Court Opinion

ID: 5092727
Source: CourtListenerOpinion
Date Created: 2021-10-01 16:09:32.372343+00
Date Added: 2024-06-11T14:22:26.638005
License: Public Domain

Accepting for purpose of discussion, the majority's position that the present assignment amounted to an absolute transfer of rents, we are still left with the question of how that assignment affected a payment of the underlying debt. I conclude that the debt remains outstanding and would affirm the summary judgment in favor of the RTC.
From the date of its default, 801 Nolana has collected over two million dollars in rental payments which would fall within the terms of the assignment. However, rather than turning those payments over to the RTC in payment of the debt, 801 Nolana contends that the creditor had agreed to allow those rents to be used to maintain the rental property. Nevertheless, because the creditor had an immediate right to those rental payments, 801 Nolana asserts that the rental payments should be credited against its debt.
An absolute assignment of rental operates to transfer the right to rentals automatically upon the happening of a specified condition, such as default. Taylor v.Brennan, 621 S.W.2d 592, 594 (Tex. 1981). However, I would not equate the mere right to payment of such rentals with actual payment of the underlying debt, until the creditor has actually received such payments. Even when the creditor agrees to allow his debtor to retain assigned rental payments, I would view this in terms of a forbearance of the right to rental payments, rather than a payment of the underlying debt. Forbearance in collection of the underlying debt does not cancel the debt, but merely extends the debtor's time to repay it. See Meyer v. Mack Sales, Inc., 645 S.W.2d 493, 495 (Tex.App. — Corpus Christi 1982, writ ref'd n.r.e.). Likewise, forbearance in collecting the assigned rents from the debtor should not cancel the debt, but merely postpone or forgo that particular means of satisfying the debt. By forgoing its right to immediate turnover of the rents under the assignment, the creditor may not reasonably be understood to have also abandoned its right to the amount of the underlying loan which remains unpaid. Such an interpretation would force the lender to either demand absolute and immediate turnover of any rental payments subject to such an assignment or risk having the underlying debt abruptly canceled.
In the present case, I would hold that the creditor's consent to allow 801 Nolana to retain the rental payments in order to maintain the rental property amounted to only a forbearance of the creditor's right to immediate turnover of such rents under the terms of the assignment, and that the underlying debt remained unpaid and subject to the present action against 801 Nolana.
Accordingly, I would affirm the summary judgment.