Continental Purchasing v. Van Raalte
|Continental Purchasing v. Van Raalte|
|Court||Appellate Division of New York|
|Citation||295 N.Y.S. 867|
|Date decided||May 19, 1937|
Mrs. Potter, an employee of the Van Raalte Co. ("Van Raalte"), owed money to a sporting goods store. Later, Continental Purchasing Co. ("Continental") took over the debt.
- Van Raalte = sends wages to creditor (sporting goods store).
- Potter = original debtor
- Continental = new debt owner; new creditor; assignee; 3rd party
However, Potter still agreed to $1.50 wage garnishments by Van Raalte. This occurred 6 times. Van Raalte sent 6 wage garnishments to Continental.Suddenly, Van Raalte decided to forgive the debt.
Continental sued Van Raalte in New York state court. Continental sought $19.20 owed on the debt.
Van Raalte answered Continental by explaining that Van Raalte had paid $19.20 directly to Potter.Van Raalte won in the trial court.
A debt is assigned to a 3rd party, the assignee. So, what if the original debtor continues to pay the creditor instead of the assignee?Namely in this case, is a debtor (Potter) who receives notice that her debt has been assigned to a 3rd party (Continental) but continues to pay the original creditor (Van Raalte) liable for the resulting damage to the assignee (Continental)?
Justice Edgcomb: A debtor [Potter] is not affected by the assignment of her debt to a 3rd party [Continental] until the debtor [Potter & Val Raalte that was collecting the debt by wage garnishments] received notice of that assignment.
If after the notice, the debtor continues to pay the original creditor, then the debtor is liable for compromising the new assignee's [Continental] rights.Of course, the original actor on behalf of the creditor (Van Raalte) is in no position to forgive the debt that has been assigned to the new creditor (Continental).