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Seattle-First Nat'l Bank v. Or. Pac. Indus., Inc. - 262 Or. 578, 500 P.2d 1033 (1972)

Rule:

Or. Rev. Stat. § 79.3180(1) provides that the rights of an assignee are subject to all the terms of the contract between the account debtor and assignor and any defense or claim arising therefrom, and any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives notification of the assignment.

Facts:

Defendant purchaser bought plywood from Centralia. Centralia assigned the invoice evidencing the purchase to plaintiff bank, and the bank notified the buyer of the assignment. However, the purchaser refused to pay, and the bank brought action against the purchaser. The purchaser sought to set off damages it suffered as a result of the seller's failure to deliver additional goods purchased that were not part of the invoice assigned to the bank. The trial court refused to allow the set off because Or. Rev. Stat. § 79.3180(1) provided that the rights of the bank were subject to the claim for set off against the purchaser for claims that did not arise from the assigned invoice only where the claim accrued before the purchaser received notification of the assignment. The parties had stipulated that the breach that the purchaser sought to use as a set off occurred several weeks after the assignment. The purchaser appealed.

Issue:

Was the purchaser entitled to a set off?

Answer:

No

Conclusion:

The Court affirmed the judgment in favor of the bank and denied the purchaser's right to a set off. The court held that the setoff was unrelated to the assignment because it arose from a breach of a contract not connected with the invoice assigned to the bank. Thus, in that the breach occurred after the purchaser received notification of the assignment, the set off could not be asserted.

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