Opinion
Hearing Granted June 2, 1960.
Opinion vacated 8 Cal.Rptr. 474.
Nichols, Miller & Hodge, Richard E. Hodge, Beverly Hills, and Christopher Hall, Los Angeles, for appellant.
Mitchell & Gold, Seymour Gold, Beverly Hills, for respondent.
BISHOP, Justice pro tem.
The controversy in this case centers about a fund of $9,875.25 which is in the possession of the defendant Bank of Belmont Shore. The bank had offered to distribute this fund between the plaintiff and the defendant California Equities, Inc. as they should agree, or, should they not agree, then to disburse it as directed by a court of competent jurisdiction. The plaintiff and California Equities, Inc. did not agree, so this action for declaratory relief was brought. A judgment was entered 'That the plaintiff * * * have judgment against the defendant, California Equities, Inc., that the sum of $9,875.25 now being held by the defendant, Bank of Belmont Shore, is the property of the plaintiff and shall be delivered to the plaintiff.' Our first impression, that the judgment should be affirmed, has been confirmed as we have reviewed the record, step by step.
Plaintiff's case is a simple one. It was a factor, engaged in the business of buying up accounts receivable. It dealt with Modern Crane & Conveyor Co., Inc., a corporation, (Modern Crane in future references), which was under contract to manufacture certain items for the U.S. Navy. On February 27, 1956, plaintiff and Modern Crane executed a Notice of Assignments of Accounts and on the next day Modern Crane assigned to the plaintiff two of its accounts with the Navy, identified by invoices numbered 2073 and 2075; each dated February 28th; each for $3,960. On March 5th the Notice of Assignments was filed in the Office of the County Recorder and that officer gave his certificate '* * * that, for a period of three years prior to the date and hour of such filing, there were no other uncanceled Notices of Assignment filed in my office by the Assignor * * *.' Modern Crane assigned another of its Navy accounts to the plaintiff on March 6th, this one covering invoice numbered 2083, for $1980, dated the day it was assigned.
It was stipulated that the items shown on these three invoices had all been delivered to the Navy. The total of the three invoices was $9,900, and it was this sum, discounted to $9,875.25, that the bank had notified the plaintiff and California Equities, Inc. that it had received from the Navy, in payment of the three invoices, and was holding for instructions.
We see no reason to doubt that under the facts so far narrated, the proper decree would be that it was the plaintiff to Relying on these three instruments, the defendant alleged in an affirmative defense in its answer and then in its cross-complaint, that it was the owner and assignee of indebtednesses from the Navy to Modern Crane identified as follows (omitting from each the description of articles covered): (a) invoice number 1737, date 7/21/55, total price $6,435; (b) invoice number 1820, date 8/24/55, total price $1,485; (c) invoice number 1824, date 8/30/55, total price $4,950. It was noted that $3,165.59 had been received on invoice No. 1,737, leaving an unpaid balance on all three of $9,704.41.
We must confess ourselves at a loss to understand defendant's theory, in either its affirmative defense or in its cross-complaint. This is not an action against Modern Crane nor against the U.S. Navy, but one not very different from an action in interpleader to determine who was entitled to funds held by the bank. If it were established that the U.S. Navy owed Modern Crane, and so the defendant, a balance because of invoices numbered 1737, 1820 and 1824, that fact would have no bearing on our question: to whom is due the sums that have been paid on invoices numbered 2073, 2075 and 2083? But it appears that the Navy owed no money because of the invoices which the defendant pleaded; the testimony was positive that those invoices were returned to Modern Crane for the reason that the records indicated that nothing there listed had been shipped.
In its brief, the defendant lists not only the three invoices numbered 1737, 1820 and 1824, but four others, 1703, 1728, 1735 and 1744, for a total of $37,620 from which sum it subtracts $27,915.59 as the amount received from all sources under the Navy contract, with the result that a balance, again of $9,704.41, is left. Again we point out: even should $9,704.41 be owing the defendant on its invoices, that fact does not affect the judgment disposing of the money in question.
We are left with a contention that does touch the fund in the bank's hands; one that requires an interpretation of the sections of the Civil Code, §§ 3017-3029, under which the two Notices of Assignment of Accounts Receivable were filed with the County Recorder. It is defendant's position, as we understand it, that it acquired by assignment all of the moneys due or ever to become due Modern Crane under its Navy contract, and that it was protected against all other assignees by having recorded its Notice of Assignments. To be even more specific; defendant's position is, that long before the invoices on which plaintiff pins its hopes were written, the accounts they represent were effectually assigned to the defendant California Equities, and so they should be paid to it, and not to the plaintiff.
We would be inclined to agree with the defendant, in the light of H. S. Mann Corp. v. Moody, 1956, 144 Cal.App.2d 310, 301 P.2d 28, but for one fact, not yet mentioned: the defendant cancelled its Notice of Assignments of Accounts Receivable on November 11, 1955. Its contention is that this cancellation affected only assignments to be made after November 11, 1955, and did not affect those already made as to accounts that might come due after that date. The court, in the Moody case, noted, 144 Cal.App.2d 313, 301 P.2d 30 that 'the recorded notice of assignment had never been A reading of sections 3017-3029, of the Civil Code, constituting its chapter on Assignment of Accounts Receivable, leads us to a conclusion contrary to that defendant maintains. We are not unmindful of the language of the first paragraph of section 3018: 'An assignment of an account is entitled to priority over any subsequent assignment of the same account; provided, that as between two or more assignees who receive written assignments for value without notice, the assignee whose notice of assignment or of intention to assign, is first filed as provided in this chapter is entitled to priority over all other assignees of the same account.'
We find the word that we emphasize in section 3023 of significance: 'Any notice filed hereunder may be canceled by a certificate executed and acknowledged by the assignee reciting (1) the date of the notice, (2) the date of the filing thereof, (3) the names of the parties thereto, (4) and a statement that the same is canceled.' (Emphasis ours.) We find the word significant because of the provisions of section 3020, where one, filing a Notice of Assignment of Accounts Receivable, may, upon request, obtain the county recorder's certificate stating '* * * whether or not there is on file in his office on the date and hour of such filing any other presently effective uncanceled notice of assignment by the assignor named in the notice so filed and setting forth therein the names and addresses of the assignee or assignees named in any such presently effective uncanceled notice or notices then on file.'
The philosophy back of these provisions is clear. Before one files a Notice of Assignment which may cover accounts to be assigned, before he pays for those accounts, he wishes to know if he will enjoy priority. Were defendant's contention sound, he would be interested in learning if his assignor had ever filed a Notice of Assignment, and the legislature, in its endeavor to afford factors protection would have required the certificate to reveal that fact. But if a canceled notice is no longer an effective notice, and the choice of the word 'canceled' would itself lead to that conclusion, then the intending assignee need only to know what uncanceled notices are on file. So it is that the fact, that the defendant had filed the notice earlier in 1955, and, in accordance with its prophecy, there had been assigned to it accounts to become due in 1956, did not serve to give it priority over the plaintiff as to those accounts after the notice that was essential to priority had been canceled.
It should be further noted, at that point, that the trial court found that the plaintiff '* * * was without notice or knowledge of any claim of California Equities, Inc. to said accounts receivables at the time the plaintiff filed its Notice of Assignment of Accounts Receivables or at the time it purchased said accounts receivables' and this finding is supported by the evidence.
This leaves one other contention that the defendant makes, with apparent sincerity, based on the fact that in the Notice of Assignment filed by Modern Crane and the plaintiff, in which the latter appears as assignee, Modern Crane's name appears twice, each time as 'Modern Crane & Conveyor Co.' Its true name, defendant asserts, is 'Modern Crane & Conveyor Co., Inc.' In support of its assertion the defendant refers to no evidence of its Articles of Incorporation, but to places in the various pleadings and to some exhibits where the 'Inc.' appears. It does not call attention to its own factoring agreement of February 7th, in which the seller is 'Modern Crane & Conveyor Co.' without any 'Inc.'; nor to paragraph IV of its cross-complaint where it makes an allegation concerning Modern Crane & Conveyor Co., no Inc.; nor to its two references to this corporation by name in the opening paragraph of its first affirmative defense, without including 'Inc.' in either.
In plaintiff's Notice of Assignment there appears on the line after the assignor's This is not the first time the courts have considered the contention that there was a blot on the record occasioned by no 'Inc.' and we are not going to be the first to take the omission seriously. Note Gelber v. Cappeller, 1958, 161 Cal.App.2d 113, 131, 326 P.2d 521, 526 and the cases cited.
The judgment is affirmed.
SHINN, P.J., and FORD, J., concur.