Home Articles FAQ Site Map
Return Clauses And Bailment
Bailment means to loan something to someone without transferring ownership. In the context of civil court judgments, bailment means to recover a judgment without either being a lawyer, or not having complete ownership of all rights, title, and interest in a particular judgment.
Few subjects are more controversial and hotly debated by judgment recovery professionals than the subject of bailment. Judgment enforcers who are not lawyers or collection agencies cannot represent anyone, so they must have judgments assigned to them, so they can "step into the shoes" of the Original Judgment Creditor (OJC).
After a judgment is assigned to the judgment enforcer with a notarized assignment of judgment, and that assignment gets endorsed and filed by the court, the judgment enforcer owns the judgment, and all rights to recover that judgment.
When an OJC sells their judgment outright for a very steep discount, the judgment enforcer owns all legal and financial rights to the judgment. When the judgment is purchased on a future-pay basis, the enforcer has a fiduciary responsibility to the OJC if and when any money is recovered beyond their reasonable expenses to recover the OJC's judgment.
A court case that discusses the fiduciary responsibility of future-pay purchases of judgments assigned to enforcers is Cross v. Bonded Adjustment Bureau, 48 Cal. Appeals 4th 266; 55 California Reporter. 2d 801, July 9, 1996.
The simplest example of potential bailment in the judgment business is a time limit in a purchase agreement, for example "buyer will return judgment to OJC in one year". While this should not be a problem in most states, more than one court judge has decided that putting time limit clauses in judgment purchase contracts is a form of bailment.
A charge of bailment may subject the judgment enforcer to charges of Unlicensed Practice of Law (UPL) and is often an abuse of process. Sometimes, unfortunately, the law is often what any black robe judge decides it is.
In most states, time limits in judgment contracts are working just fine, and many judgment enforcers put time limits in their contracts. Many OJCs are uncomfortable assigning their judgment, and such time limits make many OJCs feel more comfortable.
However, there is case law (in California, Cohn v. Thompson) that says purchase agreements should be for "all rights, title and interest" in the judgment. The case also says time limits for recovery in the purchase agreement constitutes a temporary agreement, and are tantamount to an agency relationship (creating a bailment).
In a few states, for example, Arizona or Virginia; one should never buy a judgment on a future-pay basis unless they first consult with a lawyer, or form a collection agency, etc.
Most judgment enforcers will gladly return difficult or impossible judgments back to the OJC, but very few put this policy in writing. The return of judgments should be at the discretion and policy of the enforcer, and not a contractual obligation.
In some states, courts view return clauses as judgment "rentals" and bailment. In some states, revocable, conditional, or temporary assignments, may constitutes bailment and UPL. In at least one instance, the "perpetrator" was sentenced to a long prison term because of UPL-related charges. Note that UPL is a crime, not a civil matter, and a UPL charge usually starts with a judge recommending that the district attorney make a criminal charge.
The best judgment purchase agreements identify the irrevocability of the assignment. Most enforcers (who are not lawyers) do not let the OJCs have any control over their actions.
Go Back To Articles JudgmentBuy.com Home Page
|Contact: Mark Shapiro at Mark@GoGuys.com Fax 719-396-7035|
© Copyright 2001-2017 . Entire site is protected by copyright laws. All rights reserved.