William B. Grover, Trustee in Bankruptcy of the Estate of North State Grocers, Inc., a Corporations, Bankrupt v. James Hull and Aileen Hull

On October 31, 1960, the bankrupt, under the name of Redding Specialty Products, Inc., as borrower, and Leo Audia and Ronald L. Farley, as lenders, executed an inventory lien agreement by the terms of which the bankrupt granted the lenders a lien on its inventory to secure future and present advances and obligations not to exceed $65,000.00. Previously, on October 14, 1960, a notice of inventory lien was recorded in the Shasta County, California, official records, which notice was signed by all parties. Also on October 31, 1960, the same parties executed an agreement to assign future accounts receivable of the bankrupt to Audia and Farley. The record does not disclose that a notice of the assignment of the accounts receivable was recorded. On May 31, 1962, the bankrupt, Farley and Audia, and James and Aileen Hull executed an agreement which purported to substitute the Hulls for Farley and Audia, by way of assignment, as lenders in the inventory lien agreement and as assignee in the accounts receivable assignment. On June 19, 1962, notices of the assignments of the accounts receivable and inventory lien were recorded in Shasta County. Both notices were signed only by the bankrupt.…