Illinois Appellate Court Holds That Assignee of Legal Title May Sue To Collect Debt In Own Name

On February 1, an Illinois state appellate court concluded that the Illinois Collection Agency Act permits an assignee of an account to sue in its own name to collect on the account, but the assignee must prove a valid assignment in order to do so. Unifund CCR Partners v. Shah, No. 1-10-0855, 2011 WL 477725 (Ill. App. Ct. Feb. 1, 2011). In this case, the plaintiff, an assignee of the account, sued to collect on a defaulted credit card debt. The defendant moved to dismiss, arguing that the plaintiff could not prove a valid assignment because the plaintiff could not produce one document that included all of the information required under section 8b of the Illinois Collection Agency Act (i.e., the account information, the consideration paid for the assignment, and the effective date of the assignment). The circuit court denied the motion to dismiss, but certified two questions for the appellate court to review, (i) does an assignee for collection of a debt only have standing to sue in its own name; and (ii) can a plaintiff properly plead that an assignment exists using multiple documents?

Answering the first question, the court relied on two statutes, one which provides that an assignee and owner of a non-negotiable chose in action may sue in his or her own name, and a second in the Collection Agency Act which permits an account to be assigned to a collection agency in order to enable collection of the account in the agency’s name as assignee. The court found that the specific statute in the Collection Agency Act is broad enough to encompass not just assignees who take complete ownership of an account, but assignees who take legal title for the purposes of collection while the creditor retains a beneficial interest and equitable title.

To address the second question, the court recited the rule in the Collection Agency Act that permits an agency to bring suit only when "the assignment is manifested by a written agreement, separate from and in addition to any document intended for the purpose of listing a debt with a collection agency." The court found that the phrase "written agreement" signifies a term that refers to the parties’ entire bargain in written form, and not just a single document. Therefore, an assignment must be manifested in a written contract, but such contract can include or incorporate all or part of other instruments or documents by reference. As such, a valid assignment can be established through multiple documents, as long as the documents include the required information under section 8b. The court did add that the Collection Agency Act’s provision specifying a written contract must prove the existence of an assignment is not broad enough to permit a valid assignment to be proven by affidavit.