Opinion
April 12, 1984
Appeal from the Supreme Court, Erie County, Mintz, J.
Present — Dillon, P.J., Hancock, Jr., Callahan, Doerr and Moule, JJ.
Order unanimously modified, on the law, and, as modified, affirmed, with costs to defendant, in accordance with the following memorandum: Defendant appeals from an order granting partial summary judgment dismissing its affirmative defenses and counterclaims in which it seeks to offset against the claim of plaintiff as assignee, a judgment obtained by a third party against defendant covering some $58,282.80 of plaintiff's asserted claim of $63,517. The subject matter of the offset claim is identical to a debt owed by plaintiff's assignor to the third party. ¶ The rights of an assignee are subject to all the terms of the contract between the account debtor (defendant herein) and the assignor and any defenses which the contract debtor could have asserted against the assignor (Uniform Commercial Code, § 9-318, subd [1], par [a]). The Uniform Commercial Code also provides that in a contract for sale the seller warrants that the title to the goods conveyed is good and that delivery is free from any security interest or other lien or encumbrance of which the contract buyer has no knowledge (Uniform Commercial Code, § 2-312, subd [1], pars [a], [b]). Here delivery of the truck by plaintiff's assignor to defendant was clearly encumbered by a debt owing from the assignor to a third party. Since this debt has been reduced to judgment by the third party against defendant, defendant clearly would have the right to offset this judgment against any claim the assignor would make against it under their contract. No less should this defense be available to defendant against the assignee asserting the same claim (Uniform Commercial Code, § 9-318). It was error to deprive defendant of these defenses by the grant of summary judgment. Whether defendant can establish these defenses must await the trial of the action. Defendant's second affirmative defense and its first three counterclaims are reinstated.