## Facts

- Valerie Clapp, an independent truck driver, arranged to acquire a highway tractor through Laser Express, Inc., which acted as her undisclosed agent.
- Laser entered into a conditional sale contract note for the tractor; Orix (as assignee of the vendor) held the contract and a security interest in the tractor.
- The contract included a non-assignment clause stating the buyer would not assign the contract note without Orix’s prior written consent.
- Clapp paid the down payment and made all installment payments that Orix received under the contract.
- Laser and Clapp executed an assignment transferring Laser’s “right, title and interest” in the contract and related sale documents to Clapp without Orix’s prior written consent.
- The tractor later sustained an insured loss; insurance proceeds were paid to Orix.
- Orix applied the proceeds to the contract debt and retained the funds; Clapp claimed Orix kept more than necessary to satisfy its secured claim.
- Clapp sued Orix for money had and received; the trial court denied Clapp’s partial summary judgment motion and granted Orix’s cross-motion.
- On appeal, the material facts were not disputed; the dispute concerned the legal effect of the non-assignment clause and entitlement to any surplus insurance proceeds.

## Issues

1. Whether a clause stating the buyer “shall not assign” the contract note without the holder’s prior written consent renders an unconsented assignment ineffective against the holder.
2. Whether an assignee of the buyer’s rights may maintain an action for money had and received to recover insurance proceeds retained by a secured party beyond the amount needed to satisfy the secured obligation.

## Decision

- The appellate court reversed the summary judgment entered for Orix.
- The court held the non-assignment clause did not invalidate the assignment as against Orix; it operated, at most, as a covenant by Laser not to assign without consent.
- The court held Orix could retain insurance proceeds only to the extent necessary to satisfy its secured claim; any surplus belonged to the buyer’s assignee.
- The case was remanded with instructions to enter an order granting Clapp’s motion for partial summary judgment.

## Legal Principles

- A non-assignment term phrased as a promise (e.g., “shall not assign without consent”), without clear language declaring assignments void or ineffective, generally does not defeat an assignee’s rights against the obligor; it may create only a breach by the assignor.
- Insurance proceeds paid for loss of secured collateral function as a substitute for the collateral, allowing the secured party to take proceeds up to the amount of its secured debt.
- When a secured party receives insurance proceeds exceeding the amount needed to satisfy the secured obligation, the excess belongs to the party holding the residual interest in the collateral (here, the buyer/assignee).
- Money had and received permits restitution where a defendant holds money that, in equity and good conscience, belongs to the plaintiff; it is available to recover surplus proceeds retained without entitlement.
- Where material facts are undisputed, entitlement to summary judgment turns on legal issues such as contract interpretation and allocation of proceeds in a secured transaction.

## Conclusion

The court held that the unconsented assignment transferred the buyer’s contract rights despite a non-assignment clause framed as a covenant, and that the secured party could not keep insurance proceeds beyond satisfaction of its secured claim; the assignee could recover any surplus through money had and received.


Clapp v. Orix Credit All., Inc., 192 Or. App. 320, 84 P.3d 833 (Or. Ct. App. 2004)