The opinion of the court was delivered by: WEBER
We have cross-motions for Summary Judgment from plaintiff and original defendant based on the same set of facts. The entry of Summary Judgment as a matter of law is proper.
On February 27, 1970, Marine National Bank (Bank) loaned $15,000 to Craneways, Inc. In May of 1970, a second loan for $15,000 was made. On October 13, 1970, Bank made another loan to Craneways, this time of $3,500 and took back a security agreement which was duly recorded. Although the $3,500 note was paid in full on November 2nd, this first security agreement provided for coverage as follows:
"Borrower agrees that the security interest created hereby in favor of Bank shall secure payment to Bank by Borrower of . . . all other obligations of Borrower to Bank, now or hereafter incurred, whether matured or unmatured, direct or contingent, and any renewals, extensions, or substitutes therefor . . ."
As security the Bank took all inventory
"now or hereafter acquired, and the proceeds of disposition thereof, all accounts receivable now owned or hereafter created, and proceeds thereof."
On April 15, 1971, the Bank consolidated the two $15,000 obligations dating back to 1970, by issuing a new, consolidating note of the face amount of $30,000. Although the due date was June 1st, 1971, the note was not paid at that time.
On June 1st, 1971, the Bank lent Craneways another $28,000 to finance an order, evidenced by a separate note, and took back a security agreement containing language identical to that of the first agreement. This note was paid on August 18th.
In June of 1971, Mr. Beals, Craneways president, who cannot now be found, notified the Bank of an agreement between Craneways and defendant Airco for the reconstruction of a crane evidenced by a purchase order for which he had already received a payment of $11,500 and for which he was to receive another $23,000 upon completion of the agreement.
On July 19, 1971, the Bank sent defendant Airco a registered letter that notified Airco that the Bank held a security agreement with Craneways covering all of Craneways' accounts receivable and inventory, and demanding payment to Bank of all moneys due Craneways. Airco does not deny that it received this letter.
In August of 1971, the crane was delivered to Airco, and Airco issued a check for $17,985 (85% of unpaid balance, remainder to be security for adequate performance) directly to Craneways. Craneways received this check and endorsed it over to the Internal Revenue Service to cover payment of delinquent taxes.
The issue in this case is whether defendant Airco, at the time it made the $17,985 payment directly to Craneways, was under an obligation to make that payment to the Bank to which ...