NO. 83-443 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

TIMOTHY CUCHINE, 

Plaintiff and Appellant, 

H. 0. BELL, INC., and 

FORD MOTOR CREDIT CO. , 

Defendants and Respondents. 

Appeal from: District Court of the Fourth Judicial District, 

In and for the Countv of Missoula 

Honorable Robert M. Holter, Judge presiding. 

Counsel of Record: 

For Appellant: 

Tipp, Hoven, Skjelset & Frizzell, Missoula, Montana 

For Respondents: 

Boone, Karlbers & Haddon, Missoula, Montana 

Barbara Conrafi, Missoula, Montana 

Submitted on briefs: March 30, 1984 

Decided : June 4, 1984 

Filed: ,+ 984 

Clerk 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

Timothy Cuchine appeals from a summary judgment of the 

District Court, Fourth Judicial District, Missoula County, in 

favor of Ford Motor Credit Company. 

On October 15, 1980, Timothy Cuchine purchased a pickup 

from H. 0. Bell, Inc. under a retail installment sales 

contract which was subsequently assigned to Ford Motor Credit 

Company. Cuchine later beqan experiencing difficulties with 

the pickup and returned it to H. 0. Bell. to be repaired. 

When it became apparent that the truck could not be 

adequately repaired, Cuchine left the truck with H. 0. Rell 

and filed a suit against H. 0. Bell and the credit company 

for rescission or revocation of the installment contract due 

to breach of the implied warranties of merchantability and 

fitness for a particular purpose. The credit company filed 

an answer, admitting that it was the assignee under the 

contract and asserting a counterclaim for the payments due 

under the contract. Shortly thereafter, the contract was 

reassigned to H. 0. Bell and a motion for summarv judgment 

was filed in the District Court. The District Court granted 

the credit company's motion for summary judgment and Cuchine 

now appeals from the order granting the motion. 

The issue presented on appeal is whether the assignment 

of a retail installment sales contract imposes full contract 

liability on the assignee of certain rights under the 

contract. 

Cuchine contends that the credit company assumed full 

contract liability when the assignment was accepted. Cuchine 

further contends that the credit company could not avoid this 

liability during the pendency of the action by reassigning 
the contract to H. 0. Bell. Cuchine predicates the credit 

company' s liability under the contract. upon the following 

language which appears in the contract in bold, capital 

letters: 

"NOTICE -- ANY HOLDER OF THIS CONSUMER CREDIT 

CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES 

WHICH THE DEETOR COULD ASSERT AGAINST THE SET2LER OF 

GOODS OR SERVTCES OBTAINED PURSUANT HERETO OR WITH 

THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE 

DEBTOR SHATIL NOT EXCEED AMOUNTS PAID RY THE DEBTOR 

HEREUNDER. " 

This language is consistent with section 9-318 of the 

Uniform Commercial Code, adopted in Montana as section 

30-9-318, MCA. That section reads in pertinent part: 

"Unless an account debtor has made an enforceable 

agreement not to assert defenses or claims arising 

out of a sale as provided in 30-9-206, the rights 

of an assignee are subject to: 

"(a) all the terms of the contract between the 

account debtor and assignor and any defense or 

claim arising therefrom;. . ." 

At common law, it is a well established rule that a 

party to a contract cannot relieve himself of the obligations 

which the contract imposed upon him merely by assigning the 

contract to a third person. 6 Am.Jur.2d Assignments § 110; 

6A C.J.S. Assignments S 31. Therefore, we must determine 

whether, under the Uniform Commercial. Code, the assignment of 

the contract to the credit company imposed full. contract 

1ia.bility on the credit company as assignee. 

The ca-se law as to the effect of section 9-318 of the 

UCC on the liabilities of an assianee of contract rights is 

scant, but conclusive. In Michelin. Tires v. First National 

Bank of Boston (1st Cir. 1981), 666 F.2d 673, the court 

examined section 9-318 and determined that: 

"The key statutory lanquaqe - - is ambiquous. That 

'the rights of an assignee are subject'-to . . . (a) 

all the terms of the contract' connotes only that 

the assignee's rights to recover are limited by the 
obligor's rights to assert contractual defenses as 

a set-off, implying that affirmative recovery 

against the assignee is not intended. " (Citations 

omitted.) 666 F.2d at 667. 

The court also noted that: 

"The words 'subject to,' used in their ordinary 

sense, mean ' subord-inate to, ' ' subservient to, ' or 

'limited by.' There is nothing in the u.se of the 

words 'subject to,' in their ordinary use, which 

would even hint. at the creation of affirmative 

rights." 666 F.2d at 667. 

See also Gold Circ1.e v. Riviera Finance-East Bay (N.D. Cal. 

Such a conclusion is buttressed by the official comment 

to section 9-31-8. Official Comment 1 provides in pertinent 

part : 

"Subsection (1) makes no substa.ntia1 change in 

prior law. An assignee has traditionally been 

subject to defenses or set-offs existing before an 

account debtor is notified of the assignment.." 

Under prior law, the assignee of a contract was 

generally not held liable for the assignor's breach of 

contract. Thompson v. Lincoln National Life Insurance Co. 

(1943), 114 Mont. 521-, 138 P.2d 951; Apple v. Edwards (1932), 

92 Mont. 524, 16 P.2d 700. This rule has been carried into 

current law as well; where it is not clearly shown that the 

assignee under a contract expressly or impliedly asumed the 

assignor's liability under the contract the assignee is not 

subject to the contract liability imposed by the contract on 

the assignor. Massey-Ferguson Credit Corporation ~7. Brown 

(1977), 173 Mont. 253, 567 P.2d 440. 

We believe that the intent of section 9-31.8 of the 

Uniform Commercial Code and section 30-9-318, MCA, was to 

allow an account debtor to assert contractual defenses as a 

set-off; the provisions were not intended, generally, to 

place the assignee of a contract in the position of being 
held a guarantor of a product in place of the assign.or. 

Therefore, the summary judgment of the District Court is 

affirmed. 

We concur: 

Chief Justice 

Justices 

Mr. Chief Justice Frank I. Haswell, Mr. Justice Daniel J. Shea 

and Mr. Justice Frank B. Morrison, Jr., dissent and will file 

written dissents later. 
DISSENT OF MR. JUSTICE DANIEL J. SHEA 

No. 83-443 

Timothy Cuchine, 

VS . 

H. 0. Bell Inc. and Ford Motor Credit Co. 
Mr. Justice Da-niel J. Shea dissenting: 

I concur with the dissent of Mr. Justice Morrison. The 

majority has improperly decided this case on an issue not 

presented by this appeal. The issue of contractual liability 

assumed by H. 0. Bell under the assigned contract was not 

presented at the trial court level, nor by the appellant's 

brief. Rather, the sole issue appealed was whether Ford 

Motor Credit Company could relieve itself of its contractual 

obligations, by assigning the contract to H.O. Bell. Instead 

of ruling on those legal issues proper1.y presented to this 

Court, the majority has rai-sed its own issue in order to 

iustify the desired result. 

I would hold that Ford Motor Credit Company could not 

relieve itself of its contractual obligations by assigning 

the contract to H. 0. Bell. Accordingly, the summary 

judgment entered in favor of Ford Motor Credit Company should 

be reversed and the cause remanded for further proceedings. 
Mr. Chief Justice Frank I. Haswell, dissenting. 

I fully concur in the dissent of Mr. Justice Morrison. 

However, since the majority have decided this appeal on the 

ground that the credit company i-s not liable to the consumer 

under the terms of the contract, I further dissent to that 

holding. 

The contract contains the following provision in bold 

face print on the face of the contract: 

"NOTICE--ANY HOLDER OF THIS CONSUMER 

CONTRACT IS SUBJECT TO ALL CLAIMS AND 

DEFENSES WHICH THE DEETOR COULD ASSERT 

AGAINST THE SELLER OF GOODS OR SERT7ICES 

OBTAINED PURSUANT HERETO OR WITH THE 

PROCEEDS HEREOF. RECOVERY HEREUNDER BY 

THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID 

BY THE DEBTOR HEREUNDER." 

This provision clearly and unambiguously states that 

the holder of the contract (Ford Motor Credit Company) is 

subject to all claims and defenses which the debtor (Cuchine) 

could assert against the seller (H. 0. ell, 1nc.). his 

provision for consumer protection is mandatory under Federal 

Trade Commission regulations. 16 C.F.R. Sec. 433.2 (1978). 

If Cuchine got a "lemon," he has a claim against H. 0. Bell 

to which Ford Motor Credit Company is subject. 

Alternatively, this consumer contract should be recognized for what it is -- an adhesi~.n contract. There is no 

real choice or bargaining on the terms of the contract. It 

is offered to the consumer on a take-it-or-leave-it basis and 

he must accede to the terms required by the finance company. 

The FTC regulation is an attempt to protect the powerless consumer. Montana's version of the UCC provides a mea.ns 

for the Court to assist those purchasing goods for personal, 

family or household use: 
"Unconscionable contract or clause. (1) 

If the court as a matter oflaw finds the 

contract or any clause of the contract to 

have been unconscionable at the time it 

was made the court may refuse to enforce 

the contract, or it may enforce the 

remainder of the contract without the 

unconscionable clause, or it may so limit 

the application of any unconsciona.ble 

clause as to avoid any unconscionable 

result. 

"(2) When it is claimed or appears to the 

court that the contract or any clause 

thereof may be unconscionable the parties 

shall. be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to 

aid the court in making the 

determination." 

Contrary to the majority opinion, I would hold the 

credit company liable to the consumer under the contract, 

both by its express terms or alternatively under 

non-enforceability of unconsci.onable terms if otherwise 

interpreted. 

%Le_&.Wkd. 

Chief Justice 
Mz. Justice Frank B. Morrison, Jr. respectfully dissents 

as follows: 

The majority opinion recognizes the "we11 established 

rule" that a party to a contract cannot relieve himself of 

obligations imposed by the contract by assigning the contract 

to a third person. However, the majority then goes on to 

determine whether, under the Uniform Commercial Code, the 

assignment of the contract to the credit company imposed full 

contract liability on the credit company as assignee. While 

it may appear that, pursuant to section 30-9-318, MCA, the 

assignee assumed full liability by operation of law, the 

issue is not before this Court. 

At the trial court level Ford Motor Credit Company moved 

for summary judgment based upon its assignment of the 

contract to H.O. Bell. This issue was briefed. The trial 

court granted summary judgment based upon that re-assignment. 

Cuchine appealed. The only issue on appeal was whether the 

assignment by Ford Motor Credit Company to H.O. Bell 

effectively insulated Ford Motor Credit Company from 

liability. In respondent's brief mention is made of an 

interpretation of section 30-9-318, MCA, which would protect 

Ford Motor Credit Company from liability. Since this issue 

was not presented below it was not addressed by the 

appellant's brief. It was first raised on appeal in the 

respondent's brief. The issue is not properly before this 

Court and the majority opinion, in turning the case on this 

issue, has prevented appellant Timothy Cuchine from having 

his day in court. 

I would hold that the re-assignment from Ford Motor 

Credit Company to H.O. Bell, Inc., did not relieve Ford Motor 

Credit Company from its liability. I would therefore reverse 
summary judgment in favor of Ford Motor Credit Company and 

remand for trial.