Rosenberg v. Son by Collin

Rosenberg v. Son by Collin - Rosenbergs sued Son and Pratt...

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Brief 17.2 Rosenberg v Son. Supreme Court of North Dakota, 1992. 491 N.W.2d.71. STATEMENT OF FACTS : Mary Pratt contracted to buy Harold and Gladys Rosenberg’s Dairy Queen on February 8, 1980. The purchase price for the “franchise, inventory, and equipment” was $62,000, with payments to be made over a fifteen-year period. In 1982, Pratt assigned her rights in the contract to Son, Inc. The Rosenbergs signed a “Consent to Assignment” clause at that time. Pratt then moved to Arizona and had nothing more to do with the Dairy Queen business. In 1984, Son assigned the contract to the Merit Corporation. The assignment did not contain a consent clause for the Rosenbergs to sign, but they were aware of the transaction and accepted Merit’s payment on the balance. Merit took out a bank loan, using the equipment and inventory as security, or collateral, for the loan. After June 1988, Merit ceased making payments to the Rosenbergs. Merit filed for bankruptcy, and the bank repossessed the collateral. The
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Unformatted text preview: Rosenbergs sued Son and Pratt for payment of the balance due ($17,326.24) under the original contract for the sale of the Dairy Queen. The trial court dismissed the Rosenbergs claims, finding that Pratt was a guarantor and that the second assignment to Merit, Merits pledging of the business assets as collateral for a loan, and other actions accomplished without Pratts knowledge were sufficient alterations to the original contract to exonerate her. The Rosenbergs appealed. ISSUE: May rights of a contract be assigned to a third party when a consent to assignment clause is not signed by the obligatee? DECISION: Unknown. REASONING: The appellate court stated that the trial court erred by applying guaranty law to the dispute. The court decided that the case be sent back to the trial court for further fact finding to determine whether the Pratt-Son agreement constituted an assignment of the contract....
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