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[C]ontracts extending financial credit or trust to a contracting party are of such a personal nature that substitution of another in his stead does not legally suffice. Clayman v. Goodman Properties, Inc., 518 F. 2d 1026 (D.C. Ct. App. 1973).

Everyone has a right to select and determine with whom he will contract, and cannot have another person thrust upon him without his consent. Midwest Psychological Center v. Indiana, 959 NE 2d 896 (Ind. Ct. App. 2011)

Discuss? xdancex

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It would seem that it's worth a shot trying to get the "we can sell your account whenever we want, to whomever we want and without telling you" clauses in CC contracts stricken. Of course, I haven't read those cases in their entirety, but that could be one hulluva win for our side, except that it may cause OCs to retain the accounts for a longer period, thus ensuring a tougher fight.

And that 2nd case looks a little more iffy, because it is based on medical services if the word 'Psychological' in the name of the plaintiff means anything. IMO, medical debt could very well be viewed differently than CC debt when it comes to this kind of thing.

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I haven't read the entire cases but, from the excerpts you quoted, these rulings would seem to preclude JDB's and mortgage guyers from claiming they have a contract with you.

I did notice that the cites are from the District of Columbia and from Indiana court of appeals respectively so, I'm guessing they wouldn't hold precedent in other states ...... or am I wrong?

Interesting concept, however.

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“A bank can lend its money, but not its credit.” First Nat’l Bank of Tallapoosa

v. Monroe. 135 Ga 614, 69 SE 1124, 32 LRA (NS) 550.

“.. . the bank is allowed to hold money upon personal security; but it must

be money that it loans, not its credit.” Seligman v. Charlottesville Nat. Bank,

3 Hughes 647, Fed Case No.12, 642, 1039.

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“It has been settled beyond controversy that a national bank, under federal

Law being limited in its powers and capacity, cannot lend its credit by guaranteeing

the debts of another. All such contracts entered into by its officers are ultra

vires . . .” Howard & Foster Co. v. Citizens Nat’l Bank of Union, 133 SC

202, 130 SE 759(1926).

“Neither, as included in its powers not incidental to them, is it a part of

a bank’s business to lend its credit. If a bank could lend its credit as well as

its money, it might, if it received compensation and was careful to put its name

only to solid paper, make a great deal more than any lawful interest on its money

would amount to. If not careful, the power would be the mother of panics, . . .

Indeed, lending credit is the exact opposite of lending money, which is the real

business of a bank, for while the latter creates a liability in favor of the bank,

the former gives rise to a liability of the bank to another. I Morse. Banks and

Banking 5th Ed. Sec 65; Magee, Banks and Banking, 3rd Ed. Sec 248.” American

Express Co. v. Citizens State Bank, 194 NW 429.

Exhibit C Mem of Law Bank Fraud

.

Edited by My~Cuz~n~Vinny~
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I think that not only would they argue the "we can sell your account" clause, which the cardholder assumedly agreed to when he opened the account, but they might also argue that the "contract" is virtually null and void once the account goes into default and collections. There would be no further business activity between the lender and the customer concerning performance of the contract, thus the customer is not being forced to deal with the new owner. I think they'd zero in on this language...

extending financial credit or trust to a contracting party

They would probably claim that they are not extending credit in this instance, they are simply trying to collect a debt which they legally purchased.

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they might also argue that the "contract" is virtually null and void once the account goes into default and collections.

We're getting somewhere now . . .

If the contract is "virtually null and void," would that amount to it being cancelled?

If a contract has been "cancelled," can it still be assigned?

Or, are debt buyers only acquiring the right to collect a receivable when they "purchase" a delinquent account?

Does that right to collect a receivable include the rights to enforce the terms of a contract which has been cancelled?

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We're getting somewhere now . . .

If the contract is "virtually null and void," would that amount to it being cancelled?

If a contract has been "cancelled," can it still be assigned?

Or, are debt buyers only acquiring the right to collect a receivable when they "purchase" a delinquent account?

Does that right to collect a receivable include the rights to enforce the terms of a contract which has been cancelled?

It is my understanding that each purchase made creating a receivable represents in and of itself a new contract under CC law in most states. It would be interesting to put those ideas together to kill a breach of contract claim by a JDB. I'm not confident that it would fly, but ohhhhh man, if it did! They'd have to rely on other claims, such as account stated. Then it would be more than a good idea to dispute the debt in its entirety when you get that 1692g letter.

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We're getting somewhere now . . .

If the contract is "virtually null and void," would that amount to it being cancelled?

If a contract has been "cancelled," can it still be assigned?

Or, are debt buyers only acquiring the right to collect a receivable when they "purchase" a delinquent account?

Does that right to collect a receivable include the rights to enforce the terms of a contract which has been cancelled?

The first thing I noticed about the Indiana case was that it stated "without his consent."

I would think it might depend upon the terms and conditions in the cardmember agreement. The agreement specifies the obligations of each party, the penalties for default, and a the statement that the account can be assigned.

It also includes the "use and acceptance" condition. We use the card, we accept the terms. In other words, we give our consent.

Missing a payment is a default. Technically, the consumer has breached the agreement. The consumer can bring the account current, or the account can eventually be closed by the issuer.

I could understand how one could assume that a breached agreement is now void and that the terms and conditions no longer apply, but I'm not sure that's how it works.

If the consumer is the one who breaches the agreement, I don't understand how terms that have been outlined and specified regarding a default could be cancelled. It would seem to me if that were the case, a consumer could default in order to avoid those penalties and conditions that occur after default (breach).

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If the contract is "virtually null and void," would that amount to it being cancelled?

If a contract has been "cancelled," can it still be assigned?

By null and void, I meant that the main body of language contained therein, the terms and conditions governing the use of the credit card, is no longer relevant due to default. The consumer will not BE using the credit card any longer. The only remaining part of the contract in force would be the collections clause, which is still legally binding.

The contract isn't cancelled, I don't think you can cancel a contract, can you, unless both parties agree in writing to set it aside somehow. It should remain in force until some logical conclusion is reached, either full performance by both parties, or adjudication of a breach.

In credit card cases, the contract would remain in force until the consumer pays in full, cancels the account after paying in full, the creditor closes the account after payment in full due to a downgrade of the consumer's credit, or a suit is filed for default and a decision rendered by the court. I don't see where assignment is an issue, there must be a million cases where accounts were assigned to JDBs. I don't recall any instance where a defendant raised a defense challenging the legality of assignment itself, only the valid proof thereof.

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If the contract is "virtually null and void," would that amount to it being cancelled?

If a contract has been "cancelled," can it still be assigned?

By null and void, I meant that the main body of language contained therein, the terms and conditions governing the use of the credit card, is no longer relevant due to default. The consumer will not BE using the credit card any longer. The only remaining part of the contract in force would be the collections clause, which is still legally binding.

The contract isn't cancelled, I don't think you can cancel a contract, can you, unless both parties agree in writing to set it aside somehow. It should remain in force until some logical conclusion is reached, either full performance by both parties, or adjudication of a breach.

In credit card cases, the contract would remain in force until the consumer pays in full, cancels the account after paying in full, the creditor closes the account after payment in full due to a downgrade of the consumer's credit, or a suit is filed for default and a decision rendered by the court. I don't see where assignment is an issue, there must be a million cases where accounts were assigned to JDBs. I don't recall any instance where a defendant raised a defense challenging the legality of assignment itself, only the valid proof thereof.

You are probably correct, but, in any event, since it hasn't been tried, it might be kind of fun. You go first though ;)

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The contract isn't cancelled, I don't think you can cancel a contract, can you, unless both parties agree in writing to set it aside somehow. It should remain in force until some logical conclusion is reached, either full performance by both parties, or adjudication of a breach.

If you have time, do a Google search for "unilateral cancellation of the contract."

Don't most credit card terms and conditions state that the credit grantor can terminate the agreement at will?

The rule of law in such cases is when a contract provides expressly that it is subject to termination upon notice, each party to the contract has the legal right to cancel the contract. See Juliette Fowler Homes, Inc. v. Welch Associates, Inc., 793 SW 2d 660 (Tex. 1990).

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I did read both cases and it appears to me that the argument, using those two cases, would not exactly be comparing apples to apples. They are a fairly boring read so I lost a little interest in them, but one of them involves a dec judgement and the other appears to involve a governmental dispute over the awarding of a contract.

I also interperted one of them that it appeared the contract was trying to be somewhat changed or amended (guess that's the same thing really) too late in the game. I might be wrong about that, but what I go out of it.

I guess what I'm trying to say is I see the argument being made and I know you are one of the ones I can count on one hand that know this stuff inside and out, but I'm failing to see how these cases would be the ones where you would try to persuaded the court with. I just see too many holes in them when you start trying to compare them to a junk debt buyer type lawsuit.

In one of the cases they are dealing with a for profit company and a non profit company getting into it over the dispute and a lot of the argument involves their statues as a profit or non profit.

I personally think that if the unilaterally written contract of adhesion, the credit card contract, passes the unconscionability doctrine, pretty much all other arguments are just throwing it against the wall and hope it sticks. However, that strategy has been known to work, but in my opinion the party just throwing it against the wall usually loses.

Just my two cents, the age of the cases don't bother me but the subject matter being discussed and ruled by the courts in comparision to what we discuss here is where I see the problem with using those cases.

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Don't most credit card terms and conditions state that the credit grantor can terminate the agreement at will?

Of course, and I addressed this when I listed the usual reasons a credit card contract can be terminated. I guess they don't really need a reason, but I have never seen an instance where someone with an excellent credit score and a good history of payment had their account closed. Creditors like good payers, that's how they make their money. Maybe that's why they advertise on CIC. Now THERE is something I'll never understand.

I did look quickly at "unilateral cancellation of the contract" and it seems to have conditions related to breach, certain conditions specified therein, and carries the potential litigation issue of breach itself. I'm curious.....where are you going with this? How does this apply to credit card contracts?

As I read your Texas case, it seems to suggest the same thing I stated, but in slightly different terms. The cardholder has the right to cancel the card by notifying the creditor in writing and by no longer using the account. The creditor has the same option, they can send you proper notification per Reg Z cancelling the account. Not that it matters, because the next time you swipe the card, it won't work. The letter is well, you know, I sent it, no you didn't, immaterial to the fact that your card won't work and you can't do anything about it.

As I read this, your position seems to be going toward a defense that assignment of a debt is not legally supportable based upon the fact that the substitute "owner" was not the person / entity with whom the creditor originally contracted. I see nothing in case law to support this theory, although it is interesting. I've never seen anybody raise this defense, much less use it successfully. However, I am always open to new ideas and love case law that supports new theories of litigation. God knows I've tried a few myself, and am now on my third major law firm with a major bank who just doesn't seem to know what to do with me. I went from a hack collections firm to a better hack collections firm to a major nationwide litigation firm. All over a credit card case. I guess they think I'm worthy of their attention. I intend to prove them right.

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I would think it might depend upon the terms and conditions in the cardmember agreement. The agreement specifies the obligations of each party, the penalties for default, and a the statement that the account can be assigned.

It also includes the "use and acceptance" condition. We use the card, we accept the terms. In other words, we give our consent.

This was my first inclination as well.

The question to be settled, I think, is how strictly this agreement can be enforced, and whether or not any of it can be stricken as unconscionable.

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On a side note, if you know how to handle a junk debt buyer, you really don't want the original creditor to be barred from selling a bad debt. If you're in the unfortunate position of having a charged off debt you should be begging and praying they sell it to a junk debt buyer. I know we are discussing the legal part of this and not the strategic part, but just throwing that in on a side note.

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whether or not any of it can be stricken as unconscionable

Only if you can prove that the agreement had provisions contrary to state or federal law that were so one sided as to provide an unfair advantage to the creditor. Tough to do. Although you should be able to rely on the legality of what they send you. Nobody should have to go to law school to analyze a credit card agreement. The obligation is on them per REG Z / TILA.

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I'm curious.....where are you going with this? How does this apply to credit card contracts?

My question is whether, in today's society, anyone thinks a contract extending financial credit could still be viewed as so personal in nature that parties cannot be subsituted at will. Are credit card contracts equivalent to personal service contracts?

Can Capital One provide you with the same benefits and services as American Express? What if you got a letter from American Express informing you that your American Express card is being converted to a Capital One card?

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My question is whether, in today's society, anyone thinks a contract extending financial credit could still be viewed as so personal in nature that parties cannot be subsituted at will. Are credit card contracts equivalent to personal service contracts?

Can Capital One provide you with the same benefits and services as American Express? What if you got a letter from American Express informing you that your American Express card is being converted to a Capital One card?

Generally speaking when I use a card there are Visa, MasterCard, AMEX, Discovery etc... accepted here. So in my book they all provide the same services.

However, the key is that when there are changes to a contract the other party can refuse the changes and stay under the terms and conditions of the original agreement.

In addition, either party may close the account and finish off any balance due under the terms and conditions at the time of the cancelling of the account.

In your example if AMEX told me Cap One was now going to service my account and I did not want to live with the Cap One terms, I have the right to close my account with no penalty.

Again, it all will go back to the written contract and what the contract will and can allow. Then if those terms and conditions pass the unconscionability doctrine, the parties are stuck with them.

Arbitration is a perfect example. They wrote those contracts so tight to include language where the arbitration agreement can't be removed no matter what. Now when the consumers started turning that on them they started taking the arbitration agreements out of the contracts. However, savoy consumers (even though I don't like arb, just an example) are still saying sorry, you wrote it, we agreed and now you're stuck with it, the good and the bad.

I think the key is choices and rights are given to both parties and nothing is forced on them. It's a voluntary contract with the right to cancel at anytime and live with the exact terms you agreed.

As long as banks are bought and sold and it's a common practice, I don't see how anybody could really argue in good faith they have such a personal relationship with their credit card issuer the party could not be substuted, but even if you could make the argument, the consumer can just say no, I'm not doing business with CAP ONE, close my account.

I guess the question is if the consumer says the relationship is too personal to change the bank, would they have an issue with Cap One if they said we now own your account and are dropping the interest rate 5% and sending all new customers $100.00 checks. Would the bond with AMEX still be so strong there would be an objection to Cap One stepping in? I think we all know that "special bond" with AMEX would be done in a heartbeat.

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Can Capital One provide you with the same benefits and services as American Express? What if you got a letter from American Express informing you that your American Express card is being converted to a Capital One card?

They might not provide the exact same service but it's like Erin Andrews has promised me to come over and "help me relax" and at the last minute Jennifer Anniston calls and says Erin can't make it but I'll be over to take over with whatever you and Erin were going to do.

Um Okay, it might not all be the same exactly, but I'm fine with the new contract. Sorry, high school attempted humor got the best of me. But really we all know nobody really cares, just give us our plastic (and I mean credit card plastic).

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Can Capital One provide you with the same benefits and services as American Express? What if you got a letter from American Express informing you that your American Express card is being converted to a Capital One card?

Sure, Cap 1 can screw you over with 29% interest just as good as the next guy. What else do they do for you except pay for your purchases and hope they get their money back? Maybe they should change their name to Casino 1, because they are taking the same gamble as a roulette player. Choice depends on the state of residence and the borrowing statute. There would be no advantage to accepting a Cap1 card since they specify "either or" SOL. Therefore, there is no potential advantage to me if I decide not to pay them. Then again, the average consumer doesn't know this stuff like we do. All they would care about is the interest rate, nothing else. That's why they come here after they get sued.

Like Steve Quayle said last night on Coast to Coast AM, the average American is intellectually one step away from a lobotomy and a feeding tube. All they want is their MTV, their I pad - I phone - I - could care less if I pay my bills, and their next electronic junk technology fix. Ask the average high school student what book they last read. What do you get for a response? "Book? Dude, what's a book? Like what is Lady Gaga doing today?" Spending your money, you moron.

We see this all the time here, "Me no remember making $50,000 on credit card," "I don't remember this account," and the ever popular "Sorry, I liked the 327 responses to my thread telling me I am completely crazy, but I already filed my answer and 27 special defenses. Oh, and I got a summary judgment motion this morning. Any help? I don't know what to do."

Coltfan made a good point with the girls, but with my luck Rosie O'Donnell would show up to replace Tyne Daly. Sorry, Bruno is bitter today. He does not like the FEMA prison camps being constructed all over the US and the joint exercises between the Russian military and the US military, in which a squadron of Russian attack helicopters executed a mock attack on a Walmart in Ohio. He also does not like the fact that the Department of Homeland Security purchased 2 billion rounds of ammunition, 200 million of which were 7.62 sniper rounds and most of the rest was .223 and .40 caliber hollow points. Then again, they may just be interested in target practice.

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