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TexLaw
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Arizona case laws RE: Precluding Evidence

Resolved Question:

I am looking for Arizona case laws RE: Precluding Plaintiff's Affidavidt, Chain of Title, Assignment (and the criteria for an Assignment) Cannot find any. Already filed the Motions to preclude the above. I know the Rules of Evidence to cite. I do not want a monthly $40 plan  Merely need Case Law AZ Civil Ct / Az Supreme Ct Division 1

Submitted: 2 years ago.
Category: Legal
Expert:  TexLaw replied 2 years ago.

Hi,

I'd be happy to do some legal research for you. I need to know a little bit more detail to be able to find you the right cases.

1. What is the plaintiff's affidavit being used for (what motion or procedure)?

2. When you say chain of title, what is the subject of the title and why do you dispute the chain of title? A car, a house, a peice of evidence?

3. When you say "assignment" what are you referring to exactly? A contractual right that has been assigned? Or a peice of property that has been assigned?

4. Where are you in the case? Are you filing motions for summary judgment or are you about to go to trial?

The more detail you can provide, the better. After you answer, you will have to give a few hours to look for the cases to put the requested information out of them.

Thanks and I look forward to hearing back from you.

-ZDN

Customer: replied 2 years ago.


Thanks! This is a debt collection case (not a valid one:)


 


1. Plainitiff's Affidavit is an unidentified employee swearing the Plaintiff has accuracute business records - and P bought the debt.


 


2. Chain of Title: the alleged assignment - it is actually a generic bill of sale with zero info about me or my acct or anyone's info although it states the exhibits are included. 2nd doc is merely a Notice of Name Change from Pl's company - dated prior to the alleged assignment/purchase & completely irrelevant evidence.


 


3. Assignemnet is for an alleged credit card account that I have never had. No billing statements with any transactions have been produced EXCEPT1 copied 3 times - no transactions- with an account # XXXXX have never had.


 


4. Plaintiff just filed MSJ - I will be opposing it. I just filed motions to preclude five piece of evidence. I think the most important are: Assignment (which is just a bill of Sale) Chain of Title, Affidavidt.


 


I would appreciate case law RE: the evidence and please no hurry _ i am not in need of this "stuff" tonight. I want to file the Case Law along with the Rules of Evidence (I have them) on Monday as Attachments to each motion.


 


Thank-YOU!

Customer: replied 2 years ago.

 


P.S. I am the Defendant, Pro Se



Thanks! This is a debt collection case (not a valid one:)


 


1. Plainitiff's Affidavit is an unidentified employee swearing the Plaintiff has accuracute business records - and P bought the debt.


 


2. Chain of Title: the alleged assignment - it is actually a generic bill of sale with zero info about me or my acct or anyone's info although it states the exhibits are included. 2nd doc is merely a Notice of Name Change from Pl's company - dated prior to the alleged assignment/purchase & completely irrelevant evidence.


 


3. Assignemnet is for an alleged credit card account that I have never had. No billing statements with any transactions have been produced EXCEPT1 copied 3 times - no transactions- with an account # XXXXX have never had.


 


4. Plaintiff just filed MSJ - I will be opposing it. I just filed motions to preclude five piece of evidence. I think the most important are: Assignment (which is just a bill of Sale) Chain of Title, Affidavidt.


 


I would appreciate case law RE: the evidence and please no hurry _ i am not in need of this "stuff" tonight. I want to file the Case Law along with the Rules of Evidence (I have them) on Monday as Attachments to each motion.


 


Thank-YOU!

Customer: replied 2 years ago.


OOPPSSS sorry I just hit the mediocre face by Mistake!


 


Here is some more information:


Plaintif's Affidavit - I have already included with proof the Affiant does not know: information that should be in Plaintiff's file - EG: stated was that Plaintiff sent me regular billing statements. My response: I rec'd a letter in Jan 2011 stating I owed the Plaintiff and Chase bank. I owed Chase Bank zero at that time & had never heard of the Plaintiff. I request (3 times with tracking numbers to prove my mailings) proof of assignment & stated they had the wrong person. No response until summons & complaint June, 2012. I also showed with proof: Affiant does not know the difference between a chain of title (defining it) and a company notice of name change. Proven, too in the motion: was the Bill of Sale had no consideation, no names of borrowers, etc. Affiant's title in company is Assent Legacy Manager & does not mention record keeping knowledge/time with Plaintiff/or not at company when the alleged Feb. 2010 assignment happened. You got my point.


 


I need case law in AZ District 9 + AZ Supreme Ct Dist 1 + Federal law to cite when affidavits have been precluded due to the Affidant no telling the truth and merely depending upon hearsay.


 


I intend to use relevance of evidence a great deal. I do have the Rules.


 


Does this info assist?


 


Also, Plaintiff is now claiming it is a claim of open account vs. written agreement. Would I be correct & I need assitance with the LAW that Plaintiff must produce x amount of billing statements showing transactions. They can't - they haven't - never had that account #.


 


Hoping this assists! Thank-you.


 

Expert:  TexLaw replied 2 years ago.

First, just to make sure we are on the same page, I want to give you a brief explanation of the function of a business records affidavit. The hearsay rule prevents any written document being used as evidence unless there is an exception to the general rule which would allows its use. A business records affidavit may be used to bring about an exception to the general hearsay rule.

So I will explore objections to the business record affidavit in Arizona case law.

Second, are you saying that the Plaintiff has not been able to produce an original record showing that you had an account with Chase? Or are you saying that while you had an account with Chase, the Plaintiff just does not have proof of it?

Third, a person making a business records affidavit can only testify that the records were properly received and kept in the business's records. The person cannot be testifying about any facts that are not about the records, as there would be a lack of personal knowledge. Does the affidavit contain such unfounded statements?

This research may take longer than originally thought, but I should have something back to you within the next 24 hours.

Thanks

ZDN

Expert:  TexLaw replied 2 years ago.
Hi,

The Plaintiff has submitted a business records affidavit in support of their motion for summary judgment claiming an “open account” and/or “breach of contract”.

In your Response to Plaintiff’s Motion for Summary Judgment, the structure needs to be as follows:
1. Introduction –
a. What is this document “Response”
b. Brief statement of the case “Plaintiff is suing Defendant for ______”
c. Court should deny Plaintiff’s motion because Plaintiff is asserting an open account without having plead the same in its petition, Plaintiff has no evidence of an open account or a written agreement which has been breached by the Defendant.
2. Objections to Plaintiff’s Summary Judgment Evidence
a. This is where you are going to put in your objections to their evidence
i. Plaintiff’s Affidavit lacks personal knowledge
ii. Plaintiff’s Affidavit lacks foundation
iii. Plaintiff’s affidavit contains hearsay upon hearsay
3. Defendant’s Summary Judgment Evidence
a. Defendant offers herein the follow summary judgment evidence to support its Response to Plaintiff’s Motion for Summary Judgment
i. Affidavit of You
ii. Exhibit A
iii. Exhibit B
iv. etc
4. Statement of the Facts
a. Tell the story – you never had any credit account with Chase; tell about how you first learned of the claim; talk about how you tried to tell them that there was no account; how they have never provided you with any document showing you have an account. You need to attach all the correspondence that you’ve had with this debt collector and reference the correspondence in your statement of facts as supporting exhibits. End by stating why you don’t owe them anything.
5. Argument and Authorities
a. Plaintiff’s burden of proof in a motion for summary judgment
b. Under Rule 56, Plaintiff may not seek summary judgment on an unpled claim. Accordingly, this motion must be denied as Plaintiff is asserting a cause of action on an open account for the first time herein.
c. Plaintiff cannot establish its cause of action. To prove an open account, the Plaintiff must show:
i. Plaintiff is missing evidence
6. Conclusion
a. Defendant respectfully XXXXX XXXXX this court deny Plaintiff’s Motion for Summary Judgment.


Objections to the Affidavit: Plaintiff submits a business records affidavit to support the records it claims show Defendant has open account with Plaintiff on which it is suing. Defendant objects to this affidavit and moves to exclude and strike it as summary judgment evidence. Pursuant to Arizona Rule of Evidence 803, a business records affidavit:
(6) Records of a regularly conducted activity. -- A record of an act, event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by -- or from information transmitted by -- someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and
(E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.

Plaintiff’s affidavit does not meet the necessary requirements for a business records affidavit concerning an open account. First of all, it contains statements which are not based on personal knowledge. The custodian of records for Plaintiff received records but has no personal knowledge of whether the records were made by someone with actual knowledge of the matters asserted therein. “Rule 56(e), Arizona Rules of Civil Procedure, provides that affidavits submitted in support of a motion for summary judgment must be based on personal knowledge, setting forth facts which would be admissible in evidence and establishing the affiant's competence to testify to those facts.” GM Dev. Corp. v. Community Am. Mortgage Corp., 165 Ariz. 1, 8 (Ariz. Ct. App. 1990) (cite). Specifically, the affiant has no personal knowledge regarding ___________.

Defendant further objects to the affidavit on the grounds that it lacks foundation and is conclusory in nature. Specifically, the affidavit concludes that there is an open account belonging to Defendant without any showing whatsoever that an account was ever opened by Defendant or any reference to documentary evidence which establishes an account belonging to the Defendant or otherwise linked to Defendant.

Defendant objects to Plaintiff’s affidavit and the attached documents as they contain hearsay upon hearsay. Multiple hearsay is not admissible, unless each part of the combined statements meets a recognized exception. State v. McGann, 132 Ariz. 296, 298 n.1, 645 P.2d 811, 813 n.1 (1982); see also Ariz. R. Evid. 805 (permitting hearsay within hearsay where each part conforms with an exception to the hearsay rule). Because the affidavit attaches documents which it cannot support because of a lack of personal knowledge, a lack of foundation, or otherwise, and because the affidavit contains statements testifying to that information, it is hearsay upon hearsay without an exception and must be excluded.




A decision to grant summary judgment requires us to view evidence in the light most favorable to the nonmoving party. Hegel v. O'Malley Insurance Co., 122 Ariz. 52, 593 P.2d 275 (1979). We also note that when the moving party presents [***2] sworn proof of specific facts negating the adverse party's pleadings, the adverse party must respond with proof of specific facts showing a genuine issue of fact for trial. Gibbons v. Globe Development, Nevada, Inc., 113 Ariz. 324, 553 P.2d 1198 (1976); Gomez v. Great American Insurance Co., 26 Ariz.App. 394, 548 P.2d 1206 (1976). The opposing party must show that evidence is available which justifies going to trial, Dobson v. Grand International Brotherhood of Locomotive Engineers, 101 Ariz. 501, 421 P.2d 520 (1966), and that evidence must be based on personal knowledge and must be admissible at trial. Williams v. Campbell, 20 Ariz.App. 136, 510 P.2d 766 (1973). Affidavits based on otherwise inadmissible hearsay are insufficient to counter sworn statements based on personal knowledge. Jabczenski v. Southern Pacific Memorial Hospitals, 119 Ariz. 15, 579 P.2d 53 (App.1978). In the absence of controverting affidavits, facts alleged by affidavits attached to a motion for summary judgment may be considered true, and if appropriate, summary judgment may be granted. Sato v. VanDenburgh, 123 Ariz. 225, 599 P.2d 181 (1979).

Portonova v. Wilkinson, 128 Ariz. 501, 502 (Ariz. 1981)

Please respond back, as I have more case law, but am prohibited to post much more by the character limitations
-ZDN
TexLaw, Attorney
Category: Legal
Satisfied Customers: 4258
Experience: Lead trial/International commercial attorney licensed 11 yrs
TexLaw and 14 other Legal Specialists are ready to help you
Expert:  TexLaw replied 2 years ago.
110 Ariz. 276, *; 517 P.2d 1272, **;
1974 Ariz. LEXIS 233, ***

Glen HOLT and Jane Doe Holt, his wife, Appellants, v. WESTERN FARM SERVICES, INC., dba Desert Verde Co., a Delaware corporation, Appellee

No. 11251-PR

Supreme Court of Arizona

110 Ariz. 276; 517 P.2d 1272; 1974 Ariz. LEXIS 233


January 11, 1974

DISPOSITION: [***1] Decisions of Court of Appeals vacated; judgment of Superior Court affirmed.

CASE SUMMARY
PROCEDURAL POSTURE: Appellant buyers, a husband and his wife, sought review of an order of a court of appeals (Arizona), which affirmed a decision of a trial court granting judgment to appellee seller in the seller's action to collect an indebtedness owed by the buyers.

OVERVIEW: The buyers had purchased various products from the seller over a 10-year period of time. Orders were placed by the buyers either in person or by telephone. The seller kept an account of the charges and credits and billed the buyers regularly. When the outstanding balance on the buyer's account was in excess of $ 14,000, the seller requested payment. A large payment was made, but shortly thereafter the buyer's account was again in excess of $ 14,000. When the seller contacted the buyer and requested payment, the buyer indicated that it could be quite a while before payment could be made. The seller then filed its action. On appeal, the court affirmed, holding that merely furnishing a statement of account, which was not understood by the buyer as a final adjustment of the seller's demands did not constitute an account stated. Furthermore, the trial court did not abuse its discretion by admitting the seller's invoices into evidence because the seller proved the correctness of the account stated and each item thereof. Finally, there was sufficient evidence to show that the invoices were prepared during the ordinary course of business at or near the time of the sale.

OUTCOME: The court affirmed the decision of the trial court.


CORE TERMS: oldest, account stated, open account, invoices, debit, running account, preparation, farm, regular course of business, indebtedness, correctness, monthly, recapitulation, duplicate, owes


LEXISNEXIS® HEADNOTES Hide

Contracts Law > Formation > General Overview

Contracts Law > Types of Contracts > General Overview

HN1 An account stated is an agreed balance between the parties to a settlement; that is, that they have agreed after an investigation of their accounts that a certain balance is due from one to the other. The element of agreement is an absolute requisite to the legal concept of account stated. More Like This Headnote | Shepardize: Restrict By Headnote

Contracts Law > Formation > Acceptance > General Overview

HN2 Monthly bills sent to buyers cannot be considered as an account stated because there is no element of finality where the parties are still transacting business. More Like This Headnote | Shepardize: Restrict By Headnote

Contracts Law > Formation > Acceptance > General Overview

HN3 The mere furnishing of a purported statement of account which is not understood by a debtor as a final adjustment of the parties' demands does not constitute an account stated. More Like This Headnote | Shepardize: Restrict By Headnote

Contracts Law > Formation > General Overview

Evidence > Procedural Considerations > Burdens of Proof > General Overview

HN4 In Arizona, the burden is on the person seeking to recover on an open account to prove the correctness of the account and each item thereof. More Like This Headnote | Shepardize: Restrict By Headnote

Contracts Law > Remedies > General Overview

HN5 In the absence of direction by a debtor, a creditor may apply payments made by the debtor to such portions of the debt as he prefers. Where no special application has been made, it is applied against the oldest items. This rule is applicable to running accounts. Where there is a running account, the creditor may apply a payment to any item. General credits on open accounts stand as payments on the oldest items of such accounts unless some other application be clearly indicated. More Like This Headnote

Evidence > Hearsay > Exceptions > Business Records > General Overview

HN6 See Ariz. R. Civ. P. 44(q)(2).


COUNSEL: Ralph F. Brandt, Yuma, for appellants.

Westover, Keddie & Choules by Thomas A. Thode, Yuma, for appellee.

JUDGES: In Banc. Struckmeyer, Justice. Hays, C. J., and Lockwood and Holohan, JJ., concur.Note: Vice Chief Justice JAMES DUKE CAMERON did not participate in the determination of this matter.

OPINION BY: STRUCKMEYER

OPINION


[*277] [**1273] This action was commenced by Western Farm Services, Inc., doing business as Desert Verde Co., against Glen Holt and Cherry Holt, his wife, for an indebtedness in the amount of $ 14,246.64. The Superior Court of Yuma County rendered judgment in favor of Western and the Holts have appealed. The Court of Appeals affirmed. Holt v. Western Farm Services, Inc., 19 Ariz.App. 335, 507 P.2d 674 (1973). We accepted review. Decision of the Court of Appeals vacated. Judgment of the Superior Court affirmed.

The Holts farm in the Poston-Parker area of Arizona. They purchased fertilizers, herbicides, and seed from Western for approximately ten years prior to the institution of this action. Orders were placed by the Holts either in person or by telephone at appellee's [***2] office in Blythe, California. Western kept an account of the charges and credits and billed the Holts regularly.

In April 1970, Western requested payment of the outstanding balance due on the account in the amount of $ 14,236.20, but it was not until July that $ 10,000.00 was paid on the account. In November, $ 2,000.00 was paid. The Holts continued to place orders with Western until February 1971, when the balance as indicated by Western's statement was again in excess of $ 14,000.00. Western's managing agent, Robert W. Todd, in February 1971 called on Glen Holt and asked him when he could pay the balance due on the account. Holt answered, "It might be this year or next." Almost immediately thereafter this suit was filed.

At the trial, Western introduced two exhibits. Exhibit 1 consisted of the duplicate copies of invoices for merchandise delivered January 1, 1970 through December 31, 1970, together with copies of interest charges on the running balance of appellant's account. Exhibit 2 was a monthly recapitulation of the account derived from Exhibit 1. A copy of Exhibit 2 follows:
GLENN HOLT
DESERT VERDE CO.
CHARGES CREDITS BALANCE
Bal. Forward $ 14,371.11 $ 14,371.11
January 1970 4,232.07 5,000.00 13,603.18
February 1,007.05 14,610.23
March 2,951.74 3,031.08
Credit Memo 294.69 14,236.20
April 3,547.18 17,783.38
May 307.39 18,090.77
June 1,200.57 19,291.34
July 2,728.35 10,000.00 12,019.69
August 1,573.54 13,593.23
September 1,303.33 14,896.56
October 156.06 15,052.62
November 100.00 2,000.00 13,152.62
December 1970 675.88 13,828.50
January 1971 131.53 13,960.03
February 286.61 14,246.64
March 139.60 14,386.24
April 143.86 14,530.10
April 143.86 14,673.96
May 143.86 14,817.82
June 148.18 14,966.00
July 149.66 15,115.66


[***3] Exhibit 2 cannot be considered as an account stated. HN1An account stated is an agreed balance between the parties [*278] [**1274] to a settlement; that is, that they have agreed after an investigation of their accounts that a certain balance is due from one to the other. Chittenden & Eastman Company v. Leader Furniture Company, 23 Ariz. 93, 201 P. 843 (1921). The element of agreement is an absolute requisite to the legal concept of account stated. Builders Supply Corp. v. Marshall, 88 Ariz. 89, 352 P.2d 982 (1960).

There is no evidence that the appellants or either of them ever saw appellee's Exhibit 2 prior to its introduction in evidence at the trial. HN2The monthly bills sent to appellants obviously cannot be considered as an account stated. There was no element of finality because the parties were still transacting business. Hamilton v. Miller, 217 Miss. 316, 64 So.2d 147 (1953); American Fruit Growers, Inc. of California v. Jackson, 203 Cal. 748, 265 P. 926 (1928). HN3The mere furnishing of a purported statement of account which is not understood by the debtor as a final adjustment of the parties' demands does not constitute an account stated. [***4] O'Harrow v. Salmon River etc. Co., 84 Idaho 427, 373 P.2d 336 (1962); Meagher v. Kavli, 251 Minn. 477, 88 N.W.2d 871 (1958); Martin Milling Co. v. Evelyn, 179 Neb. 31, 136 N.W.2d 177 (1965); Hansen v. Fettig (N.D.1970), 179 N.W.2d 739.

We think, however, that the evidence in the trial court was sufficient to support the judgment as one on an open account. The credit manager for appellee testified in response to a question concerning the accounting procedures that credits were applied to the oldest balance on an account such as the Holts'.
"* * * If I have a balance that shows the individual owes the company some money, it also shows how much he owes for the last month, and how much for every month prior to that and so on and so forth. When I say it's applied to the oldest amount, this means when the money comes in. As far as our book-keeping system is concerned, it comes off the oldest balance that I show. It comes off the oldest amount.

THE COURT: Then doesn't it come off the total also?

THE WITNESS: That's right. That's right."
Obviously, payments on an account when applied against the oldest charges would also reduce the total of the charges.

HN4In Arizona it is the settled [***5] rule that the burden is on the person seeking to recover on an open account to prove the correctness of the account and each item thereof. Piper v. Salem, 48 Ariz. 314, 61 P.2d 399 (1936); Kunselman v. Southern Pacific Railroad Company, 33 Ariz. 250, 263 P. 939 (1928). For that reason, appellants urge that the court erred because appellee's account started with a debit balance of $ 14,371.11; cf. Merrick v. United States Rubber Company, 7 Ariz.App. 433, 440 P.2d 314 (1968). We agree that an open running account cannot be established by commencing with a debit balance, but we do not think this is such a case here.

HN5It is well settled that in the absence of direction by a debtor, a creditor may apply payments made by the debtor to such portions of the debt as he prefers. Where no special application has been made, it is applied against the oldest items. Security Trust and Savings Bank v. June, 38 Ariz. 513, 517, 1 P.2d 970, 971 (1931). This rule is applicable to running accounts.
"Where there is a running account, the creditor may apply a payment to any item. General credits on open accounts stand as payments on the oldest items of such accounts unless some other application [***6] be clearly indicated." Hollywood Wholesale Electric Company v. Baskin, 146 Cal.App.2d 399, 402, 303 P.2d 1049, 1051 (1956).


An examination of the appellee's recapitulation of the final eighteen months of the account discloses that it commenced with a debit balance as of January 1970 of $ 14,371.11, but a total of $ 20,325.77 was [*279] [**1275] thereafter paid on the account. If the $ 20,325.77 is applied as payment of the oldest items of the account, the debit balance of January 1, 1970 would be extinguished and the duplicate copies of the invoices admitted in evidence as Exhibit 1 would then be a sufficient itemization to prove the remaining indebtedness as an open account. We think therefore, that appellee proved the correctness of the account and each item thereof.

Appellants finally question whether appellee's Exhibit 1 was admissible under Rule 44(q). Rules of Civil Procedure, 16 A.R.S., Rule 44(q) provides:
HN6"2. Any record of an act, condition or event, shall, insofar as relevant, be competent evidence if the custodian or other qualified witness testifies to its identity and the mode of its preparation, and if it was made in the regular course of business, [***7] at or near the time of the act, condition or event, and if, in the opinion of the court, the sources of information, method and time of preparation were such as to justify its admission."


Robert Todd testified that he personally reviewed appellant's account on several occasions; that he compared the method of preparation of the invoices before his employment with Western Farm Services with the method used during his employment, and that the procedures were the same. There was ample proof that the invoices were prepared in the regular course of business at or near the time of sales. We do not find that the trial court abused its broad discretion in admitting Exhibit 1 in evidence, cf. Drumwright v. Lynn Engineering & Mfg., Inc., 14 Ariz.App. 282, 482 P.2d 891 (1971).

Judgment affirmed.
116 Ariz. 601, *; 570 P.2d 769, **;
1977 Ariz. LEXIS 202, ***

CERTIFIED COLLECTORS, INC., an Arizona Corporation, Appellant, v. David LESNICK and Jane Doe Lesnick, his wife, dba the House of David, Appellees

No.XXXXXof Arizona

116 Ariz. 601; 570 P.2d 769; 1977 Ariz. LEXIS 202


October 14, 1977

PRIOR HISTORY: [***1] Appeal from the Superior Court of Maricopa County

Cause No. 305493

The Honorable A. Melvin McDonald, Jr., Judge.

DISPOSITION: Affirmed.

CASE SUMMARY
PROCEDURAL POSTURE: Plaintiff collection company appealed from an order of the Superior Court of Maricopa County (Arizona), which granted summary judgment for defendants, debtors and debtors' corporation (debtors), on the collection company's complaint on an alleged assignment of a debt which the collection company asserted was due and owing. The collection company had filed a motion for summary judgment, and defendants had filed a cross-motion for summary judgment.

OVERVIEW: Defendants' motion for summary judgment asserted that: the assignment of the right to collect the subject debt was invalid and therefore that the collection company was precluded from suing in its own name; and in bringing the instant action the collection company was engaging in the unauthorized practice of law. The court took jurisdiction pursuant to Ariz. Sup. Ct. R. 47(e)(5). Without reaching the second issue, the court affirmed the trial court's entry of summary judgment in favor of defendants, holding that there was no evidence of a valid assignment of the right to collect the subject debt and therefore there was no basis for finding that the collection company had the right to bring the instant action as the real party in interest. The purported assignment failed to identify the capacity in which the assignor made the agreement and to what debt the purported assignment related.

OUTCOME: The court affirmed the trial court's entry of summary judgment in favor of defendants in the collection company's action on an alleged assignment of a debt which was purportedly due and owing.


CORE TERMS: chose in action, assignee, real party in interest, unauthorized practice of law, summary judgment, own name, purported, last name, dispositive


LEXISNEXIS® HEADNOTES Hide

Contracts Law > Performance > Novation

Contracts Law > Types of Contracts > Choses in Action

HN1 The valid assignee of a chose in action may bring a suit thereon in his own name. Moreover, the assignee need not be the full party in interest; and the debtor or alleged obligor is not prejudiced because by statute he may assert his defenses as fully against the assignee as he could the original claimant. More Like This Headnote | Shepardize: Restrict By Headnote

Civil Procedure > Parties > Real Parties in Interest > Assignees

Contracts Law > Performance > Novation

Contracts Law > Types of Contracts > Choses in Action

HN2 Ariz. Rev. Stat. § 44-144, provides in part, that as to the effect of an assignment of a chose in action upon defenses existing at the time of assignment; the following exception exists: an assignment of a chose in action shall not prejudice any set-off or other defense existing at the time of the notice of the assignment. More Like This Headnote | Shepardize: Restrict By Headnote

Contracts Law > Formation > Capacity of Parties > General Overview

Contracts Law > Performance > Novation

Contracts Law > Types of Contracts > Choses in Action

HN3 In order to effect a legal assignment of any kind there must be evidence of an intent to assign or transfer the whole or part of some specific thing, debt, or chose in action, and the subject matter of the assignment must be described sufficiently to make it capable of being readily identified. Moreover, an assignment is subject to the same requisites for validity as are other contracts, i. e., mutuality of assent, proper parties with the capacity to make a contract, consideration and legal subject-matter. More Like This Headnote | Shepardize: Restrict By Headnote

Civil Procedure > Appeals > Standards of Review > General Overview

HN4 In those instances where under the facts a trial court could only come to one legal conclusion, and it has reached the correct one, although for the wrong reason, its judgment is to be affirmed. More Like This Headnote | Shepardize: Restrict By Headnote


COUNSEL: Hyman Brazlin, Phoenix, for appellant.

Craig & Rich by David Rich and Burch, Cracchiolo, Levie, Guyer & Weyl by Jack Daniel Klausner, Phoenix, for appellees.

Barry M. Corey, Tucson, for amicus curiae Arizona Collectors Association.

Ronald W. Sommer, Tucson, for amicus curiae State Bar of Arizona.

JUDGES: In Banc. Holohan, Justice. Cameron, C. J., Struckmeyer, V. C. J., and Hays and Gordon, JJ., concur.

OPINION BY: HOLOHAN

OPINION


[*601] [**769] Plaintiff has appealed the granting of summary judgment for defendants on [*602] [**770] plaintiff's complaint. We took jurisdiction pursuant to 17A A.R.S. Sup.Ct. Rules, Rule 47(e)(5), and for the reasons herein stated we affirm the judgment of the trial court.

In January of 1975, Certified Collectors, Inc. (appellant) brought an action against David and Jane Doe Lesnick and their corporation, The House of David (appellees) on an alleged assignment of a debt in the amount of $ 8,835.21 which appellant claimed was past due and owing since February of 1972. Although it was not alleged in [***2] the complaint, the record indicates that the purported assignment to plaintiff concerned a debt owed by the Lesnicks as owners of The House of David to the Emerson Television Sales Corp.

Appellees denied the substantial allegations of the complaint and affirmatively asserted, inter alia, that the plaintiff was not the real party in interest. 1

FOOTNOTES

1 16 A.R.S. Rules of Civil Procedure, Rule 17(a).


Following the taking of David Lesnick's deposition, plaintiff filed a motion for summary judgment. Defendants cross-moved for summary judgment asserting that (1) the assignment plaintiff alleged was invalid and that plaintiff was therefore precluded from suing on it in its own name and that (2) by bringing this action, plaintiff was engaged in the unauthorized practice of law in violation of A.R.S. § 32-261.

The trial court found that the assignment and subsequent initiation of litigation by plaintiff, Certified Collectors, Inc., constituted the unauthorized practice of law. 2 Reasoning that plaintiff could not, [***3] therefore, properly obtain a judgment while engaging in such unauthorized practice, the trial court dismissed the complaint and entered judgment for the defendants.

FOOTNOTES

2 The parties and amicus have cited the following cases on the issue: State Bar of Arizona v. Arizona Land Title & Trust Co., 90 Ariz. 76, 366 P.2d 1 (1961), modified 91 Ariz. 293, 371 P.2d 1020 (1962); State ex rel. State Bar v. Bonded Collections, Inc., 36 Wis.2d 643, 154 N.W.2d 250 (1967); J. H. Marshall & Associates, Inc. v. Burleson, 313 A.2d 587 (D.C.App.1974). Cf. contra Washington State Bar Association v. Merchants Rating & Adjusting Company, 183 Wash. 611, 49 P.2d 26 (1935); Cohn v. Thompson, 128 Cal.App. (Supp.) 783, 16 P.2d 364 (1932).

Although both parties argued the issue of whether Certified Collectors, Inc., by its actions before and during this case was engaged in the unauthorized practice of law, and the trial court's decision also rested on this point, we think that the facts in the record were not sufficiently well-developed for us to reach the issue. We therefore reserve our decision on this issue for another case in which a clearer record is presented to us.


[***4] Because of the nature of the record before us, we think that one issue is dispositive of this case: was there a valid assignment running between Emerson Television Sales Corporation and Certified Collectors, Inc., so as to give Certified standing to bring this action in its own name as the real party in interest? For the reasons which follow, we answer that question in the negative.

We think that the general rule in our state is well-settled that HN1the valid assignee of a chose in action may bring a suit thereon in his own name. General Accident Fire & Life Assur. Corp. v. Little, 103 Ariz. 435, 438, 443 P.2d 690, 693 (1968). Moreover, the assignee need not be the full party in interest; and the debtor or alleged obligor is not prejudiced because by statute 3 he may assert his defenses as fully against the assignee as he could the original claimant. General Accident Fire & Life Assur. Corp. v. Little, supra; Mosher v. Hiner, 62 Ariz. 110, 112, 154 P.2d 372, 374 (1944), cert. den., 325 U.S. 874, 65 S.Ct. 1554, 89 L.Ed. 1992 (1945).

FOOTNOTES

3 HN2Ariz.Rev.Stat. § 44-144, provides in relevant part:
"Effect of assignment of chose in action upon defenses existing at time of assignment; exceptions

"An assignment of a chose in action shall not prejudice any set-off or other defense existing at the time of the notice of the assignment. . . ."



[***5] Although we have not passed on the issue (and do not do so now), we are aware that some jurisdictions have held that the assignment of a chose in action for collection is valid and entitles the assignee to bring [*603] [**771] suit on the claim in its own name as the real party in interest, even where the assignment is partial and the assignor retains an interest in the proceeds recovered. See Campbell v. Peter, 108 Utah 565, 162 P.2d 754 (1945); Bankers Trust Co. v. International Trust Co., 108 Colo. 15, 113 P.2d 656 (1941); Amende v. Town of Morton, 40 Wash.2d 104, 241 P.2d 445 (1952).

It is, however, hornbook law that HN3in order to effect a legal assignment of any kind there must be evidence of an intent to assign or transfer the whole or part of some specific thing, debt, or chose in action, and the subject matter of the assignment must be described sufficiently to make it capable of being readily identified. See Ingram v. Mandler, 56 F.2d 994 (10th Cir., 1932); Novo Trading Corp. v. Commissioner, 113 F.2d 320 (2nd Cir., 1940). Moreover, an assignment is subject to the same requisites for validity as are other contracts, i. e., mutuality of assent, [***6] proper parties with the capacity to make a contract, consideration and legal subject-matter. Hutsell v. Citizens' National Bank, 166 Tenn. 598, 64 S.W.2d 188 (1933).

We now turn to the purported assignment in this case which is the crux of plaintiff's claim for recovery. We note that plaintiff has continually characterized itself as an "assignee" throughout this litigation and that this conclusion is apparently based on a document in the record entitled "Assignment." This exhibit indicates that on May 21, 1973 one Louis Sierra 4 signed an assignment form with Certified Collectors, Inc. This form contains only a recitation of the consideration involved, and the seal of a California notary public. The crucial information necessary here, namely Sierra's identity and the capacity in which he made this agreement, his relation (if any) to the Emerson Television Sales Corporation and any identification of what debt this purported assignment related to are all absent. Moreover, there are no additional facts in the record which would even suggest an answer to the lack of information in this-at best-cryptic form "assignment." 5

FOOTNOTES

4 Because the photocopies in the record are poor and the individual's handwriting difficult to read, we have concluded that Sierra's last name is XXXXX XXXXX that. In any event, it is, of course, the form of the assignment, and not the individual's last name, which is dispositive here. [***7]

5 The defendants raised this matter in their memorandum in support of their motion for summary judgment; however, plaintiff's reply made no response to this issue. The face of the record, taken together with plaintiff's failure to rebut the issue (or to supply the necessary information) leads us to conclude that there was no rebuttal to be made. Lujan v. MacMurtrie, 94 Ariz. 273, 383 P.2d 187 (1963).


We therefore hold that the basic elements of a legal assignment are so lacking in this case that we can find no basis in the record on which to conclude that Certified Collectors, Inc. has any right to bring an action on this claim as the real party in interest. 6

FOOTNOTES

6 Since it is not before us, we make no determination whether the Emerson Television Sales Corporation (the owner of the alleged debt) can recover from either the Lesnicks or The House of David in a separate action.


HN4In those instances where under the facts [***8] a trial court could only come to one legal conclusion, and it has reached the correct one, although for the wrong reason, its judgment is to be affirmed. Komarek v. Cole, 94 Ariz. 94, 100, 381 P.2d 773, 777 (1963); Nicholas v. Giles, 102 Ariz. 130, 133, 426 P.2d 398, 401 (1967). We affirm the judgment dismissing plaintiff's complaint.
Expert:  TexLaw replied 2 years ago.
119 Ariz. 356, *; 580 P.2d 1210, **;
1978 Ariz. App. LEXIS 515, ***

Francisco M. CRUZ and Delores Cruz, husband and wife, Bernard and Dorothy Louk, a single man and a single woman, and Fred Pugh, a single man, James A. Seamon and Deborah Seamon, husband and wife, Robert N. Kell and Betsy Kell, husband and wife, Appellants, v. LUSK COLLECTION AGENCY, an Arizona Corporation, Doctors Business Bureau, an Arizona Corporation, and American Creditors Bureau, an Arizona Corporation, Appellees

No. 2 CA-CIV 2687

Court of Appeals of Arizona, Division Two

119 Ariz. 356; 580 P.2d 1210; 1978 Ariz. App. LEXIS 515


March 30, 1978

SUBSEQUENT HISTORY: [***1] Rehearing Denied May 2, 1978. Review Denied June 6, 1978.

PRIOR HISTORY: APPEALS FROM THE SUPERIOR COURT OF PIMA COUNTY

Cause Nos. 162135, 162708 and 162737

(Consolidated)

Honorable J. XXXXX XXXXXnah, Judge

DISPOSITION: Affirmed.

CASE SUMMARY
PROCEDURAL POSTURE: In several consolidated cases, appellant debtors challenged decisions from the Superior Court of Pima County (Arizona), which granted motions brought by appellee collection agencies to dismiss the debtors' claims that the collection agencies were not the real party in interest for the purpose of bringing actions on the debt.

OVERVIEW: Some debtors were plaintiffs who brought actions for relief from a default judgment, and some debtors were defendants being sued by the collection agencies on the debts. All of the debtors argued that the collection agencies could not bring an action on the assignment from the creditors because the collection agencies were not the real parties in interest and, alternatively, the assignment was void as against public policy. On appeal, the court held that although the text of Ariz. R. Civ. P. 17(a), the real party in interest rule, did not specifically so state, an assignee of an account for collection had the right to bring an action in his own name. The court also held that the collection agencies did not engage in the unauthorized practice of law when they took an assignment of a debt for the purpose of bringing a lawsuit. The court noted that the collection agencies were subject to strict regulation by the state and were not barred by the regulatory scheme from taking an account for the purpose of bringing an action if necessary and, in fact, actually bringing an action in their own name.

OUTCOME: The court affirmed the trial court's decisions in favor of the collection agencies.


CORE TERMS: collection agencies, assignee, collection, real parties in interest, assignor, own name, chose in action, prosecuted, bring suit, file suit, furnish, license, practice law, legal services, attorney's fees, express trust, entitled to sue, proper parties, financial statement, filing suit, economic waste, beneficially interested, administrator, ratification, substitution, unauthorized, abandoning, delinquent, intangible, authorize


LEXISNEXIS® HEADNOTES Hide

Civil Procedure > Parties > Capacity of Parties > General Overview

Civil Procedure > Parties > Joinder > General Overview

Civil Procedure > Parties > Real Parties in Interest > General Overview

HN1 Ariz. R. Civ. P. Rule 17(a) states that every action shall be prosecuted in the name of the real party in interest. An executor, administrator, guardian, bailee, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party authorized by statute may sue in his own name without joining with him the party for whose benefit the action is brought; and when a statute of the state so provides, an action for the use or benefit of another shall be brought in the name of the State of Arizona. No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest. More Like This Headnote | Shepardize: Restrict By Headnote

Civil Procedure > Parties > Capacity of Parties > General Overview

Civil Procedure > Parties > Real Parties in Interest > General Overview

Civil Procedure > Judgments > Preclusion & Effect of Judgments > Res Judicata

HN2 The purpose of Ariz. R. Civ. P. Rule 17(a) is to enable the defendant to avail himself of the evidence and defenses that he has against the real party in interest and to assure the finality of the results in the application of res judicata. More Like This Headnote | Shepardize: Restrict By Headnote

Civil Procedure > Parties > Capacity of Parties > General Overview

Contracts Law > Types of Contracts > Choses in Action

HN3 A valid assignee of a chose in action may bring a suit thereon in his own name. The assignee need not be the full party in interest and the debtor or alleged obligor is not prejudiced because by statute, Ariz. Rev. Stat. § 44-144, he may assert his defenses as fully against the assignee as he could against the original claimant. More Like This Headnote

Civil Procedure > Parties > Capacity of Parties > General Overview

HN4 In Arizona the assignee of an account for collection can sue in his own name. More Like This Headnote | Shepardize: Restrict By Headnote

Contracts Law > Formation > Capacity of Parties > General Overview

Contracts Law > Performance > Assignment > General Overview

HN5 An assignment is subject to the same requisites for validity as are other contracts, i. e., mutuality of assent, proper parties with the capacity to make a contract, consideration and legal subject-matter. More Like This Headnote

Business & Corporate Law > General Partnerships > Management Duties & Liabilities > Rights of Partners > Inspection of Books & Records

Governments > State & Territorial Governments > Licenses

HN6 Ariz. Rev. Stat. § 32-1051 states in part that an individual, firm, partnership, association or corporation to whom a license is to be issued for the operation of a collection agency shall not attempt to collect any collection fee, attorney's fee, court cost or expenses unless such fees, charges or expenses are justly due from and legally chargeable against the debtor, or have been judicially determined. More Like This Headnote

Administrative Law > Agency Rulemaking > General Overview

Governments > State & Territorial Governments > Licenses

HN7 Rule 4-8-05, Arizona Secretary of State Administrative Rules and Regulations prior to April 4, 1977, states in part that every licensee of a collection agency shall maintain a record and history of each claim or account for collection which shall clearly show any attorney's fee or court costs charged or collected. Furthermore, Rule 4-8-11, Arizona Secretary of State Administrative Rules and Regulations prior to April 4, 1977, states in part that a collection agency shall not file a lawsuit against a debtor unless such lawsuit is filed by an attorney who has no personal or financial interest in that collection agency. More Like This Headnote | Shepardize: Restrict By Headnote


COUNSEL: Southern Arizona Legal Aid, Inc. by John G. Balentine and Phillip R. Morgan, Tucson, for appellants.

Barry M. Corey, Tucson, for appellees.

Ronald W. Sommer, Tucson, for amicus curiae State Bar of Arizona.

JUDGES: Howard, Judge. Richmond, C. J., and Hathaway, J., concur.

OPINION BY: HOWARD

OPINION


[*357] [**1211] OPINION

The issue in this appeal is whether appellees are proscribed from bringing suit on the grounds that they are not the real parties in interest and are not authorized to practice law in the State of Arizona.

The instant case commenced with a complaint for declaratory relief filed in the superior court on August 20, 1976, by appellants Cruz to set aside a default judgment taken against them on October 16, 1975 by appellee Lusk Collection Agency. The default judgment had been entered in the justice court based on a claim against the Cruzes which had been assigned by a local merchant to Lusk.

After Lusk filed a motion to dismiss the Cruz complaint [***2] for failure to state a claim upon which relief could be granted, the trial court ordered that two pending suits which had been transferred from the justice court to the superior court be consolidated with the case of Cruz v. Lusk. Those suits, Doctors Business Bureau v. Seamon and American Creditors Bureau v. Kell were actions in which the collection agencies were suing on assignments from Tucson Medical Center and Sloan Personnel, respectively. The debtors, Seamon and Kell, had counterclaimed for declaratory and injunctive relief.

The original complaint in Cruz v. Lusk was then amended to include as additional plaintiffs, Bernard and Dorothy Louk and Fred Pugh. The Louks had also been sued by Lusk in justice court based on an assignment from Tucson Medical Center to Lusk. Pugh had not been sued by Lusk but had been threatened that if payment was not made within a certain time, suit would be filed by Lusk on an account assigned by Mountain States Telephone & Telegraph Company.

The court ordered that the motion to dismiss was deemed directed to the amended complaint in Cruz v. Lusk and to the counterclaims in the Seamon and Kell cases and dismissed [***3] the complaint and respective counterclaims.

The "Assignment and Verification" which was utilized for the assignment of the accounts owed by each of the appellants is a standard form assignment with blanks for the name of the collection agency, the nature of the claim, the name of the creditor, and the name of the debtor.

The "Assignment and Verification" form provides:
"That for legal consideration, the undersigned hereby sell(s), assign(s), transfer(s) unto [name of collection agency] that certain [nature of claim] owed to [name of creditor] by [name of debtor] and do hereby authorize said assignee to bring action in the name of the undersigned or its own name and do any and all things necessary to enforce collection or effect a compromise settlement, if in said assignees' opinion such action or compromise is prudent.

That the attached claim is, within the knowledge of the affiant, just and true, that it is due, and that all just and lawful offsets, payment and credits have been allowed, and assignor agrees to furnish competent testimony and evidence to prove said claim or any part thereof when requested by said assignee or its attorneys."
Appellants do not [***4] claim that these forms were not properly completed as to each.

The appellants and counterclaimants alleged the following facts which are deemed to be true for the purposes of a motion to dismiss: (1) No consideration for the alleged assignment passes from the collection agency to the owner of the claim except for the efforts of the collection agency to collect such account prior to instituting suit; (2) the collection agency employs attorneys to institute suit on said accounts in its own [*358] [**1212] name; (3) the attorneys employed by the collection agency represent the collection agency in the suit instituted on such accounts and do not represent the assignor; (4) the collection agency pays in advance all costs of litigation on such accounts; (5) the collection agency has complete discretion in determining whether or not to institute a suit on such accounts; (6) the collection agency receives from the assignor an agreed-upon percentage of any recovery from such suits as a commission or fee; (7) the attorneys employed by the collection agency to prosecute such actions receive a percentage of the collection agency's share of the recovery plus any attorney's fees awarded; [***5] and (8) the collection agency, by the terms of the agreement entered into with the owner of the claim, is required to remit an agreed-upon percentage of the recovery from such suits to the owners.

Appellants contend that appellees could not bring suit on the assignment because they were not the real parties in interest under Rule 17(a), Arizona Rules of Civil Procedure. Intertwined with this argument is the contention that the assignments were based upon unlawful subject matter and were therefore void.

HN1Rule 17(a), Arizona Rules of Civil Procedure, states:
"Real party in interest. Every action shall be prosecuted in the name of the real party in interest. An executor, administrator, guardian, bailee, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party authorized by statute may sue in his own name without joining with him the party for whose benefit the action is brought; and when a statute of the state so provides, an action for the use or benefit of another shall be brought in the name of the State of Arizona. No action shall be dismissed on the ground that it is not prosecuted in the name of the [***6] real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest."
HN2The purpose of Rule 17(a) is to enable the defendant to avail himself of the evidence and defenses that he has against the real party in interest and to assure the finality of the results in the application of res judicata. See, State Bar Committee Note to Rule 17(a), Arizona Rules of Civil Procedure; Celanese Corp. of America v. XXXXX XXXXX Industries, Inc., 214 F.2d 551 (5th Cir. 1954); 6 Federal Practice and Procedure, Sec. 1541, pp. 635-636.

In Certified Collectors, Inc. v. Lesnick, 116 Ariz. 601, 570 P.2d 769 (1977) the court recognized, as being the general rule, the well-settled proposition that HN3a valid assignee of a chose in action may bring a suit thereon in his own name. The court further stated that the assignee need not be the full party in interest and that the debtor or alleged obligor is not prejudiced because by [***7] statute, A.R.S. Sec. 44-144, he may assert his defenses as fully against the assignee as he could against the original claimant.

The court, however, declined to pass on the issue of whether the assignment of a chose in action for collection was valid and entitled the assignee to bring suit on the claim in his own name as the real party in interest, even where the assignment was partial and the assignor retained an interest in the proceeds recovered.

We believe that since 1896 the law in this state has been that HN4the assignee of an account for collection can sue in his own name. In Sroufe v. Soto Bros. & Co., 5 Ariz. 10, 43 P. 221 (1896), a case involving the assignment of an account for collection, the court stated:
". . . Though it was in fact understood by the parties that the beneficial [*359] [**1213] interests to pass by the assignment were limited, still the plaintiffs, as holders of the legal title of said accounts, could sue for and recover the whole amount thereof." 5 Ariz. at 12, 43 P. at 221.
In Mosher v. Bellas, 33 Ariz. 147, 264 P. 468 (1928), a case also involving the assignment of a chose in action for collection, the court stated: [***8]
"It cannot be questioned that the assignee of a chose in action is, under the law, the legal owner of it and as such entitled to sue for its collection." 33 Ariz. at 151, 264 P. at 469.
The real party in interest statute which was in effect when the Sroufe case was decided, Revised Statutes of Arizona (1887) para. 680 as amended in 1893, provided:
"Every action shall be prosecuted in the name of the real party in interest, provided, an executor of administrator, or a trustee of an express trust, or a person expressly authorized by the statute, may sue without joining with him the person for whose benefit the action is brought. A person with whom or in whose name a contract for the benefit of another is made, and the assignee of any chose in action is a trustee of an express trust, within the meaning of this section." (Emphasis added)
The foregoing emphasized language was retained until 1939 when it was omitted from Sec. 21-501, Arizona Code (1939). We do not believe the omission worked any change in the law. The holding of the Sroufe case made the omitted language redundant. The federal courts have held that if an assignee, for the purposes of [***9] collection, holds legal title to the debts according to the governing substantive law, he is the real party in interest even though he must account to his assignor for whatever is recovered in the action. 6 Federal Practice and Procedure, Sec. 1545.

We conclude that if there was a valid assignment here, appellees were the real parties in interest under Rule 17(a), Arizona Rules of Civil Procedure, and therefore could sue in their own names.

In Certified Collectors, Inc. v. Lesnick, supra, the court stated:
". . . Moreover, HN5an assignment is subject to the same requisites for validity as are other contracts, i. e., mutuality of assent, proper parties with the capacity to make a contract, consideration and legal subject-matter. . . ." (Emphasis added) 570 P.2d at 771.
Appellants contend that the subject matter of the assignment was illegal because it authorized appellees to practice law without a license. A comprehensive annotation on the subject "Operations of Collection Agency As Unauthorized Practice of Law" is contained in 27 A.L.R.3d 1152 et seq. Appellants have cited to us many cases collected in the annotation to support their proposition. We do not [***10] find these cases apposite. Collection agencies in this state are governed by comprehensive statutes. See A.R.S. Sec. 32-1001 et seq. A collection agency must be licensed by the state and have furnished the Secretary of State a financial statement and bond. A.R.S. Secs. 32-1021 and 32-1022. Minimum qualifications are required under A.R.S. Sec. 32-1023. The license must be renewed each year and accompanied by a financial statement. A.R.S. Sec. 32-1025. A.R.S. Sec. 32-1052 authorizes the examination by the Secretary of State of the licensee's records.

Examination of the applicable statutes leads us to the conclusion that the legislature has given the collection agencies the power to take assignments of accounts for collection for the purpose of filing suit when necessary in their own names. HN6A.R.S. Sec. 32-1051 states in part:
"An individual, firm, partnership, association or corporation to whom a license is to be issued under this chapter shall:

* * *

5. Not attempt to collect any collection fee, attorney's fee, court cost or expenses unless such fees, charges or expenses are justly due from and legally chargeable against the debtor, or have been judicially determined [***11] . . . ."
[*360] [**1214] A.R.S. Sec. 32-1055 enumerates the acts which constitute unlawful conduct on the part of a collection agency. Nowhere does the statute state that an agency cannot take an account for the purpose of filing suit if necessary and, in fact, actually file suit in its own name.

We also note that the rules and regulations promulgated by the Secretary of State have interpreted the statutes as allowing the collection agencies to file suit. 1 HN7Rule 4-8-05, Secretary of State Administrative Rules and Regulations prior to April 4, 1977, states in part:
"Every licensee shall: . . . (2) maintain a record and history of each claim or account for collection which shall clearly show: . . . (d) any attorney's fee or court costs charged or collected."
Rule 4-8-11 states in part:
". . . A collection agency shall not file a lawsuit against a debtor unless such lawsuit is filed by an attorney who has no personal or financial interest in that collection agency."


FOOTNOTES

1 Pursuant to A.R.S. Sec. 32-1002 the Secretary of State has the duty to promulgate regulations governing collection agencies.


[***12] California, the source for part of our statutes on collection agencies, has faced the problem at hand and resolved it in a manner which we believe is based on sound reasoning. In Cohn v. Thompson, 128 Cal.App.Supp. 783, 16 P.2d 364 (1932) the court stated:
"The assignee merely contracts to file suit in his own name, if necessary to make the collection. But he does not agree to furnish any legal services whatever to the assignor. The assignee employs the attorney and controls his action. No legal services are performed for the assignor. The only duty of the assignee is to account to the assignor after the collection has been made. In making the agreement to bring suit, the assignee merely agrees to do that which he can legally do without any agreement, by virtue of the assignment. Provided the assignment is absolute, so as to vest the apparent legal title in the assignee, the latter is entitled to sue in his own name * * *.

. . . In the case now before us . . we find that the plaintiff was not practicing law within the meaning of the foregoing definition. Certainly the plaintiff did not agree to furnish to his assignor legal advice or counsel, nor to prepare legal [***13] instruments, or contracts. Neither did the plaintiff agree to do or perform services in a court of justice for the assignor or to employ an attorney to perform such services for the assignor. The services performed by the attorney were for the assignee alone, who was the real party in interest and exercised entire control of the action; the assignor having no power to exercise any control whatsoever either over the action or the attorney in the performance of his services." 16 P.2d at 365.
The viability of Cohn v. Thompson, supra, was recognized by the court in Le Doux v. Credit Research Corporation, 52 Cal.App.3d 451, 125 Cal.Rptr. 166 (1975). There the court referred to a law review note which we believe is appropriate to this case. The author of Note, The Real Party In Interest Rule Revitalized; Recognizing Defendant's Interest In the Determination of Proper Parties Plaintiff, 55 Cal.L.Rev. 1452, 1476-77, was quoted by the Le Doux court:
"'Commercial necessity is the primary justification for allowing suits by assignees for collection only. Refusal to permit such parties to sue results in unnecessary economic waste. If assignees for collection only were [***14] not permitted to sue, merchants might be forced to decide between abandoning their enterprises while suing on delinquent accounts, or abandoning their delinquent accounts. Neither choice produces socially desirable results.

'* * *.

[*361] '* * * [**1215] The policy reasons for requiring that suits be prosecuted by beneficially interested parties are highly abstract. They reflect value judgments regarding fairness. Against such intangible judgments must be weighed the probability that tangible economic waste will follow from refusal to allow assignees for collection only status to sue. In small cases the threat of tangible harm seems far more compelling than the intangible feeling that suits should be prosecuted by the beneficially interested party.' (Footnotes omitted.)" 125 Cal.Rptr. at 169.


We do not believe that the appellees engaged in the unauthorized practice of law. They were acting within the powers authorized by the Arizona State Legislature.

Affirmed.


Chain of title – this is not something that applies to your situation. This only applies where there is a physical piece of evidence, rather than a document based lawsuit like yours. That being said, what you are objecting to is that there is no evidence of a valid assignment of any debt owed by you. They bear the burden of proof, not you.


Here are some other cases for you:

180 Ariz. 570, *; 886 P.2d 649, **;
1994 Ariz. App. LEXIS 258, ***; 179 Ariz. Adv. Rep. 28

METRO COLLECTIONS, Plaintiff-Appellant, v. LARRY G. MEGGERS and MARLA MEGGERS, husband and wife, Defendants-Appellees.

1 CA-CV 93-0131

COURT OF APPEALS OF ARIZONA, DIVISION ONE, DEPARTMENT B

180 Ariz. 570; 886 P.2d 649; 1994 Ariz. App. LEXIS 258; 179 Ariz. Adv. Rep. 28


December 13, 1994, Filed

PRIOR HISTORY: [***1] Appeal from the Superior Court of Maricopa County. Cause No. CV 92-08389. The Honorable Gary E. Donahoe, Judge.

DISPOSITION: REVERSED

CASE SUMMARY
PROCEDURAL POSTURE: Appellant debt collector sought review of a judgment of the Superior Court of Maricopa County (Arizona), which dismissed for lack of subject matter jurisdiction the collector's suit against appellee debtor to collect a credit card debt. The debtor did not answer the complaint, but the superior court dismissed it sua sponte under Ariz. Rev. Stat. § 22-201(B) (Supp. 1993) because the amount in controversy did not meet the jurisdictional minimum.

OVERVIEW: The debt collector's collection suit prayed for $ 4,980, plus $ 1,659 in attorney's fees. Section 22-201(B) provided that the superior court did not have jurisdiction over matters that involved $ 5000 or less. In holding that it lacked jurisdiction, the superior court reasoned that, even though the parties' contract provided for the payment of attorney's fees, § 22-201(B) required exclusion of the fees for purposes of determining jurisdiction. In reversing the superior court's judgment, the court found that, under § 22-201(B), the contractual attorney's fee provision required that the attorney's fees be considered in computing the amount in controversy. Section 22-201(B) provided that awarded attorney's fees were to be excluded "when authorized by law" from the computation of the amount in controversy. The court interpreted that portion of § 22-201(B) to require the inclusion of contractual attorney's fees for purposes of determining the amount in controversy. An earlier amendment to § 22-201(B) merely codified an earlier court decision to the effect that contractual attorney's fees were included in determining the amount in controversy for jurisdictional purposes.

OUTCOME: The court reversed the judgment.


CORE TERMS: attorney's fees, jurisdictional amount, credit card, exclusive original jurisdiction, matter jurisdiction, exclusive of interest, contract provision, statutory provision, express promise, legislative intent, limiting language, jurisdictional, contractually, codification, counterclaim, excluding, dollars, intend, card, collection


LEXISNEXIS® HEADNOTES Hide

Civil Procedure > Appeals > Appellate Jurisdiction > State Court Review

Constitutional Law > The Judiciary > Jurisdiction > General Overview

Governments > Courts > Justice Courts

HN1 Ariz. Rev. Stat. § 22-201(B) provides that the amount constituting the exclusive jurisdictional limit for justice courts, to be determined exclusive of interest, costs and awarded attorney's fees when authorized by law, is $ 5000 or less. More Like This Headnote

Governments > Legislation > Interpretation

HN2 The cardinal rule of statutory construction is to ascertain and give effect to the legislative intent. In determining the legislative intent, courts consider the statute's context, the language used, the subject matter, the historical background, the statute's effects and consequences, and the statute's spirit and purpose. Every phrase in a statute should be interpreted so as to have meaning and effect because courts presume that the legislature did not intend to do a futile thing by including in a statute a provision that is non-operative. More Like This Headnote


COUNSEL: ARON & ASSOCIATES, P.C., Peter M. Balsino, Attorneys for Plaintiff-Appellant, Tucson.

JUDGES: LEVI RAY HAIRE, Judge, CONCURRING: SARAH D. GRANT, Presiding Judge, BARRY C. SCHNEIDER, Judge.

OPINION BY: LEVI RAY HAIRE

OPINION


[*570] [**649] OPINION

HAIRER, Judge

This appeal is from the superior court's dismissal of plaintiff-appellant's complaint for lack of subject matter jurisdiction. Because we hold that the superior court had jurisdiction, we reverse.

The pertinent facts and procedural history are as follows. In August 1989 Larry G. Meggers applied for a credit card with Norwest Card Services ("Norwest"). The credit card application, which constituted the written agreement between the parties, provided that Meggers would pay attorney's fees if Norwest had to refer collection of the credit card balance to a lawyer. Meggers defaulted on his payments, and Norwest assigned its interest in this matter to Metro Collections ("Metro").

Metro then filed an action in superior court against Meggers for the credit card balance of $ 4,980.21 plus $ 1,659 in attorney's fees. [***2] When Meggers failed to file an answer, [**650] [*571] Metro moved for entry of default judgment. However, the court on its own motion dismissed the complaint, holding that under Ariz. Rev. Stat. Ann. ("A.R.S.") section 22-201(B) (Supp. 1993), the superior court did not have subject matter jurisdiction.

A.R.S. section 22-201(B) provides that justices of the peace "have exclusive original jurisdiction when the amount involved, exclusive of interest, costs and awarded attorney's fees when authorized by law, is five thousand dollars or less." (Emphasis added.) The trial court reasoned that even though the parties' contract provided for the payment of attorney's fees, in determining the superior court's jurisdiction under the above-quoted statutory provision, the attorney's fees must be excluded. Since the credit card balance alone was insufficient to vest jurisdiction in the superior court, Metro's complaint was dismissed. Metro has appealed from the superior court's dismissal of its complaint.

The sole issue on appeal is whether attorney's fees claimed pursuant to a contract provision specifically providing for such an award must be excluded in determining whether the amount involved [***3] exceeds $ 5,000 under A.R.S. section 22-201(B). If such attorney's fees must be excluded, then the justice of the peace court has "exclusive original jurisdiction," and the trial judge correctly determined that the superior court lacked jurisdiction.

Prior to 1976, A.R.S. section 22-201(B) did not have a provision expressly providing for the exclusion of attorney's fees when determining the limits of the justice court's exclusive original jurisdiction. At that time the statute merely provided for the exclusion "of interest and costs." In Rojas v. Kimble, 89 Ariz. 276, 361 P.2d 403 (1961), the Arizona Supreme Court was faced with the issue whether the language of A.R.S. section 22-201(B) providing for the exclusion of "interest and costs" required the exclusion of attorney's fees based on an express promise in the parties' agreement. In considering a different statutory provision, the court had previously held that attorney's fees based on a statute, rather than the agreement of the parties, constituted "costs." See Murphey v. Gray, 84 Ariz. 299, 327 P.2d 751 (1958). In Rojas, the supreme court distinguished Murphey's analysis regarding attorney's fees based on statute, [***4] and held that when attorney's fees are based on an express promise, they cannot be considered as "costs," but, rather, "must be considered in determining the amount in controversy for jurisdictional purposes." Rojas at 278, 361 P.2d at 404 (citations omitted).

As previously noted, at the time Rojas was decided, A.R.S. section 22-201(B) merely provided for the exclusion of "interest and costs" in determining the limits of the exclusive original jurisdiction of justice of the peace courts. After the supreme court's decision in Rojas, the legislature amended A.R.S. section 22-201(B) by adding language providing HN1that the amount constituting the exclusive jurisdictional limit for justice courts was to be determined, "exclusive of interest, costs and awarded attorney's fees when authorized by law, is five thousand dollars or less." (Emphasis added.)

HN2The cardinal rule of statutory construction is to ascertain and give effect to the legislative intent. Martin v. Martin, 156 Ariz. 452, 457, 752 P.2d 1038, 1043 (1988). In determining the legislative intent, "we consider the statute's context, the language used, the subject matter, the historical background, the statute's [***5] effects and consequences, and the statute's spirit and purpose." State v. Korzep, 165 Ariz. 490, 493, 799 P.2d 831, 834 (1990). Every phrase in a statute should be interpreted so as to have meaning and effect because we "presume that the legislature did not intend to do a futile thing by including in a statute a provision that is non-operative." State v. Schultz, 123 Ariz. 120, 121, 597 P.2d 1023, 1024 (App. 1979).

Here, the legislature amended the statute to include the phrase "awarded attorney's fees when authorized by law." The trial court interpreted that phrase to exclude from the jurisdictional amount all attorney's fees, even those claimed pursuant to a contract provision providing for recovery of attorney's fees. Metro urges that the trial court's interpretation renders meaningless the last portion of the added provision. We agree.

[**651] [*572] If the intent was that all attorney's fees be excluded in determining the jurisdictional amount, there was no reason to add the limiting language "when authorized by law." It is our opinion that the limiting language was intended to refer to attorney's fees authorized other than by the contractual agreement of the parties. [***6] Therefore, although it is normally presumed that, by amending a statute, the legislature intends to change the existing law, State v. Kozlowski, 143 Ariz. 137, 138, 692 P.2d 316, 317 (App. 1984), we conclude that the amendment here was no more than a codification of the Arizona Supreme Court's decision in Rojas. Cf. Application of Webb, 150 Ariz. 293, 294, 723 P.2d 642, 643 (1986) (legislature's amendment of A.R.S. section 31-144(A) held to be no more than a codification of the decision in Pickett v. Boykin, 118 Ariz. 261, 576 P.2d 120 (1978)). 1

FOOTNOTES

1 We further note that when the legislature amended subsection B of A.R.S. section 22-201 in 1976 so as to add the language excluding "attorney's fees when authorized by law," a similar change was not made in subsection F pertaining to the jurisdictional amount for counterclaims. Subsection F retains the former language merely providing for the exclusion of "interest and costs." If we were to interpret the amended language of subsection B as providing for the exclusion of contractually based attorney's fees, we would be faced with the anomalous situation where contractually based attorney's fees would be excluded in determining jurisdiction on a complaint, but under the Rojas interpretation would be included in determining the jurisdictional amount on a counterclaim.


[***7]

We conclude that the trial court erred by excluding the requested attorney's fees when computing the jurisdictional amount. The judgment dismissing Metro's complaint is reversed.

LEVI RAY HAIRE, Judge

CONCURRING:

SARAH D. GRANT, Presiding Judge

BARRY C. SCHNEIDER, Judge

Summary judgment is proper in cases where there is "no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(c)(1). Summary judgment should be granted, "if the facts produced in support of the claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense." Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). We review a trial court's granting of summary [*7] judgment de novo. United Bank of Ariz. v. Allyn, 167 Ariz. 191, 195, 805 P.2d 1012, 1016 (App. 1990). Additionally, we view the facts in a light most favorable to the non-moving party and draw any inferences reasonably derived from the facts in favor of that party. Angus Med. Co. v. Digital Equip. Corp., 173 Ariz. 159, 162, 840 P.2d 1024, 1027 (App. 1992).


91 Ariz. 284, *; 371 P.2d 1014, **;
1962 Ariz. LEXIS 287, ***

W. Francis WILSON, Appellant, v. J. Newton BRAMBLETT and Elizabeth Bramblett, his wife, Frank J. Stefanich and Effie M. Stefanich, his wife, Stuart M. White and Helen K. White, his wife, James G. Huebner, a widower, Tim Mazzoni and Gladys Mazzoni, his wife, and F. M. Hammack and Niva M. Hammack, his wife, as Individuals and as members of The Kipling Syndicate, Co-partnership, and The Kipling Syndicate, Co-partnership, Appellees
Expert:  TexLaw replied 2 years ago.
No.XXXXXof Arizona, In Division

91 Ariz. 284; 371 P.2d 1014; 1962 Ariz. LEXIS 287


June 6, 1962

SUBSEQUENT HISTORY: [***1] Rehearing Denied July 5, 1962.

DISPOSITION: Affirmed in part and reversed in part and remanded with directions.

CASE SUMMARY
PROCEDURAL POSTURE: Plaintiff client sought review of judgment from the trial court (Arizona), which entered a decision in favor of the client and against defendant partnership except that the trial court found that a California judgment was res judicata as to all members of the partnership who appeared and answered in the California case.

OVERVIEW: The trial court found that the California judgment was res judicata as to all defendants appearing and answering in that case and entered judgment in their favor and against the client upon the ground of res judicata alone. The client appealed. On review the court found that an action on an open account constituted a different cause of action to an action on an account stated, although arising out of the same transaction. Thus, the California judgment between the same parties was not res judicata as to the client's legal rights in the instant action.

OUTCOME: The court affirmed the judgment of the trial court for the client as to the members of the partnership not appearing in the California action and reversed as to the remaining members of the partnership with directions to enter judgment against these members.


CORE TERMS: cause of action, signature, open account, original note, res judicata, promissory note, join, stated account, nondelivery, joinder, executed and delivered, materially, conclusive, compulsory, litigated, supplied, altered, copartnership, invalid, account stated, allegations of fact, laid down, statute of limitations, new agreement, action arising, ratification, conditional, depending, proceeded, election


LEXISNEXIS® HEADNOTES Hide

Civil Procedure > Judgments > Preclusion & Effect of Judgments > Res Judicata

HN1 The rule is often stated in general terms that a judgment is conclusive not only upon the questions actually contested and determined, but upon all matters which might have been litigated and decided in that suit; and this is undoubtedly true of all matters properly belonging to the subject of the controversy and within the scope of the issues, so that each party must make the most of his case or defense, bringing forward all his facts, grounds, reasons, or evidence in support of it, on pain of being barred from showing such omitted matter in a subsequent suit; and it is also true that where the second suit is upon the same cause of action all matters which might have been litigated are conclusively settled by the judgment; But the weight of authority is that where the second action, although between the same parties, is on a different cause of action, the judgment is not conclusive on all matters which might have been litigated in the former action, but only as to such points or questions as were actually in issue and adjudicated thereon. More Like This Headnote

Civil Procedure > Pleading & Practice > Pleadings > Rule Application & Interpretation

HN2 Ariz. R. Civ. P. 18(a) in pertinent part provides that the plaintiff in his complaint may join either as independent or as alternate claims as many claims either legal or equitable or both as he may have against an opposing party. More Like This Headnote

Commercial Law (UCC) > Investment Securities (Article 8) > Security Entitlements

Governments > Legislation > Statutes of Limitations > General Overview

HN3 An action on an open account constitutes a different cause of action to an action on an account stated, although arising out of the same transaction. More Like This Headnote | Shepardize: Restrict By Headnote

Contracts Law > Formation > General Overview

Contracts Law > Negotiable Instruments > Enforcement > Defenses > Failure of Consideration

HN4 Consideration is presumed, Ariz. Rev. Stat. § 44-424, and the burden is on defendants to prove failure of consideration or any other defense interposed. More Like This Headnote


COUNSEL: Richard A. Wilson, Phoenix, and Kent A. Blake, Phoenix, for appellant.

Langmade & Sullivan, Phoenix, and Lawrence W. Young, Fresno, California, for appellees.

JUDGES: M. T. Phelps, Justice (retired). Bernstein, C. J., and Struckmeyer, J., concur.

OPINION BY: PHELPS

OPINION


[*285] [**1014] This is an action brought by plaintiff-appellant in this state against defendants-appellees to recover the sum of $ 9,645.54 together with interest, for legal services rendered over a period of years. The parties will hereinafter be designated as plaintiff and defendants. The defendants were members of a limited partnership with headquarters in Fresno, California, operating under the name of The Kipling Syndicate.

The complaint in the instant case contains two counts: one based on a stated account and the second on an open account for legal services and for money advanced to defendants.

Plaintiff had previously brought an action in Fresno, California, against said defendants based upon the same transaction but predicated his action upon an original and a copy of a promissory note signed [***2] by two members of the partnership. Later the signature of the Kipling Syndicate by C. M. S. Kipling was added to the copy. Kipling and Ernest K. Bramblett and Lois Bramblett, his wife, were not served with process in the California case and neither appeared or answered the complaint.

In that case the trial court found that the original note was conditionally delivered and was to have no force or effect until signed by J. Newton Bramblett who refused to sign it, and that the copy was materially altered and C. M. S. Kipling had no authority to execute the note for the copartnership and consequently held the note invalid and of no force or effect. Judgment was therefore entered for defendants and plaintiff appealed to the California District Court of Appeals.

[**1015] The District Court of California in that case entitled Wilson v. Bramblett, 151 Cal.App.2d 369, 311 P.2d 22 (1957), said:
"Many of the several defenses made by respondents and found by the court as to why the note was unenforceable against these defendants appear to be tenable. Without discussing them, we conclude that respondents' liability on the original note and copy thereof sued upon was conditional, depending [***3] upon the signature of Bramblett or ratification by the individuals signing and was not duly executed and delivered, within the meaning of that term. This conclusion is sufficiently supported by the evidence and the law even though appellant retained a copy of the note. It therefore becomes unnecessary to determine the other claimed defenses." (Emphasis supplied.) 311 P.2d at 25.
The Court further said:
"* * * It has been definitely held [*286] that where a note is given under an agreement that it is not to become binding until signed by another person, the failure to obtain said additional signature precludes a recovery as between the original parties or transferees who have notice of the agreement, unless the obtaining of the additional signature is wrongfully prevented by the maker. (Citing cases.)" 311 P.2d at 25.


The Court thereupon proceeded to affirm the judgment of the trial court upon the sole ground as shown above that "the note was not duly executed or delivered within the meaning of the terms." (Emphasis supplied.)

We have quoted at length from the California decision in order to show that such decision is based exclusively upon the fact [***4] that the delivery of the original note was conditional depending upon the additional signature thereto of Bramblett or ratification by the individuals signing and was not executed and delivered within the meaning of that term. With this view we wholeheartedly agree.

The Arizona trial court in the instant case expressly found all of the allegations of fact in the complaint were true and therefore found all of the issues in favor of plaintiff W. Francis Wilson and against the defendants C. M. S. Kipling and Ernest K. Bramblett and Lois Bramblett, his wife, because they were not served in the California case with process and did not appear or answer in that case, and entered judgment against them. However, the court found that the California judgment was res judicata as to all defendants appearing and answering in that case and entered judgment in their favor and against the plaintiff upon the ground of res judicata alone. From this portion of the judgment plaintiff has appealed to this court.

We therefore have presented for our consideration the sole question of whether the California judgment is res judicata as to the defendants there and consequently whether plaintiff may maintain [***5] the instant cause of action.

It is, of course, urged by defendants here that it is, and by plaintiff that it is not res judicata.

The California court was presented first with the question of whether the note sued upon was a valid contract since one of the defenses was that the note was delivered conditionally for the purpose of procuring the signature of J. Newton Bramblett, another member of the copartnership. The court found the note to be invalid because the signature of J. Newton Bramblett to said note was never procured and the original note never returned to plaintiff. In other words, it found the original note had [*287] never been delivered to plaintiff and that the copy retained by plaintiff had been materially altered by adding the signature of the Kipling Syndicate by C. M. S. Kipling and that Kipling had no authority to sign the name of the copartnership thereto. Of course, if the original note was not delivered under the circumstances of the case it could not be claimed that there was a delivery of the copy retained by plaintiff. When the court found nondelivery of the [**1016] original note it followed as a matter of law that the note was invalid and that [***6] judgment must be entered for defendants regardless of whether the plaintiff had rendered valuable services for defendants or whether defendants had paid him therefor.

With respect to whether the California decision is conclusive upon this court in a different cause of action arising out of the same transaction we have adopted the language laid down in 34 C.J. 909 to the effect that:
"HN1The rule is often stated in general terms that a judgment is conclusive not only upon the questions actually contested and determined, but upon all matters which might have been litigated and decided in that suit; and this is undoubtedly true of all matters properly belonging to the subject of the controversy and within the scope of the issues, so that each party must make the most of his case or defense, bringing forward all his facts, grounds, reasons, or evidence in support of it, on pain of being barred from showing such omitted matter in a subsequent suit; and it is also true that where the second suit is upon the same cause of action all matters which might have been litigated are conclusively settled by the judgment; * * * But the weight of authority is that where the second action, although [***7] between the same parties, is on a different cause of action, the judgment is not conclusive on all matters which might have been litigated in the former action, but only as to such points or questions as were actually in issue and adjudicated thereon." (Emphasis supplied.) Fischer v. Hammons, 32 Ariz. 423, 430, 259 P. 676, 678 (1927).


Our HN2Rule 18(a) insofar as here pertinent provides that:
"The plaintiff in his complaint * * may join either as independent or as alternate claims as many claims either legal or equitable or both as he may have against an opposing party. * * *" 16 A.R.S. R.Civ.P.
In this jurisdiction this has long been the recognized practice.

[*288] As early as 1928 in the case of Kunselman v. Southern Pac. R. R. Co., 33 Ariz. 250, 263 P. 939, we held that HN3an action on an open account constituted a different cause of action to an action on an account stated, although arising out of the same transaction. Plaintiff in that case brought his action on an open account. Later, after the statute of limitations had run he attempted to amend his complaint to plead an account stated. The court held that this was not an amendment but that he had pleaded [***8] a new cause of action and therefore the statute of limitations had run against it and ordered the action dismissed.

The court said:
"The fact that the same debt lies at the foundation of distinct causes of action does not render them identical. * * *" 33 Ariz. at 258, 263 P. at 941.
and after illustrating the truth of this statement, not pertinent here, stated that:
"The test generally laid down for a departure is whether proof of additional facts will be required. * * *" 33 Ariz. at 259, 263 P. at 941.
citing 21 R.C.L. 583 and 31 Cyc. 418. This is still the law in this jurisdiction and it refutes the contention that joinder of several causes of action is compulsory.

Now, let us apply the above test to the instant case. Had the notes in the California case been held to be valid and enforceable the only evidence required of plaintiff to entitle him to judgment would have been to prove that defendants were the persons who executed and delivered the note to him and that the debt had not been paid, introduce the note in evidence and rest his case. HN4Consideration is presumed, § 44-424 A.R.S., and the burden was on defendants to prove failure of consideration [***9] or any other defense interposed. The defendants proved nondelivery of the note; [**1017] that it was materially altered, etc. The appellate court rested its decision upon its nondelivery.

The issues in that case and the evidence introduced therein necessary to support the judgment of the trial court were entirely foreign to the facts necessary to be proved in either count in the instant case. And the evidence to support a judgment for plaintiff in that case to entitle him to judgment was in no respect similar to the evidence in the instant case. Upon proving nondelivery of the note defendants were then and there entitled to judgment. This merely deprived plaintiff of his one means of proving that defendants were indebted to him in that case but did not close the door to him to prove his case in other causes of action available to him.

In the cause of action based upon an open account plaintiff had to prove not only that [*289] he rendered the services alleged in his complaint but he had to prove each item thereof and its value.

On the other hand if he proceeded upon the account stated his proof is again different from what he would have to prove on an open account. [***10] The items necessary to be proved in the open account are merged into the new agreement fixing the amount stated which is the balance mutually agreed upon between the plaintiff and defendants and as said in Chittenden and Eastman Co. v. Leader Furniture Co., 23 Ariz. 93, 201 P. 843 (1921):
"* * * The party in whose favor the balance in a stated account appears is virtually in the position of the holder of a promissory note, while the other party is obligated practically as the maker thereof (Citing cases). Hence the allegation of facts relating to the prior transactions of the parties or referring to the manner in which the new agreement came about has no place in the complaint any more than the facts leading to the giving of a promissory note would be proper in a suit thereon. * * *" 23 Ariz. at 95, 201 P. at 844.


An examination of the California authorities indicated that even if California has not adopted Rule 18(a) of the Federal Rules, 28 U.S.C.A., it has followed the same practice as we have with respect to the joinder of different causes of action in the same complaint. The case of Goldwater v. Oltman, 210 Cal. 408, 292 P. 624, 71 A.L.R. 871, decided in 1930 is ample [***11] proof of that fact as well as the fact that a plaintiff may or may not join all of his causes of action in one complaint. In that case the plaintiff did join his action on a promissory note, on an open account and on a stated account.

The court there said that it seemed to be conceded that all three causes of action were based upon the same transaction and that plaintiff had the right to set them forth and if need be, even inconsistent counts (Citing cases). The court then stated:
"* * * The law is well settled that in such cases a plaintiff cannot be compelled to elect as to the cause of action upon which he desires to rely. * * *" (Citing cases.) 292 P. at 630.
It later stated it was proper for the plaintiff to join the causes of action in one complaint and it was error for the trial court to compel an election. It would appear to us to logically follow that if a defendant cannot compel an election where two or more causes of action are joined, he cannot require a compulsory joinder in the first place.

The statement in 8 Cal.Jur.(2d), Bills and Notes § 181, is to the same effect as that [*290] set forth in the Goldwater case, supra. It states that a person [***12] may properly join an action on a promissory note with an action on the original indebtedness such as a book account, together with another on a stated account. The language clearly indicates that it is permissive and refutes the claim that it is compulsory. Having determined that joinder of different causes of action arising out of the same transaction as in the instant case, the conclusion is irresistible that the California judgment [**1018] between the same parties is not res judicata as to plaintiff's legal rights in the instant action and we so hold.

We have read all the cases cited by defendants and find no support in any of them for their contention that the judgment and decision in the California case is res judicata in the instant case. The cases cited by defendants, we believe, support the views above expressed by us.

Therefore, the judgment of the trial court is affirmed as to C. M. S. Kipling and Ernest K. Bramblett and Lois Bramblett, his wife, and reversed as to the remaining defendants and the cause is remanded to the trial court with directions to enter judgment against said defendants in the amount prayed for together with interest at 6% from August 30, 1951, [***13] until paid.
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