Longo

Plaintiff Elster’s Sales, a corporation, had long been in the business of furnishing and equipping restaurants. The Mikado Corp., a corporation with little assets, proposed to establish a Japanese restaurant in a building located on leased land in Oakland. The restaurant corporation contemplated an installation much more expensive than that for which it could pay in cash and therefore required a long period of time to pay the entire purchase price.

Elster’s Sales had developed a program of handling such situations. An individually owned restaurant (as opposed to one of a chain) nearly always entailed a substantial degree of risk to one lending his credit to the restaurant owner. Moreover, if Elster’s Sales had provided the credit without receiving the full purchase price immediately, the number of installations which Elster’s Sales could make would be very limited. The solution was to sell the contract (of the restaurant owner to pay the stated price of the installation to Elster’s Sales) to a finance company thereby immediately making Elster’s Sales whole and enabling it to engage in making many more installations than it could have made if the contract had not been…