The bank then sued to enforce its claim under Air Metal’s assignment. Is the assignment effective? Why or why not?
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Tompkins-Beckwith, as the contractor on a construction project, entered into a subcontract with a division of Air Metal Industries. Air Metal procured American Fire and Casualty Company to be surety on certain bonds in connection with contracts it was performing for Tompkins-Beckwith and others. As security for these bonds, on January 3, Air Metal executed an assignment to American Fire of all accounts receivable under the Tompkins-Beckwith subcontract. On November 26 of that year, Boulevard National Bank lent money to Air Metal. To secure the loans, Air Metal purported to assign to the bank certain accounts receivable it had under its subcontract with Tompkins-Beckwith. In June of the following year, Air Metal defaulted on various contracts bonded by American Fire. On July 1, American Fire served formal notice on Tompkins-Beckwith of Air Metal’s assignment. Tompkins-Beckwith acknowledged the assignment and agreed to pay. In August, Boulevard National Bank notified Tompkins-Beckwith of its assignment. Tompkins-Beckwith refused to recognize the bank’s claim and, instead, paid all remaining funds that had accrued to Air Metal to American Fire. The bank then sued to enforce its claim under Air Metal’s assignment. Is the assignment effective? Why or why not? |
Explanation
In this case, the bank would have lost. In the other provision, the effect is the same; the English (minority) provision gives priority to the assignment the debtor was notified about. According to this provision, Country A Fire was the first assignee to give Individual TM the debtor proper notice, and as a result, its assertion takes precedence over the assertion of the bank. The assignment to the bank is not successful. There are two priority principles pertaining to consecutive assignments with the same right to contract. The Country A (majority) law provides precedence at the time of the assignment to the first assignee without reference to the debtor 's notice.
Verified Answer
No, the assignment made by the bank is not successful. There are two priority principles pertaining to consecutive assignments with the same right to contract. At the time of the assignment, the Country A (majority) law gives preference to the first assignee without considering the debtor 's notice.
