Opinion ID: 2188563
Heading Depth: 1
Heading Rank: 3

Heading: Milana

Text: As a final point, Mr. Carter's and Commerce Alliance's adducement to Milana v. Credit Discount Co., 27 Cal.2d 335, 163 P.2d 869 (1945) is not helpful to their case. The California Supreme Court found that the transactions in Milana were identifiable as loans on their face: From the evidence introduced by the plaintiff in the case at bar the trier of the facts could reasonably conclude that the contracts of the parties provided for a conditional transfer of title; that advances by the defendants were contemplated to be repaid within a specified time at a charge for the use of the money which was deducted in advance; that the essence of the agreements was the use by the plaintiff of the funds at prescribed rates of interest which were in excess of the constitutional rate; that the transactions were not sales of accounts receivable but loans secured by assignments of the accounts at usurious rates of interest; that the intent to accomplish such a result was discernible from the contracts themselves; and that the negotiations and the conduct of the parties under the contracts further tended to dissipate any doubt arising from the employment of sales terminology. A finding on the plaintiff's case alone to the effect that the sale form was used merely as a cover for the real intent would find support from the written contracts, the conduct of the parties and the surrounding circumstances. Milana, 163 P.2d at 872 (emphasis added). Moreover, as the circuit court noted, it is unclear whether Milana is still the law in California. In the case at hand, the primary agreement in dispute is entitled a Purchase and Sale Agreement. Moreover, the terms of the agreement detail a sales transaction throughoutnot a loan. The Milana decision is clearly distinguishable. (viii) Conclusion The Purchase Agreement at issue was the result of negotiations between two sophisticated business entities. The terms of the agreement expressly contemplated the sale of accounts receivable at a discounta common means of raising capital. Looking at the agreement itself and the actions of the parties, we discern no basis for a reversal of the circuit court on grounds that it clearly erred in finding that the parties agreed to a sale of accounts receivable. To us, it is clear that the parties intended a factoring agreement and an analysis of all relevant factors confirms our conclusion. Moreover, we agree with the circuit court that the appellants failed to meet their burden of proof by clear and convincing evidence that the financial arrangement was a subterfuge for usurious loans. To conclude as appellants would have us do under these facts would be to cast legal doubt on the business of factoring accounts receivable as a means of raising capital. This we are not inclined to do.