Court Opinion

ID: 9593750
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:24:37.404528+00
Date Added: 2024-06-11T18:01:22.133625
License: Public Domain

URBIGKIT, Justice,
dissenting.
I dissent. I differ from the majority’s interpretation of the evidence and law which is clouded by the fact that Charter Thrift and Loan’s (Charter) attorney could have been more zealous in his representation both at trial and on appeal. I refuse to lose sight of the forest for the trees. In a directed verdict1 analysis under W.R.C.P. 41(b)(1), the entire evidence must be viewed most favorably to the plaintiff with the benefit of all reasonable inferences going to the plaintiff. Willmschen v. Meeker, 750 P.2d 669 (Wyo.1988); Fuller v. Fuller, 606 P.2d 306 (Wyo.1980); Shook v. Bell, 599 P.2d 1320 (Wyo.1979). While the majority cites the correct rule, the spirit and substance of this principle is abrogated by the majority’s application to this fact situation. Clearly, a prima facie case of assignment and impairment by an original lending transaction participant was shown. Unquestionably, the impairment was for the participant’s subsequent advantage which totally eliminated the security interest to which he agreed.
The backdrop of the parties’ relationships to one another cannot be so casually disregarded as occurs in the majority. Although the majority portrays Bree Cooke as an innocuous participant in this arrangement, he was much more deeply involved with the underlying financial structure of George E. Cooke Associates (Associates) as owning five percent of the closely held family corporation. Moreover, Bree Cooke was aware that Associates was heavily encumbered with the lease being the only real security for the Charter loan which made possible the expansion of the bar property. Overall, an issue that permeates this entire financial transaction is that there were no difficulties in collecting on the note until the father, George Cooke, who worked for Charter,2 was fired. That job termination precipitated first time collection difficulties and engendered wrongful termination counterclaim interests in the present suit. *526With the parties’ interrelationships put in proper focus, the law that was applied must be considered.
Clearly, the majority as well as the district court, confused the assignment and mortgage aspects of this case. The majority states:
Charter also cites Bornel, Inc. v. City Products Corporation, 432 P.2d 489 (Wyo.1967), for the proposition that the terms of the particular documents are of primary concern in determining the effect of the collateral lease assignment. Charter fails to recite any specific language from the documents that gives it an interest in the rents from Cooke, and it concludes that Associates had the right to collect those rents only so long as it was not in default on the loan. Again, we do not necessarily disagree but note that this argument goes only to a theory that Charter had some kind of mortgage it could have foreclosed upon. At the time of trial, Charter did not seek foreclosure on the trust deed or on any other mortgage interest it may have had. [Emphasis added.]
The fallacy is the limiting of this exchange to a mortgage situation. This arrangement can be an assignment of conditional rights. Restatement (Second) of Contracts § 320 (1981).3 See In Re Allied Products Co., 134 F.2d 725 (6th Cir.), cert. denied sub nom. Barnett v. Maryland Casualty Company, 320 U.S. 740, 64 S.Ct. 40, 88 L.Ed. 438 (1943); Rockmore v. Lehman, 129 F.2d 892 (2d Cir.1942), cert. denied 317 U.S. 700, 63 S.Ct. 525, 87 L.Ed. 559 (1943); In Re New York, N H & H R Co., 25 F.Supp. 874 (D.Conn.1938); and Bonanza Motors, Inc. v. Webb, 104 Idaho 234, 657 P.2d 1102 (1983). The record discloses that during Charter’s case in chief, this assignment theory was advanced twice, and all parties stipulated that the “rental stream” was encumbered as security for the loan to Charter. This stipulation is further relevant concerning the sale by the assignor of the premises. There is sound law that once notice is given of the assignment to the obligor, Bree Cooke, the assignor cannot defeat the assignee’s rights nor specifically cancel the assignment without the assign-ee’s consent.
Notice of an assignment puts the obligor on guard. The obligor is liable to the assignee if the funds assigned are subsequently paid to the assignor in violation of the assignment. E.g., Chapman v. Tyler Bank & Trust Co., 396 S.W.2d 143 (Tex.Civ.App.1965); see generally 4 A. Corbin, supra, [Corbin on Contracts], § 890 [1951]. Once a valid assignment has been made, the assignor cannot cancel or modify the assignment by unilateral action without the assent of the as-signee; nor may he defeat the rights of the assignee. E.g., Wymer v. Wymer, 16 B.R. 497 (Bkrtcy. 9th Cir.1980); Shore v. Shore, 71 Cal.App.3d 290, 139 Cal. Rptr. 349 (1977). After notice of the assignment has been given to the obli-gor, the assignor has no remaining power of release. 4 A. Corbin, supra, at 577.
Bonanza Motors, Inc., 657 P.2d at 1104. See also J. Calamari and J. Perillo, The Law of Contracts § 18-17 (3d ed. 1987) and Restatement (Second) of Contracts, supra at § 338(1). Cf., Frankford Trust Co. v. Stainless Steel Services, Inc., 327 Pa.Super. 159, 475 A.2d 147, 149-50 (1984), where lessee, obligor, had a meritorious defense against lessor’s assignee when lessee had not been notified of the assignment. The timing of the notice to Bree Cooke may be uncertain, but the fact that notice was received cannot be denied and is evidenced by the stipulation. Further, it is *527likewise undeniable that Charter never consented to the sale. Consequently, when the facts are viewed most favorably to the plaintiff (Charter), a prima facie case of assignment of conditional rights was made out which at the very least should have survived a W.R.C.P. 41(b)(1) motion.
I also disagree with the majority in its passing reference to the $17,000 where interjected to be contended advance prepayment of rent to defeat collateral security of a lender in rent receipts. Again, when the evidence is viewed most favorably to the plaintiff (Charter), the characterization does not necessarily follow, and specifically, the evidence in this record does not bear out that description. No specific amount of money was solicited for the prepayment, and Bree Cooke had no recall if there even was a verbal agreement involving the prepayment of rent. Additionally, Bree Cooke had no idea how the prepayment would be credited to the rent obligation, and he had generously helped his father and mother individually out of fiscal difficulties previously. Thus, with all reasonable and proper inferences afforded Charter, this initial record provides a prima facie case showing a significant impairment of Charter’s rights under the assignment.
Appropriately considering the relationships of the parties with evidence of assignment established to be followed by the manipulative impairment of the rights of the holder of the collateral, I would find at least a prima facie case presented by Charter so that it was an abuse of discretion by the district court to grant the dismissal. See Shook, 599 P.2d at 1322 and Arbenz v. Bebout, 444 P.2d 317 (Wyo.1968). In reality, these parties were playing fast and loose with the concept of a corporation’s liability veil, resulting in a complete evisceration of the security that was lawfully assigned to Charter. Such a practice which significantly impairs an assignee’s rights is neither desirable nor just in our law and modem times, and I cannot condone this conduct. The case was not factually developed in any regard sufficient to justify the preclusive judgment granted to the borrowers and their successors.
I would reverse and remand for a trial on the merits.

. Actually, as the case was tried without a jury, this should be a motion to dismiss because there would be no verdict. See Willmschen v. Meeker, 750 P.2d 669, 672 n. 3 (Wyo.1988). However, the directed verdict analysis becomes important in determining how this court will view the evidence. Fuller v. Fuller, 606 P.2d 306 (Wyo.1980).

. Initially, the counterclaim was that Charter had wrongfully terminated George Cooke. However, the answer was later amended to reflect that George Cooke really worked for Citizens Bankshares, Inc., the parent corporation of the plaintiff, which became tied into this case through the alleged commingled operation of the two companies to effectively result in one corporate structure.

. Restatement (Second) of Contracts, supra at § 320 provides:
The fact that a right is created by an option contract or is conditional on the performance of a return promise or is otherwise conditional does not prevent its assignment before the condition occurs.
This financial transaction in the present case almost parallels Restatement (Second) of Contracts, supra at § 320, comment b. illustration 4:
A has a contract with B under which certain payments are to be made to A by B under a fixed schedule and other payments are to be made if B’s earnings exceed stated amounts. As security for a loan to A by C, A assigns to C A’s rights to payments by B, A to retain any payments falling due before default by A under the loan agreement. The assignment is effective according to its terms.