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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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I FILED 

United States Court of Appoom Tent.'1 Circuit 

UNITED STATES COURT OF APPEALS SEP 10 1991 

ROBERT L. HOECKER 

Clerk 

TENTH CIRCUIT 

DELTA TRAFFIC SERVICE, INC., a 

Texas corporation, 

) 

) 

) 

) 

) 

) 

) 

Plaintiff-Appellant, 

v. No. 90-4034 

SYSCO INTERMOUNTAIN FOOD SERVICES, ) 

INC., a Utah corporation, ) 

(D. C. No. 87-C-345J) 

(D. Utah) 

Defendant-Appellee. 

) 

) 

ORDER AND JUDGMENT* 

Before SEYMOUR, BALDOCK and BRORBY, Circuit Judges. 

Plaintiff-Appellant Delta Traffic Service, Inc. (Delta), 

appeals the district court's adverse judgment in its action 

against Defendant-Appellee Sysco Intermountain Food Services, Inc. 

(Sysco). Delta, the purported assignee of certain freight bills, 

seeks to collect additional charges allegedly owed by Sysco for 

trucking services rendered by Delta's assignor, Transpo 

International, Inc. (International). 

* be 

for 

res 

As International's assignee, Delta sued Sysco to collect an 

This order and judgment has no precedential value and shall not 

cited, or used by any court within the Tenth Circuit, except 

purposes of establishing the doctrines of the law of the case, 

judicata, or collateral estoppal. 10th Cir. R. 36.3. 

Appellate Case: 90-4034 Document: 010110090099 Date Filed: 09/10/1991 Page: 1 
alleged difference between the ICC tariff and the amount Sysco was 

billed (and duly paid). Following trial, the district court ruled 

that Delta "failed to establish that, at the time of its 

assignment, the assignor, Transpo International, Inc., had any 

rights or. interests". in the .freight bills .to convey to Delta. The 

court also held that Delta failed to meet its burden of proof as 

to the elements of the alleged departure from the tariff. 

Accordingly, the district court ordered the dismissal of Delta's 

complaint "upon the merits," and awarded costs to Sysco. Delta 

timely appealed, and argues there is no evidence to support the 

trial court's ruling. We affirm. 

As Delta alleges the underpayment of filed tariff rates in 

violation of 49 u.s.c. § 10761(a), jurisdiction in the district 

court was proper under 28 u.s.c. § 1337(a). See Kansas City 

Terminal Ry. Co. v. Jordan Mfg. Co., 750 F.2d 551, 552 (7th Cir. 

1984). We exercise appellate jurisdiction under 28 U.S.C. § 1291. 

We briefly explain the identity and relationships of the 

parties and participants in order to provide a background against 

which the issues on appeal may be understood. Delta audits and 

collects freight bills for motor carriers. Sysco is a shipper or 

consignor. International provided trucking services to Sysco and 

other shippers. Transpo Express, Inc. (Express), which the trial 

court found was the owner of the accounts receivable, was formed 

in November 1984 to take over International's trucking operations. 

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I. 

The critical issue in this case involves the ownership of the 

freight bills which were allegedly assigned to Delta for 

collection. International assigned "all of its right title and 

interest" in-. the .freight bills to Delta. Express is not a party 

to the assignment. The district court held Delta failed to 

establish that its assignor had any rights or interests to convey. 

The court concluded, "the November, 1985, assignment from Transpo 

International, Inc. to plaintiff [Delta] conveyed no rights to 

plaintiff upon which this action can be maintained." 

Delta argues "[t]he evidence does not support the trial 

court's conclusion that the assignment between the common carrier 

and Delta Traffic Service, Inc., was invalid." Sysco responds 

that the district court made no finding or ruling with respect to 

the validity of the assignment. "Rather," Sysco argues, "the 

court found that at the time the assignment was made to plaintiff, 

plaintiff's assignor had no rights with respect to the causes of 

action brought by plaintiff which could be assigned." We agree 

with Sysco. 

The district court factually found that "[a]t the time of the 

attempted assignment ... International had no interest in or right 

to the freight bills involved in this action or to the proceeds 

therefrom, all such rights then belonging to Transpo Express, 

Inc." Contrary to Delta's assertions, this simply is not a legal 

conclusion as to the validity of the assignment. It is, rather, a 

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factual determination as to the ownership of the accounts 

receivable, which we review for clear error. Fed. R. Civ. P. 

52(a). 

The record contains abundant evidence supporting the trial 

court's finding. After January 1, 1985, Express's operations were 

funded through its acquisition and use of International's accounts 

receivable and the funds generated from those accounts. Express's 

president, Mr. Cheeney, testified that all the funds collected by 

Express during 1985 -- whether from Express's operations or from 

International's accounts receivable -- were used by Express to pay 

its own obligations. None of the monies obtained from the 

accounts receivable were paid to International until sometime 

after September 1985, when all Express's operating expenses were 

already paid. 

The record also shows that Express controlled all carrier 

services provided to Sysco from January 1, 1985 through September 

1985, and that Express generated all the freight bills for those 

services. Express received, and controlled the disbursement of, 

all revenues collected through those bills. The financial 

statements prepared by Express during this time period reflect 

Express's ownership of all accounts receivable and the revenue 

from those accounts. Express reported the income generated from 

the common carrier operations as its own income on its 1985 

corporate tax return. The testimony of Spence Blackwood, a vicepresident of International, further supports the trial court's 

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Appellate Case: 90-4034 Document: 010110090099 Date Filed: 09/10/1991 Page: 4 
conclusion that the accounts receivable in fact belonged to 

Express, rather than International. 

The evidence favors Delta in only two respects. First, 

payments under . the bills were made by check payable either to 

International or to Allied Carriers Exchange, a freight bill 

factoring company. We find this fact insignificant, in light of 

Express's control over, and exclusive use of, the proceeds of 

those checks. Second, Express used International's letterhead, 

invoices, and other papers throughout this time period to 

facilitate a smooth transition. 

Delta argues "[t]here is no evidence of an absolute transfer 

of interest in the freight bills from Transpo International to 

Transpo Express" (emphasis added). Delta insists that Express 

provided only management services for International, and that 

Express never 

freight bills. 

acquired any interest in International's assets or 

Delta also argues the district court "reached 

exactly the wrong conclusion from the evidence." These arguments 

misperceive the applicable standard of review and Delta's burden 

of proof as a plaintiff suing under an assignment. 

The factual findings of the district court "shall not be set 

aside unless clearly erroneous, and due regard shall be given to 

the opportunity of the trial court to judge of the credibility of 

the witnesses." Fed. R. Civ. P. 52(a). Under the clear error 

standard: 

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Findings are not to be determined clearly erroneous 

unless, after a review of the entire record, we are left 

with a definite and firm conviction that a mistake has 

been made. As an appellate court, it is not for us to 

determine whether the trial court reached the correct 

decision, but whether it reached a permissible one in 

light of the evidence. "When a case is tried to the 

district court, the resolution of conflicting evidence 

and . the .determination of credibility are matters 

particularly within the province of the trial judge who 

heard and observed the demeanor of the witnesses." 

Dowell v. United States, 533 F.2d 1233, 1235 (10th Cir. 

1977). 

Higgins v. State ex rel. Oklahoma Employment Sec. Comm'n, 642 F.2d 

1199, 1202 (10th Cir. 1981) (citations omitted). Having reviewed 

the record in this case, we have no firm conviction that the 

district court made a mistake or reached an impermissible decision 

under the evidence. 

The parties have not specified the choice of law applicable 

to this case. Although the relevant events took place in Utah and 

Colorado, the record does not indicate which state the assignment 

was executed in. Neither does it indicate the state which has the 

more essential contacts. However, as the law of assignments 

applied here is the same in Utah and Colorado, the choice of law 

is of no practical consequence. 

Looking to the substantive state law of assignments, see, 

~, Loveridge v. Dreagoux, 678 F.2d 870, 877 (10th Cir. 1982); 

Fox-Greenwald Sheet Metal Co. v. Markowitz Bros., Inc., 452 F.2d 

1346, 1353 (D.C. Cir. 1971) ("the transaction must pass muster 

under state law before a federal question is reached"), we find it 

is well established that "[t]he burden of proving an assignment is 

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upon him who claims thereunder," National Advertising Co. v. 

Sayers, 144 Colo. 356, 357, 356 P.2d 483 (1960); accord, Bank of 

Salt Lake v. Corporation of President of Church of Jesus Christ of 

Latter-Day Saints, 534 P.2d 887, 891 (Utah 1975). It is equally 

well established that an assignee takes no greater rights than his 

assignor had. See,~, Jack B. Parson Companies v. Nield, 751 

P.2d 1131, 1133 (Utah 1988); Aird Ins. Agency v. Zions First Nat'l 

Bank, 612 P.2d 341, 344 (Utah 1980); McCormick v. Diamond Shamrock 

Corp., 175 Colo. 406, 487 P.2d 1333, 1335 (1971). Thus, Delta 

must establish the assignor's interest in addition to proving the 

validity of the assignment. 

Having factually found Delta's assignor had no interest in 

the freight bills, the district court concluded, as a matter of 

law, that Delta failed to meet its burden of proof. The court 

concluded: 

[Sysco] has offered evidence which supports its 

contention that prior to the assignment herein, Transpo 

International, Inc., had conveyed its interests in the 

freight bills underlying plaintiff's claim to Transpo 

Express, Inc., and that Transpo Express, Inc., generated 

all freight bills during 1985 and is the exclusive 

holder of the rights with respect thereto. [Delta] has 

failed to offer sufficient evidence to meet its burden 

of proof in overcoming the evidence offered by 

defendant. Thus, [Delta] has failed to establish that, 

at the time of its assignment, the assignor, Transpo 

International, Inc., had any rights or interests to 

convey. 

We agree with the district court's legal conclusion that Delta did 

not offer sufficient evidence to prove International had an 

assignable interest in the freight bills. 

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We emphasize our holding, like that of the district court, 

does not concern the legal "validity" of the assignment. Because 

International had no interest in the freight bills, the validity 

of the assignment by which it conveyed its interest to Delta is 

irrelevant . . So. too is the issue of .Sysco~s "standing to challenge 

the validity" of the assignment. 

II. 

Delta next offers an elaborate argument involving the alleged 

ratification of its status as the real party in interest under 

Fed. R. Civ. P. 17(a). 1 Essentially, the argument characterizes 

the trial court's adverse ruling as a procedural dismissal for 

failure to bring the action in the name of the proper party. 

In response to Sysco's defensive contention that Delta has no 

standing to maintain the present cause of action and is not the 

real party in interest, Delta arranged the execution of certain 

"Affidavits of Ratification" by officers of International2 and 

1 

2 

Rule 17(a) provides: 

Every action shall be prosecuted in the name of the real 

party in interest .... No action shall be dismissed on 

the ground that it is not prosecuted in the name of the 

real party in interest until a reasonable time has been 

allowed after objection for ratification of commencement 

of the action by, or joinder or substitution of, the 

real party in interest; and such ratification, joinder, 

or substitution shall have the same effect as if the 

action had been commenced in the name of the real party 

in interest. 

In the "Affidavit of Ratification of George Plavec," 

International's president "acknowledge[d] and ratif[ied] all 

action and conduct taken on behalf of [International] by Raymond 

Cheeney, in arranging and consummating the Assignment ... on 

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Express, 3 and filed them with the trial court several months 

before the trial. Delta claims the ratifications "cured any real 

party in interest concerns and estopped both Transpo and Express 

from later pursuing the claims against Sysco," and also argues the 

trial court . committed reversible error. by refusing to recognize 

the ratifications and then dismissing the action. 

The flaws in this argument are substantial. First, the 

district court did not dismiss Delta's suit on the ground it was 

not prosecuted in the name of the real party in interest. Delta's 

action was dismissed "upon the merits" after trial to the district 

court. Second, the affidavits of George Plavec and Raymond 

Cheeney do not constitute ratifications by the real party in 

interest, Express. Neither constitutes a corporate act, as each 

is signed by an individual in his individual capacity. Moreover, 

as the affiants purported to ratify the original assignment, 

rather than the commencement of this action, the "ratifications" 

do not meet the requirements of Rule 17(a). 

Group, Inc. v. Mahogany Run Dev. Corp., 829 F.2d 473, 478 (3d Cir. 

1987); 6A C. Wright, A. Miller & M. Kane, Federal Practice & 

Procedure, § 1555 at 418 (1990). The district court's refusal to 

recognize the ratifications was therefore proper. 

November 26, 1985." 

3 In the "Affidavit of Ratification of Raymond Cheeney," 

Express's president "abandon[ed] and quitclaim[ed] any and all 

interest [Express] had, or may have had, in those [freight] bills 

to [International] and its assignee, Delta, and ratifie[d] the 

assignment of those bills from [International] to Delta." Delta 

does not argue that this "ratification" constitutes an effective 

assignment of Express's interest in the freight bills. 

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In sum, we concur in the district court's observation that 

the "flurry of activity on the part of Express and others - the 

so-called ratification" legally amounted to nothing more than "a 

series of misadventures." Given our rejection of appellant's 

ratification argument, . we 

concerning the timeliness 

purposes of the statute of 

language of Rule 17. 

do not address Delta's arguments 

of the attempted ratifications for 

limitations and the relation back 

Other Issues 

Finally, Delta argues the district court erroneously 

concluded that Delta failed to meet its "burden of proof in 

establishing Sysco's liability for unpaid charges under the 

tariff." In its Reply Brief, Delta argues at length that Sysco 

owes additional payment on the freight bills. In light of our 

determination on the assignment issue, we do not reach the issue 

of Sysco's alleged liability. 

Conclusion 

We find no clear error in the district court's resolution of 

the factual issues raised in this case. We affirm the district 

court's holding that plaintiff failed to meet its burden of proof 

as to its right to bring this action. As plaintiff's assignor had 

no interest in the freight bills at issue, plaintiff's complaint 

was properly dismissed. The judgment of the district court is 

AFFIRMED. 

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Entered for the Court: 

WADE BRORBY 

Circuit Judge 

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