Assignment of Contract Rights

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Yale Law School Faculty Scholarship
1-1-1926
Assignment of Contract Rights

Arthur Corbin
Yale Law School
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Corbin, Arthur, "Assignment of Contract Rights" (1926). Faculty Scholarship Series. Paper 2858.
http://digitalcommons.law.yale.edu/fss_papers/2858
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University of
of Pennsylvania
Pennsylvania
University
Law Review
Review
Law
And American
American Law
Law Register
Register
And
FOUNDED
FOUNDED 1852
1852
PublishedMoasthly.
Moathly.November
NOYClDbertotoJune,
JIlIIe,by
by the
the Univenmty
Uninnit)' ofof Pennsylvania
Pel1lll11nni.Law
LawSchool,
School.
Published
34thand
aDdChestnut
CbettnutStreets,
Streeb, Philadelphia,
Philadelphia,Pa.
P
atat 34th
VOL. 74.
74.
VOL.
JANUARY, 1926.
1926.
JANUARY,
"
3No.
NO3
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
ASSIGNMENT
This subject
subject has
has been
been much
much discussed
discussed under
under the
the heading
heading
This
"alienability
of choses
choses in
in action."
action." In
In continuing
continuing the
the discussion
discussion
"alienability of
our first step
step should
should be
be to abandon
abandon altogether
altogether the
the term
tenn "chose
"chose in
our
Its linguistic
linguistic construction
construction is faulty, in
in that
that its individual
individual
action." Its
action."
that
from
different
something
very
different
from
that
words
lead
one
to
think
very
something
of
think
to
words lead one
no
is
There
which
the
expression
as
a
whole
now
denotes.
denotes.
expression
which
some
"chose" or thing or res.
There is a right (or
(or claim):
claim): against
against
rcs. There
"chose"
person. In this article we
we shall speak
speak in terms of rights
rights (or
(or
person.
claims)
and
not
about
"choses."
"choses."
claims)
It is even more important
important that we should cease to use such a
phrase as "assignment
Whatever definition we
contract." Whatever
"assignment of contract."
choose for the word "contract,"
"contract," it is not possible to construct
accurate rules by the use of such aa phrase. If a contract is defined as consisting of the facts operating to create a binding obligation-offer, acceptance, consideration, etc.-these facts are
assignedL
be assigned.
merely aa part 0off recorded history and surely cannot be
If
past
It
is
meaningless
to
speak
of
assigning
a
past
event.
If
aa cona
speak
meaningless
It
merely
we are merely
law, we
tract
at law,
enforceable at
promise enforceable
as aa promise
defined as
is defined
tract is
indicating
and
placing
emphasis
upon
one
of
the
operative
facts
and
indicating
operative
the
of
upon
emphasis
placing
and
event and
past event
merely aa past
is merely
that
promise is
A promise
operative. A
fact operative.
in fact
is in
that itit is
much
promisee;
the
be
said
to
be
assignable
by
the
promisee;
much
cannot
properly
by
cannot properly be said to be assignable
and
it, and
made it,
who made
less
promisor who
the promisor
by the
assigned by
be assigned
promise be
can aa promise
less can
bilateral
to aa bilateral
party to
either party
itit would
that either
say that
to say
erroneous to
equally erroneous
be equally
would be
deas dedefined
is
contract
botk
promises.
If
contract
is
defined
as
contract
can
assign
If
promises.
both
contract can assign
(207)
(207)
HeinOnline -- 74 U. Pa. L. Rev. 207 1925-1926
2o8
208
UNIVERSITY OF
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UNIVERSITY
noting the
the legal
legal relations
relations of
of the
the parties
parties created
created by
by agreement
agreement or
or
noting
promise,
it
is
again
erroneous
to
say
that
the "contract"
"contract" can
can or
or
promise, it is again erroneous to say that the
cannot be
be assigned.
assigned. Some
Some of
of the
the legal
legal relations
relations can
can be
be assigned
assigned
cannot
and
some
cannot. The
The legal
legal relations
relations created
created by
by any
any particular
particular
and some cannot.
contract must
must be
be analyzed
analyzed and
and the
the assignability
assignability of
of each
each one
one must
must
contract
be
considered
separately.
be considered separately.
The legal
legal relations
relations created
created by
by aa contract
contract are
are in
in various
various comcomThe
binations;
they
can always
always be
be analyze4,
analyzed, however,
however, into
into rights,
rights,
binations; they can
powers, privileges,
privileges, and
and immunities,
immunities, each
each havings
havings its
its necessary
necessary corcorpowers,
relative.
The
present
article
will
not
consider
the
assignability
of
relative. The present article will not consider the assignability of
powers, privileges
privileges or
or immunities.
immunities. They
They may
may in
in some
some cases
cases be
be
powers,
assignable. In
In the
the law
law of
of agency
agency is
is to
to be
be found
found the
the old
old maxim
maxim
assignable.
"delegatwu delegare
delegarenon
non potest,"
potest," indicating
indicating that the
the power
power of
of an
an
"delegatus
agent
is
not
assignable.
We
know,
however,
that
this
maxim
agent is not assignable. We know,
that this
does not
not tell
tell the
the whole
whole story.1
story.' The
The most important of the legal
legal
does
relations created
created by
by contract
contract is
is the
the relation of right and duty.
duty.
relations
The problem
problem of
of assignment
assignment in
in connection
connection with this relation is th~
the
The
subject
of
the present
present article;
article; and
and it
it is restricted to rights and dusubject of the
ties that
that are
are created by contract.
ties
DEFINITION
DEFINITION
To say
say that
one person
To
that one
person has a "right"
"right" against another means
that
he
has
the
aid
of
organized
society
that he has the aid of organized society in
in controlling
controlling the conduct
cond,!ct
of
of that
that other
other person
person in
in some
some respect.
respect. Exactly
Exactly the
the same idea
idea. is
is
expressed
expressed when
when we
we say
say that
that that
that other
other person
person is under
under a legal
legal duty
to
to the
the first.
first. The
The one
one who
who has
has the
the right is in the superior
superior or
or more
more
advantageous
position;
the
duty
bearer
is
in
the
advantageous position; the duty bearer in the inferior
inferior or
or less
less
advantageous
advantageous position.
position. A
A contract
contract may
may create
create in
in the
the one
one person
person
rights
to more
more than
than one
one performance;
performance; also,
also, it may
may create
create rights
rights to
in
in each
each of
of the
the contracting
contracting parties
parties against
against the
the other.
other.
Let
Let us
us determine
determine first
first what
what' is
is meant
meant by
by the
the assignment
assignment of
of aa
right.
A
simple
illustration
will
be
of service.
service.
right. A simple illustration will be of
Let
Let us
us suppose
suppose that
that A
A has
has aa right
right that
that B
B shall
shall pay
pay him
him $ioo.
$IOO.
It
is
established
law
It is established law that
that A
A has
has power
power to
to assign
assign this
this right
right to
to C.
C.
'In Barber Agency Co. v. Co-op. Barrel Co., 133 Minn. 207, i58 N. W.
1 In Barber Agency Co. v. Co-op. Barrel Co., 133 Minn. 207, Is8 N. W.
38
(igs6),
itit isis said:
38another
(1916),powers
said: "It
"It isis the
the universal
universal rule
rule that
that an
an agent
agent cannot
cannot transfer
transfer
to
to another powers calling
calling for
for the
theexercise
exercise6f
of discretion,
discretion, skill,
skill, or
orjudgment."
judgment."
ASSIGNMENT
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
is also
also established
established law
law that
that the
the assignment
assignment isis operative
operative without
without
ItIt is
duty
same
the
under
is
B
of
B.
After
the
assignment
B
is
under
the
same
duty
the
consent
assignment
the
the consent of B. After
place
and
time
as before;
before; that
that is,
is, he
he must
must still
still pay
pay $ioo
$100 at
at the
the time and place
as
specified. The
The correlative
correlative right,
right, however,
however, is
is no
no longer
longer in
in A;
A; it isis
specified.
C. The
The social
social assistance
assistance formerly
formerly at
at A's
A's command
command is now
in C.
available to
to CC and
and is not
not available
available to
to A.
'
available
If the
the foregoing
foregoing is
is correct,
correct, an
an assignment
assignment of
of an
an existing
existing
If
an act
act of the possessor
possessor of that
that right
right which
which operates
operates to exexright is an
right
similar
an
exactly
create
to
and
assignor
tinguish
right
of
the'assignor
and
to
create
an
e."<:actl:
similar
the
of
right
the
tinguish
legal operaoperaright in
in the
the assignee. This
This definition
definition is in
in terms
terms of legal
right
tion--of the
the effect of
of the assignor's
assignor's act
act upon.the
upon.the action of organtion-of
It is not a descriptive
descriptive definition
definition enabling
enabling us to
ized society. It
ized
one.
see
we
when
assignment
recognize
an
act
assignment
when
see
one.
of
an
act
recognize
definition as the foregoing renders
renders some service,
service, but
but
Such a definition
operanot sufficient
sufficient standing alone. In order
order to predict
predict legal
legal operait is not
recognize the facts that will bring
bring it about.
tion we must be able to recognize
This is true even
even though the courts do not start in the beginning
beginning
rules
definite
and
completed descriptive
descriptive definitions
definitions of facts
with completed
of law determining the legal operation of those facts. Perfect
Perfect
definition and fixed rule are the final goal toward which the courts
us, is
are striving; they are a goal which, as Judge Cardozo tells us,
is
22
may
court
the
case
never actually reached. In every decision of a
assume a definition.
definition and assert a rule; but the facts and decision
to the inductive basis used by the next court
of that very case add ,to
correcting the rule.
in remaking
remaking the definition and correcting
The law does not start with definitions and general rules
already crystallized
crystallized and put into definite words. Instead, some
The
events
events occur; A acts and B complains thereof to aa court. The
court must determine what society will do about it; this is a deterx66:
at p.
p. 166:
especially at
passim; especially
(92), passim;
Process (1921),
'The
The Natllre
Judicial Process
the Jlldicial
of the
Nature of
find how
upon the bench, to find
first years upon
"I
in my first
much troubled in spirit, in
was much
"I wa.s
certainty.
for certainty.
had embarked. II sought for
which II had
trackless
ocean on which
the ocean
was the
trackless was
was
for itit was
quest for
that the quest
TI WdS
and disheartened when II found that
oppressed and
was oppressed
and
more and
as II have reflected more
and as
by, and
futile
gone by,
have gone
years have
the years
As the
futile .. .. . As
become reconciled to the
have become
more
of the
the judicial process, II have
nature of
the nature
upon the
more upon
to
grown to
as inevitable. II have grown
see itit as
to see
uncertainty,
grown to
have grown
because II have
uncertainty, because
and
creation; and
but creation;
discovery, but
see
reaches is not discovery,
in its highest reaches
the process in
that the
see that
travail
the travail
of the
part of
are part
fears, ~e
and fears,
that
hopes and
the hopes
misgivings, the
and misgivings,
doubts and
the doubts
that the
that
principles that
which principles
in which
of death,
death, in
the pangs of
of
and the
birth and
of birth
pangs of
mind, the pangs
of mind,
born."
are born."
have
principles are
new princip}es
and new
expire, and
day expire,
their day
served their
have served
210
210
UNIVERSITY OF
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mination of
of the
the legal
legal operation.
operation.of
the particular
particular events
events by
by judijudiof the
mination
cially operating
operating because
because of
of them.
them. No
No second
second series
series of
of events
events isis
cially
exactly like
like the
the first;
first; and
and even
even if
if itit were,
were, itit could
could not
not be
be predicted
predicted
exactly
would
court,
same
the
even
or
with
certainty
that
a
second
court,
or
even
the
same
court,
would
court,
a
second
that
with certainty
time
of
course
the
In
react
to
the
events
in
the
same
fashion.
In
the
course
of
time
react to the events in the same fashion.
there are
are many
many series
series of
of events
events with
with many
many adjudications
adjudications thereon.
thereon.
there
By using
using the
the multitude
multitude of
of records
records aa jurist
jurist or
or legal
legal scholar
scholar can
can
By
make rules
rules and
and definitions.
definitions. He
He classifies
classifies the
the judicial
judicial and
and execuexecumake
tive reactions
reactions of
of society
society (the
(the legal
legal operation)
operation) and
and the
the facts
facts that
that
tive
determine
can
caused these
these reactions.
reactions. By careful
careful analysis
analysis he
he can determine the
the
caused
legal operation
operation that certain
certain facts will
will produce
produce and
and can
can specify
specify the
the
legal
will produce
produce the operation.
operation. Thus
Thus be
be creates
creates stated
stated
facts that will
rules of
of societal
societal action
action and defines
defines facts with
with reference
reference to that
that
rules
action. His chief
chief if not only
only interest
interest is
is to determine
determine what the
the
not
is
He
it.
legal operation
operation will
will be, what society
society will
will do about
about
not
legal
writing a general
general natural
natural history
history or preparing
preparing a descriptive
descriptive
writing
"movie"
of the
"movie" of
the world.
world. If
If his
his work
work is well done, however, he
will discover
discover the essentials
essentials in similar
similar series
series of events, and will dethat produce
facts
scribe
in
photographic
fashion
the
produce a certain
photographic fashion
scribe
legal effect.
.the term
assignment? Shall
describe an assignment?
Shall.the
How, then, shall we describe
include all the facts necessary to produce the legal efbe used to include
(the substitution of right in
fect stated in the foregoing definition (the
assignor) J or shall it be restricted to
the assignee in place of the assignor),
some one or aa few of those facts? This depends solely on usage
"usage"
and convenience;
convenience; but it is no easy task to determine what "usage"
A statement of the rules of
is or what "convenience"
"convenience" requires. A
accurate enumeration of the facts that
law will require aa full and accurate
fact so enumerated must be
result, and each fact
produce any juristic result,
definition
at aa descriptive definition
attempt at
and described. An attempt
identified and
follows.
follows.
assignor
the assignor
by the
intention by
of intention
is an
an expression of
As assignment is
As
s
assignee."
to
shall
to
the
assignee.
that
his
right
shall
pass
that his
or
analysis of act or
fine analysis
any fine
into any
going into
without going
definition, without
This definition,
This
of conduct
conduct
bit of
certain bit
"assignment" to aa certain
term "assigtirnent"
intent, dedicates
the term
dedicates the
Samuel
to Professor
Professor Samuel
indebted to
writer isis indebted
the writer
definition the
of definition
form of
this form
'For
For this
Will;slon.
Will;sion.
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
ASSIGNMENT
21I
by the
the assignor,
assignor, the
the objective
objective expression
expression of
of an
an intention
intention to
to subsubby
might be
be criticised
criticised because
because itit tells
tells
stituteaa new
new right-holder.
right-holder. ItIt might
stitute
us absolutely
absolutely nothing
nothingabout
about the
thelegal
legal operation
operation of
of this
thisexpression
expression
us
of the
the assignor,
assignor, since
since courts
courts and
and lawyers
lawyers are
are interested
interested in
in facts
facts
of
presthe
for
only with
with respect
respect to
to their
their legal
legal operation
operation (excluding
(excluding for the presonly
ent "evidential"
"evidential" facts).
facts). But
But ititisis not
not convenient
convenient to
to include
include irin the
the
ent
aa
of
substitution
the
produce
to
to
produce
the
substitution
of
definition
all
the
facts
necessary
necessary
facts
the
all
definition
will
facts
of
combination
one
new
right-holder,
because
more
than
one
combination
of
facts
will
than
new right-holder, because more
produce that
that result.
result. "The
"The law"
law" cannot
cannot be
be compressed
compressed into
into aa defidefiproduce
nition. ItIt isis convenient
convenient to
to pick
pick out
out the
the central
central fact
fact common
common to
to all
all
nition.
then
and
above,
definition
such
combinations,
describe
it
as
in
the
the
definition
above,
and
then
in
as
it
describe
such combinations,
to proceed
proceed to
to state
state what
what other
other facts
facts in
in combination
combination with
with this
this one
one
to
will produce
produce the
the substitution
substitution mentioned.
mentioned.
will
In order
order that
that an
an expression
expression of
of an
an intention
mtention by an
an assignor
assignor
In
must
there
assignee,
the
in
may
be
operative
substitute
in
assignee,
there
must
right
a
substitute
to
may be operative
expression
the
and
existing right
right that
that can be
be assigned, and the expression of
of
be an existing
intention by the
the assignor
assignor must be in
in a mode
mode that has been
been adjuintention
Several modes have been held effective;
effective;
dicated to be effective. Several
but we
we cannot say
say with assurance
assurance that other
other modes
modes will not be
.so held. An assignment is operative
operative if the assignor's expression
expression.
of
is accompanied
accompanied by a consideration
consideration paid; if it consists the deliv"document of title" (a docuery, along with words of gift, of a "document
ment executed by the debtor acknowledging
acknowledging his duty and describif the assignor's intention is exing the performance.
performance, due); or if
pressed by aa written and delivered
delivered documentary assignment
courts
the courts
for the
(sealed
strong tendency for
unsealed). There is a strong
or unsealed).
(sealed or
intent
to give
legal
operation
to
any
oral
expression
of
present
intent
to
oral
any
give
recogbe
that
facts
of
assign.
An
exact
determination
of
the
facts
that
will
be
recogassign.
article;
present article;
in the present
nized
be undertaken in
not be
will not
operative will
as operative
nized as
assign
promise to assign
and a promise
but
assignment and
between an assignment
but aa distinction between
will
be
briefly
noted.
noted.
will be briefly
ASSIGNMENT
AN AsSIGNMENT
PROMISES
MAKE AN
TO MAKE
PROMISES TO
suffor aa sufpromise for

makes aa promise
right makes
If
contract right
of aa contract
holder of
the holder
If the
operalegal
the
is
what is the legal operaanother, what
ficient
toanother,
assign ititto
toassign
consideration to
ficient consideration
promise isis aa
such aa promise
question such
tion
Beyond question
transaction? Beyond
the transaction?
of the
tion of
assignment
the assignment
to the
impediment to
valid
legal imp"ediment
no legal
there isis no
contract ifif there
valid contract
212
212
UNIVERSITY OF
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of such a.a right as that involved.

involved. There would
would be
be aa legally
legally enenof
forceable duty
duty to
to the
the promisee to
to perform in
in accordance with the
forceable
the
as in the
the case
case of any other
other contract. 44 But how
how does
does such
such
promise as
a
promise
to
assign
affect
the
legal relations of
of the
the obligor (the
to assign affect the legal
a
(the
to the assignor and
and the assignee?
assignee? It is quite impossible
impossible
debtor) to
to answer this question in
in one general statement, because the term
to
assign" has several distinct meanings.
"promise to assign"
has been held to be
be
In some cases the "promise to assign" has
itself a completed assignment, extinguishing the right of the asasitself"
signor against the debtor and creating aa similar right in the promisee. In such cases the "promise
"promise to assign" is self-executing
self-executing and
"promisee" in
in fact an assignee. Such a holding is quite
makes the "promisee"
"promise to
correct if the words and conduct accompanying the "promise
assign"
express
an
intention
to
convey
the
right
immediately.
assign" express an intention
That
the assignor's
assignor's words are in promissory form is not concluThat the
sive
to
the
contrary. It is clear that such an intention may exist
exist
sive to the contrary.
and may be expressed, even though the parties contemplate
contemplate the
subsequent execution of a documentary
documentary assignment. In such case
subsequent
the
document
is
to
be
a
mere
memorial of an already operative
a
the
transaction
and
is
not
operative assignment. 5II
transaction
itself to be the operative
On the other hand a promise that the promisor will on his
own behalf collect
collect the money due him and thereafter pay that
specific money over to the promisee is not an assignment.86 The
'Hughes
(1912).
4 Hughes v. Burwell,
Burwell, 113
II3 Va. 598, 75 S.
S. E. 230 (1912).
Where for a valuable consideration
consideration a promise
promise was made to assign certain insurance
policies, it
it has been held that a subsequent
subsequent formal assignment
assignment
tain
insurance policies,
of
of the policies
policies was not in fraud of creditors or an illegal preference,
preference, since
since
the
the: assignee's
assignee's right
right really dated
dated from the time of the promise:
promise: In re Grandy,
146 Fed. 318 (19o6),
(formal assignment delayed
146
(1906), (formal
delayed because insurance company
company
required
required certain
certain forms); Wilder v. Watts, 138 Fed. 426
426 (i9o5),
(1905), (here
(here the
promise
was
to
insure
promise was to insure certain property
property and to assign
assign the policy
policy so obtained).
obtained).
See
See also
also McDonald
McDonald v. Daskam, z16
II6 Fed. 276 (9o2);
(1902); In re Dier,
Dier, 296
296 Fed. 816
816
(924),
(here
(1924), (here a delivery
delivery of stock certificates
certificates was
was not an
an illegal
illegal preference,
preference,
because
because in consideration
consideration of a loan
loan the
the borrower had promised
promised to incorporate
mcorporate
and
and to
to assign
assign the
the stock to the lender).
lender).
'Carey
197 Iowa
1239, 175
175 N.
Carey v.
v. Chase,
Chase, 197
Iowa 1239,
N. W.
W. 6o
60 (xgig),
(1919), (promise
(promise by
by aa
surety
certain company
company she would apply
apply
surety that whatever
whatever she
she might
might get from a certain
in
in payment
payment of that company's
company's debt to the plaintiff);
plaintiff); Stock Growers
Growers Bank
Bank
v.
1925), (promise
v. Milisich,
Milisich, 233 Pac.
Pac. 41
41 (Nev.
(Nev. 1925),
(promise to
to a lender
lender to
to repay
repay out
out of
of a
third
third person's
person's notes
notes held
held by the
the promisor)
promisor);; Patterson
Patterson v.
v. Bank,
Bank, 236 S.
S. W.
W. 13o
130
(Tex.,
(Tex., 1922),
1922), (promise
(promise to
to pay
pay a debt
debt with
with proceeds
proceeds of
of sale
sale of crops)
crops) ; Hobbs
Hobbs
v.
out of
v. McLean,
McLean, 117
II7 U.
U. S.
S. 567
567 (1885),
(1885), (a
(a promise
promise to
to pay
payout
of moneys
moneys to be
be
received
received on
on a contract
contract with
with the United
United States
States is
is not
not within the federal
federal statutory regulation
assignments).
.
regulation of assignments).
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
ASSIGNMENT
2 13
promisor's right
right against
against the
the debtor
debtor isis not
not thereby
thereby extinguished,
extinguished,
promisor's
nor isis aa right
right against
against the
the debtor
debtor created
created in
in the
the promisee.
promisee. Such
Such aa
nor
out of
to collect
collect and
and to
to pay
payout
of the
the proceeds.
proceeds.
promise isis aa promise
promise to
promise
Words of
of present
present assignment,
assignment, however,
however, are
are not
not made
made inoperative
inoperative
Words
as aa present
present assignment
assignment by
by the
the fact
fact that
that the
the assignor
assignor at
at the
the same
same
as
to collect
collectthe
the money
money due
due as
as an
an agent
agent of
of the
the assignee
assignee
time promises
promisesto
time
and to
to pay
pay itit over
over to
to him.r
him. 7
and
For an
an effective
effective assignment
assignment itit isis necessary
necessary that
that the
the right
right asasFor
8
8
acbook
A promise
promise to
to assign
assign book acsigned shall
shall be
be clearly
clearly identified.
identified. A
signed
is not
not operative
operative as
as aa present
present assignment
assignment ifif the
the
counts as
as security
security is
counts
accounts are
are not
not clearly
clearly indicated
indicated and
and the
the terms
terms of
of the
the assignassignaccounts
are left
left to
to future
future agreement
agreement or
or if
if the
the parties
parties understand
understand
ment are
ment
accounts
the
that the
the promisor
promisor is
is to
to be
be privileged
privileged to
to collect
collect the accounts and
and use
use
that
9
In such
such aa case
case there
there is
is great
great probprobthe money
money in
in his
his own affairs.
affairs. In
the
that the agreement
agreement is
is too
too uncertain
uncertain in
in subject
subject matter
matter or
or
ability that
ability
promthe
between
contract
valid
a
terms
to
be
regarded
even
as
contract
between
the
promeven
terms to be regarded
the promisee.
promi~ee.
isor and the
AsSIGNEE NOT AN
AN AGENT
AGENT OR ATTORNEY
ASSIGNEE
It was once
once believed
believed that a right could
could not be assigned.
assigned. A
"right"
was
conceived
of
as
a
sort
of
nebulous,
ethereal,
personal
"right" was conceived of as a sort of
personal
110
0 In the nature
nat1lre of things it could not be assigned. This
relation.
A
proceeds of the litipromise to pay an attorney compensation out of the proceeds
A promise
gatIOn
because it creates only a right in the attorney
assignment, because
gation is not an assignm.ent,
against the
create aa right in the attorney against the party
client and does not create
the client
against
; Trist
(9)
69o (1902);
E. 690
Ill. 84, 65 N. E.
who is being sued: Cameron v. Boeger, 200 I11.
who
v.
1874).
S., 1874).
(U. S.,
v. Child, 21 Wall. 441 (U.
(19o6).
At. 973 (1906).
64 Atl.
8o9, 64
Eq. 8og,
'Cogan
Cogan v. Conover Mfg.
Co., 69 N. J. Eq.
Mfg. Co.,
'Thus,
Thus, aa promise by aa mortgagor to keep the property insured for the
mortgagor
though the mortgagor
even though
benefit
mortgagee is not an assignment, even
the mortgagee
of the
benefit of
was
There was
in his own name. There
shouid
executed in
cause aa policy to be executed
thereafter cause
should thereafter
Quincy
Stearns v. Quincy
no
and identified right. Steams
some designated and
to assign some
promise to
no promise
Ins.
(1878).
6I (1878).
124 Mass. 61
Co., 124
Ins. Co.,
148.
209 Fed. 148.
"In
In re
(913), 209
791 (1913),
Fed. 791
2o2 Fed.
re Stiger, 202
explained
"is better explained
assignable "is
1."The
The rule
not assignable
was not
action" was
"chose in action"
that aa "chose
rule that
creating aa
as creating
contract as
as
of aa contract
view of
archaic view
the archaic
consequence of the
logical consequence
as aa logical
278.
i9o6) 278.
(Williston's ed., 1906)
strictly
CoNTRAcTs (Williston's
POLLOcK, CONTRACTS
obligation." POllOCK,
personal obligation."
strictly personal
assigned ......
be assignea
cannot be
things cannot
of things
"A
nature of
very nature
the very
in the
relation in
personal relation
"A personal
capable
is capable
that is
nothing that
is nothing
there is
where
another, there
against another,
right against
mere right
has aa mere
one has
where one
ON
LEcruas ON
in LECTURES
Action, in
in Action,
of
Choses in
of Choses
Inalienability of
The blalie/lability
Ames, The
transfer." Ames,
of transfer."
defining
subconsciously defining
been subconsciously
LEGAl.
have been
to have
seems to
Ames seems
Dean Ames
210. Dean
HISTORY, 210.
LEGM. HISTORY,
deAs dematter. As
subject matter.
of subject
sort of
"assIgnment"
some sort
of some
tradition of
physical tradition
as aa physical
"assignment" as
case
the case
in the
as in
just as
create, just
to create,
fined
and to
extinguish and
to extinguish
operation isis to
its operation
herein, its
fined herein,
no
right isis no
contract right
of
chattels-. AA contract
or cpattels-.
land or
in land
property in
of property
conveyance of
any conveyance
of ailY
214
214
UNIVERSITY OF
OFPENNSYLVANIA
PENNSYLVANIA LAW
LAWREVIEW
REVI4W
UNIVERSITY
supposed difficulty
difficulty isis entirely
entirely eliminated
eliminated by
by aa closer
closer analysis
analysis of
of
supposed
the
in
as
Just
"relation."
by
"right"
and
"relation."
Just
as
in
the
the
concepts
expressed
and
the concepts expressed by "right"
scienceof
ofphysics,
physics, such
such an
an analysis
analysis shows
showsthat
thatthe
the ethereaf
ethereal'nebula
nebula
science
has substance
substance perceivable
perceivable by
bythe
thesenses.
senses.
has
In the
the simple
simple illustration
illustration given
given above,
above, AA had
had aa right
right that
that BB
In
nothing
mean
to
analyzed
should
pay
him
$100.
This
is
now
analyzed
to
mean
nothing
now
should pay him $ioo. This is
more than
than that
that the
the agents
agents of
of organized
organized society
society will
will assist
assist A
A in
in
more
or compelling
compelling BB to
to pay
pay over
over certain
certain money.
money. There
There are
are
inducing or
inducing
various modes
modes in
in which
which this
this societal
societal assistance
assistance isis given.
given. It
It is
is this
this
various
"relation"
legal
the
of
societal
~sistance
that
constitutes
the
legal
"relation"
great
fact
constitutes
that
assistance
great fact of societal
of "right"
"right" and
and "duty."
"duty." While
While jurists
jurists were
were for
for some
some centuries
centuries
of
as
be assigned,
assigned, they
they were
were as judges
judges
saying that
that aa right
right cbuld
could not
not be
saying
going steadily
steadily on
on transferring
transferring their
their societal
societal assistance
assistance from
from the
the
going
apaction
court
this
make
assignor
to
the
In
order
make
this
court
action
to
order
In
assignee.
the
to
assignor
pear to
to be
be consistent
consistent with their
their theory
theory that
that a right
right cannot
cannot be
be asaspear
assignor,
the
in
signed, the jurists
jurists said
said that the
the "right"
"right" was
was still
still
assignor,
signed,
that he
he had
had given
given to the assignee a power
power of
of attorney
attorney to
to
but that
but
B
that
right
his
C
to
enforce
it
for
A
right
B
assigned
having
him.
for
enforce
right
a
had
C
thereafter
when
whether
thereafter
right
should pay $100,
asked
$xoo,
against B the jurists said "no"; but when
when asked whether
whether A could
could
control the suit against B or could give B a valid
valid discharge they
also said "no"; 11
11 and when asked whether C could control the
suit
and
could
give
a valid discharge they said "yes"; and when
suit
asked
by
the
executing
sheriff to whom he should pay the money
asked
collected, they said "pay
C."
"pay it to c."
compulsion against B, is C
In
In invoking judicial or executive compulsion
As12 Asfor A? 12
(the
assignee)
acting
as
the
agent
or
attorney for
agent
the
acting
(the assignee)
A
either
of
the
of
either
A
or
suredly
not.
Such
an
idea
never
enters
the
head
enters
idea never
suredly not. Such
make
to
intention
C,
expressing an intention to make
not aa word expressing
centuries not
for centuries
C, and for
assignment. An
in assignment.
cC the agent
used in
or used
required or
has been required
of A has
agent of
Professor
See Professor
right. See
different
horse right.
or aa horse
right or
land right
from aa land
respect from
this respect
in this
different in
816
Rsv. 816
L. REv.
HAnv. L.
29 HARV.
Action, 29
i Actioll,
Walter
ChoSes ill
of Choses
Alienability of
The Alienability
Cook, The
W. Cook,
Walter W.
(1915).
(19W5).
Bos.
Legh, I i Bos.
Legh v.v. Legh,
1816);: Legh
S., 1816)
(U. S.,
U"Welch
Welch v.v. Mandeville,
233 (U.
Wheat. 233
Mandeville, I i Wheat.
&&P447
.
(x799).
P. 447 (1799).
perhas perand itit has
times; and
early times;
in early
accepted in
fiction accepted
U"This
This was
particular fiction
the particular
was the
stated
here stated
view here
The view
time. The
present time.
the present
to the
~istcd
even to
extent even
considerable extent
to aa considerable
qisted to
1o.
note 10.
cit., note
loc.cit.,
Cook, loco
Professor Cook,
by Professor
analysis by
isis prel'ented
careful analysis
with careful
presented with
ASSIGNMENT OF
OF CONTRACT
CONTRACTRIGHTS
RIGHTS
ASSIGNMENT
215
:U5
agent isis one

onewho
who isisacting
actingininhis
his principal's
principal's behalf;
behalf; CC isisacting
acting
agent
the
of
interest
the
of
prin.solely
solely for
for his
his own
own interest.
interest. Because
Because of the interest of the printooccupy
occupy aa fiduciary
fiduciary
cipal that
that isis being
being served,
served, an
an agent
agent isissaid
said to
cipal
to the
the principal
principal connoted
connotedby
bythe
the word
word
relationand
andto
to owe
owe duties
dutiesto
relation
no
has
A
C,
to
assignment
to
C,
A
has
no
"fiduciary."
After
an
unconditional,assigmnent
unconditional
an
"fiduciary." After
intehlded
not
are
relations
be served,
served, A's
A's jural
jural relations are not intended
further interest
interest to
to be
further
tobe
beaffected
affectedby
byC's
C'saction,
action, and
and CCowes
owesno
no fiduciary
fiduciary duties
duties to
to A.
A.
to
In some
some jurisdictions
jurisdictions itit may
may still
still be
be proper
proper for
for CC to
to bring
bring
In
Nsname;
name; but
but this
thisin
in no
no way
way affects
affects what
whatisis stated
stated above."'
above. 18
suitin
in A's
suit
in
sue
to
C
for
necessary
is
If
there
are
still
cases
where
it
it
is
necessary
for
C
to
sue
in A's
A's
If there are still cases where
former
the
in
was
name, this
this isis aa mere
mere empty
empty formality,
formality, as
as itit long
long was in the former
name,
of common
common law.
law.
courts of
courts
It isis no
no longer
longer even
even "proper"
"proper" to
to sue
sue in
in the
the name
name of
of A
A in
in
It
real
"the
of
name
the
in
be
states where
where by
by statute
statute the
the suit
suit must
must be in the name of "the real
states
party in
in interest." On
On proof
proof that
that the
the right
right has been
been assigned,
assigned, the
the
party
the
as
suing
is
A
that
dismissed
unless
it
shown
shown
that
A
suing
the
suit
will
is
it
unless
dismissed
be
will
suit
agent and attQrney
attQrney of the assignee C and
and that
that C is the real
real plainplainagent
1U ' So
assignor,
the
of
agent
the
So
far
from
the
assignee
being
the
agent
of
the
tiff.
being
tiff.
it now
now appears
appears that
that the assignor
assignor can
can sue only
only as
as the agent
agent of the
If the "assignee"
attorney or
assignee. If
"assignee" merely holds a power of attorney
assignee.
to the
proceeds
is
an
assignee
for
collection
remission
of
proceeds
and
collection
is an
the
name
whose
in
interest"
in
the.
assignor, he is not the "real
"real party interest"
15
suit
must, under many statutes, be brought. lIS
suit must,
assignor's
in the assignor's
sue in
still sue
may still
JlI It
assignee may
the assignee
Connecticut the
appears that in Connecticut
It appears
same
the same
from counterclaiming in the
name
defendant from
the defendant
thereby prevent the
and thereby
name and
plaintiff.
the real plaintiff.
acUOI1
against the assignee, thereal
has against
he has
which he
on a separate claim which
action 011
obbe obshould be
It should
(907).
Atl. 514 (1907).
166 AtL
Lowndes
It
693, 166
Codln. 693,
79 Colin.
Bank, 79
City Bank,
v. City
Lowndes v.
enforcing
agent enforcing
is a mere agent
served
the assignee is.a
that the
this isis not aa holding that
served that this
addian addiassignee an
the assignee
gives to the
that itit gives
the
effect isis that
Its effect
assignor. Its
the assignor.
of the
right of
the right
which
to which
one to
and one
have and
not have
would not
he would
tioaal
States he
other States
in other
that in
one that
advantage, one
tional advantage,
him.
entitle him.
not entitle
the
would not
justice would
of justice
notions of
conmon notions
the COIijD1OI1
v.
Whiting v.
(192);j Whiting
5o3 (1921)
E. 503
N. E.
33 N.
503, 133
JI
Y. 503,
X. Y.
231 N.
Simon, ~31
v. Simon,
Parker v.
U Parker
113
Col., II3
of CoL,
Dist. of
v. Dist.
Looney v.
(1g6);j Looney
Gliss,
xo82 (1916)
E. 1082
N. E.
I N.
333, III
Y. 333,
N. Y.
217 N.
Gliss, ~17
U.
(88s).
2s8 (I88S).
S.~s8
U. S.
Crum
(1924) j ; Crum
479 (1924)
E. 479
N. E.
144 N.
479, 144
Y. 479,
N. Y.
sa Spencer
237 N.
Corp., ~37
Standard Corp.,
v. Standard
Spencer v.
(1898).
8s (18gB).
v.
W. 85
N. W.
7s N.
351, 7S
Neb. 351,
55 Neb,
Stanley, SS
v. Stanley,
attoror attoragent or
mere agent
conversely, aa mere
attorney;j conversely,
An
or attorney
agent or
an agent
not an
assignee i.is not
An as.ignee
and
collect and
to collect
agent isis to
the agent
that the
ney
expressed that
clearly expressed
If ititisis clearly
assignee. If
anassignee.
not an
ney isisnot
the
before the
assignment before
no assignment
there isis no
isis by
assignment, there
an assignment,
effect an
to effect
collecion to
juck colketitm
by .stICh
144
Y. 477, 144
N. Y.477,
238 N.
Winthrop, 238
Co. v.v. Winthrop,
T. Co.
L.&&T.
act
Farmers' L.
See Fanners'
collection. See
of collection.
act of
N.
(x924).
686 (1924).
N. E.E.686
216
216
UNIVERSITY OF
OF PENNSYLVANIA
PENNSYLVANIA LAW
LAW REVIEW
REVIEW
UNIVERSITY
ASSIGNMENT OF DUTIES
DUTIES
ASSIGNMENT
to detennine
determine what rights are assignable
Before proceeding to
of the assignment
and what are not assignable, the easier problem of
of duties will be disposed of.
of. This disposal
disposal consists of the flat
statement that no duty can ever be effectively assigned, if we adstatement
here to our description of an assignment as a unilateral expression
of the assignor. Applying that definition to duties instead of
expression of intention by
rights, we have: An assignment is an expression
the assignor that his duty shall immediately
immediately pass to
the assignee.
tothe
Many a debtor wishes that by such an expression he could get
rid of his debts. Any debtor can express such an intention, but
it is not operative to produce such a hoped-for result. It does not
cause society
society to relax its compulsion against him and direct it
toward the assignee as his substitute. In spite of such an "assignment," the debtor's duty remains absolutely unchanged. The
signment,"
performance
perfonnance required by a duty can often be delegated; but by
16
such a delegation the duty itself is not escaped.16
Suppose the following cases: i.
A is under contract with B
I. A
compensation a ton of coal to B's house. A
A emto deliver for compensation
ploys C to deliver it for him. By so doing A
A is not a repudiator
'epudiator
contractual duty. If
of his contract; but he is still bound by the contractual
C delivers the coal, A has a right to payment of the compensation by B. If C does not deliver the coal, B has a right to damages against A for breach of duty. C's failure to deliver the coal
damages against C.
may also give
give to both A and B a right to damages
This depends on whether
This
whether C made a valid contract
contract with
with A; if he
7
did, A can sue for its breach,
'
and
nearly
everywhere
breach,17
everywhere B can sue
C as an obligee-beneficiary
obligee-beneficiary of his contract with A.
U "It has been uniformly
that aa man
man cannot
assign his
.. "It has been uniformly held
held that
cannot assign
his liabilities
liabilities under
under
a
contract,
but
one
who
is
bound
so
as
a contract, but one who is bound so as to
to bear
bear an unescapable liability
liability may
delegate
the
performance
of
his
obligation
to
another,
if
the
liability
be
be of
delegate the performance
such a nature
nature that its performance
performance by another will be substantially
substantially the same
thing as
as performance
performance by
thing
by the promisor
promisor himself. In such circumstances the
performance of the third party is the act of the promisor, who
who remains liable
performance
under the contract and answerable
performance be not in
answerable in damages
damages if the performance
strict
fulfillment of
of the
Crane Ice
strict fulfillment
the contract."
contract." Crane
Ice Cream
Cream Co. v. Terminal Freezing
Co., 128
128 At.
(Md. 1925).
i925). In
"liability" means
AU. 280,
280, 283
283 (Md.
In the
the foregoing, "liability"
means legal
ing Co.,
duty.
~~
"Explosive
Chemical Co. v. Gray & Co., 2o7
N. Y.
Y. Supp.
Supp. 638,
1f Explosive Chemical Co. v. Gray & !Co.,
20'/ N.
638, 124
124 Misc.
Mise.
333
333 (1g25).
(1925)
.
ASSIGNMENT
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
217
2. A
A isis under
under contract
contract with
with BB to
to play
play the
the part
part of
of Hamlet
Hamlet inin
2.
B's theater.
theater. In
In B's
B's absence,
absence, AA employs
employs CC to
to play
play Hamlet
Hamlet and
and CC
B's
comagreed
the
to
right
no
has
A
In
this
case
A
has
no
right
to
the
agreed
comactually
does
so.
case
this
In
actually does so.
A
from
and instead
instead BB has
has aa right
right to
to damages
damages from A for
for
pensation; and
pensation;
breach of
of contract.
contract. No
No more
more than
than in
in the
the first
first case
case could
could A
A esesbreach
C; but
but in
in addition,
addition, A
A
cape his
his duty
duty by
by such
such an
an arrangement
arrangement with
with C;
cape
first
the
in
do
did
and
could
he
as
he
could
and
did
do
in
the
first
could
not
perform
vicariously
as
vicariously
could not perform
case.
case.
'be escaped
escaped by
by assignment
assignment or
or delegation;
delegation;
A duty
duty can
can never
never -be
A
but any
any duty
duty can
can be
be extinguished
extinguished by
by performance.
performance. Some
Some duties
duties
but
In
not.
do
others
person;
do
not.
In
require
a
performance
by
a
specific
person;
others
specific
a
by
require a performance
coal
of
delivery
the
was
required
the coal
coal case,
case, the
the performance
performance required was the delivery of coal
the
at B's house,
house, and
and itit made
made no
no difference
difference whether
whether by
by team
team or
or by
by
at
or by
by whom
whom driven.
driven. In
In the
the Hamlet
Hamlet case,
case, the performance
performance
truck or
truck
involving the
the co-ordinaco-ordinarequired was
was the physical
physical acting
acting of A, involving
required
of A's
A's trained
trained body
body and brain. Whether
Whether or
or not a contractual
contractual
tion of
requires personal
personal performance
performance by a specific
specific individual
individual can
can be
duty requires
determined only by interpreting
interpreting the
the words
words used
used in the light of exdetermined
many cases there will be ample room for a differperience. In many
But whether the performance
performance required
required is a perence of opinion. But
sonal performance
performance or not, the legal duty is not escaped by an
assignment or delegation
delegation of performance.'
performance. IS8
It is easy to put striking cases where the performance required is not solely the personal action of the contractor. A contracts with B that C'will
C will not expose a trade secret or that D will
play Hamlet. Here A
A can neither escape his duty by assignment,
by
duty by
delegate performance
new person, nor satisfy his duty
performance to ,a new
C nor D under
performing himself. The
The contract puts neither C
the
by the
be satisfied only by
A can be
of A
any duty whatever;
the duty of
but the
whatever; but
of D.
silence of
and the acting of
of C and
proposition
the proposition
state the
they state
when they
mean when
books mean
the books
all the
is all
ordinarily is
, S"This
.. "This ordinarily
that
assigned; that
be assigned;
cannot be
in
imposing liability cannot
contract imposing
terms--that aa contract
general terms-that
in general
from
assignor from
the assignor
relieve the
rule, relieve
as aa rule,
the
not, as
does not,
contract does
such aa contract
of such
assignment of
the assi~ent
C.
N. C.
147 N.
Co., 147
C. Co.,
N. C.
& N.
Atlantic &
v. Atlantic
responsibility."
Co. v.
R. Co.
C. R.
N. C.
& N.
Atlantic &
responsibility." Atlantic
(i08).
185 (I~).
F. ISS
368,
S. E.
61 S.
368, 61
and
special and
not special
obligations not
involving obligations
"What
-contracts involving
that-contracts
not that
is, not
meant is,
"What isis meant
oblian obliof an
burden of
the burden
shifting the
of shifting
personal
sense of
full sense
the full
in the
assigned in
be assigned
can be
personal can
and
special and
it isis special
when it
than when
more than
gation
any more
contractor, any
substituted contractor,
to aa substituted
on to
gation on
another
of another
act of
the act
on the
rely on
may rely
assignor may
personal;
the assignor
case the
first case
the first
in the
that in
but that
personal; but
Tolhurst
cannot." Tolhurst
he cannot."
case he
second case
as
the second
in the
whereas in
himself, whereas
by himself,
performance by
as performance
669. -66o, 669.
v.v.Associated
B. 660,
K. B.
[i9o2] 22 K.
Mfrs., [1902]
Associated Mfrs.,
218
218
UNIVERSITY OF
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PENNSYLVANIA LAW
LAW REVIEW
REVIEW
UNIVERSITY
is impossible
impossible for
for A
A to
to assign
assign his
his duty,
duty, how
how can
can he
he get
get
IIff itit is
rid
of
it?
Only by
by some
some one
one of
of the
the recognized
recognized methods
methods by
by which
which
rid of it? Only
contractual duty
duty isis discharged.
discharged. Most
Most of
of these
these require
require the
aa contractual
the asassent
of
the
obligee,
the
party
having
the
right
correlative
to
the
sent of the obligee, the party having the right correlative to the
duty to
to be
be discharged.
discharged. One
One of
of these
these methods
methods isis called
called "nova"novaduty
tion,"
by
which,
with
the
obligee's
assent,
substitution of
of debtors
debtors
tion," by which, with the obligee's assent, aa substitution
is effected.
effected. This
This is
is not
not assignment.
assignment.
is
WHAT RIGlITS
RIGHTS ARE
ARE ASSIGNABLE
ASSIGNABLE
WHAT
It is
is almost
almost safe to say
say that all contract
contract rights
rights are assignable
It
-almost but
but not
not quite.
quite. Weare
We are far
far removed from
from the notion
notion
-almost
that
all
rights
are
strictly
personal
and
therefore
not
assignable;
that all rights are strictly personal and
not assignable;
but itit is
is still
still often
often said
said that some rights are so
so personal in charbut
acter as
as to
to be
be non-assignable.
non-assignable. It
It is
is believed that this latter limiacter
tation on
on assignability
assignability has
has no more foundation than the earlier
tation
and more general one.
one.
Let
us
consider
few specific
specific cases. I.
I. A contracts
contracts with B
Let us consider aa few
to
act
as
B's
valet.
Surely, it
it will
will be
be said, B's right is so personal
to act as B's valet. Surely,
that it
it cannot
cannot be
be assigned. But no, the contrary is believed to be
that
correct
although
no decision
decision pro or con has been seen by the
correct although no
writer.
By
this
statement
writer. By this statement it is not meant to say that the character of
of the
the service
can in
in any way be changed
service can
changed by assignment.
acter
The
right
of B
B is
is that
that A
act as
The right of
A shall
shall act
as B's
B's valet, not that A shall
act as
valet for
for whom
as valet
whom it
it may concern. Anyone ought to know
act
that
serving
as
valet
to
a
miserly, old curmudgeon
cross, ill,
ill, nUserly,
curmudgeon is not
not
that serving as valet to a cross,
the
same
performance
as
the same performance
serving a healthy, happy-go-lucky,
happy-go-lucky, generous,
erous, young
young prince.
prince. Therefore,
Therefore, when
when B assigns his right against
against
A,
he
must
assign
it
as
it
is.
He
cannot
by
assignment
to
A, he must assign it as it is. He cannot by assignment C crecreate
in C
C aa right
right that
that A
A shall
shall act
act as
as C's
C's valet. That would
would be a
ate in
different
to aa different
different performance.
performance. But B can
can assign
assign to
different right
right to
C
the
valet; and
and if
if A
A shall commit
commit
C the right
right that
that A
A shall
shall serve
serve as
as B's valet;
aa breach
it
will
be
C
who
gets
the
damages
measured
by
the
value
breach it will, be C who gets the damages measured by the value
19
of
of the
the promised
promised service.
service. 19
"
".. .This,
This, of
of course,
course, isis oil
011 the
the assumption
assumption that
that BB made
made itit clear
clear by
by his
his words
words
of
no
of assignment
assignment that
that he
he was
was
no longer
longer to
to be
be regarded
regarded as
as the
the possessor
possessor of
of aa right
right
against
against A,
A, either
either to
to performance
performance or
or to
to damages--that
damages-that aa true
true assignment
assignment by
by
sustitution
was intended.
intended.
substitution of
of aa new
new beneficial
beneficial right-holder
right-holder was
ASSIGNMENTOF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
ASSIGNMENT
2 19
SUppose that
that AA contracts
contracts with
with BB to
to supply
supply all
all the
the coal
coal
2.2. Suppose
the
all
or
conducting
then
is
B
that
that
B
may
need
in
a
business
that
B
is
then
conducting
or
all
the
business
a
in
that B may need
case
the
in
as
Just
use.
of
coalthat
thatBBmay
mayneed
needininhis
hishousehold
household use. Just as in the caseof
coal
thevalet,
valet,B's
B's right
rightisis assignable
assignable;20
;20 but
butBB cannot
cannotby
by assignment
assignmenttoto
the
create in
in CC aa right
right that
that AA shall
shall supply
supply all
all the
the coal
coal that
that CC may
may
CC create
though
even
true
is
This
or
his
household.
This
is
true
even
though
need
in
his
business
household.
his
or
need in his business
at the
the time
timeof
of the
the attempted
attemptedassignment
assignment BB sells
sells his
his business
business or
or his
his
at
business
a
of
needs
The needs of a business or
or
house to
to CC and
and CC continues
continues therein.
therein. The
house
business
same
the
of
those
with
a
house
run
by
C
are
not
identical
with
those
of
the
same
business
identical
not
are
C
by
run
a house
or house
house run
run by
by B.
B. B's
B'g power
power of
of assignment,
assignment, therefore,
therefore, is
is limlimor
possessed,
B
that
right
same
ited
to
the
creation
in
C
of
the
very
same
right
that
B
possessed,
ited to the creation in C of the very
namely, the
the right
right that
that B's
B's needs
needs shall
shall be
be supplied.
supplied.
namely,
Of course,
course, it
it is
is possible
possible for A
A to
to contract
contract with
with B
B so
so as
as to
to
Of
cera
supply
shall
or
person
give
B
a
right
that
A
shall
valet
any
person
or
shall
supply
a
cerany
valet
shall
A
right that
give
tain house
house with
with coal
coal without
without regard
regard to
to its
its occupant.
occupant. This
This right,
right,
tain
asafter
like the
the previous
previous ones,
ones, can
can be
be assigned,
assigned, the
the performance
performance after
aslike
21
assignment.
21
before
as
signment remaining
remaining exactly
exactly the same
same
before assignment.
signment
To show
show that
that the decision in the
the foregoing cases
cases is not fanthat-his
wishes
C
3.
cases.
us
consider
two
more
that his son
son
ciful
let
ciful
C
right.
legal
a
B shall
shall have a valet, but not that B shall
shall have
have
therefore contracts with A that A shall serve B as valet, and also
therefore
secondary right to the value
that the primary legal right and the secondary
one would doubt that this
No
of
the
services
shall
be
in
C
alone.
Noone
of
is a valid contract, th~t
that C has aa right that A shall serve B as valet,
of the services in case of breach
or that C
the value of
C has a right to the
i. No suffiin case I.
produced in
by A. This is exactly the result produced
by asresult by
this
produce
cannot
cient
result
they ca~ot
reason appears why they
cient reason
some
be
may be some
signment
direct contract. No doubt itit may
as by direct
signment as well as
Mr.
old Mr.
hard-hearted, old
severe, hard-hearted,
disadvantage
duty to severe,
owe aa c1uty
to owe
A to
to A
disadvantage to
this
in
so
more
is
it
but
B;
of
to
young,
easy-going
B;
but
it
is
no
more
so
in
this
C
instead
C instead of to young, easy-going
the
with the
go with
to go
damages to
the damages
means the
that BB means
,."Here
assumed that
again, itit isis assumed
Here again,
primary
right.
primary right.
or
"successors or
his "successors
and his
X and
with X
J1'Thus
Thus where
contracted with
defendant contracted
the defendant
where the
lighting,
for lighting,
service for
electric service
all electric
St. all
assigns"
Main St.
"222 Main
premises "222
his premises
supply his
to supply
assigns" to
defendant
the defendant
that the
held that
was,held
fans
consumer," itit was
the consumer,"
by the
required by
heating reqUIred
and heating
fans and
occupying
assignee occupying
an assignee
plaintiff, an
the plaintiff,
was
to the
service to
promised service
the promised
supply the
to supply
bound to
was bound
W.
S. W.
179 S.
221, 179
Ark. 221,
12o Ark.
Co., 120
E. Co.,
the
Rock R.L&&E.
Little Rock
Co. v.v. Little
Leader Co.
premises. Leader
the premises.
Cem.
Port. Cem.
Associated Port.
358
Tolhurst v.v. Associated
holding inin Tolhurst
similar holding
was aa similar
There was
(xgi5). There
358 (1915).
Mfrs;,
C. 414.
.
[r9o3] A. C.414Mfrs., [1903].A.
220
220
UNIVERSITY OF
OFPENNSYLVANIA
PENNSYLVANIA LAW
LAW REVIEW
UNIVERSITY
REVIEW
kind of
of aa case
case than
than in
in any
any other
other assignment.
assignment. The
The social
social service
service
kind
rendered
bythe
the assignability
assignability of
of rights
rights so
so far
far overweighs
overweighs the
thedisdisrendered by
advantage
to
the
debtor
incidental
to
a
change
in
creditors
advantage to the debtor incidental to a change in creditors that
that
the latter
latter isis disregarded.
disregarded. In
In no
no case
case however,
however, isis the
the actual
the
actual servservice required
required of
of AA changed
changed by
by the
the assignment.
assignment.
ice
4. CC wishes
wishes that
that his
his son
son BB shall
shall have
have an
an ample
ample supply
supply of
4.
of
coal, but
but that
that B
B shall
shall have
have no
no legal
legal right.
right. C
C therefore
therefore contracts
coal,
contracts
with A
A that
that A
A shall
shall supply
supply B's
B's business
business or
or B's
B's household
household with
with
with
coal,
the
primary
right
to
delivery
and
the secondary
secondary right
right to
coal, the primary right to delivery and the
to the
the
value of
of the
the coal
coal in
in case
case of
of breach
breach to
to be
be in
in C
C alone.
alone. This
This creates
value
creates
in C
C exactly
exactly the
the same
same right
right that
that was
was produced
produced by
by the
the assignment
assignment
in
in
case
2. Further,
Further, C's
C's right
right that A
A shall
shall supply
supply B
B with
with coal
coal is
is
in case 2.
assignable
by
C.
On
C's
death
his
right
would
pass
to
his
perassignable by C. On C's death his
would pass to his personal representative.
representative. This
This in
in itself shows
shows that there is
is nothing
nothing
sonal
in the
the nature
nature of
of aa right
right that
that A
A shall
shall serve or supply
supply B to make it
it
in
22
22
non-assignable.
non-assignable.
In almost
almost all
all cases
cases where
where aa "contract"
"contract" is said to be non-as
non-asIn
signable
because
it
is
"personal,"
what
is
meant
signable because it is "personal,"
is not that the
contractor's right
right is
is not
not assignable
assignable but that the performance
performance re
recontractor's
quired
by his
his duty
is aa personal
quired by
duty is
performance and that an attempt
to
perform by
substituted person
person would not discharge
conto perform
by aa substituted
discharge the con
tractor's
duty.
In
this
sense
the
statement
is
correct
if
a
proper
tractor's duty. In this sense the statement
proper
interpretation
shows that
that the
of the
the agreement
agreement shows
the performance
performance by
by a
interpretation of
particular
person
is
required.
particular person is required.
A
A second
second possible
possible correct
correct meaning
meaning is
is that
that personal
personal performperformance
ance by
by the
the contractor
contractor is
is aa condition
condition precedent
precedent to his
his right to perperformance
by
the
other
party,
and
an
assignee
of that right
right will
formance by the other party, and an assignee of
' It should be observed that the contracts between C and A in cases 3 and
..
Ithave
should be observed that the contracts between C and A in cases 3 and
44 might
might
have been
been of
of aa very
very different
different sort.
sort. They
They might
might have
have been
been made
made so
so that
that
BB would
be
aa donee-beneficiary
in
would
be
donee-beneficiary
in each
each case.
case. If
If so
so made, in
in nearly
nearly all
all jurisjurisdictions
there
would
dictions
there
would be
be created
created in
in BB both
both aa primary
primary right
right to
to performance
performance and
and
(in
(in case
case of
of breach)
breach) aa secondary
secondary right
right to
to damages.
damages. No
No doubt
doubt such
such aa right
right as
as
CC
(the
promisee)
(the promisee) gets
gets in
in this
this case
case could
could be
be assigned;
assigned; but
but this
this is
is not
not the
the right
right
that
was
assigned
in
that was assigned
in cases
cases iI and
and 2.2. No
No doubt,
doubt, also,
also, the
the right
right of
of BB (the
(the doneedoneebeneficiary)
could
beneficiary)
could be
be assigned;
assigned; but
but BB was
was not
not aa donee-beneficiary
donee-beneficiary in
in any
any of
of the
the
four
cases
put--such
fourservices
cases put-such was
was not
not in
in fact
fact the
the contract
contract made.
made. In
In cases
cases 33 and
and 4,
4.
the
and
the services and the
the coal
coal were
were sold
sold to
to CC and
and not
not to
to B;
B; on
on performance
performance of
of the
the
service
or
delivery
service
or delivery of
of the
the coal
coal A
A could
could maintain
maintain an
an action
action of
of debt
debt against
against C
C
for
price,
and
on
for the
the
price,
and
on breach
breach by
by A
A the
the sole
sole right
right to
to damages
damages would
would be
be in
in C.
C.
The
point
made
is
that
however
The pointexactly
made is that however unusual
unusual aa result
result may
may be
be reached
reached by
by an
an asassignment,
signment, exactly the
the same
same result
result may
may be.reached
be. reached by
by aa direct
direct contract.
contract. That
That
the
result
is
an
unusual
the result is an unusual one
one isis irrelevant
irrelevant in
in either
either case.
case.
OF CONTRACT RIGHTS
ASSIGNMENT OF
ASSIGNMENT
221
non-fulfilment of this condition. In this case, as

fail in case
case of non-fulfilment
If it
delegated. 2233 If
be delegated.
in the preceding
preceding one, performance
performance cannot be
it
fail
even
should be meant that the assignee of the right would
though the contracting assignor himself performs
performs as originally
agreed, thus fulfilling the condition
condition precedent,
precedent, the statement
statement is
entirely erroneous.
'
correct meaning is that in a bilateral
A third possible correct
bilateral conboth his right and his
contractor has no power to assign bpth
tract the contractor
duty. Thus it has been said: "When rights arising out of a conperfonned by the contract are coupled with obligations to be performed
confidence that it
tractor and involve such a relation of personal confidence
exercised 24
be exercised
should be
24
must have been intended that the rights should
and the obligations
obligations performed
performed by him alone, the contract, includincludso In the following cases the performance
performance due was held to be personal and
performance would
manner that his performance
not delegable to another person in such manner
aseither discharge
discharge the assignor's duty or fulfil a condition precedent to the asi66 At!.
AtI.
Eq. 22,
compensation; Wooster
signor's right to compensation;
J. Eq.
22, 166
Wooster v. Crane, 73 N. J.
Callaghan & Co.,
(services as printer and publisher);
Io93 (i9o7),
1093
(1907), (services
publisher); Foster v. Callaghan
248 Fed. 944 (1918),
(same); Linn
Linn Co. Abstract
Abstract Co. v. Beechley, 124 Iowa
Iowa
(igi8), (same);
(9o4),
(services as abstractor of titles)
W. 702 (1904),
146, 99 N. W.702
(services
titles) ; Corson
Corson v. Lewis,
iog N. W. 735 (19o6),
(1906), (services
(services as attorney at law); N. Y.
77 Neb. 446, 109
Y. 280, 73 N. E. 48
180 N.
N. Y.
Bank Note Co. v. Hamilton Bank Note Co., i8o
'14, 129
129 N.
(services as selling agent) ; Paige v. Faure, 229 N. Y. II4,
(i9o5), (services
(1905),
N. E.
i58.
(192o), (same);
(same); Barber
Barber Agency Co. v. Co-op. Barrel
Barrel Co., 133 Minn.
Minn. 207, 158.
(1920),
v. Morris,
W.38
(same); New England Cabinet
Cabinet Works v.
Morris, 226 Mass.
38 (1916),
(i916), (same);
N. W.
(1917), (services
(services in designing
115 N. E. 315 (1917),
246, II5
designing and installing druggists'
(services as
(i9o5), (services
fixtures);
fixtures) ; Deaton v. Lawson, 40 Wash. 486, 82 Pac. 879 (1905),
(sales agency
physician);; Thomas-Bonner
(1922), (sales
physician)
Thomas-Bonner Co. v. Hooven, 284 Fed. 386 (1922),
(services in giv(1923), (services
2oo Ky. 4 (1923),
contract) ; Beard v. Beard, 254 S.
S. W. 430, 200
contract)
son).
ing support and a home for a mother with her son).
performance due was held not to be personal;
In the following cases the .performance
personal;
delegated it was held
the performance
held
performance by the substitute to whom the assignor delegated
to
to discharge the duty of the assignor and to fulfil the condition precedent
precedent to
147
& N. C. R. Co. v. Atlantic Co., 147
the right assigned to the assignee:
assignee: Atlantic &
& Co. v.
cordwood); Browne
(iqo8), (delivery
N. C. 368, 6i
61 S. E. 185 (1908),
(delivery of cordwood);
Browne &
booklets) ;
ii5 Pa. 156 (igii),
(19II), (printing
(printing advertising booklets)
Sharkey Co., 58 Or. 480, lIS
(x896), (drilling oil wells)
i72 Pa. 443, 133
133 AtI.
Atl. 56o
560 (x896),
wells) ; Overby
Overby
Galey v. Mellon, 172
1922), (same); Devlin v. Mayor, etc.,
(Tex., 1922),
v. Mona Trust, 240 S. W. 581 (Tex.,
streets).
(cleaning city streets).
(1875), (cleaning
of N. Y., 63 N. Y. 8, 23 N. Y. Supp. 891
Bgl (1875),
another
"In
Sf
In its proper sense, a "right" is a claim to certain conduct
conduct by anotTlcr
is evident
person, enforced by society. It
It ,is
evident that, in this sense, the possessor
possessor
person,
of a right never
never "exercises"
"exercises" it. It
It is always the other party, the one
one owing
owing
"exercise." The form of language
the correlative duty, who is to perform or "exercise."
used shows that the court was thinking of performance
performance by the contractor who
assigns, and hardly
performance by anhardly at all of that contractor's right to performance
other.
.
222
m
UNIVERSITY OF PENNSYLVANIA
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UNIVERSITY
ing both
both his
his rights
rights and
and his
his obligations
obligations cannot
cannot be assigned."
assigned." 25
25
ing
As has
has been
been seen
seen previously, aa legal
legal duty cannot
cannot be
be escaped
escaped by
by
As
assignment; and, as has just been
been said,
said, a truly personal
personal performperformassignment;
ance cannot
cannot be
be delegated.
delegated.
ance
It is sometimes
sometimes said
said that where
where the
the contract
contract makes
makes it the
the
It
duty of
of one
one party
party thereto
thereto to
to render
render a personal
personal service,
service, special
special
duty
trust and confidence
confidence being
being reposed
reposed in him, a valid
valid assignment
assignment isis
trust
impossible "as long
long as such
such contract
contract is executory
C?Cecutory on the part of
of
impossible
the party
party in whom such
such trust
trust and confidence
confidence is
is reposed."
reposed." 26
26
the
both
While
this
is
correct
if
the
assignment
is
meant
to
include
include
both
assignment is meant
While this is correct
duties and
and rights, it is not
not correct
correct if it is meant
meant to say that a right
right
duties
cannot be assigned
assigned as long as a duty of the assignor, requiring
requiring
cannot
performance remains
remains executory. The assignor's
assignor's
his personal
of
the
character
personal
right
is
assignable
spite
the
~rsonal
character
the perof
spite
in
assignable
right
is still under
under a duty to render;
render; but if it is a right that
formance he is
was conditional
conditional upon some personal
performance by the assignor,
assignor,
was
remains so conditional after the assignee gets the right by asit remains
teacher can assign his wages
wages to besignment.2217 Thus, a school teacher
(189o).
.. Delaware Co. v. Diebold Safe &
& Lock Co., 133
133 U. S.
S. 473, 488 (1890).
=Delaware
I., who
Brewer, /.,
(1893), by Brewer,
152 U. S. 634 (1893),
This was quoted in Burck v. Taylor, 152
transferred an interest in it to the
"the contr&ctor
contractor could never have transferred
added: "the
plaintiff so as to vest in him a right to take part in the work or a subsequent
plaintiff
recover from the State on completion of the work." The words "right
right to recover
performance due
thinking of the performance
to take part" show that Brewer also was thinking
performance by a
from the contractor
contractor who was the assignor, and meant that performance
substituted party would not have fulfilled a condition precedent to the right
substituted
clearly
to payment. Judge Jackson, in a dissenting opinion, distinguishes more clearly
enforcement of right against another
between
between performance of duty and the enforcement
"There is a class of cases where the services to be rendered are
when he says: "There
of such a personal character that they cannot be assigned; but where is the aucertain work a memthority that holds that where a firm is a contractor to do certain
ber of the firm cannot
cannot assign or transfer his share of the profits to arise therethe defendant, a
from?" The case is no doubt well decided for the reason that the
second assignee, had fully performed the building contract under a novation
novation
made with the State.
2248.
(2d ed.),
ed.), 2248.
_PAGE,
CONMACTS, (2d
sa PAGE,
CONTRACTS,
In
(1x14). In
909 (19i4).
103 N. E. 909
v. Ziegler, 216 Mass. 287, 103
It
American Lith. Co. v.
"American
(igo8), the vendee of land
3o5 (1908),
153 Calif. 509, 96 Pac. 305
Montgomery v.
v. DePicot, 153
on credit tendered his ovm
own notes secured by the agreed mortgage (and at the
specific performance
trial the notes of the
the assignor also) and got a decree for specific
& Ohio R.
v. Baltimore &
& T.
T. Co. v.
Bonding &
against the vendor.
vendor. In American Bon.ding
existence
is nothing in the existence
Co., 124
"There is
the court said: "There
(x9o3), the
124 Fed. 866 (1903),
his
the creditor of his
of such
counter obligation to prevent an assignment by the
such counter
right, or,
or,
right after
and thus perfected his right,
obligation, and
he has performed that obligation,
after he
from
even before, if no
to shift the duty of performing it from
made to
no attempt is made
himself to the assignee."
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
ASSIGNMENT
come due
dueunder
under an
an existing
existing contract
contract even
even though
though his
his services
services are
are
come
the
exactly
be
will
right
still to
to be
be rendered;
rendered; but
but the
the assignee's
assignee's right will be exactly the
still
of
same as
as the
the assignor's,
assignor's, conditional
conditional upon
upon proper
proper performance
performance of
same
the work
work by
by the
the teacher
teacher in
in person.
person.
the
Of course,
course, even
even in
in cases
cases where
where the
the required
required performance
perfonnance isis
Of
that
not "personal,"
"personal," the
the non-personal
non-personal performance
perfonnance that isis required
requ1red
not
may be
be aa condition
condition precedent
precedent to
to the
the right
right to
to payment
payment contracted
contracted
may
in return.
return. In
In such
such cases
cases the
the. right
right isis assignable
assignable before
before fulfulfor in
for
fulfillment
that
fact
the
and
of
the
condition
precedent;
and
the
fact
that
fulfillment
fillment
precedent;
fillment of the condition
of this
this condition
condition is
is delegated
delegated to
to the
the assignee
assignee of
of the
the right
right to
to paypayof
28
assignment.
the
of
validity
the
ment does
does not
not in
in any
any way
way affect
affect the validity of the assignment. 28
ment
Thus, where
where the
the duty
duty to pay
pay for
for coal
coal is
is conditional
conditional on
on certain
certain
Thus,
deliveries
these
of
making
the
made,
instalment
deliveries
being
the
making
of
these
deliveries
being
instalment deliveries
payment by
by the
condition precedent
precedent to the
the seller's
seller's right
right to payment
is a condition
of these
these deliveries
deliveries is
is in no sense
sense a personal
personal
buyer; but
but the
the making
making of
buyer;
perfonnance. A
A tender of delivery
delivery by
by an
an assignee
assignee of
of the seller's
seller's
performance.
right would fulfill the condition
condition precedent
precedent and the
the assignee
assignee could
could
buy~.
then enforce
enforce the right against
against the buyer.
then
his
An attempt by the assignor to assign both his right and his
It
been supposed
be assigned in AmerAmersupposed that the right was too personal to be
It has been
Belden Min. Co.,
Co., 127 U. S. 379 (1888).
(1888). The trouble
trouble
ican Smelting &
& R. Co. v. Belden
was, however, that the assignor not only assigned his right to delivery of ore,
but also became unready
unready to perform his purely personal duty of crushing,
sampling, and assaying the ore so as to determine the amount to be paid. His
right to delivery (and therefore the right of the assignee also)
also) was conditional
upon his continued
continued readiness to perform in person. Had he fulfilled this condiright to delivery was not nonThe right
tion, the assignee should
should have won the suit. The
assignable.
..="In
"In principle it would not impair
the rights of the assignee, or destroy
impair the
as between
that the assignee, as
claim, that
the assignable
of the contract or claim,
assignable quality of
himself and
assumed some duty in performing the condiassignor, has assumed
and the assignor,
or is made the agent or subtions precedent to
of action, or
cause of
perfected cause
to aa perfected
to be
service to
the service
If the
contract. If
the contract.
of the
stitute
performance of
the performance
in the
assignor in
of the assignor
stitute of
and such
necessarily personal, and
is not necessarily
rendered
performed is
be performed
to be
condition to
or the condition
rendered or
the
of the
the rights of
and the
parties, and
the parties,
of the
as
intent of
the intent
to the
due regard to
with due
only with
can only
as can
and
contracting party, and
original contracting
the original
by the
adverse
performed by
or performed
rendered or
be rendered
party, be
adverse party,
contract,
the contract,
of the
performance of
the performance
the
from the
himself from
disqualified himself
not disqualified
latter has not
the latter
assignee,
is the assignee,
him is
for him
acting for
and acting
the
representing and
individual representing
the individual
that the
fact that
mere fact
the mere
conor conof, or
rescission of,
as aa rescission
operate as
not operate
and
will not
servant, will
or servant,
agent or
mere agent
the mere
not the
and not
performing
for performing
agent for
the agent
Whether the
stitute
contract. Whether
the contract.
terminating the
for terminating
cause for
stitute aa cause
interest,
an interest,
with an
coupled with
power coupled
the
or aa power
power, or
naked power,
under aa naked
acts under
contract acts
the contract
by
power by
of power
delegation of
the delegation
of the
cannot
effect of
the effect
vary the
or vary
character or
the character
affect the
cannot affect
distime disno time
at no
was at
contractor, was
the
original contractor,
the original
Hackley, the
contractor. Hackley,
original contractor.
the original
perthe perfor the
disqualified for
he disqualified
was he
charged
nor was
city, nor
the city,
to the
obligations to
his obligations
from his
charged from
part
his part
perform his
to perform
position to
in aa position
formance
times in
all times
at all
was at
but was
contract, but
the contract,
of the
formance of
Y.
N. Y.
23 N.
Y. 8,8, 23
N. Y.
63 N.
Y. 63
N. Y.
of N.
etc., of
of
Mayor, etc.,
v. Mayor,
Devlin v.
agreement." Devlin
this agreement."
of this
.
Supp.
(1875).
891 (1875).
Supp. 891
224
224
UNIVERSITY OF
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duty under
under aa bilateral
bilateral contract will sometimes be
be interpreted as
duty
of his duty,
duty, particularly where the
the performance
aa repudiation of
required by
by the duty
duty is personal to
to the
the assignor and not possible
required
of delegation.
delegation. This
This will prevent any enforcement
enforcement of the
the right
right
of
29
by
the
assignee
thereof,
wholly independent
independent
by the assignee thereof,29 unless the right is wholly
of the
the duty
duty and not conditional upon performance or readiness
of
to perform.
to
A contract
contract right is hardly ever made non-assignable
non-assignable by the
A
fact that
that it is conditional 80
80 or is for some other reason not enforceable until aa future date. A
A right to money not yet due can
can
be assigned.
assigned. A right to the payment of money to become due on
be
condition of services yet to be rendered 31
81 and on condition that
condition
the
obligee
does
not
drink
intoxicants
is
an
assignable right. The
the obligee does not
right
of
the
assignee
is,
of
course,
right of the assignee
subject to the same conditions
as was the right of the assignor.
The power
of assignment may exist before all of the facts
The
power of
necessary
to
the
necessary to the enforceability of the right exist, as appears in
the preceding
some of the operative facts
the
preceding paragraph;
paragraph; but at least so~e
must
exist.
If
loan
must exist.
A, expecting that he will thereafter make a loan
to B,
B, assigns
assigns to C his right to repayment, C gets no right against
to
against
B
at the
the time
time of
the assignment
A had none to assign.
B at
of the
assignment because A
The
same
is
true
even
though
B
had
asked
for
such a loan. There
The same is true even
"See
Crane Ice
Ice Cream
Cream Co.
Co. v.
Co., 128 AUt.
...
See Crane
v. Terminal
Terminal Freezing Co.,
AU. 280, 285
(Md., 1925)
S925);
American Smelting
Smelting &
& R. Co.
Belden Min. Co., .supra;
(Md.,
; American
Co. v.
v. Belden
supra; ANSON,
ANSON,
CONTRACTS
1924), 303,
CONTRACTS (Corbin's
(Corbin's ed.
ed. 1924),
303, n. 2.
Where aa party
obtained aa rescission
duties under
under a bilateral
Where
party has
has obtained
rescission of
of his
his duties
bilateral contract,
his rights
of such duties
duties will
win normally be
be
tract, his
rights dependent
dependent upon
upon the
the fulfilment
fulfilment of
rescinded
In such
by aa separate
rescinded also
also by
by implication.
implication. In
such case,
case, by
separate assignment of the
rights
the assignee gets nothing. Tarr
i99, 93AU.
93-Atl. 428
Tarr v. Veasey,
Veasey, 125 Md.
Md. 199,
rights
('9,s).the assignee gets nothing.
(19 15).
.
the general
.. The
The only
only exception
exception to
to the
general rule seems to be in the case of a right
right
created
contract where
performing is
is
created by
by an
an aleatory
aleatory contract
where the
the promisor's
promisor's duty
duty of performing
conditional
upon
an
uncertain
event
and
party might
conditional upon an uncertain event and the
the assignment
assignment to a new party
considerably
increase
the
probability
of
the
happening
happening of this
this event. For
For this
considerably increase the probability of
reason
of an
an insured
insured under
under aa policy
policy of
of fire
fire insurance
insurance has been
been held
held
reason the
the right
right of
not
assignable.
VANCE,
INsURANCE,
50.
In such a case, an assignment
assignment of the
the
not assignable. VANCE, INSURANCE, 50. In
right
cannot
be
made
without
changing
materially
the
conditions
conditions and
and extent
extent of
of
right cannot be made without changing materially
the correlative
correlative duty.
. 11
' It
has
been
held
It has been held that
that such
such an
an assignment
as~ignment remains
remains effective
effective even
even though
though
the
the assignment
assignment but
but before
before the
the assignor
assignor is
is discharged
discharged in
in bankruptcy
bankruptcy after the
wages
v. Boston
Boston &
& M.
M. 1.
R. R.,
R., I96
196 Mass.
Mass. 528.
528,
wages are
are earned.
earned. Citizens
Citizens Loan
Loan Assn.
Assn. v.
82
(i9o7);
82 N.
N. E.
E. 696
(1907); Mallin
Mallin v.
v. Wenham,
Wenham, 209
209 Ill.
III. 252,
2,52, 7o
70 N. E. 564
564 (1904).
(1904).
Contra:
IO3 N.
v. Northern
Northern Pac.
Pac. R.,
R., 95
95 Mimn.
Minn. 35,
35, 103
N. W.
W. 704
704 (1905);
(1905); Hupp
Hupp
Contra: Leitch
Leitch v.
v.
v. Union
Union Pac.
Pac. R.,
R., 99
99 Neb.
Neb. 654,
654, 157
157 N.
N. W.
W. 343
343 (1916).
(1916).
ASSIGNMENT
OF CONTRACT
CONTRACT RIGHTS
ASSIGNMENT OF
225
must at least be a contract at the time of the assignment;

assignment; acceptance as well as offer must have taken place.
On the other hand, if the right against B that A purported
purported to
assign to C afterwards
aftenvards comes
comes into existence, the assignment has
been held in a number
number of cases to transfer
transfer the right at once
once to
BC.8822 There seems to be nothing in the interests
interests of A and "Bdebtor-to prevent such a result; but in givthe assignor and the debtor--to
ing effect to such an assignment the interests of A's creditors
protected. Assignments in advance
advance of the creation
creation of
of
should be protected.
the right assigned
may
easily
be
used
in
fraud
of
creditors.
assigned
Thus far, with the exception
exception mentioned
mentioned in note 30, we have
discovered no contract
contract right that is not assignable. There are a
few cases, however where the welfare
welfare of the public is believed to
be involved and where
where the substitution of a new obligee
obligee by asstatutes
signment is against
against the public interest. There are some statutes
forbidding assignment; and other assignments have been held
invalid by the courts on some supposed
supposed principle of public policy.
Thus, a right to a Federal pension has been made non-assignable;
non-assignable;
and the right of a public officer to future salary not yet due has
non-assignable.88
been held non-assignable.
88
PROHIBITION
ASSIGNMENT.
PROHIBITION OF ASSIGNMENT.
a contract
The parties
parties to a'
contract may themselves agree
agree that a right
created
not be assignable. It may be regarded
created thereby shall npt
regarded as
doubtful
agreement to this effect would indoubtful whether
whether a mere oral agreement
validate a subsequent assignment to an assignee who had no notice of the agreement. But a provision of this sort in a written
contract
assignee of a
contract may properly be regarded as notice to any assignee
right based on that contract. There are many cases where
where such
such
a prohibition
prohibition in writing has been held operative to prevent any
power to assign and where the assignee failed in his action to enforce the right. Thus where
where an employee's
employee's time pay check was
' Field v,
of N.
i79 (1852);
(1852); Tailby v. Official
Receiver,
"'Field
v. Mayor
Mayor of
N. Y.,
Y., 6-N.
6'N. Y. 179
Official Receiver,
App. Cas.
13 Apll.
Cas. 523 (1888).
(1888).
Sample, 168 Ala. 270,
So. 182
18a (1910);
(igio) ; Anderson v. Bran270, 53 So.
"Stewart
Stewart v. Sample,
strom, 173
173 Mich.
I57, 139
39 N.
40 (1912);
(1912); Roesch
Roesch v.
Worthen Co.,
Co., 95
Ark.
Mich. 157,
N. W.
W.40
v. Worthen
95 Ark.
strom,
482,
I3o S.
S. W. 55!
482,130
551 (I91o).
(1910). f
.
226
226
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its face
face made payable
payable only
only to the
the named
named payee and declared
declared
on its
and where
where on the
the detached
detached stub of
of such
such pay
pay
non-transferable, and
check the employee
employee had signed an agreement that he
he would preprethe check in
in person and would not transfer
transfer it,
it, it
it was held
held
sent the
that an assignee
assignee got no
no enforceable
enforceable right.
right.3344 The like has
has been
held in
in several
several cases
cases where trading
trading stamps have been marked
marked
held
on
their
face
"not
transferable"
85
This
has
been
assumed
to be
be
on
face "not transferable." 3~
3
6
36
as a matter
matter of
of course in many cases.
the rule as
In one
one case,
case, however,
however, the United States Supreme
Supreme Court has
In
said that aa prohibition against assignment contained in aa writwritten contract
contract was
was ineffective, likening the contract right to perper-.
ten
87
sonal chattels.37
There has been aa strong tendency to hold that
goods and chattels cannot be made inalienable.
inalienable According
According to
goods
expressions used by the Supreme Court, not only are already existexpressions
ing contract
contract rights not inalienable; they cannot even be made ining
alienable ab
ab initio
initio by the party who is their original creator.
alienable
v. Bes
Line Const.
Const. Co.,
Co., 23
23 Okla. 131,
131, 99 Pac. 775 (9o9).
.."Barringer
Barringer v.
Bes Line
(1909). In
accord: Joint
Joint School
School Dist.
Dist. v.
v. Marathon
Marathon Bank, 204
204 N. W. 471 (Wis., 1925);
1925);
accord:
Bonds-Foster
L.
Co.
v.
No.
Pac.
R.
Co., 53
53 Wash.
1o Pac. 877 (1909);
(1o9) ;
Bonds-Foster L. Co. v. No. Pac. R. Co.,
Wash. 302,
302, 101
State
v.
Kent,
98 Mo.
Mo. App.
App. 281,
281, 71
7, S.
S. W.
W. 1066
io66 (1902);
(ixo2); Tabler &
& Co. v.
v. ShefState v. Kent, 98
field Coal
Coal Co.,
Co., 79
79 Ala.
377 (1885).
Contra: Aldridge
v. Graves, 131
field
Ala. 377
(1885). Contra:
Aldridge L. Co. v.
S.
W.
846
(ipxo);
Lumber Co.
v. Hall,
94 Ga. 539, 21
21 S. E. 154
S. W. 846 (1910); Bewick
Bewick Lumber
Co. v.
Hall, 94
154
(1894), relying
on aa statute
statute declaring
declaring that
that choses
choses in
in action
(1894),
relying on
action shall be assignable.
But
Oklahoma
had
a
similar
statute,
and
the court
rightly said
said that
that it was
was only
But Oklahoma had a similar statute, and the
court rightly
only
for
purpose of
nullifying the
the old
common law rule against assignment,
for the
the purpose
of nullifying
old common
assignment, not
for
the
purpose
of
invalidating
agreements that the contract right shall
express agreements
for the purpose of invalidating express
not be assignable.
assignable
& Hutchinson
Co. v. Siegel,
.."Sperry
Sperry &
Hutchinson Co.
Siegel, Cooper & Co.,
Co., 225
225 Ill. App. 54o
540
the assignee
got no primary
((1922)
1922) ;; holding
holding that
that the
assignee got
primary right by delivery
delivery with intent
to
assign,
and
also
that
such
delivery
did
not
assign
the
secondary
right
to
to assign, and also that such delivery
assign the
damages for
breach in absence
damages
for anticipatory
anticipatory breach
absence of evidence
evidence to show intent to do
this. In
this.
In accord:
accord: Sperry
Sperry &
& Hutchinson
Hutchinson Co.
Co. v. Weber &
& Co., 161
161 Fed. 219
219
(Igo8).
755 (I915),
(1908). Cf.
Ct. Same
Same v.
v. Fenster,
Fenster, 219
219 Fed.
Fed. 755
(1915), saying:
saying: "The
"The right
right to redeem
the
stamps
is
a
property
right
transferable
by
possession
while
the
license
deem the stamps is a property right transferable by possession
license
to
use them
for advertising
against
to use
them for
advertising purposes
purposes is
is not
not transferable." The prqvision
prQvision against
assignment
is
not
discussed.
assignment
not
NSee
case of
American Bonding
Bonding &
.. See discussion
discussion in
in the
the excellent
excellent case
of American
& T.
T. Co.
Co. v.
v.
Baltimore
&
Ohio
Co., 124
Baltimore & Ohio R.
R. Co.,
124 Fed.
Fed. 866 (i9o3).
(1903).
'Portuguese Bank v.
IT Portuguese Bank
v. Welles,
Welles, 242
242 U.
U. S.
S. 7 (1916).
(1916). The supposed
supposed policy on
on
which
said to
which this
this statement
statement was
was based
based cannot
cannot be
be said
to have
have been
been demonstrated.
demonstrated. See
See
Comment, 26
Comment,
26 YALz
YALE L.
L. J.,
J., 304
304 (1917).
(1917). It
It should
should be
be observed
observed that
that in this case
case
the obligor
the
obligor did
did not
not object
object to
to the
the assignment,
assignment, but
but paid
paid the
the money
money into
into court.
If
If he
he is
is willing
willing to
to abandon
abandon his
his immunity,
immunity, the
the assignee
assignee may
may well get
get the
the money
money
as
as against
against other
other claimants.
claimants. The
The prohibition
prohibition was
was not
not for
for their
their protection.
protection. To
To
the
the same
same effect
effect is
is Fortunato
Fortunato v.
v. Patten,
Patten, 147
147 N.
N. Y.
Y. 277,
277, 52
52 N.
N. Y. Supp. 872
872
(1895).
(1895).
ASSIGNMENT
ASSIGNMENT OF CONTRACT
CONTRACT RIGHTS
227
There are
are some
some cases
cases that
that definitely
definitely hold
hold aa prohibition
prohibition against
against
There
8
33s
invalid.
be
to
right
a
assigmnent of
of right to be invalid.
'
assignment
Express
Express provisions
provisions against
against assignment
assigmnent are
are usually
usually found
found in
in
some such
such generaf
generaf words
words as "this
"this
bilateral contracts
contracts and
and are
are in some
bilateral
contract shall
shall not
not be
be assignable."
assignable." In
In the pay
pay check
check and
and trading
trading
contract
stamp cases
cases this
this was not the
the case, for there
there the
the contracts
contracts were
were
stamp
unilateral and
and the
the prohibition
prohibition was
was clearly
clearly directed
directed against
against the
unilateral
holder
of the
the right
right alone'
alone: Such
Such a general
general prohibition
prohibition in
in a biholder of
against
be
directed
likely
to
more
is
much
contract
lateral contract
much more likely to
directed against atlateral
tempts to
to delegate
delegate performance
performance of a duty by the promisor
promisor rather
rather
tempts
by the promisee. For
For such a
against assignment
assigmnent of a right by
than against
should
limited
limited purpose
purpose they should always
always be held
held valid;
valid; but
but they should
rights."
of
contract
be interpreted
interpreted to forbid assignment
assigmnent of contract rights. S99
not be
AsSIGNMENT DoES
DOES NOT
NOT AFFECT PERFORMANCE,
PERFORMANCE,
ASSIGNMENT
The performance, whether action

action or forbearance, that
that an
The
obligor is under a duty to render cannot be changed in any mateobligor
asSigmnent of the right by the obligee. It must be
rial way by assignment
disadvantage to a'debtor
creditor
a debtor that his creditor
admitted that it is some disadvantage
"The
The Iowa Code, 9452, provides: 'Wten
''When by
by the terms of an instrument
instrument
assignment thereof shall nevertheless
nevertheless be valid."
valid."
its assignment is prohibited, an assignment
provision in a policy
policy of fire insurance
insurance that it shall not be assigned before
before
A provision
because the risk is not the same with a new owner. But a proloss is valid, because
after loss is not valid, since
assigned after
since
policy shall be void if assigned
vision that the policy
the risk is not affected by.such an assignment. Spare v. Home Mut. Ins. Co.,
598 (1874),
(1874), (semPennebaker v. Tomlinson,
(1883); Pennebaker
17 Fed. 568 (1883);
Tomlinson, Ii Tenn. Ch. 5gB
(sem(semble) ;
E. 233 (i889),
(Il!8g), (semble);
ble) ; Nease v. Insurance Co., 32 W. Va. 283, 99 S. Eo
(3d ed.)
ed.) 386. Where a bank issued a pass book expressly
May, Insurance (3d
thereafter in the bankbanksubject to all rules and regulations that might be posted thereafter
to
ing room, and later the bank posted a rule that money was payable only to
assignee of the
depositor in per~on,
person, this rule was held void as against an aSsignee
the depositor
(iiS).
S. v. Public Bank, 151 N. Y. Supp. 94 (1915).
entire deposit. Bank of U. S.
(i91i), a contract for
" In Lockerby v.
u6 Pac. 463 (19U),
v. Amon, 64 Wash. 24, 1i6
the sale of land provided that '"no
"no assignment of this agreement shall be valid
It was vigorously argued
argued that this was inserted
without the consent of Amon." It
in order to secure payment
payment and that on tender of payment in full by the asIn accord
accord is
the court held otherwise. In
signee Amon
Anon must convey to him; but the
(1898). In a note,
Oil Co., 55 Neb. 337, 75 N. W. 859 (18gB).
Omaha v.
v. Standard Oil
against
the great weight of authority is against
S.) 1064,
io64, it is said that the
35 L. R. A. (N. S.)
v. Cheney,
(1896); Wagner v.
74 Fed.
Fed. 52 (18g6);
v. Bilby, 74
this decision. See Cheney v.
195, 75 N.
72 Minn.
Minn. 195,
v. Eklund, 72
2o N. W. 222 (1884); Johnson v.
x6 Neb. 202, 20
16
i68 Calif. 32, the
& E. Co., 168
Francisco Gas &
W. 14 (18gB).
v. San
San Francisco
(1898). In Butler v.
should
of it should
no assignment
assignment of
court
provided that no
court said: "The contract expressly provided
portion of the work
be made by Butler (the
contractor) nor any portion
(the building
building contractor)
only to the perthis prohibition went only
that this
sublet
court held that
by him." The court
sublet by
to payment.
formance of the work and
not apply to the right to
and did not
228
228
UNIVERSITY OF
OF PENNSYLVANIA
PENNSYLVANIA LAW
LAW REVIEW
UNIVERSITY
has power
power to
to substitute
substitute aa new
new creditor without the
the debtor's
debtor's conconhas
sent.
It
would
be
a
much
greater
disadvantage, without
without any parwould
a
greater disadvantage,
sent.
ticular gain
gain to the
the community,
community, to give the
the creditor
creditor power to
to
ticular
change the
the perfonnance
performance due
due from
from the
the debtor.
debtor. \Ve
We have seen
seeh
change
above that
that if B has
has aa right
right that A
A shall
shall serve
serve as his
his valet, he cancanabove
not
by
assignment
make
it
A's
duty
to
serve
C
as
valet;
also that
it A's duty serve C
also
not by assignment
if B
B has
has aa right
right that A
A shall supply his needs
needs for coal he cannot
if
40
make it
it A's
A's duty
duty to supply the needs of c.
C.40
In like manner, if
make
A owes
owes B
B aa debt
debt of
of $100
$ioo payable
payable at the First National Bank on
on
A
May
i,
B
can
assign
his
right
to
the
Second
National
Bank;
but
May I, B can assign
he cannot
cannot make it
it A's duty to pay at the Second Bank
Bank or on any
he
other
day
than
May
i. If A sells his stock of hardware, busiother day than May 1.
ness, and
and good
good will to B and promises to forbear from competicompetiness,
tion for
for five
five years,
years, B
B can
can assign his right along with the business
tion
to C;
C; but
but he
he cannot
cannot by
by such
such assignment make it A's duty to
to
forbear to solicit hardware business in any greater territory than
the business
business covered
C's business may be
the
covered previously, even though C's
more widely extended.
In
classes of
of cases
cases and to a verylimitedextent,
very limitedextent, it seems
In certain
certain classes
that
the
actual
performance
by
the
obligor
can be changed
that the
perfonnance
changed by an
assignment.
Thus,
if
assignment. Thus, no particular
particular place is specified
specified for the payment
of aa debt,
debt, the
the debtor
debtor must search for his creditor and pay
ment of
him
person. If the creditor should assign his right, it seems
him in
in person.
that the debtor must now seek the assignee in order
order to make payment.
This
might
require
the
assignee
to
pay
at a much more
assignee
ment. This might require
distant
place.
There
is
an
equal
equal possibility, however, that it is
distant place. There
the
obligee and
distant
the original
original obligee
and not the assignee who goes to the distant
place;
case the assignment
assignment would
place; and
and in
in such
such case
would save trouble. As
business
distant
business is now conducted,
conducted, it is not difficult to pay at a distant
".. Crane
Cream Co. v. Terminal
x28 Ati.
Crane Ice Cream
Terminal Freezing
Freezing Co., 128
Atl. 28o
280 (Md.,
(Md., 1925),
1935),
(one having
having aa right
in his
(one
right to
to all
all the
the ice
ice he
he may
may use
use in
his business
business for three
three years
years
cannot
cannot create
create in
in an
an assignee
assignee aa right to all
all the ice such
such assignee
assignee may
may use in
its
Frankfort &
& C.
C. R.
R. Co. v. Jackson, 153
153 Ky. 534,
534, 156 S. W. io3
103
its business)
business) ;; Frankfort
(1913);
(1913); Kemp
Kemp v.
v. Baerselman,
Baerselman, [i9o6]
[1906] 22 K. B.
B. 6o4,
604. (B
(B agreed
agreed to supply K
with
"all fresh
fresh eggs
with "all
eggs that
that he shall require
require for manufacturing
manufacturing purposes
purposes for one
year)
io6 (186g),
(1869), ("all
year);; Lansden
Lansden v.
v. McCarthy,
McCarthy, 45
45 Mo. 106
("all fresh beef
beef . .. .. that
might
might be
be ordered
ordered or
or required
required by
by B.
B. &
& K. for the use
use and consumption
consumption of said
hotel");
hotel"); Tifton,
Tifton, etc.,
etc., R.
R. Co.
Co. v.
v. Bedgood,
Bedgood, 116
116 Ga.
Ga. 945,
945, 43 S.
S. E. 257 (1903),
(1903),
(R.
Leader
(R. R.
R. contracted
contracted to
to haul
haul all
all lumber
lumber cut
cut by
by H.
H. &
& S.).
S.). Cf.
ct.
Leader Co. v. Little
Rock
Rock R.
R. &
& E.
E. Co.,
Co., 12o
120 Ark.
Ark. 221,
221, 179
179 S.
S. W.
W. 358
358 (xg5)
(1915) ; Tolhurst
Tolhurst v. Associated
Associated
Port.
414.
A. C.
C.414Port. Cem.
Cem. Mfrs.,
Mfrs., [x9o3]
[1903] A.
ASSIGNMENT
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
place through
through the
thebanks
banksor
orother
other established
established agencies.
agencies. The
The posposplace
selis
assignment
the
by
debtor
put
upon
the
debtor
by
the
assignment
is
selsible
added
burden
the
upon
put
sible added burden
courts
the
by
and thus
thus far
far itit has
has been
been disregarded
disregarded by the courts inin
domgreat,
great, and
dom
of the
thebusiness
business community.
community.
theinterest
interestof
the
Wherever the
the promised
promised performance
performance consists
consists partly
partly inin the
the
Wherever
aa
of
case
the
in
of
new
legal
relations
in
the
obligee-as
in
the
case
of
creation
obligee-as
the
in
relations
creation of new legal
perthe
causes
of goods-it
goods-it may
may be
be said
said that
that the
the assignment
assignment causes the persaleof
sale
to differ
differ in
in that
that these
these legal
legal relations
relations must
must now
now be
be crecreformance to
formance
to the
the
ated in
in aa different
different party.
party. This
This difference
difference isis immaterial
immaterial to
ated
09
44oa
debtor.
debtor.
In cases
cases where
where the
the performance
performance of
of the
the obligor
obligor isis not
not changed
changed
In
in any
any way
way by
by the
the assignment,
assignment, itit may
may reasonably
reasonably be
be said
said that
that the
the
in
by
held
previously
that
as
of
the
assignee
is
the
same
right
as
that
previously
held
by
right
right
same
the
is
assignee
the
of
right
slightly
is
and
be
can
right
the
assignor;
but
to
the
extent
that
the
the
right
can
be
and
is
slightly
that
the assignor; but to the extent
be aa
changed by
by assignment,
assignment, the
the assignee's
assignee's right
right must
must be
be said
said to
to be
changed
new right
right pro
pro tanto, similar
similar in all
all other
other ways
ways to that
that previously
previously
new
the assignor.
held by the
DEFENSES AND
AND "EQUITIES"
"EQUITIES"
DEFENSES
The great difference

difference between
between instruments
instruments ordinarily
ordinarily described as "negotiable"
"negotiable" and contracts not so described is that the
holder of aa negotiable instrument frequently has power to create
power
aa right in a transferee when he has none himself. No such power
negotiafrom
distinguished
exists
of. assignment as
exists in any case of.
assignor
tion.
An assignee never gets -aa better right than the assignor
tion. An
void, voidable,
claim was void,
had.
reason the assignor's claim
for any reason
If for
had. If
asthe asclaim
is
also
conditional,
so
also
is
the
claim
of the
unenforceable, or
conditional,
or
41
4
1
set-off
or
counterclaim,
signee.
If
defense, counterclaim, or set-off
any defense,
the debtor had any
If the
into the
goods intothe
deliver goods
to deliver
-Usually
obligor to
the obligor
of the
duty of
the duty
made the
be made
can be
' Usually itit can
assignor
the assignor
to the
delivery to
the delivery
where the
possession
however, where
so, however,
not so,
assignee; not
an assignee;
of an
possession of
the
of the
benefit of
the benefit
for the
performance for
was
purely personal
render aa purely
to render
him to
enable him
to enable
was to
impossible.
this
make
would
hands
of
an
assignee
would
make
this
impossible.
obligor
and
delivery
into
the
assignee
an
of
hands
the
into
delivery
and
obligor
27.
n. ~7.
supra, n.
Co., supra,
Min. Co.,
American
Belden Min.
v. Belden
Co. v.
P.Co.
&R.
Smelting &
American Smelting
without
promise without
informal promise
an informal
on an
U Thus, if
based on
was based
claim was
assignor's claim
the assignor's
'Thus, if the
was
claim was
assignor's claim
the assignor's
If the
right. If
sufficient
no right.
has no
assignee has
the assignee
consideration, the
sufficient consideration,
promised
has promised
If AA has
assignee's. If
the assignee's.
voidable
also isis the
so also
infancy, so
or infancy,
fraud or
for fraud
voidable for
and
person and
by BB inin person
work by
BB $1000,
specified work
of specified
completion of
the completion
after the
payable after
sooo, payable
condibe condiwill be
from BB will
assignee from
only
any assignee
of any
right of
the right
in, the
comes in,
ship comes
As ship
after A's
only after
ship.
A's ship.
of A's
arrival of
the arrival
on the
and on
tional
by BB and
work by
thework
of the
completion of
the completion
onthe
tional on
ratificaa ratificaby
g.,
(e.
removable
If
the
defects
in
the
assignor's
right
were
removable
(e.
g.,
by
a
were
right
assignor's
the
in
defects
If the
tion),
assignment.
after assignment.
removable after
remain soso removable
they remain
tion), they
230
230
UNIVERSITY OF
OF PENNSYLVANIA
PENNSYLVANIA LAW
LAW REVIEW
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UNIVERSITY
good against
against the
the assignor,
assignor, it is
is good
good also
also against
against the
the assignee,
good
it existed
existed before
before notice
notice of
of the assignment
assignment is
is received
received by
by
provided it
provided
42
If a first assignee
assignee assigns
assigns to
to a second
second assignee,
assignee, any
any
the debtor.42
If
the
that the debtor
debtor had against
against the
the first
first assignor
assignor is
is good
good
defense that
defense
against both
both the
the first
first and
and second
second assignees;
assignees; and
and any
any additional
additional dedeagainst
the
against
had
set-off that
that the debtor
debtor had against the
counterclaim, or set-off
fense, counterclaim,
assignee while he was in
in possession
possession of
of the
the claim, or
or after
after
first assignee
second assignment
assignment but before
before notice
notice thereof
thereof by
by the debtor,
the second
43
Such
good against
against the second
second assignee.43
Such is
is the
the case
case even
even
is good
is a
assignee,
previous
any
previous
assignee,
though
the
assignee
in
question,
or
any
in
question,
the
assignee
though
purchaser for value without notice. A debtor
debtor cannot
cannot by assignassignpurchaser
ment be put in
in a worse
worse position
position in any respect,
respect, except
except so far as
result from being
being indebted
indebted to a new and more pressing
pressing
this may result
creditor.
so-called
A difference must be
be taken, however, with respect
respect to so-called
equities." These
"latent equities."
"latent
These are claims
claims of third persons, persons
of
other than
than the debtor. The rule followed by the majority of
other
"latent equity"
equity" of a third person
person does not surcourts is that the "latent
44
Thus
innocent purchaser
purchaser for value. 44
vive an assignment to an innocent
if the assignor is a mere trustee for X, but he holds a document
document
that reasonably
reasonably leads the assignee
assignee to believe that the assignor is
value to him for the assignment, the
unlimited owner and to pay value
claims of X are inferior to those of the assignee. Again, if a
claims
" WILLISTON, CONTRAcrs, 433.
"WILUSTON, CONTRACTS, 433
(Pa.,
Rawle 227
v. Metzgar,
Metzgar, 1I Rawle
in Metzgar
Metzgar v.
argued in
was well
well argued
"The
point was
.. The point
227 (Pa.,
assignor
"Notice puts an end to all privity between
1829).
between the assignor
1829). Counsel said: "Notice
and obligor, and the assignee becomes
becomes the owner of the bond, subject to any
existing equity against the obligee. After notice of the assignment,
assignment, a new
contract arises between the obligor and the assignee, who holds a chose in
If he
action no more negotiable than it was in the hands of the obligee. If
transfers it, he does so liable to all the equity arising from the contract beof an assignment
assignment
not the case, the effect of
If this be not
tween him and the obligor. If
J.,
C. J.,
agreed, Gibson, C.
negotiable." The court agreed,
would be to make the instrument negotiable."
(set-off)
the right of defalcation (set-off)
time of the assignment, the
saying: "At the time
By
obligor and the intermediate assignee. By
the obligor
in full force between the
existed in
subsequent assignee in a more advanput aa subsequent
right, then, can the latter put
what right,
this state, no assignee, whether
himself? In this
than he held himself?
situation than
tageous situation
notice; it being his
legal or equitable, can affect to be prejudiced by want of notice;
duty,
duty, as established by many decisions, to sound the obligor before he parts
v. RichRichIn accord
accord is Martin v.
due." In
with his
his money, as to the amount actually due."
C, who
B assigned to C,
B on bond. B
(A owed B
(1873). (A
ardson, 68 N. C. 255 (1873).
ardson,
B,
assigned back to B,
C assigned
A on
on another
another bond. Later C
owed A
at that time already owed
at
has aa set-off
set-off against B.)
debt to
to A. Held, A has
C's debt
had no
no notice of C's
who had
(i886).
REV. 7,
7,8 (1886).
HAv. L.
L. REv.
Notice, 1I HARv.
Without Notice,
for Value
Value Without
Purchasefor
.."Ames,
Ames, Purchase
ASSIGNMENT
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
231
creditor, the
the holder
holder of
of aa right,
right, isis induced
induced by
by the
the fraud
fraud of
of X
X to
to
creditor,
purinnocent
to
an
assigns
thereafter
assign the
the right
right to
to X,
X, and
and X
X thereafter assigns to an innocent purassign
for value,
value, the
thelatter
latter isis not
not affected
affected by
by the
the "equities'
"equities" of
of the
the
chaser for
chaser
45 The debtor is not the
creditor-the first
first assignor.
assignor.45 The debtor is not the
defrauded creditor-the
defrauded
of these
these "equities."
"equities." He
He would
would have
have no
no sure
sure defense
defense
possessor of
possessor
knowledge
has
he
if
although
X,
the
defrauder;
although
if
he
has
knowledge
even
as
against
even as against X, the defrauder;
of the
the fraud
fraud he
he would
would be
be well
well advised
advised to
to interplead
interplead X
X and
and the
the
of
defrauded creditor.
creditor. In
In such
such an
an interpleader
interpleader the
the latter
latter could
could win
win
defrauded
as against
against X, but
but not
not (by
(by the
the majority
majority rule)
rule) as
as against
against the
the innoinnoas
kinds
other
of
case
the
in
rule
cent second
second assignee.
assignee. This
This is the
the rule in the case of other kinds
cent
of property,
property, and
~d there
there seems
seems to
to be
be no sufficient
sufficient reason
reason for
for applyapplyof
different rule
rule in
in the
the case
case of
of contract
contract rights. They, too,
too, are
ing a different
"property." The
The reasons
reasons for
for protecting
protecting an
an innocent
innocent purchaser
purchaser
:'property."
of cases
cases and
and uniformity
uniformity is
is
value are
are the same
same in
in both classes
classes of
for value
desirable.
SUCCESSIVE ASSIGNMENTS
AsSIGNMENTS BY
By THE
THE SAME
SAME ASSIGNOR
ASSIGNOR
SuccEssivE
Where the holder

holder of a right makes two successive
successive assignWhere
different persons.there
persons.there has been
been much
much conments thereof
thereof to two different
problems inrolved.
Involved. Some of this conflict in the solution of the problems
explained away. Thus, the English rule is that the
flict cannot be explained
thit assignee who first gives
gives
right against the debtor belongs to that
446
6 Most of the American
notice to the debtor of his assignment.
follow: this rule,47
jurisdictions refuse to follow
rule,47 and hold that the right
jurisdictions
is in the first assignee except in two classes of cases, as follows:
I.
belohgs to the second assignee if the prior asi. The right belongs
signment was itself
itself inoperative for any reason and no such reason
Evermortgage) ; Everand mortgage);
(bond and
"Putnam
(1878), (bond
412 (1878),
Eq 412
N. J. Eq
29 N.].
v. Clark,
Clark, 29
"Putnam v.
96o
Pac. 960
74, 44 Pac.
Calif. 74.
66 Calif.
Evans, 66
v. Evans,
sole v. Maull,
(1878) ; Ambrose v.
Md. 95 (1878);
5o Md.
Maull, 50
(1874),
2a9 (1874),
Y. 229
57 N. Y.
Guild, 57
(1884),
Contra: Cutts v. Guild,
stock). Contra:
of stock).
(certificate of
(1884), (certificate
assigned
(bonds assigned
(i879), (bonds
547 (1879),
(judgment
debt); Blackman v.v. Lehman, 63 Ala. 547
(judgment debt);
Sutherland
(18o); Sutherland
505 (1890);
App. 505
Ill. App.
by
40 III.
Burch, 40
v. Burch,
Commercial Bank v.
bailee) ; Commercial
by bailee);
Some
('894). Some
130 (1894).
E. 130
N. E.
38 N.
Ill. 384, 38
151 III.
v.
(i8po), 151
295 (I~O),
App. 295
41 Ill. App.
Reeve, 41
v. Reeve,
assignor
ground that the assignor
the ground
of
reconciled on the
doubtless be reconciled
can doubtless
contra can
cases contra
the cases
of the
ownership.
of ownership.
indicia of
did
have the indicia
did not have
456,
F. 456,
Cl. && F.
Cockerell, 33 Cl.
v. Cockerell,
Foster v.
"DearIe
(823) ; Foster
Russ. I1 (1823);
Hall, 33 Russ.
v. Hall,
"Dearle v.
(igig).
88o (1919).
Pac. 880
179 Pac.
i57, 179
Calif. 157,
i8o Calif.
(H.
v. Paonessa,
Paonessa, 180
Adamson v.
1835); Adamson
L., 1835);
(H. L.,
discussed
(1924), discussed
182 (1924),
S. 182
U. S.
264 U.
d'Salem
Salem Trust
Co., 264
Finance Co.,
Mfrs. Finance
v. Mfrs.
Co. v.
Trust Co.
1842).
Y., 1842).
(N. Y.,
228 (N.
Hill, 228
Schenck, 33 Hill,
v. Schenck,
in
Muir v.
(1924);; Muir
767 (1924)
J. 767
L. ].
33 YALE
YALE L.
in 33
a32
232
UNIVERSITY OF PENNSYLVANIA
PENNSYLVANIA LAW REVIEW
UNIVERSITY
exists as to the second.

second. This is self-explanatory. An example is
exists
a case in which the first assignment was a mere oral expression
of gift and the second was for value.
2. The prior assi~ee's
assignee's right will be extinguished and the
2.
obligor will be to the subsequent assignee in case the
duty of the obligor
latter pays value without knowledge of
of the prior assignment
assignment and
and
in reasonable reliance on
on aa document evidencing the existence
in
of the right in the assignor and48negligently left in the assignor's
assignee. 48
prior assignee.
possession by the
the prior
An innocent assignee for value should be protected against
a prior assignee who made it possible for the assignor to perpeIf the prior assignee knew or ought to have known
trate a fraud. If
evidencing the existence of the
of the existence of a document evidencing
right in the assignor and that its possession would enable the
assignor to induce a reasonably prudent person to pay value for
another assignment, the law compels the prior assignee to bear the
loss (unless
(unless he can collect from the defrauder),
defrauder), and confers the
right upon the subsequent innocent assignee for value. The docnon-negotiable instrument.
ument may be either a negotiable
negotiable or a non-negotiable
It may be a formal bond, a certificate
certificate of stock, aa savings bank
book, or an insurance policy. The only limitation upon its chardocument that is so customarily suracter is that it must be a document
rendered upon payment or assignment that the inference
inference of nonpayment
and
non-assignment
may
reasonably
be
drawn from its
payment and non-assignment
reasonably
continued possession by the assignor.
For the
the second
second assignee
assignee to
to be preferred, there must be an
For
element
of
"estoppel"
in
the
broad general
element of "estoppel"
general use of that word.
word,.
Merely
document with actual
Merely obtaining
obtaining possession of such a document
knowledge of
of an earlier assignment or without paying value in
in
knowledge
reliance
on
it
will
not
make
the
second
reliance
make
second assignment superior to the
first.
is believed
believed that
no longer
longer sound to prefer
It is
that it
it is
is no
prefer the secfirst. It
"Herman v.
Ins. Co.,
Co, 218
2x8 Mass.
181, 105
ioS N.
E. 45o
(1914) ;
"Herman
v. Conn.
Conn. Mut.
Mut. L.
L. Ins.
Mass. 181,
N. E.
450 (1914);
Bridge
same, isa
E. 612
62 (i8go)
Maybin v.
Bridge v.
v. same,
152 Mass.
Mass. 343,
343, 25
25 N.
N. E.
(1890);; Maybin
v. Kirby,
Kirby, 44 Rich.
Rich.
Eq.
105 (S.
x851). The
The second
assignee may
Eq. 105
(S. C.,
C, 1851).
second assignee
may also
also be
be preferred
preferred if he
he made
made
inquiry
value by
of the
the debtor
debtor and
and was
was induced
induced to
to become
become aa purchaser
purchaser for
tor value
by the
the
inquiry of
fact
of aa prior
prior assignment.
assignment. See
See Salem
Salem
fact that
that the
the debtor
debtor had
had received
received no
no notice
notice of
Trust
Co.
v.
Mfrs.
Finance
Co.,
supra.
Trust Co. v. Mfrs. Finance Co., supra.
ASSIGNMENT
ASSIGNMENT OF
OF CONTRACT
CONTRACT RIGHTS
RIGHTS
233
of
ond assignee
aSsign~on
onthe
thebasis
basis
of the
the ancient
ancient distinction
distinction between
between "equi"equiond
49
able" and
and "legal"
"legal" title.
title. 9
able"
It has
has also
also been
been said
said that
that the
the second
second assignee
assignee isis in
in all
all jurisjurisIt
purchaser
innocent
an
is
he
dictions preferred
preferred over
over the
the first
first ifif he is an innocent purchaser for
for
dictions
value and
and gets
gets payment,
payment, gets
gets aa judgment,
judgment, or
or enters
enters into
into aa novanovavalue
50 In
tion with
with the
the debtor.
debtor}SO
In these
these cases,
cases, however,
however, whatever
whatever right
right
tion
the second
second assignee
assignee has
has isis aa very
very different
different right
right from
from the
the one
one that
that
the
either
are
rights
His
him.
to
the
creditor
purported
to
assign
to
him.
His
rights
are
either
the creditor purported to assign
"property" rights
rights 51
lSI or
or "judgment"
"judgment" rights
rights or
or "novation"
"novation" rights,
rights,
"property"
determined solely
solely by
by the
the new
new transaction
transaction and
and not
not by
by the
the assignassigndetermined
ment. The
The assignment
assignment to
to him
him gave
gave him
him the
the power
power to
to discharge
discharge
ment.
assignfirst
the
of
notice
no
the
debtor,
as
long
as
the
debtor
had
no
notice
of
the
first
assignhad
debtor
as long the
the
2
iS2
restricted
not
is
ment and
and no
no longer.
This power
power to discharge
discharge not restricted
This
ment
to the
the three
three methods
methods above
above named.
named. A sealea
sealed release,
release, an
an accord
accord
to
debtor,
the
of
favor
in
merits
the
on
and
satisfaction,
judgment
the
merits
in
the
judgment
a
satisfaction,
and
award of
of an arbitrator
arbitrator would
would all
all operate
operate to
to discharge
discharge the
and an award
3 By
5III
By a sealed
sealed release
release or by a judgment
judgment or award
award in
in
debtor.
favor of the debtor, the second
second assignee
assignee would get no rights whatfavor
ever. By
By the other methods he would get the rights appropriate
to the method,
method, but not the right of an assignee-the
assignee-the same right
right
had.
assignor
debtor that the assignor
substance against the debtor
in substance
debtor
It
It should be observed that this power to discharge the debtor
It
is not dependent upon the second
assignee's being innocent. It
second assignee's
is exactly the same power that the guilty creditor had prior to noof notice
tice to the debtor. It depends upon the debtor's lack of
of the first assignment and upon the fact that the debtor is justified in believing that the
second assignment is aa valid one. If,
the second
is not an innocent purchaser for
however, the second
assignee
is
second
whatever
for whatever
assignee for
first assignee
value, he
to account to the first
have to
will have
he will
the debtor is dishe gets out of the
transaction whereby the
new transaction
the new
to
"fund" to
or "fund"
res or
no res
There is no
i5. There
n. 15.
aSee
See 33
(1923), Do
768 (1923),
J.768
L. ].
YA.E L.
33 YALE
which
exist.
can exist.
"title" can
which "title"
n.
328 n.
TRUSTS, 328
"Aus,
AllES, CASES
o TRUSTS,
CASES ON
debtor. RabinRabinto him
him in
in good
good faith
faith by
by the
the debtor.
He may
may keep
keep the
the money
money paid
paid to
a He
(192o).
425 (1920).
E. 425
N. E.
136 N.
owitz
io2, 126
Mass. 102,
235 Mass.
Bank,235
People's Bank,
v. People's
owitz v.
433.
SWnasToN,
WILLISTON, CoNTllAcrs,
CONTRAMCS, 433.
asthe asby the
"power" by
of aa "power"
exercise of
the exercise
"Two
not the
are not
course, are
of course,
these, of
of these,
Two of
assignee.
the assignee.
of .the
favor of
in favor
signee;
judgment in
is aa judgment
indeed, is
nor, indeed,
signee; nor,
234
LAW REVIEW
UNIVERSITY
OF PENNSYLVANIA
PENNSYLVANIA LAW
UNIVERSITY OF
charged. Indeed in some instances

instances the second assignee may be
be
liable in damages to the first as for a tort. In this respect, if he
had knowledge
knowledge of the first assignment, he is in the same position
as the guilty creditor
creditor would be in if he should discharge the
debtor after having assigned to an assignee.
second
If the debtor has notice of the first assignment, the second
however innocent he may be.
assignee has no power of discharge, however
A debtor with notice must fight all other
other claimants at his peril,
A voluntary payinterpleader when necessary. A
using a bill of interpleader
prior
ment to the second assignee would not affect the right of the prior
assignee; nor would a judgment
judgment obtained by the second assignee
or a new contract in the form of a novation. Yet the second as"judgment," or "nova"novasignee would have the same "property,"
"property," "judgment,"
had
if
his ashave
the
debtor
that
he
would
tion" rights against
against
signment had itself been effective. These rights are not the rights
of an assignee.
Arthur L. Corbin.
Corbin.
Yale University
University Law School.
School.

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HeinOnline -- 74 U. Pa. L. Rev. 207 1925-1926

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suffor aa sufpromise for

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of such a.a right as that involved.

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agent isis one

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non-fulfilment of this condition. In this case, as

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must at least be a contract at the time of the assignment;

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The performance, whether action

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The great difference

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Where the holder

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exists as to the second.

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charged. Indeed in some instances

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