second assignee for value and without notice obtains a novation from the obligor, she will prevail unless the obligor knew of the prior assignment. Thus, the obligor may not use novation to choose which assignee to pay.
If the second assignee for value and without notice gets the firstjudgment against the obligor or receives payment from the obligor, she will prevail over the first assignee.
If the filing provision of the U.C.C. applies to the transaction, generally the assignee who is the first to file will prevail.
QUESTION ID: K0146B
IX. RIGHTS AND DUTIES OF THIRD PARTIES TO THE CONTRACT
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C. ASSIGNMENT OF RIGHTS AND DELEGATION OF DUTIES
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- Assignment of Rights
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h. What Problems Exist If There Have Been Successive Assignments of the Same Rights?
The problem: X assigns to Y a right to the payment of $500 owed him by Smith. Subsequently, X assigns this same right to Z. Who prevails—Y or Z?
1) Revocable Assignments
If the first assignment made is revocable, a subsequent assignment will serve to revoke it (i.e.,the subsequent assignee prevails).
2) Irrevocable Assignments
a) First Assignee Has Priority
The general rule is that if the assignor makes two assignments of the same right and the first assignment is irrevocable, the first assignee has priority.
In certain situations, a second assignee whopays value and takes without notice of the earlier irrevocable assignment will prevail.
(1) Judgment Against Obligor
If the subsequent assignee gets the first judgment against the obligor, she will prevail.
(2) Payment of Claim
If the later assignee gets first paymentfrom the obligor on the assigned claim, her rights will be superior.
(3) Delivery of Token Chose
If the subsequent assignee gets the first delivery of a token chose from the assignor, she will prevail.
The second assignee will prevail if she obtains a novation that supersedes the obligation running to the assignor in favor of the new one running to her. This assumes that the obligor had no knowledgeof the prior assignment at the time of the novation.
If the subsequent assignee is able to set up an estoppel against the first assignee, she will have priority, e.g., the first assignee permits the assignor to retain a document that would indicate to a reasonable person that the assignor was sole owner of the right. (Estoppel could, of course, operate the other way as well. Thus, if the subsequent assignee has actual knowledge of the earlier assignment, she will be estopped to assert her claim as against the earlier assignee even though she would, under any of the other rules above, normally succeed.)
3) U.C.C. Rules
Basically, the U.C.C. has approached the successive assignments problem by imposing filing requirements. [U.C.C. §9-310] If the filing provision is applicable to the transaction, generally the assignee who is the first to file will prevail. [U.C.C. §9-322]