Builders' Control Service of Northern California Inc. v. North American Title Guaranty Co.

An escrow agent who has notice of the assignment of proceeds from the sale of real property may not make deductions from such proceeds in disregard of the terms of the assignment. A disbursing or “control agent” who, for the purpose of protecting the interests of the financier of a construction project and of insuring the payment of laborers and materialmen, takes an assignment of funds to be expended for such construction, possesses a sufficient interest in the assigned funds to institute in his own name an action to enforce such assignment. Finally, the assignee does not engage in the business of collecting claims owed to another within the meaning of sections 6852 and 6870 of the Business and Professions Code and therefore is not required to be licensed as a collection agency. We shall develop these points in more detail infra.

We deal here with two agreements which appellant, Builders’ Control Service of Northern California, Inc., entered into with the owners and builders of two building projects to insure the financier of the projects, the Wells Fargo Bank, that the funds advanced by it to the entrepreneurs would actually be used for the construction work contemplated upon…