209 A.D. 751 | N.Y. App. Div. | 1924
The plaintiff seeks to recover the sum of $5,932.85 alleged to be due from defendants to the Rush Silk Manufacturing Company and by that company assigned to the plaintiff, to secure the payment of loans. The account arose out of a factoring agreement. Defendants made two payments on it to plaintiff. There is no dispute with reference to the amount of the account, but the defendants assert that they are entitled to offset, against it, certain unpaid trade acceptances which they hold against the Rush Silk Manufacturing Company, and which were given in payment for silk sold by the defendants to .that company upon an independent
During the year 1917 defendants made a contract with the Rush Silk Manufacturing Company, by which they were to sell the output of its mill. This contract was modified in 1918. As modified, it provided for the delivery of the entire output of the mill to the defendants, and the assignment to them of all accounts for the sale of such output. The defendants on their part undertook to assist in selling the merchandise, to make advances thereon, and to guarantee payment of all approved accounts. They were to receive a percentage of the receipts, retaining a lien on the merchandise for all advances and for losses and damages arising from their dealings with the Rush Silk Manufacturing Company. About the fifteenth day of each month the defendants were to pay the silk company all accounts for merchandise delivered during the preceding month to customers whose accounts were assigned to and guaranteed by the defendants. The amount was to be ascertained by deducting “ returns, allowances, discounts, commissions, interests, advances, setoffs, expenses, charges and disbursements, etc., provided for by this agreement.”
In 1918 another and distinct course of dealing between the Rush Silk Manufacturing Company and defendants was entered into, when the factoring account was modified. These dealings related to the sale of raw silks to the silk company. The contracts for such sales provide for terms of “ net ninety days trade acceptances.” It is the- amount of unpaid trade acceptances, given under such independent contracts of sale, that the defendants desire to offset against the amount due under the factoring agreement.
On February 28, 1920, the Rush Silk Manufacturing Company assigned to the plaintiff, as security for loans existing and to be made, the sum of $41,963.10, due it from the defendants. The pilk company at that time owed the plaintiff the sum of $20,000, and there was subsequently advanced during the year 1920, additional amounts as follows: March first, $10,000; March twelfth, $10,000; March sixteenth, $10,000; March twenty-second, $10,000; April third, $3,500. On .March 1, 1920, the plaintiff
The condition of the account under the factoring agreement existing between the defendants and the Rush Silk Manufacturing Company on February 28, 1920, the date of the assignment, and during the months of March and April, is agreed upon and shown in a statement of account made by defendants on April 30, 1920.
Exhibit I shows that on February 1, 1920, the defendants owed the Rush Silk Manufacturing Company $41,963.10 on the factoring contract, with no credits claimed against this until February 28, 1920, when credits of $1,509.60 and $15.10 were claimed for merchandise returned, so that at the time of the assignment to plaintiff on February 28, 1920, the amount due on this account was the amount set out in the assignment, less certain charges entered on defendants' books on the same day.
During March and April, 1920, a credit of $5.55 for trucking was asserted by the defendants against this account, and $34,500 cash payments were made by defendants to plaintiff as the assignee of the account, as follows: March sixteenth, $10,000; March nineteenth, $10,000; March twenty-fifth, $5,000; April first, $5,000; April eighth, $2,500 and April twenty-first, $2,000.
The' total of such credits was $36,030.25, leaving the sum of $5,932.85 due on the factoring agreement, being the amount now claimed by the plaintiff.
The account rendered by the defendants on April 30, 1920, ignoring interest and discount, sets forth the sums then due on the factoring contract; and those figures are not questioned.
The condition of the account for the sales of silk, made by defendants to the Rush Silk Manufacturing Company, was on February 28, 1920, the date of the assignment, that two trade acceptances were outstanding; but they were not due until April 27, 1920, and May 25, 1920. The first of these was paid, but the second was not.
After the date of the assignment, other trade acceptances were given by the Rush Silk Manufacturing Company to the defendants
The two contracts were separate and distinct. The contract by which the defendants were to market the product of the Rush Silk Manufacturing Company mills had been in force for several years before 1918. By its terms the defendants were to retain certain sums and pay the remainder to the Rush Silk Manufacturing Company.
The contract by which the defendants sold the Rush Silk Manufacturing Company raw material was an independent contract, and by its terms payment was to be made by ninety-day trade acceptances.
It was the amount due the silk company under one of the contracts that was assigned to plaintiff. If the deduction sought to be made against the assignee arose from a breach by the assignor of that contract, it might be that the amount affected by the assignment would be reduced by the amount of damages caused, by that breach, to defendants. But the deduction here asserted against the assignee is based upon the assignor’s failure to carry out, after the assignment had been made, an independent contract. There was no such offset or counterclaim in existence when the assignment was made.
In National Nassau Bank v. Ludington’s Sons, Inc. (164 App. Div. 466) this court said (at p. 468): “ The respondent insists that the appellant cannot set up any claim for damages against it for the reason that the claim in question was assigned to the respondent and notice thereof given to appellant prior to the time when the alleged offset counterclaim or recoupment arose, and as authority for this proposition relies on Michigan Savings Bank v. Millar (110 App. Div. 670; affd., 186 N. Y. 606) and Siebert v. Dunn (157 App. Div. 387). I do not believe that either of these cases is applicable to the case at bar. In the first case cited the claim there sought to be pleaded as an offset or counterclaim did not arise out of the contract upon which the action was brought but was an independent and entirely separate cause of action in favor of defendant against the plaintiff’s assignor. In that case, as well, there had been complete performance of the contract by the assignor.. In the second case cited, there had likewise been a complete performance by the assignor at the time of the assignment, and the contract being a severable and not an entire
When the plaintiff accepted the assignment, it was not chargeable with notice that, under other independent contracts, amounts might become due to the defendants and remain unpaid. The amounts due under the contract to which the assignment related depended upon a variety of circumstances including performance of the entire contract, the effect of which might be to reduce what would otherwise go to the assignee. The assignments to plaintiff would be subject to a valid offset or counterclaim depending upon the circumstances out of which it might arise.
The defendants may not, however, assert against plaintiff this claim arising out of an independent contract and thus defeat the assignment. It was for value, and it was made and notice of it given to defendants before the silk company became hable for any sum whatever under the other, independent contract.
The plaintiff is entitled to judgment as prayed for, with costs.
Clarke, P. J., Merrell, Finch and McAvoy, JJ., concur.
Judgment directed in favor of plaintiff, with costs. Settle order on notice.