Vanderbilt Law Review

First Page



Under our system of government there is no constitutional requirement that the laws of the various states be uniform. On some points there are considerable differences between the laws of sister states. Such is the case with respect to the test for priority of right among successive assignees of an account receivable. This difference becomes of great importance when a multi-state transaction raises the question of the choice of the applicable law.

Fundamentally the problem is whether the jurisdiction in question follows the rule of Dearle v. Hall,' or the so-called American rule. The former establishes the order of precedence between competing assignees of a chosen action according to the priority of the date of the notice to the account debtor. The latter establishes it according to the priority of the date of assignment. The American rule is divided into the Massachusetts and New York sub-rules, which respectively allow and do not allow certain equitable exceptions. Many jurisdictions are uncertain as to which rule or sub-rule they adhere, and there is a marked tendency in this field for courts suddenly to overthrow the established rule of their state. To add to this complexity, many states in the last few years have passed either recording, bookmarking or validation statutes.