Ertel v. Radio Corp. Of America

307 N.E.2d 471 (1974)

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Nature of the Case

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Facts

Economy (P) sued Delta (D) for monies due under a loan agreement. Ertel (D1) and Dugan were the secretary and president of D. Ertel (D1) filed a third-party complaint against RCA (D3). D3 was an account debtor of D, and when D assigned its debts to P, D3 was notified of that assignment but D3 continued to pay D. D3 claimed that even though it paid the wrong party it had a right of set-off against P. On appeal the court of appeals held that P should be subrogated to Economy's rights as assignee of the accounts receivable from D3 and that Economy would take free of certain set-off rights claimed by D3 against the account creditor D.