260 F. 543 | 2d Cir. | 1919
This controversy arises out of the failure of an assignee of choses in action to give notice to the debtors at the time of the assignment. The result is that a subsequent assignee who claims to have first given notice is seeking priority of payment out of the proceeds of assigned choses in action now in the hands of the trustee of the bankrupt assignor.
It appears that Coleman & Co. were engaged in business as commercial bankers and factors, and that on October 15, 1915, they entered into an agreement with the bankrupt, which it is alleged has ever since continued in force, whereby Coleman & Co. were to acquire certain accounts receivable of the said bankrupt by advancing thereon 80 per
The contract between Coleman & Co. and the bankrupt contained the following clauses among others:
“The company [Coleman & Co.] shall have a general banker's Hen on all moneys, property, or other collateral in its possession or under its control for any and all indebtedness from the customer [Peterman, Becher & Co.] to the company. The word ‘debtor’ in this agreement refers to the customers of the customer mentioned in the assigned accounts.
“The title to all merchandise which any debtor may not receive or return or refuse to accept is in the company. Should the customer have any merchandise returned to it, or not accepted on any account assigned to the com-, pany, or should information bo received by the customer of such return or nonacceptance, the customer shall immediately giv-e notice- to the company, and the company shall thereupon have the option either to retain its title to the merchandise so returned or not accepted, or to surrender the same to the customer upon receiving payment therefor in cash or receive possession of such merchandise.
“This agreement shall be construed according to the law of the state of New York.”
In November and December, 1917, the Tawas Company advanced to the bankrupt $2,750 in three installments, for which they received the promissory notes of the bankrupt. At the time the Tawas Company made these advances the bankrupt assigned to it various accounts receivable, all of which accounts had been previously assigned to Coleman & Co. But at the time of the assignment of these accounts the Tawas Company had no information or knowledge of the previous assignment of the accounts to Coleman & Co., and it at that time was given an affidavit by the bankrupt, for the purpose of inducing the loans, in which it was recited that the bankrupt was then, in a solvent condition and was the sole owner of the accounts, and that the same had not been assigned or transferred.
No notice of the assignment of the accounts was given to the debtors of the bankrupt at the time of the respective assignments by either Coleman & Co. or the Tawas Company. But a few days before the bankruptcy and on January 11, 1918, Coleman & Co. sent letters of notification to all the debtors, informing them that the accounts had been assigned to Coleman & Co. and were payable only to them. The Tawas Company on the same day also sent notices of the assignment and that payment should be made to them.
The finding of the referee as to the facts concerning these notices was as follows:
“The evidence showed that Coleman & Co.’s [notices] went by registered letters calling for receipts of the addressees. These letters were mailed at the Madison Square branch post office on January 11, 1918, ‘not .later than 8 p. m.’ The exact hour when they were mailed was not shown. After the letters were delivered to the post office, they were entered on ‘descriptive sheets.’ Receipts were made out for each letter; that each letter was numbered and postmarked, and then entered on bills to dispatch them to the terminal.
“The Coleman registered letters were dispatched at 1:10 a. m. January 12, 1918; that is, at that hour they were seat to the Pennsylvania Railroad ter-*546 rainal to be sent forward by trains carrying registered mail. All mail trains do not carry registered mail. Mail not registered goes by any mail train, and there are more mail trains carrying mail not registered than there are trains carrying registered mail. Registered mail calling for receipts must be delivered to the addressee, or to some one usually receiving the mail for the addressee, and the person to whom the registered mail is delivered must sign a receipt therefor. Mail not registered may be left in a letter bos, or at the address of the addressee, and no receipt is taken therefor. In the ordinary course of business a registered letter is not delivered as promptly as an unregistered letter.
“The Tawas notices were put in envelopes, duly addressed, postage prepaid, and deposited in the 116th Street branch post office, Manhattan borough, at 6 p. m. on January 11, 1918. The envelopes had printed on the outside ‘Gettner, Simon & Asher,.299 Broadway.’ None of these letters came back. The Tawas letters were not registered. Unregistered letters for the South and extreme West dropped into the post office in the afternoon go earlier than midnight of that day. There is a mail from New fork to the south at about 10:30 p. m. * * *
“The fair inference’ from the testimony of McEachron, an employs of the New York post office for 24 years, is that the unregistered letters containing notices to debtors mailed by the Tawas Company at the 116th Street branch post office on January 11,1918, at 6 p. m., were received by the debtors in due course of the mails before the notice mailed by Coleman & Co. at the Madison Square branch post office on January 11, 1918, at an unascertained hour, but not dispatched from that office until 1:10 a. m. January 12, 1918.”
His conclusion of law was that the proceeds of the accounts assigned to the Tawas Company should be first applied to the satisfaction of the claim of the Tawas Company, and that the balance so far as required should be applied to the payment of the claim of Coleman & Co.
The District Judge reversed the referee. In his opinion he said:
“Nothing more can be called proven than that both' these claimants gave notice on the same day, and the day is not split up or divided into fragments by any persuasive evidence. It follows that both stand on exactly the same bottom, except as to priority in time of assignment, and there Coleman has the advantage, and the fund is awarded to him, reversing the finding of the referee.”
The leading case on this subject is the well-known case of Dearie v. Hall, 3 Rus. 1, which held that a third assignee who had given notice was entitled to priority over a first and second assignee who did not give notice. That case and the cases which have followed it have gone upon the theory that.personal property passes by delivery of possession, and that if one who acquires the right to take possession does not take it he is responsible for the consequences. A chose in action does not admit of tangible actual possession, but the assignee who gives notice to the legal holder of the fund does that which is tantamount to obtaining possession by placing the holder of the fund under an obligation to treat it as his property; and if he omits to give that notice he is guilty of the same neglect as he who leaves a personal chattel to which he has acquired a title in the actual possession and under the absolute control of another person. See Leading Cases in Equity, vol. 2, pt. 2, pp. 1581, 1582.
“If notice was essential to charge them, actual notice should have been given, at least in the absence of a statute providing some means for constructive notice.”
“Where any statute or the terms of any contract require notice to be given, and there is nothing in the context of the statute 'or the contract, or in the circumstances of the case, to show that any other notice was intended, a personal notice must always be given. But the context or the circumstances of the case may be such as to show that a personal notice was not intended, and in such a case a notice by mail, which is the ordinary mode of giving notices in business transactions, is authorized.”
In the instant case the evidence shows that notices were mailed both by the Coleman Company and by the Tawas Company. There is no evidence that the notices so mailed were not received. On the contrary, there is affirmative evidence that the notices mailed by the Coleman Company were received; and there is evidence that the notices mailed by. the Tawas Company were not returned. So that the conclusion is that the two claimants each gave proper notice to the debtors of the assignment.
The order of the District Court is reversed.