Salem Trust Co. v. Manufacturers’ Finance Co., 264 U.S. 182 (1924)

Salem Trust Company v. Manufacturers’ Finance Company

No. 74

Argued October 15, 1923
Decided February 18, 1924
264 U.S. 182

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FIRST CIRCUIT

Syllabus

1. In a suit between citizens of different states to determine which of them is entitled to a fund which by their agreement has been collected by one and deposited to his special account, as trustee, to be paid to himself or the other as the issue between them shall be determined, the depositary is not a necessary party, and its joinder as defendant in the state court will not prevent removal to the federal court. P. 189.

2. In the absence of any local statute or usage, the question whether prior notice to the debtor of the later of two assignments of an account receivable subordinates the rights of the earlier to those of the later assignee is a question of general law, in deciding which the federal court is not bound by the decisions of the highest court of the state. P. 191.

3. While there are contingencies which entitle the second of two successive assignees of the same chose in action to prevail over the first, mere priority of notice to the debtor by a second assignee who lent money to the assignor in consideration of his assignment, without making any inquiry of the debtor, is not sufficient to subordinate the first assignment to the second. Pp. 194, 197.

280 F. 803 reversed.

Certiorari to a decree of the circuit court of appeals affirming a decree of the district court which dismissed a suit brought by the above named petitioner against the above named respondent, and its corespondent, International Trust Company, to determine the rights of the first two, as assignees, to a fund deposited with the third.