Robyn N. Jones v. Wells Fargo Bank, N.A.
03-14-00658-CV
Tex. App.Feb 17, 2015Background
- Robyn N. Jones was not an original signatory on her ex-husband’s promissory note (the Note) but was a party to the deed of trust (the Deed) in a limited capacity.
- A divorce decree assigned the debt under the Note and the secured property to Jones; Jones accepted that assignment.
- The Note and Deed contain clauses stating they bind “successors and assigns” (i.e., they treat assigns as borrowers).
- Wells Fargo (assignee of the lender) moved for summary judgment; Jones moved for declaratory relief that she is a borrower and principal obligor under the Note and Deed.
- The central legal question: whether the Note/Deed language allowing assignments to “assigns” makes the debtor’s assignment to Jones effective without additional consent from the lender, thereby making Jones a borrower and principal obligor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether assignment in divorce made Jones a borrower under the Note | Jones: Note/Deed treat "assigns" as borrowers; assignment in decree + acceptance makes her a borrower | Wells Fargo: third-party assumption requires creditor consent; assignment without consent ineffective | Court concluded the contractual "assigns" language authorizes assignment by borrower, so Jones stands as borrower |
| Whether lender’s additional consent is required when instrument names "assigns" | Jones: express "assigns" language implies lender consent and makes instrument specifically assignable | Wells Fargo: common-law rule prohibits debtor assigning credit obligations absent creditor consent; instrument language insufficient | Court relied on precedent that "successors and assigns" can supply consent, so additional consent not required |
| Whether assignee’s status can discharge original obligor absent creditor release | Jones: assignment does not automatically discharge assignor; assignee stands in assignor’s shoes but original remains liable unless released | Wells Fargo: allowed assignment could improperly relieve original borrower | Court: assignment does not by itself release original obligor; assignor remains liable unless lender agrees to release |
| Whether summary judgment declaring Jones a principal obligor was appropriate | Jones: uncontroverted evidence of assignment and acceptance, and unambiguous instrument language entitle her to judgment as a matter of law | Wells Fargo: disputed legal effect of assignment and consent requirement | Court held Jones entitled to declaratory judgment based on instrument language and controlling precedent |
Key Cases Cited
- Goodloe & Meredith v. Harris, 127 Tex. 583, 94 S.W.2d 1141 (Tex. 1936) (holding an instrument stating it binds "successors and assigns" makes the contract assignable)
- City of Baird v. W. Tex. Utilities Co., 174 S.W.2d 649 (Tex. Civ. App.—Eastland 1943) ("successors and assigns" language authorizes transfer without further consent)
- Penick v. Eddleman, 291 S.W. 194 (Tex. Comm’n App. 1927) (language binding parties and their "legal assigns" implies landlord’s consent to assign)
- Zale Corp. v. Decorama, Inc., 470 S.W.2d 406 (Tex. Civ. App.—Waco 1971) (a credit contract specifically assignable by its own terms can be assigned)
- Romund v. Ginzel, 259 S.W.2d 619 (Tex. Civ. App.—Waco 1953) ("assigns" clause shows parties intended option/contract to be assignable)