Bernstein v. Equitable Discount Corp.

HARDEN, J.,

pro tem.

Robert Wolf was engaged in business as a retail merchant in Los Angeles under the name of Wolf Cabinet & Furniture Manufacturing Company. He sold furniture under conditional sales contracts to purchasers. Such contracts provided for payments in instalments by the purchasers and gave the seller the right to repossess the furniture upon default in payments. Many such contracts were assigned by Wolf to defendant Equitable Discount Corporation. There was a general blanket agreement between said corporation and Wolf providing for a cash payment to Wolf of an amount to be fixed as the purchase price of each contract assigned. Said agreement provided further, in effect,

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that the corporation might appoint Wolf as agent to collect for it instalments due under assigned contracts and that Wolf should be paid 10 per cent of the sale price of the furniture for making the collections on each contract, payable by the corporation to him when and if the collection had been made in full and remitted to the corporation, provided the aggregate of delinquencies for nonpayment of instalments upon the remaining contracts so assigned did not exceed 10 per cent of the aggregate of all balances then remaining unpaid on such contracts.

On December 31, 1931, Wolf made what purported to be an assignment of his assets for the benefit of creditors to a creditors’ committee composed of R. L. Smith, Sol R. Bernstein, E. W. Kohn, V. E. Freeman and J. G. Bonanomi. No notice as required by section 3440 of the Civil Code was given. Thereafter Freeman and Kohn resigned and withdrew as members of said committee, and G. D. Cobb, subsequent to December 31, 1931, and prior to the commencement of this action, associated himself therewith and assumed to act as a member of such committee. Smith, Bernstein and Bonanomi, as members of said creditors’ committee, are plaintiffs in this action, brought against the defendant for the purpose of compelling it to present any claim it had against Wolf to said committee, in order that the same might be taken into account and paid together with other valid claims against Wolf. Defendant filed a cross-complaint against Wolf, all the original members of said creditors’ committee, and Cobb, wherein its claim is set forth.

Said claim arose by virtue of the fact that, without notice to or knowledge of said corporation, Wolf repossessed himself of the furniture sold under thirty-three of the contracts of sale assigned to the corporation and thereafter sold the same at auction. At that time the aggregate balance due on said thirty-three contracts was $4,096.10. From the auction sale there came into Wolf’s hands, as proceeds thereof, the sum of $435.78, which he remitted to the corporation. Defendant’s claim was for $3,660.32, being the difference between the aggregate balances due on said thirty-three contracts and the payment of $435.78.