Kansas Attorney General Opinion 2012-011

April 25, 2012
ATTORNEY GENERAL OPINION NO. 2012- 11
The Honorable Thomas C. Owens
State Senator, Eighth District
State Capitol, Rm. 559-S
Topeka, Kansas 66612
RE: 	Procedure, Civil—Rules of Civil Procedure—Parties; Capacity; Real Party
in Interest
Procedure, 	Civil—Exemptions—Wage 	Garnishment; 	Assignment 	of
Account
Synopsis: 	The Legislature has distinguished between a creditor who sells or assigns
a debt to a collection agent or agency for collection and a creditor who
places a debt with a collection agent or agency for collection. 	When a
creditor sells or assigns a debt to a collection agent or agency, the
assignee is the real party in interest to file suit against the debtor and may
sue in its own name under the real party in interest statute, K.S.A. 2011
Supp. 60-217(a)(1); but, the assignee cannot garnish the debtor's wages
under 	K.S.A. 	60-2310(d). 	The 	assignee 	must 	also 	comply 	with
applicable laws governing debt collection. 	When a creditor places a debt
with a collection agent or agency for collection, there is no assignment and
the creditor is the real party in interest to file suit against the debtor under
K.S.A. 2011 Supp. 60-217(a)(1) and can garnish the debtor's wages under
K.S.A. 60-2310(d). 	Cited herein: 	K.S.A. 2011 Supp. 16a-2-301, 60-217,
K.S.A. 60-2310.
* 	* 	*
Dear Senator Owens:
As State Senator for the Eighth District, you ask whether the conclusion in Attorney
General Opinion No. 79-100 conflicts with the real party in interest statute, K.S.A. 2011

The Honorable Thomas C. Owens
Page 2
Supp. 60-217(a)(1). The 1979 opinion did not address that statute. Rather, the opinion
interpreted 	a 	1979 	amendment 	to 	K.S.A. 	1978 	Supp. 	60-2310(d), 	the 	provision
prohibiting a creditor's assignee from garnishing a debtor's wages. 	To address your
request, an understanding of the history of both statutes is necessary. 	Our analysis
begins with the real party in interest statute.
K.S.A. 2011 Supp. 60-217, the real party in interest statute
K.S.A. 2011 Supp. 60-217(a)(1) states:
An action must be prosecuted in the name of the real party in interest.
The following may sue in their own names without joining the person for
whose benefit the action is brought:
(A) An executor;
(B) an administrator;
(C) a guardian;
(D) a conservator;
(E) a bailee;
(F) a trustee of an express trust;
(G) a receiver;
(H) a party with whom or in whose name a contract has been made for
another's benefit; and
(I) a party authorized by statute.
Nearly identical language appeared in the Code of Civil Procedure adopted one year
after 	statehood 1 as 	well 	as 	intervening 	versions 	of 	the 	Code. 2 One 	suggested
interpretation of K.S.A. 2011 Supp. 60-217(a)(1) is that the creditor is the real party in
interest because the creditor has the contractual relationship with the debtor and that
the list of exceptions in (A) through (I) is exclusive. 	Under such interpretation, an
assignee cannot sue in the assignee's name to collect the debt. 	As discussed below,
case law does not support this interpretation.
The real party in interest statute has had few substantive changes for nearly 150 years.3
Thus, we review interpretations by the Kansas Supreme Court of prior versions as it
relates to the collection of a debt by the creditor's assignee. 	The first cases to address
this issue are Krapp v. Eldridge, 4 Stewart v. Price, 5 and Manley v. Park.6
1 G.S.1862, §§ 80-26 (real party in interest) and 80-28 (exceptions).
2 See K.S.A. 60-217 (1963); G.S. 1949, 60-40; and G.S. 1909, 95-5618 (real party in interest) and 95-
5618 (exceptions).
3 The Legislature added the following classifications to the list of exceptions: a bailee, a conservator, and
a receiver. L. 2010, Ch. 135, § 84; L. 1965, Ch. 354, § 2; L. 1963, Ch. 303, § 60-217, respectively.
4 33 Kan. 106 (1885).
5 64 Kan. 191 (1902), rev'd 68 Kan. 400 (1904).
6 68 Kan. 400 (1904).

The Honorable Thomas C. Owens
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As pointed out in Krapp and Stewart, prior to the adoption of the Code, common law
prohibited the transfer of a chose in action; 7 thus, a court of law allowed only the
creditor, who had the equitable interest, to sue the debtor for collection. 	However,
courts of equity disregarded the prohibition and permitted the assignee, who had the
legal title, to sue in the assignee's name to collect the debt; thus, the question was
whether the adoption of the Code reflected the rule in courts of law or courts of equity.8
In Krapp, the Court found that the adoption of the Code departed from the common law
prohibition applied by courts of law. 9 The court held:
Where the owner of an account or claim transfers and assigns, in writing,
the same to another person, such other person may maintain an action
thereon in his own name, when the account or claim becomes due; and it
is immaterial to the debtor whether the claim was given or sold to the
assignee. 10
Fifteen years later the Court revisited the issue in Stewart. There, the assignee brought
a cause of action in his own name against a debtor on an account that a creditor had
assigned for collection. 	Regarding the real party in interest provision and the list of
exceptions, the Court stated:
Section 26 of the civil code (Gen. Stat. 1901, § 4454), provides that "Every
action must be prosecuted in the name of the real party in interest except
as otherwise provided in section 28." 	It is not contended by either party
that the case falls within any of the exceptions. 	It must, therefore, be
considered 	solely 	with 	reference 	to 	the 	meaning 	of 	section 	26. 	In
examining this provision, it will be observed that it does not say that it is
the person in whose name the right of action stands, or the person who
holds the legal title thereof, that may prosecute the action, but that "every
action must be prosecuted in the name of the real party in interest." . . . Is
the real party in interest the person who is to be benefited or injured [the
creditor], or the person who holds the legal title to the thing in action [the
assignee]?11
Based upon case law in Indiana and Nebraska, the Court concluded that an assignee of
a debt owed to a creditor is not the real party in interest and cannot maintain an action
in the assignee's name to collect the debt where the assignee agreed to pay the debt to
the assignor when collected. The Court then overruled the decision in Krapp. 12
7 A chose in action means the right to bring an action to recover a debt, money, or thing; in Kansas, all
choses in action, except torts, are assignable. Bolz v. State Farm Mutual Automobile Ins. Co., 274 Kan.
420, 423 (2002).
8 33 Kan. at 108 and 64 Kan. at 197 (concurring opinion), respectively.
9 33 Kan. at 107.
10 33 Kan. at 107, Syl. No. 3.
11 64 Kan. at 193.
12 Id. at 193-95, 196.

The Honorable Thomas C. Owens
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The 	dissenting 	opinion 	in 	Stewart 	noted 	that 	the 	majority 	opinion 	expressed 	the
viewpoint of the minority jurisdictions on real party in interest statutes.13 The dissent
pointed out that the purpose of the Code was to adopt the equity rule by permitting "the
assignee holding the legal title to a chose in action to bring suit in his own name,
instead of that of the original promisee or his personal representative, and without
joining with him such original promisee."14
Two years later in Manley the Court adopted the reasoning of the dissenting opinion
and overruled Stewart. 15 The Manley Court stated:
When the owner of a note, for reasons satisfactory to himself, assigns it to
another, thereby vesting in him the full legal title, the assignee becomes,
so far as the debtor is concerned, the real party in interest. 	The original
owner is still the person to be finally benefited by the litigation, but his
legal demand is no longer against the maker of the note, but against the
person to whom he has assigned it. 	When the obligor is sued by such
assignee (no claim as innocent purchaser being involved), he can make
any 	defense 	he 	could 	have 	made 	against 	the 	assignor; 	he 	is 	fully
protected against another action; and in no way is it a matter of the
slightest concern to him what arrangement between the plaintiff and the
original creditor occasioned the assignment. This being true, it would be a
sacrifice of substance to form to permit the defendant to defeat the action
by showing a failure of consideration for the transfer, or that the plaintiff
was bound to account to his assignor for a part or all of the proceeds. We
hold that the objection to the judgment urged on the ground that plaintiff
was not the real party in interest is untenable.16
Thus, it has been stated that "'[t]he meaning and object of the real party in interest
provision would be more accurately expressed if it read: 	An action shall be prosecuted
in the name of the party who, by the substantive law, has the right sought to be
enforced.'" 17 The Court has consistently followed Manley when interpreting the real
party in interest statute for assignees.18
We note that your request states that a creditor gives a collection agent or agency a
"limited assignment" of a debt "for collection purposes." 	Attorney General Opinion No.
79-100 did not use the term "limited assignment." If this term means the creditor did not
relinquish all legal title or control over the debt, it is contrary to the rule of assignment
adopted by the Kansas Supreme Court.
13 Id. at 201.
14 Id. at 203.
15 68 Kan. at 400, Syl. 1 and 2.
16 Id. at 401-02.
17 Torkelson v. Bank of Horton, 208 Kan. 267, 270 (1971), quoting 3A Moore's Federal Practice (2 nd ed.
1970) § 17.02, p. 53.
18 Id. at 269-70; First National Bank of Topeka v. United Telephone Ass'n, 187 Kan 29, 34-36 (1960) (also
cites other cases following rule adopted in Manley); and Rullman v. Rullman, 81 Kan. 521, 523-24 (1910).

The Honorable Thomas C. Owens
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The Kansas cases clearly state the rule to be that an assignment passes
all of the assignor's title or interest to the assignee, and divests the
assignor of all right of control over the subject matter of the assignment. .
. . 	If the assignor proceeds to collect the sum due on an assigned chose,
the 	moneys 	so 	coming 	into 	his 	hands 	are 	regarded 	as 	trust 	funds
belonging to the assignee, who may recover the same either in action for
money had and received or in tort for conversion. 19
Thus, no legal authority exists for a "limited assignment" that does not pass the
creditor's legal interest in the debt to the collection agent or agency; as such, the
collection agent or agency is not a real party in interest.
Based upon the above analysis, if the creditor assigned the debt by relinquishing the
legal title and control to the collection agent or agency for the purpose of collection, the
creditor no longer owns or controls the debt and the assignee may sue in the assignee's
name under K.S.A. 2011 Supp. 60-217(a)(1). 	However, if the creditor retains the legal
title and control of the debt, the creditor has not assigned the debt but has merely
placed it with the collection agent or agency for collection. 	Under those circumstances,
the collection agent or agency is not an assignee and is not a real party in interest who
can file a suit in its own name under K.S.A. 2011 Supp. 60-217(a)(1).
K.S.A. 60-2310(d), Assignment of an account and wage garnishment
The Legislature has placed limitations on wage garnishments since the late 1800s. 20
However, the provision that concerns this opinion and our 1979 opinion was not added
until 1913. 21 It provided:
[I]f any person, firm or corporation sells or assigns his account to any
person or collecting agency, or sends or delivers the same to any collector
or collecting agency for collection, then such person, firm or corporation or
the assignees of either shall not have nor be entitled to the benefits of this
act.22
The Kansas Supreme Court first interpreted the above language in Losier v. Sherman. 23
In 	Losier, 	the 	creditor 	placed 	a 	delinquent 	account 	with 	a 	collection 	agency 	for
collection; after securing a small payment from the debtor, that agency returned the
account to the creditor. 	The creditor then sued the debtor and sought garnishment of
the debtor's wages. The debtor contended that the above statutory provision prohibited
the creditor from garnishing his wages; the creditor responded that the statutory
19 Patrons State Bank and Trust Company v. Shapiro, 215 Kan. 856, 861 (1974). Citations omitted.
20 G.S. 1868, Ch. 80, § 490; G.S. 1889, Ch. 80, § 4589; G.S. 1901, Ch. 80, Art. 20, § 4967; and G.S.
1909, Ch. 95, Art. 20, § 6127.
21 L. 1913, Ch. 232, § 2.
22 Id. Last Codified in G.S. 1935, § 60-3495.
23 157 Kan. 153 (1943).

The Honorable Thomas C. Owens
Page 6
prohibition was an unconstitutional bill of attainder. 24 Noting that the provision had been
in effect for nearly 30 years, the Court rejected the creditor's argument, stating:
When the debt here involved was incurred, the creditor was bound to take
notice of the conditions under which he could seek by garnishment
process to levy on the earnings of his debtor if the debtor became in
default. 	The statute conferred a right on the creditor of which he could
avail himself if he observed its terms and conditions. 	The choice was his,
and it may not be said the proviso in question is in any sense a bill of
attainder.
Nor do we agree with [the creditor] that since the account has been
returned to the creditor it is immaterial it previously had been sent to a
collection agency. 	To so hold would be to write into the proviso a
condition which the legislature did not see fit to include. 	If such a
condition is to be a part of our statutes pertaining to garnishment, it should
be placed there by the legislature.
We think that the portion of the statute quoted above means just what it
says, and if a creditor sees fit to send or deliver his account to a collector
or collecting agency, he shall not be entitled to the benefits of the statute
permitting garnishment of a portion of the earnings of his debtor, as
provided in the statutes above mentioned. 25
The next challenge to the prohibition occurred in Miller v. Keeling. 26 The creditor in that
case assigned a debt to a collection agent; the collection agent filed a lawsuit in his own
name against the debtor. 	After obtaining a judgment, the collection agent sought to
garnish the debtor's wages. 27 The Court adopted the reasoning in Losier to reject the
collection agent's arguments that the provision was unconstitutional because it violated
the Contract Clause. 28 In rejecting the collection agent's argument that the provision
also violated the Equal Protection Clause, the Court stated:
[T]he remedy of garnishment is made available to all creditors-provided
they observe its terms. 	The choice is theirs. 	The general rule is that
exemption laws are to be liberally construed in favor of those intended to
be benefited and favorable to the objects and purposes of the enactment,
and, with respect to the exemption of wages or earnings, it has been said
that the purpose of such exemption is to protect a class of persons who
are largely dependent on their wages for support, as well as their families
and dependents who look to them for a living, and that such a statute
should receive a liberal construction rather than one which would defeat
24 Id. at 155-56.
25 Id. at 156.
26 185 Kan. 623 (1959).
27 Id. at 624.
28 Id. at 627.

The Honorable Thomas C. Owens
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the benevolent object aimed to be accomplished. 	In enacting the specific
proviso in question perhaps the legislature had in mind to protect the
dependents of wage earners from repeated harassment by "professional
collection agencies." 	Be that as it may—it was within the province of the
legislature to enact the proviso, and it is not invalid on either of the
grounds asserted.29
The provision in the current Code of Civil Procedure was enacted in 1963 30 and codified
in K.S.A. 60-2310(d). 	The only change made in the 1963 provision was amending the
last two words "this act" to "garnishment."31 This amendment was challenged in
Wagner v. Mahaffey.32
In Wagner, the debt collector purchased a note from the creditor and obtained judgment
against the debtor. When the bill collector threatened garnishment proceedings against
the debtor's wages, the debtor threatened to sue for wrongful garnishment, resulting in
the bill collector filing for a declaratory judgment.33 On appeal, the Court held that the
language used in the current Code was not an alteration in meaning from that of the
prior law; thus, its decision in Miller applied to the bill collector's claim that the provision
violated the Equal Protection Clause. 34
The 1979 amendment to K.S.A. 60-2310(d) resulted in Attorney General Opinion No.
79-100.
Attorney General Opinion No. 79-100
The 1979 amendment deleted from K.S.A. 60-2310(d) the phrase, "or sends or delivers
the same to any collector or collecting agency for collection." 35 No substantive changes
have been made to the remaining language since then.
In the 1979 opinion, we said that an assignment, in its technical legal sense, requires an
assignor to transfer completely the account being transferred, thereby relinquishing any
control over or ownership in such account. 36 However, if a creditor placed an account
with a third party for collection purposes only, the creditor did not divest ownership or
control over such account. 37 Based on these differences, we concluded that the wage
garnishment prohibition now found in K.S.A. 60-2310(d) did not apply to situations
where a creditor retained ownership of or control over the account and placed the
account with a third party for collection purposes. 	Thus, the wage garnishment
prohibition in K.S.A. 60-2310(d) applied only to situations where a creditor assigned an
29 Id. at 627-28 (citations omitted).
30 L. 1963, Ch. 303, § 60-2310.
31 L. 1963, Ch. 303, § 60-2310(d).
32 195 Kan. 586 (1965).
33 Id. at 587.
34 Id. at 591-92.
35 L. 1979, Ch. 183, § 5.
36 Citing 6A C.J.S. Assignments § 43 (1975) and Turner v. Williams, 114 Kan. 769, 774 (1923).
37 Attorney General Opinion No. 79-100.

The Honorable Thomas C. Owens
Page 8
account, by relinquishing all ownership interest and control, to a third party. 	A Kansas
federal district court has concurred with that interpretation of K.S.A. 60-2310(d).38
The legislative history for the 1979 amendment supports the conclusion in Opinion 79-
100. 	The proponent of the amendment, an attorney representing two credit unions,
initially asked for repeal of K.S.A. 60-2310(d) arguing consumer debtors had protection
under laws recently enacted by the state and federal governments.39 Later, the
proponent requested an amendment to K.S.A. 60-2310(d) by deleting the phrase "or
sends or delivers the same to any collector or collecting agency for collection" so that a
creditor who had placed a delinquent debt with an unsuccessful debt collector could
garnish the debtor's wages after the debt collector returned the account to the creditor.40
The 1979 amendment essentially followed the direction given in Losier—a legislative
change authorizing the garnishment of a debtor's wages by a creditor who had placed
an account with a collection agency for collection that was later returned to the creditor.
However, the Legislature's refusal to repeal the prohibition against garnishing a debtor's
wages by a collection agent or agency who was assigned a debt for collection kept
intact the decisions of Miller and Wagner.
Debt Collection Laws
We want to emphasize that the above analysis does not mean a collection agent or
agency can avoid compliance with laws applicable to debt collection. 	For example, the
Kansas Uniform Consumer Credit Code, K.S.A. 16a-1-101 et seq., governs retail
installment sales, consumer credit, and consumer loans. 41 Pursuant to K.S.A. 2011
Supp. 16a-2-301(1), only a supervised financial organization or a person licensed by the
administrator 42 can engage in the business of:
(a) Making supervised loans;
(b) taking assignments of and directly or indirectly, including through the
use of servicing contracts or otherwise, undertaking collection of payments
from debtors arising from supervised loans, but such person may collect
for three months without a license if the person promptly applies for a
license and such person's application has not been denied; or
(c) taking assignments of and directly or indirectly, including through the
use of servicing contracts or otherwise, enforcing rights against debtors
arising from supervised loans, but such person may enforce for three
months without a license if the person promptly applies for a license and
such person's application has not been denied.
38 Bieber v. Associated Collection Services, Inc., 631 F. Supp. 1410, 1414-415 (1986).
39 Minutes, Senate Judiciary Committee, February 22, 1979, Written Testimony, p. 4-5. t
40 Minutes, House Judiciary Committee, March 22, 1979, Attachment No. 2, p. 3.
41 K.S.A. 16a-1-102(2)(a).
42 "'Administrator' means the deputy commissioner of the consumer and mortgage lending division
appointed by the bank commissioner pursuant to K.S.A. 75-3135, and amendments thereto." K.S.A. 16a-
1-301.

The Honorable Thomas C. Owens
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Thus, a collection agent or agency holding the legal interest of a consumer debt
assigned by a creditor has no authority to collect that debt or enforce its term unless
licensed under K.S.A. 2011 Supp. 16a-2-301(1)(a)-(b) 43 even though such collection
agent or agency may qualify as the real party in interest under K.S.A. 2011 Supp. 60-
217(a)(1).
Conclusion
The Legislature has distinguished between a creditor who sells or assigns a debt to a
collection agent or agency for collection and a creditor who places a debt with a
collection agent or agency for collection. 	When a creditor sells or assigns a debt to a
collection agent or agency, the assignee is the real party in interest to file suit against
the debtor and may sue in its own name under the real party in interest statute, K.S.A.
2011 Supp. 60-217(a)(1); but, the assignee cannot garnish the debtor's wages under
K.S.A. 60-2310(d). The assignee must also comply with applicable debt collection laws.
When a creditor places a debt with a collection agent or agency for collection, there is
no assignment of the debt and the creditor is the real party in interest to file suit against
the debtor under K.S.A. 2011 Supp. 60-217(a)(1) and can garnish the debtor's wages
under K.S.A. 60-2310(d)
Sincerely,
Derek Schmidt
Kansas Attorney General
Janet L. Arndt
Assistant Attorney General
DS:AA:JLA:ke
43 Independent Financial Inc. v. Wanna, 39 Kan. App. 2d 733, 738-40 (2008).