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Oregon Pacific (D) purchased plywood from Centralia. Centralia assigned the invoice to Seattle First (P), and P notified D of the assignment on December 13. D refused payment and P sued D. D defends the action based on setoffs. Prior to the assignment of the invoice in question, D placed two orders for plywood with Centralia that were not included in the assigned invoice. Delivery of those orders was never completed by Centralia and D claims that it can offset the invoice P held with the damages suffered from nondelivery. Centralia was insolvent at the time it assigned the invoice to P and P knew that. The trial court gave the judgment to P and D appealed.

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