109 N.J. Eq. 409 | N.J. Ct. of Ch. | 1931
1. The primary inquiry herein is: As between successive assignees of the same chose in action (in this case a legacy), does prior notice to the debtor (in this case a testamentary trustee) of the later assignment, without more, subordinate the rights of the earlier to those of the later assignee?
It is difficult to suggest any concrete question which has received more consideration from the courts of England and of this country than this; and perhaps equally difficult to find any question on which the courts of this country are more evenly divided. In this state, until the decision of the late Vice-Chancellor Emery in Jenkinson v. New York Finance Co.,
"There is no decision of this court which sustains the contention that, as between successive assignees of the same chose in action, mere priority of notice gives priority of right. It seems to us that the better reasons are against such a rule. By the first assignment, the rights of the assignor pass to the assignee. The creditor has a right to dispose of his own property as he chooses, and to require the debt to be paid as he directs, without the assent of the debtor. See Story Eq. Jur. (11thed.) § 1057. Notice of the assignment to the debtor adds nothing to the right or title transferred. A subsequent assignee takes nothing by his assignment because the assignor has nothing to give. See Judson v. Corcoran, supra 614. If, after assignment, the assignor receives payment from the debtor, he is liable to the assignee. Failure of the first assignee to give notice does not divest him of any title or right, or vest any claim in a subsequent purchaser. It cannot injuriously affect an intending purchaser who makes no inquiry of the debtor concerning the assignor's title. The debtor is not bound to answer inquiries concerning the assignor's title, and there can be no assurance that an intending *412 purchaser can ascertain the encumbrance by inquiry of the debtor having notice of the earlier assignment. Low v. Bouverie (1891), 3 Ch. 82, 99; 60 L.J. Ch. (N.S.) 594; 65 L.T. (N.S.) 533; 40 Week. Rep. 50. Compare Ward v. Duncombe,supra 393. It is impossible to eliminate all risk from such a transaction, if the second assignee elects to rely on the representations of the vendor as to his title, and is deceived, he cannot shift his loss to the first assignee, unless some act or omission of the latter was proximate to the deception.
"Facts and circumstances may create an equitable estoppel against the first assignee. Herman v. Connecticut Mutual LifeInsurance Co.,
I am impelled to adopt these views. This same specific inquiry came before the American Law Institute in 1928 and the rule there adopted protects the first assignee as against the assignment of the second assignee who has given prior notice. Restatement ofLaw Contracts (Official Draft) 217, § 173. Illustration 3 (at p. 209.)
2. It herein has been assumed that both assignees enjoyed the status of purchasers for value without notice. That is true as to complainant, the first assignee in point of time. The assignment was made to it by the assignor as collateral security for a loan of money made to the assignor at the same time. If the assignment to defendant trust company was not such as to give it the status of an innocent purchaser for value the equitable rights of complainant are clearly superior for that reason alone. GeorgeF. Perry Son, Inc., v. Mand, *413
3. The two judgments entered by the Seth Thomas Clock Company and the judgment entered by the National Security Company, all entered prior to the assignments, are superior prior liens on the real estate; but no executions having been issued, are subject to the superior rights of the two trust companies under their assignment as to the personalty. The other judgments are all subsequent to the assignments and subject to the rights vested in the assignees. *414