Topic: "Volenti non fit injuria" ("Assumption of Risk"): A defense against JDBs?

[Rottweiler]

This thread will discuss the legal concept of "assumption of risk", or more specifically, the legal concept of  "volanti non fit injuria" and how it applies to dealing with JDBs and how it might be applied as a defense against a JDB lawsuit.

NOTE:  This concept and its use as a defense, is specific to JDBs and is NOT applicable to an OC or a factorer or assignee to a "good" (not defaulted at purchase or acquisition) debt.

I.)  Has "volanti non fit injuria"/assumption of risk been successfully used as a defense in a collection lawsuit filed against a consumer by a JDB?

"Assumption of risk" (volenti non fit injuria) as a defense has been discussed and no doubt tried in court.  I have not seen case law yet in which this defense worked in a debt collection case.  The defense itself is valid as a primary defense in tort cases.  Perhaps what applies here is more akin to comparative negligence in which the
plaintiff's own actions contribute to their losses and therefore that percentage of loss is unrecoverable (also a tort defense).

Some case law that does exist successfully applying the legal principle of "assumption of risk" was originally posted by TowerRat of "Art of Credit".  [This item is quoted from an archival copy of the AoC thread,  "Standard JDB Defenses", originally posted 11/20/2004 at 4:28 p.m. EST and is posted per "Fair Use" and/or the archival exemption as codified in U.S. Copyright Law.] 

CASE CITES -- Federal
MONTGOMERY et al. v. CITY COUNCIL OF CHARLESTON No. 335 Circuit Court of Appeals, Fourth Circuit 99 F. 825; 1900 U.S. App. LEXIS 4190 February 6, 1900

In Insurance Co. v. Middleport, 124 U.S. 534, 8 Sup. Ct. 625, 31 L. Ed. 537, the supreme court says:

"One of the principles lying at the foundation of subrogation in equity [subrogation definition: subrogation is the substitution of one person in the place of another with respect to a legal claim so that the substituted party gains the rights of the original], in addition to the one already stated, that the person seeking this subrogation must have paid the debt, is that he must have done this under some necessity to save himself from loss which might arise or accrue to him by the enforcement [**4] of the debt in the hands of the original creditor."

Can never apply to JDB because JDB purchases voluntarily.

The same case adopts this language of Sheld. Subr. Sec. 240:

"The doctrine of subrogation is not applied for the mere stranger or volunteer who had paid the debt of another, without any assignment or agreement for subrogation, without being under any legal obligation to make the payment, and without being compelled to be so for the preservation of any rights or property of his own."

And in Suppinger v. Garrels, 20 Ill. App. 625, it is said:

"A stranger, within the meaning of this rule, is not necessarily one who has nothing to do with the transaction out of which the debt grew. Any one who is under no legal obligation or liability to pay the debt is a stranger, and, if he pays the debt, is a mere volunteer."

A mere volunteer is not favorably regarded in equity. Fonbl. Eq. 349. "Volenti non fit injuria."

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CASE CITES OHIO [but others can cite it also]

LACEY, A MINOR, APPELLANT, v. LAIRD, APPELLEE, ET AL. No. 34737
Supreme Court of Ohio 166 Ohio St. 12; 139 N.E.2d 25; 1956 Ohio LEXIS 610; 1 Ohio

Op. 2d 158 December 12, 1956, Decided

In 1 American Jurisprudence, 415, Section 17, it is said:

"It is a general rule that one cannot maintain an action for a wrong occasioned by an act to which he has consented, under the familiar maxim 'volenti non fit injuria,' except where the act involves the life or person of a citizen, or a breach of the peace, or amounts to a public offense, as in cases of mutual combat."

See also 4 American Jurisprudence, 173, Section 84.

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John F. Miskovic, et al., Appellants v. Fred Tredway, et al., Appellees
Court of Appeals No. 92FU00009 COURT OF APPEALS OF OHIO, SIXTH APPELLATE

DISTRICT, FULTON COUNTY 1993 Ohio App. LEXIS 1154
February 26, 1993, Decided

Troop A relied on the common law doctrine of volenti non fit injuria. Id. at 551. (To a willing person no harm is done.) Cardozo explained that one who voluntarily participates in a sport, "accepts the dangers that inhere in it so far as they are obvious and necessary * * *." Murphy v. Steeplechase Amusement Co. (1929), 250 N.Y. 479, ; 166 N.E. 173, 174. The concept has also been called "implied" or "primary" assumption of the risk, Keeton, Prosser and Keeton on Torts (5th Ed. 1984) 485-486, Section 68; Anderson v. Ceccardi (1983), 6 Ohio St.3d 110, 111-112. Primary assumption [*7] of the risk has specifically been held to be unaffected by the modern
day merger of contributory negligence and misconduct-type assumption of the risk with the resultant determination that these defenses no longer bar recovery under comparative negligence. Id.; see, also, R.C. 2315.19. A finding of primary assumption of the risk has been held to be a proper basis for a decision on summary judgment.

Benjamin v. Deffet Rentals, Inc. (1981), 66 Ohio St.2d 86, syllabus; Nganga v. College of Wooster (1989), 52 Ohio App.3d 70, 72; but see Prosser and Keeton on Torts, supra, at 486-487, Section 68. The elements of primary assumption of the risk are, "* * * (1) consent to or acquiescence in (2) an appreciated or known (3) risk * * *." Wever v. Hicks (1967), 11 Ohio St.2d 230, 234.

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STEVEN HILLARD, Plaintiff-Appellant v. SCHROEDER INDUSTRIES, INC.,

Defendant-Appellee Case No. 11494 Court of Appeals of Ohio, Second Appellate

District, Montgomery County 1990 Ohio App. LEXIS 92
January 18, 1990, Decided

The appellee argues in the alternative, that summary judgment [*13] was appropriate because the appellant consented to run the machine with the guard in the upright position, citing Prosser and Keeton on Torts Sec. 18, at 112 (5th Ad. 1984). It is a fundamental principle of the common law that "volenti non fit injuria" to one who is willing, no wrong is done. Where no "public interest is contravened," they have left the individual to work out his own destiny, and are not concerned with protecting him from his own folly in permitting others to do him harm. Keeton, supra at 112.

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GUY W. McELHANEY, Plaintiff-Appellant v. RONALD MONROE, Defendant-Appellee C.A.
No. 13454 Court of Appeals of Ohio, Ninth Appellate District, Wayne County 1989 Ohio
App. LEXIS 366
February 1, 1989, Decided

The proper defense, if there be a defense, is what Anderson, supra, calls express assumption [*16] of risk which is derived from the legal maxim volenti non fit injuria.

The heart of this defense is consent. One should not be permitted to sue for an act to which one consents.

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HAMRICK, APPELLANT, v. GOODYEAR AEROSPACE CORPORATION, APPELLEE No.

12922 Court of Appeals of Ohio, Ninth Appellate District, Summit County 37 Ohio App.

3d 124; 524 N.E.2d 529; 1987 Ohio App. LEXIS 10587; 3 I.E.R. Cas. (BNA) 1245; 128

L.R.R.M. 2972; 113 Lab. Cas. (CCH) P11,593 June 24, 1987, Decided

ONCURBY: QUILLIN

CONCUR: QUILLIN, P.J., concurring.

I concur in the opinion with the added observation that the legal maxim "volenti non fit injuria" also applies. One is not legally injured if she consented to the act complained of or was willing that it should occur.

However, applying the above principles to our use, it is not unforeseeable that the JDB, by buying debt at a discount, can be held liable under this principle.

Next:  The definition of "negligence" and how it applies to assumption of risk.

[Rottweiler]

Now, the JDB, in their defense, may well state that the consumer debtor was negligent in the performance of their duties under the contract and hence, under the theory of comparative negligence, are liable for damages--the money owed--to the JDB.  The consumer, in turn, could well argue the exact same thing about the actions of the JDB!

To understand comparative negligence and how it could act as a counter to assumption of risk, the first thing we need to do is know the definition of "negligence" (applicable portion of definition quoted):

http://www.lectlaw.com/def2/n010.htm

"NEGLIGENCE - The failure to use reasonable care. The doing of something which a reasonably prudent person would not do, or the failure to do something which a reasonably prudent person would do under like circumstances. A departure from what an ordinary reasonable member of the community would do in the same community.  Negligence is a 'legal cause' of damage if it directly and in natural and continuous sequence produces or contributes substantially to producing such damage, so it can reasonably be said that if not for the negligence, the loss, injury or damage would not have occurred.

Negligence may be a legal cause of damage even though it operates in combination with the act of another, a natural cause, or some other cause if the other cause occurs at the same time as the negligence and if the negligence contributes substantially to producing such damage.

...When considered in relation to contracts, negligence may be divided into various degrees:

Ordinary negligence is the want of ordinary diligence; Slight or less than ordinary negligence is the want of great diligence; Gross or more than ordinary negligence is the want of slight diligence.

Three great principles of responsibility seem naturally to follow this division.

In those contracts which are made for the sole benefit of the creditor, the debtor is responsible only for gross negligence, good faith alone being required of him, as in the case of a depositary who is a bailee without reward.

In those contracts which are for the reciprocal benefit of both parties such as those of sale, of hiring, of pledge and the like, the party is bound to take that care which a prudent man ordinarily takes of his affairs and he will therefore be held responsible for ordinary neglect.
...

In general, a party who has caused an injury or loss to another in consequence of his negligence is responsible for all the consequences. ...

Note what was emphasized:  All the consumer is required to do under a loan contract is enter into the contract in good faith.  Since few consumer contracts are entered into with fraudulent intent, and any default is the result of circumstances that cannot be readily foreseen, it can be presumed, absent evidence to the contrary, that the contract was entered into in good faith. 

However, what about the JDB?  The second part is the applicable one:  The JDB, by engaging in the business deal with the OC to buy the "junk" debt are engaging in a sales contract.  The duties are therefore reciprocal between the OC and JDB and the "prudent man" rule would require that the JDB use all due care in assessing the "product" and therefore make the deal knowing exactly what they are getting.  As a result, they are assuming the risk of not being able to collect and they do that knowing full well they are.

So, how does comparative negligence enter into this?  First off, comparative negligence would preclude recovery if either party was at all at fault.  This is so unjust that courts and juries, whenever they can, apply the concept of contributory negligence:

http://dictionary.law.com/definition.asp?selected=341&bold=

contributory negligence

n. a doctrine of common law that if a person was injured in part due to his/her own negligence (his/her negligence "contributed" to the accident), the injured party would not be entitled to collect any damages (money) from another party who supposedly caused the accident. Under this rule, a badly injured person who was only slightly negligent could not win in court against a very negligent defendant. If Joe Tosspot was driving drunk and speeding and Angela Comfort was going 25 m.p.h. but six inches over the center-line, most likely Angela would be precluded from any recovery (receiving any money for injuries or damages) from a car crash. The possible unfair results have led some juries to ignore the rule and, in the past few decades, most states have adopted a comparative negligence test in which the relative percentages of negligence by each person are used to determine damage recovery (how much money would be paid to the injured person).

The JDB may well argue that the loss the consumer caused them as assignee of the debt precludes assumption of risk and leaves the consumer liable for money damages. 

That may well be a faulty assumption per "volenti non fit injuria"/assumption of risk, the concept which will be discussed in the next post.

[Rottweiler]

"Assumption of risk" ("Volenti non fit injuria") is defined as:

http://www.lectlaw.com/def/a083.htm

"ASSUMPTION OF RISK - A defense raised in personal injury lawsuits. Asserts that the plaintiff knew that a particular activity was dangerous and thus bears all responsibility for any injury that resulted."

The derivative, "volenti non fit injuria" ("A volunteer cannot be injured.") states that anyone who willingly engages in a behavior or does an action voluntarily is not entitled to damages and is also used in torts law and acts as a full defense to the defendant who can prove it:

http://en.wikipedia.org/wiki/Volenti_non_fit_injuria

"Volenti non fit injuria (Latin: "to a willing person, no injury is done" or "no injury is done to a person who consents") is a common law doctrine which means that if someone willingly places themselves in a position where harm might result, knowing that some degree of harm might result, they cannot then sue if harm does in fact happen. The 'volenti' only applies to the risk which a reasonable person would consider them as having assumed by their actions; thus a boxer consents to being hit, and to the injuries that might be expected from being hit, but is not a 'volenti' if (for example) his opponent should swing an iron bar at him, or punch him outside the usual terms of boxing. Volenti is also known as a "voluntary assumption of risk".

'Volenti' (from which, indirectly, the English word 'volunteer' is derived) is sometimes described as the plaintiff "consenting to run a risk". In this context, 'volenti' can be distinguished from legal consent in that the latter can prevent some torts arising in the first place (for example, consent to a medical procedure prevents the procedure
from being a trespass to the person, or consenting to a person visiting your land prevents them from being a trespasser).

..."The defence has two main elements:

   1. The claimant was fully aware of all the risks involved, including both the nature and the extent of the risk; and
   2. The claimant expressly (by his statement) or impliedly (by his actions) consented to waive all claims for damages. His knowledge of the risk is not sufficient: sciens non est volens ("knowing is not volunteering"). His consent must be free and voluntary, i.e. not brought about by duress. If the relationship between the claimant and defendant is such that there is doubt as to whether the consent was truly voluntary, such as the relationship between workers and employers, the courts are unlikely to find volenti."

So, as we can see, although "assumption of risk" appears to be strictly a torts concept (and collecting a debt is not a tort, which is defined as "A negligent or intentional civil wrong not arising out of a contract or statute." ), the derivative "volenti non fit injuria" DOES appear to have applicability to debt collection lawsuit defenses since the JDB DOES assume the risk of non-recovery of the debt when they buy it, since the debt has already been declared a "loss" by the creditor (the creditor has written off the debt, assuming that it is uncollectible).  The consumer, although they can theoretically be assumed to know that an OC can assign a debt--and all the rights pertaining to the contract--to a JDB, the very fact that the consumer can be considered to "consent" only under duress means that such consent to allow the JDB to "stand in the shoes" of the OC cannot be assumed.

One reason this defense does not seem to be one used much, if at all, in debt collection cases may well be found in the definition of "negligence" above:

http://www.lectlaw.com/def2/n010.htm

In general, a party who has caused an injury or loss to another in consequence of his negligence is responsible for all the consequences. An example of this may be found in the case of a person who drives a car during a dark night on the wrong side of the road and injures another.

The JDB's argument here would be that, by defaulting on the contract, the consumer debtor is guilty of negligence in their non-performance pre the terms of the contract.  Hence, they are responsible for the consequences of such non-performance, namely they owe the money; the JDB, as assignee to the OC, inherit the right to demand payment in full.  They would also no doubt raise the point raised in "Hamrick" that the consumer voluntarily damaged themselves by defaulting on the contract and/or, by failing to pay, consented to the continued collection in full by whomever holds title to the debt. In "Hamrick", the court stated:

...[T]he legal maxim "volenti non fit injuria" also applies. One is not legally injured if she consented to the act complained of or was willing that it should occur.

In other words, "volenti" works both ways.

The consumer, however, can answer to that problem in that they, although they did assume the risk of being found liable for the debt due to the contract default, they could not have known nor should have known that they risked being chased down by anyone, not just the OC or their immediate successor (to the same business). It's also reasonable to assume that this assumption of liability would apply ONLY to to dealings with the party who took the risk of lending to them to begin with:  The OC! 

Not a JDB:  The JDB loaned no money and took none of the risks inherent in lending any.  By buying defaulted debt, the JDB with full knowledge of what they were buying, an asset whose asset value had been declared by the original owner to be zero.  Nothing.  Zilch.  A loss.

 By extension, by buying the file and "inheriting" the business deal and the consumer debtor (the defaulting party), they took on a "customer" who, for all intents and purposes, is known to be a contractural non-performer who is likely to remain so.  In plain English, the JDB vountarily bought a pig in a poke even though the "meows" of the "pig" so trapped inside were clearly audible...and the claws were poking through the fabric!  In short, they knew what they were getting and bought it anyway.   

The consumer also can use their lack of legal standing in the sale of the debt (they were not a party to the deal) as evidence that any agreement, express or implied, giving the JDB the right to collect the debt, in full or in part, from them as an agreement made under duress.  An agreement made under duress would then insulate the consumer from the application of "volenti" and any payments would be purely voluntary and could not be coerced by anyone.