Legal Memorandum: Assignments and Loans in OH

Issue: Under Ohio law, what is the difference between a purchase and sale of an assignment of contingent proceeds, and a loan?

Well-settled Ohio law favors valid assignments, even of personal injury lawsuits, and adheres to a strict construction of the term “loan.” 

In Ohio, a legal claim is assignable.  Leber v. Buckeye Union Ins. Co., 125 Ohio App. 3d 321, 332, 708 N.E.2d 726, 733 (1997).  Accord Conley v. Brown Corp. of Waverly, Inc., 82 Ohio St. 3d 470, 696 N.E.2d 1035 (1998).  Even a personal injury lawsuit is assignable.  Goings v. Black, 164 N.E.2d 925 (Ohio Ct. Com. Pl. 1960), aff’d, 182 N.E.2d 640 (Ohio Ct. App. 1961).  Likewise, the proceeds of a lawsuit are specifically assignable in Ohio.  Hsu v. Parker, 116 Ohio App. 3d 629, 688 N.E.2d 1099 (1996).

Assignments, even partial assignments, are not treated as loans by the Ohio courts.  See Springgate v. Daneman, 32 Ohio App. 279, 167 N.E. 908 (1929) (partial assignment of wages not subject to chattel loan statute); State v. Mehaffey, 112 Ohio St. 330, 147 N.E. 506 (1925) (partial assignment of wages not loans subject to Pawn Brokers’ Act). 

[…]