This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the contest arises between an assignee who has failed to give notice to the debtor and a subsequent creditor of the assignor who seeks to attach the debt in the hands of the original debtor in an action against the assignor, we find a greater divergence of authority than in the foregoing cases. In England it is held that the prior assignee has priority over a subsequent attaching creditor, both before the enactment of the Judicature Act,1 and after.2 In the United States the great weight of authority is to the effect that the assignee who is prior in point of time has priority over a subsequent attaching creditor, as long as the contest is between such assignee and such attaching creditor.3 Notice by the assignee is given in time, although it is given after service of the attachment, as long as it is given in time to enable the debtor to protect himself in the attachment proceedings.4 As between the assignee and the debtor, the notice of the assignee comes too late if it is not given until after judgment has been rendered against the debtor in favor of the attaching creditor.5 Payment by the debtor before notice to an officer making proper levy or attaching discharges his liability to the assignee.6 It will be noted by a comparison of the cases here cited with those cited in a following section,7 that many jurisdictions, in which it is held that a subsequent bona fide assignee who takes for value and without notice has priority over a prior assignee who failed to give notice and that priority of notice controls rather than priority of time of assignment, hold that as between an assignee who has failed to give notice to the debtor and a subsequent attaching creditor, priority is to be given according to the time of the assignment, and not according to the time of notice to the debtor. At the same time it is held in a number of jurisdictions that where the contest is between the prior assignee and the subsequent attaching creditor, priority of notice rather than priority of assignment prevails, and that the subsequent attaching creditor has therefore priority over an assignee prior in point of time, but who did not give notice until after notice was given to the debtor in the attachment proceedings.8 Various reasons have been given for this result. It is said that, until notice, the title of the assignee is inchoate, and it may be divested by seizure by the creditors of the assignor.9 In Connecticut it is said that "an attaching creditor stands in a situation very similar to that of a subsequent purchaser." 10 In Vermont, by statute, negotiable paper, whether overdue or not, was subject to trustee process, "unless it shall appear that the same had been negotiated and notice thereof given to the maker or indorser before the service of process on him." 11 Under such a statute, notice is, of course, necessary to protect the assignee against a subsequent attaching creditor.12 Knowledge on the part of the debtor is insufficient.13 It has. however, been said that "upon principle, subsequent purchasers and attaching creditors must stand upon the same ground. "14 and that it "is needless to cite cases to show the necessity of such notice."15
1 Scott v. Hastings, 4 Kay & J. 633; Pickering v. Ilfracombe Ry. Co., L. R. 3 C. P. 235; Robinson v. Nesbitt, L. R. 3 C. P. 264.
2 Ex parte Whitehouse 32 Ch. D. 512; Badeley v. Consolidated Bank, 38 Ch. D. 238; Davis v. Freethy, 24 I. B. D. 619.
3United States. Young v. Upson, 115 Fed. 192.
Alabama. Jones v. Lowery Banking Co., 104 Ala. 252, 16 So. 11.
California. Mclntyre v. Hauser, 131 Cal. 11, 63 Pac. 69.
Colorado. Chamberlin v. Gilman, 10 Colo. 94, 14 Pac. 107.
Georgia. Chattanooga, etc., Bank v. Steel Co., 87 Ga. 435, 13 S. E. 586; Walton v. Horkan, 112 Ga. 814, 81 Am. St. Rep. 77, 38 S E. 105.
Illinois. Knight v. Griffey, 161 111. 85, 43 N. E. 727.
Indiana. Hoadley v. Caywood, 40 Ind. 239.
Iowa. Steltzer v. Condon, 139 la. 754, 118 N. W. 39.
Kansas. Hall v. Kansas City Terra Cotta Co., 97 Kan. 103, L. R. A. 1916D, 361, 154 Pac. 210.
Massachusetts. Mayer v. Daniels, 113 Mass. 129.
Michigan. Blumenthal v. Simons, 110 Mich. 42, 67 N. W. 1102.
Minnesota. Lewis v. Bush, 30 Minn. 244, 15 N. W. 113.
Mississippi. Schoolfleld v. Hirsh, 71 Miss. 55, 42 Am. St. Rep. 450, 14 So. 528.
Montana. State v. Conrow, 19 Mont. 104, 47 Pac. 640.
Nebraska. Scott v. Rohman, 43 Neb. 618, 47 Am. St. Rep. 767, 62 N. W. 46.
New Hampshire. Pollard v. Pollard, 68 N. H. 356, 39 Atl. 329; Glauber Mfg. Co. v. Voter, 71 N. H. 68, 51 Atl. 270.
New Jersey. Flostroy v. William B. Corby Coal Co., 80 N. J. Eq. 547, 85 Atl. 578.
New York. Williams v. Ingersoll, 89 N. Y. 508; Edison Electric Illuminating Co. v. People's National Bank, 221 N. Y. 1, L. R. A. 1917F, 1123, 116 N. E. 369.
Ohio. Copeland v. Manton, 22 O. S.
Oklahoma. Market National Bank v Raspberry, 34 Okla. 243, L. R. A. 1916E, 79, 124 Pac. 758.
Oregon. Meier v. Hess, 23 Or. 599, 32 Pac. 755.
Rhode Island. Abbott v. Davidson, 18 R. I. 91, 25 Atl. 839.
Virginia. Mack Mfg. Co. v. Smoot, 102 Va. 724, 47 S. E. 859.
Washington. Bellingham Bay Boom Co. v. Brisbois, 14 Wash. 173, 44 Pac. 153.
West Virginia. Tingle v. Fisher, 20 W. Va. 497.
4 England. Scott v. Hastings, 4 Kay & J. 633.
California. Walling v. Miller, 15 Cal. 38.
Illinois. Knight v. Griffey, 161 111. 85, 43 N. E. 727; Williams v. West Chicago Street Ry., 199 111. 57, 64 N. E. 1024.
Oklahoma. Market National Bank v. Raspberry, 34 Okla. 243, L. R. A. 1916E, 79, 124 Pac. 758.
Rhode Island. Abbott v. Davidson, 18 R. I. 91, 25 Atl. 839.
Washington. Bellingham Bay Boom Co. v. Brisbois, 14 Wash. 173, 44 Pac. 238.
5 Walters v. Washington Ins. Co., 1 Ia. 404, 63 Am. Dec. 451; McGuire v.
Pitt's Son, 42 la. 535; Wood v. Partridge, 11 Mass. 488; Corbett v. Fitch-burg Ry. Co., 110 Mass 204; Richards v. Griggs, 16 Mo. 416, 57 Am. Dec. 240; Peterson v. Kingman, 59 Neb. 667, 81 N. W. 847.
6 Faber v. Wagner, 10 N. D. 287, 86 N. W. 963.
7 See Sec. 2280.
8 Vanbuskirk v. Hartford Fire Ins. Co., 14 Conn. 141, 36 Am. Dec. 473; Bernard v. Whitney National Bank, 43 La. Ann. 50, 12 L. R. A. 302, 8 So. 702; Newman v. Irwin, 43 La. Ann. 1114, 10 So. 181; Rodes v. Haynes, 95 Tenn. 673, 33 S. W. 564; Dillingham v. Traders' Ins. Co., 120 Tenn. 302, 16. L. R. A. (N.S.) 220, 108 S. W. 1148.