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    Assignment of Accident Settlement - Binding or Not?

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    After being injured in a motorcycle accident, Gary retained the law firm of High & Low to represent him in suing the other driver. Later, in an unrelated incident, Gary dislocated his shoulder and required surgery. Having no money to pay the surgeon, Gary signed a letter addressed to High & Low requesting that any money from the motorcycle accident settlement be assigned to the surgeon for treatment of Gary's shoulder. Gary personally delivered the letter to the receptionist at High & Low. Eventually, High & Low were successful in negotiating a settlement in Gary's favor. But, when the firm received the settlement check, Gary instructed his attorney to pay the money directly to Gary. The attorney did as Gary asked. As a result the surgeon was never paid.

    If the surgeon sues High & Low, can the surgeon recover if the law firm argues in defense that the law firm, as Gary's agent, had no choice but to obey Gary when he changed his mind and demanded that payment be made directly to him?

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    Please refer to file response attached.

    Posting ID: 37094
    How to Respond to Problems?

    Law, Other
    Year 1
    Assignment

    After being injured in a motorcycle accident, Gary retained the law firm of High & Low to represent him in suing the other driver. Later, in an unrelated incident, Gary dislocated his shoulder and required surgery. Having no money to pay the surgeon, Gary signed a latter addressed to High & Low requesting that any money from the motorcycle accident settlement be assigned to the surgeon for treatment of Gary's shoulder. Gary personally delivered the letter to the receptionist at High & Low. Eventually, High & Low were successful in negotiating a settlement in Gary's favor. But, when the firm received the settlement check, Gary instructed his attorney to pay the money directly to Gary. The attorney did as Gary asked. As a result the surgeon was never paid.

    If the surgeon sues High & Low, can the surgeon recover if the law firm argues in defense that the law firm, as Gary's agent, had no choice but to obey Gary when he changed his mind and demanded that payment be made directly to him.

    No files attached.

    Bid Credits: 1 Deadline: April 4, 2005, 11:39 am EDT

    1. After being injured in a motorcycle accident, Gary retained the law firm of High & Low to represent him in suing the other driver. Later, in an unrelated incident, Gary dislocated his shoulder and required surgery. Having no money to pay the surgeon, Gary signed a latter addressed to High & Low requesting that any money from the motorcycle accident settlement be assigned to the surgeon for treatment of Gary's shoulder. Gary personally delivered the letter to the receptionist at High & Low. Eventually, High & Low were successful in negotiating a settlement in Gary's favor. But, when the firm received the settlement check, Gary instructed his attorney to pay the money directly to Gary. The attorney did as Gary asked. As a result the surgeon was never paid.

    If the surgeon sues High & Low, can the surgeon recover if the law firm argues in defense that the law firm, as Gary's agent, had no choice but to obey Gary when he changed his mind and demanded that payment be made directly to him.

    Response:

    Whether or not the assignment of the accident settlement was binding would depend of several issues. First issue: Did the contract between High & Low have an assignment or bill of exchange clause? Some contracts are nonassignable.

    Second issue: Did the assignor (the surgeon) contact the High & Low firm? Since the assignment was between Gary (assignor) and the surgeon (assignee), the surgeon (the assignee) would have to notify High & Low to inform them of the assignment, but she or he did not. For assignments to be binding, it is the assignee (the surgeon) that was to contact the High & Low firm about the assignment. Because this did not occur, there was no agreement between High & Low and the surgeon about the assignment. No agreement; no assignment.

    Third Issue: Did the letter (i.e., bill of exchange) have the necessary components to make it valid? (See below: *Article 1 for 8 necessary requirements). A bill of exchange may be drawn payable to drawer's order. It may be drawn on the drawer himself. It may be drawn for account of a third person.(see Article 3 at same website)

    The Law firm would need to prove that something did not happen. Although Gary (as the drawer) initially gave an order (i.e., in writing) to High & Low (i.e., bill of exchange is an order to a person to pay an amount to another person) to pay the settlement amount to a third party (the surgeon or the drawer), he later rescinded (Article 9) and asked for the check to be sent to him instead.

    Article 9 33
    The drawer guarantees both acceptance and payment. He may release himself from guaranteeing acceptance- every stipulation by which he releases himself from the guarantee of payment is deemed not to be written (non Šcrite).

    Issue: Is the bill of exchange binding for the drawer or can Gary 'change his mind'? Article 9 states that Gary can release himself from guaranteeing acceptance, as Gary did when he instructed his attorney to pay the money directly to Gary.

    Therefore, High & Low could argue that he had to comply with (obey) Gary's request that payment be made directly to him.

    FINAL COMMENTS There sure are many angles to look at a case. I hope this helps and take care.

    *Article 1
    A bill of exchange contains:
    1. The term 'bill of exchange' inserted in the body of the instrument and expressed in the language employed in drawing up the instrument;
    2. An unconditional order to pay a determinate sum of money;
    3. The name of the person who is to pay (drawee);
    4. A statement of the time of payment;
    5. A statement of the place where payment is to be made;
    6. The name of the person to whom or to whose order payment is to be made;
    7. A statement of the date and of the place where the bill is issued;
    8. A statement of the date and of the place where the bill is issued;

    (The above can be found at: http://www.jus.uio.no/lm/bills.of.exchange.and.promissory.notes.convention.1930/doc#4).

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