Benedict v. Ratner
United States Supreme Court
268 U.S. 353 (1925)
The Hub Carpet Company secretly assigned its accounts receivable to Ratner (plaintiff) as security for $30,000 in loans, giving Ratner monthly lists of outstanding accounts while retaining the right to collect payments itself and use the proceeds as it wished, unless and until Ratner demanded an accounting. Four months after the assignment, the Hub was forced into involuntary bankruptcy, and Benedict (defendant), the bankruptcy receiver and trustee, sought to recover the collected proceeds from Ratner, arguing the assignment was fraudulent under New York law. The lower courts held the assignment valid, and Benedict petitioned for certiorari.
Whether an assignment of accounts receivable is valid when the assignor retains the right to collect and freely use the proceeds until the assignee affirmatively demands otherwise.