Recovery Prior to Discovering Defects In the Merchandise

In Matter of Kaufman (Iselin & Co.) (272 App Div 578 [1st Dept 1947]), the buyer of goods sought recovery from a factor whom it had paid prior to discovering defects in the merchandise. It sought arbitration pursuant to its contract with the seller. In denying such application, the court quoted from Langel v. Betz (250 NY 159, 164 [1928]), where it was stated that: "The law remains that no promise of the assignee to assume the assignor's duties is to be inferred from the acceptance of an assignment of a bilateral contract, in the absence of circumstances surrounding the assignment itself which indicate a contrary intention." The court, therefore, concluded that "the mere assignment of an invoice and of the merchandise covered thereby for the purpose of securing a loan ... is not a situation in which it may be said that it was the intention of the parties that the factor should assume performance of the basic contract" (272 App Div, supra, at 581). Consequently, it was ruled that the factor had not "assumed the duty to arbitrate." (See also, Matter of King Broadcasting Co. [Programs for Tel.], 38 Misc 2d 536 [Sup Ct, NY County 1963].)