Although Zlotnic Had Been in Business a Long Time, He

question 133

Multiple Choice

Although Zlotnic had been in business 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 the Regal Bank called him in for a talk. Subsequently, Zlotnic sold his house for $250,000 to the Johnsons. He contracted to buy another from the Scotts. From the proceeds he anticipated receiving from the Johnsons, he assigned $200,000 to the Scotts, the purchase price of Scott's house, and assigned $50,000 to the 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. Johnson verified the assignment and paid out the $200,000 to the Scotts. On March 2, the 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 $5,000 to the Canada Revenue Agency for Zlotnic. On these facts, which of the following is true?

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

---

Definitions:

Oxygen

A chemical element (O) essential for most forms of life on earth, playing a key role in cellular respiration and energy production.

ATP

Adenosine triphosphate, a high-energy molecule that stores and transports chemical energy within cells for metabolism.

Energy Content

The amount of energy, typically measured in calories or joules, that is contained in a food or fuel source, indicating its potential to do work or produce heat.

Reactants

Substances initially present in a chemical reaction that are consumed during the reaction to make products.