Ark. Code Ann. § 4-58-105 (2026)
Completion of assignments — Rights and remedies of debtor and subsequent assignees
- Every written assignment made in good faith, whether in the nature of a sale, pledge, or other transfer, or on account receivable or any moneys due or to become due on an open account or on a contract, except for wages and salaries, all of which shall be hereinafter referred to as “account”, with or without the giving of notice of the assignment to the debtor, shall be valid and complete at the time of the making of the assignment and shall be deemed to have been fully perfected at that time.
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- After an assignment made in good faith is complete, no bona fide purchaser from the assignor, no creditor of the assignor, and no other assignee or transferee of the assignor in any event shall have or be deemed to have acquired any right or interest in the account so assigned or transferred or in the proceeds thereof or in any obligation substituted therefor, superior to the rights and interest therein of the assignee.
- In any case where, acting without knowledge of the assignment or transfer, the debtor in good faith pays all or part of such account to the assignor or to the creditor, subsequent purchaser, or other assignee and transferee, all payments so made shall be acquittance to the debtor to the extent thereof, and the assignor, creditor, subsequent purchaser, or other assignee and transferee shall be a trustee of any sums so paid and shall be accountable and liable to the prior assignee thereof.
- However, any defense of the debtor against any account so assigned or transferred shall be good as against any subsequent purchaser or other assignee and transferee.
History. Acts 1945, No. 118, § 1; A.S.A. 1947, § 68-805.
Case Notes
Applicability.
This section is not intended to apply to assignments of rent. A lease is not a contract but a conveyance, and rent is not a mere income stream, and thus personalty, but an interest in realty subject to all the rules of conveyancing. First Fed. Sav. v. City Nat'l Bank, 87 B.R. 565 (W.D. Ark. 1988).
Relationship to Other Laws.
Subdivision (b)(2) of this section simply prescribed the legal effect when a party to an assigned account in good faith paid the assignor rather than the unknown assignee; the mere use of the word “trustee,” when viewed in the context of the statute as a whole, did not reflect a legislative intent to create the kind of express or technical trust required in the strict and narrow sense under 11 U.S.C. § 523(a)(4), and therefore, the $65,000 debt was not nondischargeable under 11 U.S.C. § 523(a)(4). Arvest Mortg. Co. v. Nail (In re Nail), 680 F.3d 1036 (8th Cir. 2012).
Assignment provision in the mortgage documents merely served as a collection device for miscellaneous proceeds (funds owned by debtor that she was contractually obligated to remit to the mortgage company); thus, even if the settlement proceeds from the builder were miscellaneous proceeds, debtor's alleged failure to comply with the assignment provision was a dischargeable breach of contract, not a nondischargeable embezzlement. Arvest Mortg. Co. v. Nail (In re Nail), 680 F.3d 1036 (8th Cir. 2012).
Security Interest Created.
Although debtor executed a back-dated assignment purporting to convey all of his right, title, and interest in a promissory note to his parents, their interest in its proceeds was superior to that of debtor's creditors under this section and § 4-58-102, where the parties to the assignment did not intend an absolute transfer of the note, but merely the creation of a security interest. Luker v. Reeves, 65 F.3d 670 (8th Cir. 1995).
Sureties.
The rights of a surety to funds in the hands of the owner, when a contractor defaults, are superior to the rights of an assignee of the contractor, as the assignee stands in the contractor's position. Exchange Bank & Trust Co. v. Texarkana School Dist., 227 Ark. 759, 301 S.W.2d 453 (1957).
Unauthorized Practice of Law.
If an assignee was engaged in the unauthorized practice of law by bringing an action on the assigned list, it would not extinguish or invalidate a just debt. Smith v. National Cashflow Sys., 309 Ark. 101, 827 S.W.2d 146 (1992).
Cited: Newton v. Merchants & Farmers Bank, 11 Ark. App. 167, 668 S.W.2d 51 (1984).