In October of 1959 the financial collapse of a frozen food firm in Norfolk brought to the attention of the citizens of Virginia a method of business finance which, when used without responsibility, or for fraudulent purposes can lead to hardship on innocent people.

Briefly, the situation involved selling food on the installment plan. "Warehouse 42", which is the name of the firm which failed, made arrangements to sell and deliver food to householders over a period of months, usually three or four, taking a note from the customer in payment. These notes were usually payable within four months. The concern then discounted the notes immediately. "Warehouse 42" entered into a great many of these arrangements, discounted the notes and delivered only a small part of the food, and in some cases none at all. The holder of the notes which had been discounted was a holder in due course, in this case a Texas corporation. After "Warehouse 42" failed, the people who had signed the notes in most cases had to pay the Texas company even though they had not received and would not receive the food for which the note was given.

As a result of this situation, Governor J. Lindsay Almond, Jr. requested that the Virginia Advisory Legislative Council study the problem.