CITY OF NORTH MIAMI, A POLITICAL SUBDIVISION OF THE STATE OF FLORIDA, APPELLANT,
v.
AMERICAN FIDELITY FIRE INSURANCE COMPANY, A FOREIGN CORPORATION, APPELLEE
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City of North Miami appeals a judgment requiring it to pay sums due under an assignment of contract rights held by American Fidelity Fire Insurance Company. The court reverses, finding that the City was not properly notified of the assignment as required by Florida's Uniform Commercial Code, and therefore validly paid the original creditor instead of the assignee.
The court reversed the judgment against the City because: (1) the assignment created a security interest governed by Article 9 of Florida's UCC, making the contract's anti-assignment clause ineffective under UCC § 679.318(4); (2) the City was never properly notified to pay the assignee as required by UCC § 679.318(3); and (3) therefore the City was privileged to pay the original creditor and is not indebted to the assignee.
[1] A contract provision prohibiting assignment is ineffective when the assignment creates a security interest governed by Article 9 of the Uniform Commercial Code.
[2] A debtor is privileged to pay its creditor, the assignor, when the debtor has not received notice to pay the assignee as required by the Uniform Commercial Code.
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Join FLexlaw to unlock all legal intelligence“the defendant City of North Miami was never notified to pay the assignee under the above security interest assignment as required by Section 679.-318(3) of Florida's Uniform Commercial Code and was therefore privileged to pay, as it did, its creditor R.J.L. Trading Company, the assignor under the assignment”
Establishes that proper notice to the obligor is a necessary prerequisite to enforce payment obligations against an assignee
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Join FLexlaw to unlock all legal intelligenceR.J.L. Trading Company assigned contract rights to Seitlin and Company, which were subsequently held by American Fidelity Fire Insurance Company. The …
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PER CURIAM.
This is an appeal by the defendant City of North Miami from a final judgment requiring it to pay sums allegedly due under an assignment held by the plaintiff American Fidelity Fire Insurance Company as assignee. We reverse for entry of a final judgment in favor of the defendant City of North Miami based on the following, briefly stated legal analysis.
First, we assume, without deciding, that the assignment herein made by R.J.L. Trading Company to Seitlin and Company was a valid one — notwithstanding the fact that the contract between R.J.L. Trading Company and the City of North Miami prohibited any assignment without the consent of the City of North Miami, which we find the latter justifiably refused — on the theory that (a) Article 9 of Florida’s Uniform Commercial Code [§ 679.102(l)(a), Fla.Stat. (1985) ] governs this assignment as it creates a security interest therein, and (b) the above contract provision prohibiting the said assignment was, therefore, ineffective under Section 679.318(4), Florida Statutes (1985).
Florida First Nat’l Bank at Key West v. Fryd Constr. Corp., 245 So. 2d 883, 886 (Fla. 3d DCA 1971); Mississippi Bank v. Nickles & Wells Constr. Co., 421 So. 2d 1056 (Miss.1982); Aetna Casualty & Surety Co. v. Bedford-Stuyvesant Restoration Constr. Corp., 90 A.D.2d 474, 455 N.Y.S.2d 265 (1982); American Bank of Commerce v. City of McAlester, 555 P. 2d 581 (Okla.1976).
Second, the defendant City of North Miami was never notified to pay the assignee under the above security interest assignment as required by Section 679.-318(3) of Florida’s Uniform Commercial Code and was therefore privileged to pay, as it did, its creditor R.J.L. Trading Company, the assignor under the assignment.
We reject the argument that the assignment itself, which was given to the City of North Miami, constitutes sufficient notice to pay the above assignee, as there is nothing in the assignment which requests the City of North Miami to pay the said assignee. Estate of Haas v. Metro-Goldwyn-Mayer, Inc., 617 F. 2d 1136 (5th Cir.1980); Vacura v. Haar’s Equip., Inc., 364 N.W. 2d 387 (Minn.1985); First Nat’l Bank at E. St. Louis v. Board of Educ., School Disk No. 189, 68 Ill.App.3d 21, 24 Ill.Dec. 670, 385 N.E. 2d 811 (App.Ct.1979); American Bank of Commerce v. City of McAlester, 555 P. 2d 581 (Okla.1976).
Third, this being so, it is plain that the defendant City of North Miami is not indebted under the subject assignment to the present holder of same as assignee — namely, American Fidelity Fire Insurance Company — and therefore the final judgment in favor of the latter on the said assignment was erroneously entered below.
The final judgment under review is, therefore, reversed and the cause is remanded to the trial court with directions to enter judgment in favor of the defendant City of North Miami.
Reversed and remanded.
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Bldg. Materials Corp. OF Am. v. Presidential Fin. Corp., 972 So. 2d 1090 (Fla. 2d DCA 2008)…e if the debtor later pays the assigned debt to the assignor rather than the assignee. See generally, Capital City Second Nat’l Bank v. Peavy & Son Constr. Co., 585 So. 2d 1123 (Fla. 1st [*1093] DCA 1991); City of N. Miami v. Am. Fid. Fire Ins. Co., 505 So. 2d 511 (Fla. 3d DCA 1987); Fla. First Nat’l Bank at Key West v. Fryd Constr. Corp., 245 So. 2d 883 (Fla. 3d DCA 1970). As stated in section 679.4061(1), Florida Statutes (2002): Subject to subsections (2) through (9), an account debtor on an account, chat…
Authorities Cited
- Fla. First Nat'l Bank AT KEY W. v. Fryd Constr. Corp., 245 So. 2d 883 (Fla. 3d DCA 1970)
- Est. of Arthur Dwight Haas v. Metro-Goldwyn-Mayer, Inc., 617 F.2d 1136 (5th Cir. 1980)