Rockmore v. Lehman ( 1942 )

CLARK, Circuit Judge

(dissenting).

As is the case with so many problems of creditors’ rights, New York law is none too clear on the point at issue. But if we take the matter irrespective of statute, I do not believe the decisions require so ancient a theory as that an assignment of definite contract rights, future only in the sense that they are conditioned upon the performance which the promisee has promised, is only a promise to pay out of future funds, and not a present transfer. The New York cases cited, to my mind, are all distinguishable. Some deal with after-acquired property; and some with future accounts receivable. Such cases emphasize the distinction between assignment of rights under an already existing contract and of rights to be created by promises in the future. See Restatement, Contracts, §§ 150, 154, 155, 161. The validity of an assignment of the former kind seems to me upheld by Niles v. Mathusa, 162 N.Y. 546, 57 N.E. 184, holding an assignment of a liquor license as security valid as against a judgment creditor; McNeeley v. Welz, 166 N.Y. 124, 59 N.E. 697, approving Niles v. Mathusa, supra, and distinguishing between assignment of a license and an agreement to assign a renewal; and Bloomer v. Offerman, 247 App.Div. 860, 287 N.Y.S. 133, holding an assignment of a lottery ticket valid against attachment after assignment, but before the lottery drawing. And before the amendment of 1896, requiring filing of assignments of money to become due upon performance of construction contracts, N. Y. Lien Law, Consol.Laws c. 33, § 15, it was well settled that the as-signee for security prevailed over subsequent mechanics’ lienors. Bates v. Salt Springs Nat. Bank, 157 N.Y. 322, 51 N. E. 1033; Beardsley v. Cook, 143 N.Y. 143, 38 N.E. 109, 62 N.Y.St.Rep. 144; Stevens v. Ogden, 130 N.Y. 182, 29 N.E. 229, 41 N.Y.St.Rep. 331; Lauer v. Dunn, 115 N.Y. 405, 22 N.E. 270, 26 N.Y.St.Rep. 412. Judge Hincks, in a careful and persuasive opinion, also reached the conclusion that an assignment, similar to the one before us, was valid under New York law. In re New York, N. H. & H. R. Co., D.C.Conn., 25 F.Supp. 874. And the cases distinguished in the opinion herewith certainly tend to support validity of the assignments. See, also, Central Trust Co. v. West India Imp. Co., 169 N.Y. 314, 323, 324, 62 N.E. 387.

Furthermore, assignments of moneys to become due under a contract seem in reality more nearly comparable to an assignment of existing book accounts than to a mortgage of after-acquired property. Under Benedict v. Ratner, 268 U.S. 353, 45 S.Ct. 566, 69 L.Ed. 991, such assignments are valid unless the assignor exercises “dominion” over the accounts. See Lee v. State Bank & Trust Co., 2 Cir., 54 F.2d 518, 85 A.L.R. 216, certiorari denied 285 U.S. 547, 52 S.Ct. 395, 76 L.Ed. 938. Certainly there is no evidence before us indicating reservation of “dominion” by the assignor. It also seems to me that the transactions before us better fit the analogy of expectancies, upheld by us in In re Barnett, 2 Cir., 124 F.2d 1005, than the after-acquired property analogy relied on by the court here. '

So I believe that, so far as New York non-statutory law is concerned, these assignments, even if for security, would be valid where made long before bankruptcy. But New York public policy in this field is now expressed in many, even diverse, statutes; there is no harder problem for. the judge — particularly one admonished as are federal judges merely to utter, not amplify, state law — than to try to make these enactments work together. See Sammet v. Mayer, 2 Cir,, 108 F.2d 337, 341, for such problems in general, as well as for the particular statutory question here, arising through two amendments to N. Y. Lien Law, § 230, requiring the recordation of chattel mortgages. A 1916 amendment definitely excepted one-day loans on stocks and bonds. Hence, in Sammet v. Mayer, we held, following the suggestion of Brandéis, J., in Benedict v. Ratner, supra, 268 U.S. at page 362, note, 45 S.Ct. 566, 69 L.Ed. 991, that security transactions in stocks and bonds were within the scope of the statute.. A 1921 amendment validated a certain type of security assignment covering specifically “notes or other evidences of indebtedness, or contracts or choses in action.” We then declined to decide whether or not this brought all the named interests within the scope of the Lien Law. That question is now presented. Indeed, if reasons of policy support the result reached by my brothers here, they should be found in statutory provisions for recording, rather than in vague deductions going back in essence to antique views of the non-as-signability of choses in actions. Cf. M. Witmark & Sons v. Fred Fisher Music Co., 2 Cir., 125 F.2d 949, 953, 954.

No question of the statute was briefed or argued before us. So important a question as to interpretation ought not to be decided, particularly by a federal court, without the utmost light possible and upon a record ¿ontaining definite findings as to whether these assignments were outright or for security. It may well be that differing results may be reached in the two cases before us. I am ready to return the case to the court below for a more complete record, as well as more extensive investigation of the issue which seems to me controlling. I am not willing now to assign these funds to the trustee upon what seems to me the unreal ground that, even though the parties intended and thought they were assigning rights in an existing contract, they succeeded only in making a promise of a future transfer.