Although Zlotnic Had Been in Business for a Long Time

question 24

Multiple Choice

Although Zlotnic had been in business for a long time, he had been forced to borrow heavily in the last few years.When his debt reached the limit of his line of credit, $100 000, the manager of Regal Bank called him in for a talk.Subsequently, Zlotnic sold his house for $250 000 to the Johnsons.He contracted to buy another house from the Scotts.From the proceeds he anticipated receiving from the Johnsons, he assigned $200 000 to the Scotts, the purchase price of their house, and assigned $50 000 to Regal Bank to reduce his debt.The assignment to the Scotts was in writing; the assignment to the bank was not.The Scotts gave written notice of the assignment to the Johnsons on March 1, the day the money was owed to Zlotnic.The Johnsons verified the assignment and paid out the $200 000 to the Scotts.On March 2, Regal Bank gave written notice of its assignment to the Johnsons.Unfortunately, at that time only $45 000 was owing to Zlotnic because the Johnsons had paid $5000 to Canada Revenue Agency for Zlotnic.On these facts, which of the following is true?

• A)The assignment to the bank is a statutory assignment.
• B)Regal Bank has no claim since the Johnsons didn't owe Zlotnic the specified $50 000 at the time of the assignment.
• C)Regal Bank must take "subject to the equities" between Zlotnic and the Johnsons (i.e., it can't receive the whole $50 000).
• D)Zlotnic needed the permission of the Johnsons, the debtors, before he could make any assignments.
• E)The assignment to the bank is not enforceable because it was not in writing.

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