. The trial court further found that the Assignment of Accounts Receivable Act (C.R.S. 1963, 11-2-1, et seq.) did not protect unsecured creditors and that therefore the claimants had no basis for contesting the claim as a secured claim. We concur and affirm the trial court.
[1] The evidence established a course of dealing between the parties to the transaction under which it was clearly intended by them that RGC would loan money to Mogan; that the loan would be secured by an assignment of all funds due Mogan from NYLIC; that the note would be endorsed to the Bank as partial security for RGC's line of credit there; and that the Bank would act as RGC's agent for collection and disbursement of all funds received from NYLIC. It is clear that the assignment was given to secure the note which was the basis for the claim. The fact that the assignment ran to the agent of the lender did not affect its efficacy.
[2,3] The Restatement of Contracts § 149 defines an "assignment" of a right as "a manifestation to another person by the owner of the right indicating his intention to transfer, without further action or manifestation of intention, the right to such other person or to a third person." (Emphasis added.) "An assignment for value" is one given "as security for a right which the assignee, induced by the assignment, thereafter acquires."
A similar rule obtains when the security is a chattel mortgage. Anderson Buick Co. v. Cook, 7 Wash.2d 632, 110 P.2d 857.
[4] The assignment was valid as to Mogan. It was also, therefore valid as to his conservator. The Conservator had only the rights to the assigned property that Mogan had. McCormick v. First National Bank, 88 Colo. 599, 299 P. 7. The right of the Conservator to receive monies due Mogan from NYLIC is subject to the superior right of Mogan's creditor.
Claimants assert that, even though the assignment might be valid as against Mogan and his conservator, failure to file the renewal of the notice of assignment on time invalidated the assignment as to them. Admittedly Claimants are not secured creditors of Mogan and are general creditors only. The trial court ruled that general creditors were not protected by the Assignment of Accounts Receivable Act. We agree.
The question is a novel one in Colorado. The only Colorado Supreme Court decision relative to the act is Ware v. Barr, 126 Colo. 311, 248 P.2d 1073, which held that a creditor holding a judgment and garnishment lien had a right to the asset superior to a prior assignee who had not filed under the Act.
The Supreme Court has uniformly held that other security statutes in Colorado protect only other lien claimants and do not protect general, unsecured creditors. Thus the chattel mortgage statute (C.R.S. 1963, 21-1-1) provides that upon complying with the statute a chattel mortgage "shall be valid and enforceable against the rights and interests of third persons. * * *" However, the Colorado courts have held that failure to so record does not render a chattel mortgage invalid as against unsecured creditors. Glass and Bryant Mercantile Co. v. Farmers State Bank, 83 Colo. 193, 265 P. 682, Morse v. Morrison, 16 Colo. App. 449, 66 P. 169.
In Carlton v. Camfield, 64 Colo. 373, 171 P. 1140 the court interpreted a statute which provided that "no transfer of stock shall be valid for any purpose" unless the statutory provisions were followed. The statute required that a pledge of stock be noted on the books of the company within sixty days. A pledgee who had failed to comply sought to establish his secured status against the decedent pledgor's estate. There, as here, an unsecured creditor objected to the allowance of the claim as a secured claim. The Supreme Court held that the pledge was valid as against the deceased and his executor and further held that the statute was not "intended for the protection of a creditor who has no lien."
[5,6] Both of the above statutes refer to the validity of the security. Failure to comply with the assignment act however does not affect the validity of the assignment. The act merely provides that compliance with the act gives the assignee a "protected" status. The principle of law that no protection is given to general creditors under the chattel mortgage and similar statutes is equally applicable to the assignment of accounts receivable act and we therefore hold that failure to comply strictly with that act did not deprive RGC of its rights under the assignment, as against the Claimants, who were general creditors of Mogan.
Claimants further assert that the assignment violates the Assignment of Wages Statute, C.R.S. 1963, 80-15-1, et seq. There is nothing in the record which would indicate that the commissions or other rights assigned were wages within the meaning of that act.
[7] Whether an insurance agent is an employee or an independent contractor depends upon the terms of his contract. Glynn v. M. F. A. Mutual Ins. Co., 363 Mo. 896, 254 S.W.2d 623, annotated at 36 A.L.R.2d 256. The record here is silent as to Mogan's relationship with NYLIC other than that he held an agency contract with the insurance company or its general agent. The contract was not offered. There is, therefore, no support in the record for this assertion.
Although the judgment does not limit the secured status of RGC to the first $526 out of each monthly payment, RGC has stated in its brief that the secured status is limited to that amount and as so limited the judgment is affirmed.
JUDGE DWYER and JUDGE DUFFORD concur.