Although Zlotnic Had Been in Business a Long Time, He

Multiple Choice

Although Zlotnic had been in business a long time, he had been forced to borrow heavily in the last few years. When his debt reached the limit of his line of credit, $100,000, the manager of the Regal Bank called him in for a talk. Subsequently, Zlotnic sold his house for $250,000 to the Johnsons. He contracted to buy another house from the Scotts. From the proceeds he anticipated receiving from the Johnsons, he assigned $200,000 to the Scotts, the purchase price of Scott's house, and assigned $50,000 to the Regal Bank to reduce his debt. The assignment to the Scotts was in writing; the assignment to the bank was not. The Scotts gave written notice of the assignment to the Johnsons on March 1, the day the money was owed to Zlotnic. Johnson verified the assignment and paid out the $200,000 to the Scotts. On March 2, the Regal Bank gave written notice of its assignment to the Johnsons. Unfortunately, at that time only $45,000 was owing to Zlotnic because the Johnsons had paid $5000 to the Canada Revenue Agency for Zlotnic. On these facts, which of the following is true?

A) The assignment to the bank is a statutory assignment.
B) The assignment to the bank is not enforceable because it was not in writing.
C) Regal Bank must take "subject to the equities" between Zlotnic and the Johnsons; i.e., it can't receive the whole $50,000.
D) Zlotnic needed the permission of the Johnsons, the debtors, before he could make any assignments.
E) The bank has no claim since the Johnsons didn't owe Zlotnic the specified $50,000 at the time of the assignment.