In re Leader Furniture Co., 19054.
| Decision Date | 09 January 1939 |
| Docket Number | No. 19054.,19054. |
| Citation | 36 F. Supp. 986 |
| Parties | In re LEADER FURNITURE CO. |
| Court | U.S. District Court — Western District of Pennsylvania |
John G. Callender and George H. Kaercher, both of Pottsville, Pa., for petitioner.
Jenkins, Bennett & Libby, of Philadelphia, Pa., for trustee.
L. Halpern Miller and Wexler & Weisman, all of Philadelphia, Pa., for Acceptance Corporation.
This case presents a contest between two successive assignees of the bankrupt's accounts receivable. Each assignee advanced money to the bankrupt upon the security of its assignment. The bankrupt was in the furniture business, and made sales upon bailment lease contracts, at the same time opening a separate account upon its books against each of the purchasers.
When Acceptance Corporation, the prior assignee, made its loan and took the assignment, the bankrupt turned over to it all the bailment lease contracts corresponding to the accounts and made a pencil notation at the top of each page of its ledger upon which an assigned account was kept. In each case the notation was (for example) "B.S. 12/20/34." The date was the date of the assignment. "B.S." meant Biglow Stamford Company, but what that had to do with the case does not appear from the record. In addition some of the pages bore a notation (for example), "4/13/34 L.N.N." That referred to the date upon which the buyer's landlord was notified that the goods had been sold under a bailment lease. It had nothing to do with the assignment and was for the protection of the bankrupt against the landlord at the time the furniture was sold.
When the Bank, the subsequent assignee, made its loan it sent one of its employees to the bankrupt's place of business who took the bankrupt's books and made a selection of accounts which he directed to be included in the assignment. No particular accounts were offered him, and he made no inquiry about them, nor did he ask to see the bailment lease contracts corresponding to the accounts. Apparently he did not notice the notations. If he had inquired as to their meaning, it is a fair inference that he would have been told what they meant and would have known that the accounts had been assigned, for there is no proof of fraud, and the situation seems to have arisen entirely out of carelessness and oversight.
The case is ruled by Lasser v. Philadelphia National Bank, 321 Pa. 189, 183 A. 791, 792, unless its facts can be distinguished upon the question of notice. The Lasser decision adopted the rule embodied in Section 174 of the Restatement of the Law of Contracts to the effect that, "If an assignor's right against the obligor is * * * held in trust for" a third person "an assignee who purchases the assignment for value in good...
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...a duty . . . and would lead to knowledge of the requisite facts by the exercise of ordinary diligence and prudence." In Re Leader Furniture Co., 36 F.Supp. 986 (E.D.Pa.1939). See also First Nat. Bank v. Pittsburgh F. W. & C. Ry. Co., 31 F.Supp. 381 (E.D.Pa. 1939); Pa. Range Boiler Co. v. Ph......
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