Opinion ID: 2218842
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Heading: lien v. assignment

Text: A lien is a right afforded by law to have an obligation satisfied out of particular property. Dupuy v. Western State Bank, 221 Neb. 230, 233, 375 N.W.2d 909, 912 (1985). A lien does not displace a prior right or prior equities that are superior. See, Verschoor v. Miller, 259 Iowa 170, 143 N.W.2d 385 (1966); Briley v. Madrid Improvement Co., 255 Iowa 388, 122 N.W.2d 824 (1963). On the other hand, an assignment is a transfer vesting in the assignee all the assignor's rights in property which is the subject of the assignment. See Craig v. Farmers Mut. Ins. Co., 239 Neb. 271, 476 N.W.2d 529 (1991). An assignment transfers to an assignee only the rights of the assignor; thus, if the assigned property is subject to a lien, the assignee takes the assigned property subject to the lien. See State Securities Co. v. Daringer, 206 Neb. 427, 293 N.W.2d 102 (1980). Unless a transfer by an assignment is a gift, an assignment is effective only when supported by valid consideration. See, Abraham v. Abraham, 203 Neb. 384, 279 N.W.2d 85 (1979); Scott v. First Nat. Bank, Adm., 224 Md. 462, 168 A.2d 349 (1961); Robert S. Pinzur, Ltd. v. The Hartford, 158 Ill.App.3d 871, 110 Ill. Dec. 961, 511 N.E.2d 1281 (1987); Bank of Cave Spring v. Gold Kist, Inc., 173 Ga. App. 679, 327 S.E.2d 800 (1985); Sheeran v. Sitren, 168 N.J.Super. 402, 403 A.2d 53 (1979). As DSS points out, consideration for a contract requires either a benefit to the promisor or a detriment to the promisee. See, Hecker v. Ravenna Bank, 237 Neb. 810, 468 N.W.2d 88 (1991); Buckingham v. Wray, 219 Neb. 807, 366 N.W.2d 753 (1985); Hasenauer v. Durbin, 216 Neb. 714, 346 N.W.2d 695 (1984). As in the ordinary case of a contract, an assignment, other than a gift, requires a benefit to the assignor or a detriment to the assignee. Although LGH argues that the provision in its admission form, STATEMENT TO PERMIT PAYMENT OF HOSPITAL AND MEDICAL INSURANCE BENEFITS TO HOSPITAL: ... I request that payments of authorized benefits be made to the hospital in my behalf, results in Perry's assignment of the $100,000 settlement fund, the particular language in LGH's admission form has but one reasonable meaning: a patient's hospital and medical insurance benefits are payable directly to LGH rather than to the patient. The settlement fund from Perry's automobile accident is not derived from hospital and medical insurance benefits. Consequently, we conclude that the designated language in LGH's admission form is not an assignment of the settlement fund deposited in the interpleader action. LGH next argues that Perry's assignment to DSS was ineffective because the DSS application lacks Perry's signature at the place internally specified for written assignment of Perry's right to receive payments from a third party. None of the parties disputes that Perry made his X at the place provided for an applicant's signature on the last page of the DSS application for medical assistance benefits. Moreover, for trial of the interpleader action, the parties stipulated that Perry signed `X' on the application for assistance. A signature is whatever mark, symbol or device one may choose to employ as representative of himself [or herself]. Griffith v. Bonawitz, 73 Neb. 622, 627, 103 N.W. 327, 329 (1905). A stipulation, entered by parties to a proceeding or by their attorneys within the scope of authority for representation of the parties, establishes the fact or facts stipulated and binds the parties in the proceeding. See White v. Mertens, 225 Neb. 241, 245, 404 N.W.2d 410, 413 (1987): Parties are bound by stipulations voluntarily made and are granted relief therefrom only under exceptional circumstances (citing State v. Wells, 197 Neb. 584, 249 N.W.2d 904 (1977)). See, also, State v. Davis, 224 Neb. 205, 397 N.W.2d 41 (1986); Martin v. Martin, 188 Neb. 393, 197 N.W.2d 388 (1972). Since the stipulation is binding on the parties in the present action and appeal, LGH is unable to contradict the stipulated fact that Perry signed the DSS application. Because the application was signed by Perry, resulting in a statutory assignment pursuant to § 68-1026, we reject LGH's contention that Perry's application was formally invalid due to the absence of his signature at the particular place provided beneath the printed assignment contained in the DSS application. Therefore, as a question presented for the first time to this court, the key question in determining priority of the interests acquired by LGH and DSS is the time at which LGH's lien and the assignment to DSS became legally effective. In West Neb. Gen. Hosp. v. Farmers Ins. Exch., 239 Neb. 281, 284, 475 N.W.2d 901, 905 (1991), we held that a hospital lien attaches upon admission of the patient to the hospital for treatment. Thus, LGH's lien attached on May 24, 1987, when Perry was admitted for hospital care. On August 5, LGH satisfied the notice requirement of § 52-401 by serving written notice on Battle Creek and Ehlers concerning LGH's hospital lien. If by itself a DSS application under § 68-1026 operates as a transfer of an applicant's right to receive payments from a third party, DSS would be entitled to receive such payments without obligating itself to pay medical assistance benefits or without paying medical expenses on behalf of the applicant, both of which would be a classic case of DSS' getting something for nothing. Therefore, in the present case, Perry's assignment to DSS became legally effective either on the date on which DSS obligated itself to pay medical expenses pursuant to Perry's application, a date undisclosed in the record, but obviously sometime after June 30, 1987, or on August 17, the date on which DSS commenced payments on behalf of Perry for his medical expenses necessitated by the automobile accident. Thus, the benefit to Perry was DSS' first payment of his medical expenses, and conversely, the detriment to DSS was its payment of medical expenses on Perry's behalf. Consequently, Perry's assignment to DSS became legally effective on August 17 after LGH's lien had attached on May 24. However, given the language of § 68-1026, the dispositive issue concerning LGH and DSS is whether the statutory assignment to DSS, resulting from Perry's application for benefits, is retroactive to May 1, 1987, asserted by DSS as the date of Perry's eligibility for state benefits, so that the assignment to DSS takes precedence over LGH's lien which attached on May 24. While an interpretation of § 68-1026, albeit a somewhat dubious interpretation, might be that eligibility for such benefits is not expressly restricted to the time after an application under § 68-1026, one then encounters the incongruity that an applicant is eligible for medical assistance benefits before occurrence of the event that necessitates the medical expenses which are the basis of the application. In Perry's situation, according to DSS, Perry became eligible for medical benefits more than 3 weeks before the accident that caused the injuries which were the basis of his application to DSS. Would that all government operated so efficiently. However, in our examination of § 68-1026, we find no statutory language expressing a clear legislative intent that an assignment to DSS is retroactive and thereby supersedes a valid hospital lien acquired under § 52-401 when the hospital lien has attached before DSS obligates itself to pay, or does pay, medical assistance benefits in response to an application under § 68-1026. Thus, if Perry's June 30 application under § 68-1026 resulted in an immediate statutory assignment that was retroactive to May 1, determined by DSS as the date of Perry's eligibility for benefits, then the statutory assignment to DSS would circumvent LGH's lien and would be superior to the hospital's lien against the settlement fund in the interpleader action. In the foregoing situation, and through circumvention by retroactivity of the statutory assignment, DSS would eliminate a property right validly acquired by LGH on May 24 under § 52-401, thereby raising a serious constitutional question whether the State had unconstitutionally deprived LGH of its property in the form of a valid statutory lien. If a statute is susceptible to more than one reasonable construction, a court uses the construction that will achieve the statute's purpose and preserve the statute's validity. See, Doak v. Milbauer, 216 Neb. 331, 343 N.W.2d 751 (1984); State ex rel. Johnson v. Marsh, 149 Neb. 1, 29 N.W.2d 799 (1947). See, also, Union Stock Yards Co. v. Nebraska State Railway Commission, 103 Neb. 224, 170 N.W. 908, modified 103 Neb. 224, 172 N.W. 528 (1919). Therefore, we now hold that the statutory assignment to DSS under § 68-1026 is subject to a valid hospital lien acquired under § 52-401 when the hospital lien exists before DSS obligates itself to pay, or pays, medical assistance benefits pursuant to an application under § 68-1026. For that reason, LGH's lien, validly acquired before DSS made payments pursuant to Perry's application for medical assistance benefits, is superior to DSS' statutory assignment under § 68-1026. Since LGH charged Perry $86,308.74 for care during his initial hospital admission that commenced on May 24, 1987, it is immaterial and, therefore, undecided, whether LGH's claim is based on the aggregate of charges reflected in three distinct liens for separate hospital confinements, that is, the sum of all charges for multiple admissions to the hospital, or whether LGH's claim is based on one continuing lien for care commenced on May 24 as the result of the automobile accident and concluded on August 31 at a charge of $116,309. Before Perry's assignment to DSS became legally effective, the charges for his initial hospital admission alone were $86,308.74, an amount exceeding the settlement fund of $66,667 available for distribution after McCord's fee. Therefore, LGH's charges, included within its hospital lien, exceed the amount of the settlement fund available for distribution through the interpleader action.