Opinion ID: 1769581
Heading Depth: 4
Heading Rank: 3

Heading: Affirmative Defenses Are Available to Account-Debtor

Text: Finally, an account-debtor has available to him or her various defenses against an assignee. See, e.g., Fall River Trust Co. v. B.G. Browdy, Inc., 346 Mass. 614, 195 N.E.2d 63, 64 (1964). In addition to the defense of failure to provide adequate notice, fraud and misrepresentation in the creation of an assignment may be asserted. This Court has not addressed assertion of this specific defense in cases involving an assignment, but other jurisdictions have. See, e.g., Daugherty v. Blaase, 191 Ill. App.3d 496, 138 Ill.Dec. 900, 902, 548 N.E.2d 130, 132 (1989) (In the absence of fraud or bad faith, a claim assigned prior to judgment constitutes a sufficient potential claim to make the assignment valid.); 99 Pratt Street Corp. v. Stand Realty Corp., 27 Conn. Supp. 101, 230 A.2d 613, 614-15 (1966) (fraudulent representation that defendant was a bona fide operating corporation authorized to do business in this state and was legally qualified in this state could constitute a good defense to assignee's claim under assignment); cf. Franchise Tax Bd. v. McKean, 168 Cal. App.3d 970, 215 Cal. Rptr. 36, 39 (1985) (court finds evidence of fraud involved in assignment); In re Estate of Vought, 76 Misc.2d 755, 351 N.Y.S.2d 816, 820 (Surrogate Ct. 1973) (defenses of usury, fraud and unconscionable contract preclude enforcement); see also 6 Am.Jur.2d Assignments § 3, at 187-88 ([O]nly those assignments which are ... free from elements of fraud ... are valid.). In a case involving a contract but not an assignment, this Court noted that [f]raud vitiates everything it enters into. The contract and notes which were the basis of this suit, having been procured by fraud, are void in all their provisions. J.A. Fay & Egan Co. v. Louis Cohn & Bros., 158 Miss. 733, 740, 130 So. 290, 292 (1930); accord Stand Realty Corp., 230 A.2d at 614. And this Court has repeatedly held that a party alleging fraud or misrepresentation must prove the following elements by clear and convincing evidence: (1) A representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted on by the person and in the matter reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance upon its truth; (8) his right to rely thereon; (9) his consequent and proximate injury. See, e.g., Johnson v. Brewer, 427 So.2d 118, 121 (Miss. 1983). This burden ... is a function of the degree of confidence we should have in the correctness of a factual determination that one has perpetrated a fraud. Anderson v. Burt, 507 So.2d 32, 38 (Miss. 1987) (emphasis added).