First National Bank of Vista v. John R. Hellen, Trustee, 392 F.2d 58, 1st Cir. (1968)

392 F.
2d 58
FIRST NATIONAL BANK OF VISTA, Appellant,

v.
John R. HELLEN, Trustee, Appellee.
No. 21872.
United States Court of Appeals Ninth Circuit.

March 20, 1968.
James V. Dorman (argued) of Dorman & Dorman, San Diego, Cal., for
appellant.
James J. Biggins, Jr., (argued), San Diego, Cal., for appellee.
Before BARNES and HAMLEY, Circuit Judges, and STEPHENS,
District Judge.
PER CURIAM:
This is an appeal from an order by the district court affirming an order of a

referee in bankruptcy holding invalid an assignment to the First National Bank
of Vista (bank).
The underlying proceeding is one in bankruptcy in which the voluntary

petitions in bankruptcy of David Junior Whitlow and Frances Charlotte
Whitlow were consolidated for disposition. The two were husband and wife but
a divorce action was pending at the time the assignment in question was given.
The bank filed an asserted perfected secured claim in the amount of $2,028.20,
based upon Mr. Whitlow's assignment to the bank of group insurance
commissions due him from California-Western States Life Insurance Company
for services rendered that company.1
The trustee objected to the claim insofar as it was put forth as a secured claim.
He contended that the claim was not secured because Whitlow's assignment
was of 'wages,' as that term is defined in Calif. Labor Code, 200, and the
written consent of Mrs. Whitlow had not been attached to the assignment and
had, in fact, not been given.2
In show cause proceedings then instituted by the referee, the bank took issue
with the trustee's objection to the secured character of the claim. The bank
argued before the referee that the assignment was not of wages earned but of a
security interest in general intangibles, as defined in California Commercial
Code, 9106.
The referee agreed with the trustee, finding, in effect, that Whitlow had been an
employee of the insurance company when the commissions were earned, and
that the commissions were therefore 'wages' within the meaning of Calif. Labor
Code, 200. This led the referee to conclude that the assignment was invalid,
under Calif. Labor Code, 300(b), because Mrs. Whitlow had not consented to
the assignment of wages in writing. As noted above, the referee therefore
disallowed the claim as a secured claim and allowed it as an unsecured claim.
The bank petitioned for review in the district court. In that court the principal
issue which developed was whether, at the time he earned the commissions,
Whitlow was an employee of the insurance company, or an independent
contractor. However, the bank then advanced, for the first time, the additional
argument that Mrs. Whitlow had waived her rights, under Calif. Labor Code,
300(b). Additional evidence was taken on the question of Whitlow's status as an
employee or an independent contractor but the court declined the bank's offer to
produce the testimony of Mrs. Whitlow on the waiver question.
On the basis of the additional evidence and argument the district court affirmed
the order of the referee. While the court did not expressly find that Whitlow's
relationship to the company was that of an employee rather than an independent
contractor, such a finding, as the parties seem to agree on this appeal, is
implicit in the court holding that the commissions represented 'wages' within
the meaning of Calif. Labor Code, 200.
On this appeal, the principal contention made by the bank is, in effect, that the
finding of the referee, concurred in by the district court, that Whitlow was an
employee of the insurance company when the commissions were earned, is
clearly erroneous.
We have examined the evidence upon which this finding is based and find it
adequate to support the finding in question. Our ruling in this respect is limited
to the evidence of record in this particular case and is not to be taken as having
precedent value in any other case involving bankruptcy or any other problem.
Since, under this finding, an employer-employee relationship existed, the
commissions were necessarily 'wages' within the meaning of Calif. Labor
Code, 200.
10
It follows from this that the assignment was invalid under Calif. Labor Code,
300(b), because Mrs. Whitlow had not consented in writing to the assignment,
unless a contrary result must be reached on the bank's waiver theory raised for
the first time in the district court.
11
We find in the record no substantial evidence tending to show that Mrs.

Whitlow, although then living separately from Mr. Whitlow with a divorce
action in progress, had waived her rights under section 300(b). Accordingly, we
are not in a position to hold that the district court erred in failing to find and
conclude that there was such a waiver.3
12
On this appeal, the bank does not contend otherwise. But it does argue that the
district court abused its discretion in denying the bank's request to submit, at
the district court hearing, the testimony of Mrs. Whitlow on the question of
waiver.
13
The record is somewhat confusing as to the reason the district court declined to
receive the testimony of Mrs. Whitlow. But, as the bank itself asserts, it appears
that the court may have rejected the request on the mistaken ground that Mrs.
Whitlow had been present in the proceedings before the referee. Assuming that
to be the reason, the district court can hardly be charged with an abuse of
discretion when counsel for the bank, apparently aware of this possible
misapprehension on the part of the court, did not advise the court that Mrs.
Whitlow was not present in the proceedings before the referee. Moreover, the
bank made no offer of proof as to what Mrs. Whitlow's testimony would be. It
follows that the view that she would have testified in support of the waiver
theory is speculative.
14
Affirmed.
The assignment was given in connection with the bankrupts' indebtedness to

the bank on a debt evidenced by a promissory note
Calif.Labor Code, 300(b) provides that where such an assignment is made by a

married person, it shall not be valid unless the written consent of the husband or
wife of the person making such assignment is attached to the assignment
We express no view as to whether, in any event, such a waiver would overcome
the effect of Calif.Labor Code, 300(b) under which assignments of wages not
consented to in writing by the other spouse, are declared invalid

First National Bank of Vista v. John R. Hellen, Trustee, 392 F.2d 58, 1st Cir. (1968)

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392 F.

FIRST NATIONAL BANK OF VISTA, Appellant,

United States Court of Appeals Ninth Circuit.

This is an appeal from an order by the district court affirming an order of a

The underlying proceeding is one in bankruptcy in which the voluntary

We find in the record no substantial evidence tending to show that Mrs.

The assignment was given in connection with the bankrupts' indebtedness to

Calif.Labor Code, 300(b) provides that where such an assignment is made by a

We express no view as to whether, in any event, such a waiver would overcome

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