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Faculty Scholarship Series Yale Law School Faculty Scholarship

1-1-1926

Assignment of Contract Rights


Arthur Corbin
Yale Law School

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Recommended Citation
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
University of Pennsylvania
Pennsylvania
Law Review
Law Review
And American
And Law Register
American Law Register
FOUNDED 1852
FOUNDED 1852
PublishedMoasthly.
Published Moathly.November JIlIIe,by
NOYClDbertotoJune, by the LawSchool,
Pel1lll11nni.Law
Uninnit)' ofof Pennsylvania
the Univenmty School.
atat 34th aDdChestnut
34thand CbettnutStreets, Philadelphia,Pa.
Streeb, Philadelphia, P

74.
VOL. 74.
VOL. JANUARY, 1926.
JANUARY, 1926. " No. 3-
NO3

ASSIGNMENT OF
ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT RIGHTS
This subject
This subject hashas been
been much discussed under
much discussed under the the heading
heading
"alienability
"alienability of of choses
choses inin action."
action." In In continuing
continuing the the discussion
discussion
our first step
our step should
should bebe to abandon altogether the
abandon altogether the term "chose in
tenn "chose
action." Its
action." Its linguistic construction is faulty, in
linguistic construction that its individual
in that individual
words lead
words lead one one to
to think
think of something
something very
very different
different from
from that
that
which
which the expression
expression as a whole now denotes.
denotes. There is no
"chose" or thing or res.
"chose" There is a right (or
rcs. There claim): against
(or claim): against some
person. In this article we
person. speak in terms of rights
we shall speak rights (or (or
claims)
claims) and not about "choses."
"choses."
important that we should cease to use such a
It is even more important
"assignment of contract."
phrase as "assignment Whatever definition we
contract." Whatever
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 de-
fined as consisting of the facts operating to create a binding obli-
gation-offer, acceptance, consideration, etc.-these facts are
merely aa part 0off recorded history and surely cannot be assignedL
be assigned.
It
It is meaningless
meaningless to speak
speak of assigning a
a past
past event. If
If aa con-
tract
tract is defined as
is defined as aa promise
promise enforceable
enforceable at law, we
at law, merely
we are merely
placing
placing emphasis
emphasis upon
upon one of
of the
the operative
operative facts and
and indicating
indicating
that
that itit isis in
in fact
fact operative.
operative. A A promise
promise is merely aa past
is merely event and
past event and
cannot properly be said to be
cannot properly be said to be assignable assignable by
by the
the promisee;
promisee; much
much
less
less can can aa promise
promise be be assigned
assigned by by the
the promisor
promisor who made it,
who made and
it, and
would be
itit would be equally
equally erroneous
erroneous to to say
say that
that either party to
either party bilateral
to aa bilateral
contract can
contract can assign assign botk
both promises.
promises. If
If contract
contract is
is defined
defined as de-
as de-
(207)
(207)

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2o8
208 UNIVERSITY OF
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LAW REVIEW
REVIEW
noting the
noting the legal
legal relations
relations ofof the
the parties
parties created
created byby agreement
agreement or or
promise, it is again erroneous to
promise, it is again erroneous to say that the say that the "contract"
"contract" can can or
or
cannot be
cannot be assigned.
assigned. Some Some ofof the
the legal
legal relations
relations can
can bebe assigned
assigned
and some
and some cannot.cannot. The The legal
legal relations
relations created
created byby any
any particular
particular
contract must
contract must be be analyzed
analyzed and
and the
the assignability
assignability ofof each
each one
one must
must
be considered separately.
be considered separately.
The legal
The legal relations
relations created
created by by aa contract
contract are
are inin various
various com-
com-
binations; they
binations; they can can always
always be be analyze4,
analyzed, however,
however, into into rights,
rights,
powers, privileges,
powers, privileges, andand immunities,
immunities, eacheach havings
havings itsits necessary
necessary cor-
cor-
relative. The present article will not consider the
relative. The present article will not consider the assignability of assignability of
powers, privileges
powers, privileges or or immunities.
immunities. They They may
may in in some
some cases
cases be
be
assignable. In
assignable. In the
the law
law of
of agency
agency is is to
to be
be found
found thethe old
old maxim
maxim
"delegatwu delegare
"delegatus delegarenon non potest,"
potest," indicating
indicating that the the power
power of of an
an
agent is not assignable.
agent is not assignable. We know, We know, however, that this
that this maxim
does not
does not tell
tell the
the whole
whole story.1
story.' TheThe most important of the legal legal
relations created
relations created by by contract
contract isis the
the relation of right and duty. duty.
The problem
The problem of of assignment
assignment in in connection
connection with this relation is th~ the
subject of
subject of the the present
present article;
article; and
and itit is restricted to rights and du-
ties that
ties that are
are created by contract.

DEFINITION
DEFINITION
To say
To say that one person
that one person has a "right"
"right" against another means
that he has the aid of organized
that he has the aid of organized society insociety 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 whenwhen 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 oror more
more
advantageous position; the duty bearer
advantageous position; the duty bearer in the inferioris in the inferior or
or less
less
advantageous
advantageous position.
position. A A contract
contract may
may create
create inin the
the one
one person
person
rights
rights to to more
more than
than one
one performance;
performance; also,
also, it may
may create
create rights
in
in each
each ofof the
the contracting
contracting parties
parties against
against thethe other.
other.
Let
Let usus determine
determine first
first what
what' is
is meant
meant by by the
the assignment
assignment of of aa
right. A simple illustration will
right. A simple illustration will be of be of service.
service.
Let
Let usus 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),
38another itit isis said:
(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."

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ASSIGNMENT OF
ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT RIGHTS

ItIt is
is also
also established
established law law that
that the
the assignment operative without
assignment isis operative without
the consent of B.
the consent of B. After After the
the assignment
assignment B
B is
is under
under the
the same
same duty
duty
as before;
as before; that
that is,
is, he must still
he must $100 at
pay $ioo
still pay at the time and
the time and place place
specified. The
specified. The correlative right, however,
correlative right, however, is is no longer in
no longer in A;A; it isis
in C. C. The
The social
social assistance formerly at
assistance formerly command is now
A's command
at A's
available to
available to CC and
and is not
not available
available toto A. '
If the
If the foregoing
foregoing is correct, an
is correct, assignment of
an assignment of an an existing
existing
right is an
right an act possessor of that
act of the possessor right which
that right operates to ex-
which operates ex-
tinguish
tinguish the right
right of
of the'assignor
the assignor and
and to
to create
create an
an exactly
e."<:actl: similar
similar
right in
right in the
the assignee. This This definition
definition is in in terms legal opera-
terms of legal opera-
tion--of the
tion-of the effect of of the assignor's upon.the action of organ-
act upon.the
assignor's act
ized society. It
ized It is not a descriptive enabling us to
definition enabling
descriptive definition
recognize
recognize an
an act
act of assignment
assignment when
when we see
see one.
one.
definition as the foregoing renders
Such a definition service, but
renders some service, but
not sufficient
it is not sufficient standing alone. In order predict legal
order to predict opera-
legal opera-
tion we must be able to recognize recognize the facts that will bring bring it about.
This is true even even though the courts do not start in the beginning beginning
completed descriptive
with completed definitions of facts
descriptive definitions and definite rules
of law determining the legal operation of those facts. Perfect Perfect
definition and fixed rule are the final goal toward which the courts
are striving; they are a goal which, as Judge Cardozo tells us, us, is
is
22 case the court may
never actually reached. In every decision of a
assume a definition.
definition and assert a rule; but the facts and decision
of that very case add ,to to the inductive basis used by the next court
in remaking
remaking the definition and correcting correcting the rule.
The law does not start with definitions and general rules
already crystallized
crystallized and put into definite words. Instead, some
events occur; A acts and B complains thereof to aa court. The
events The
court must determine what society will do about it; this is a deter-

'The
The Natllre
Nature ofof the
the Jlldicial
Judicial Process (92), passim;
Process (1921), at p.
especially at
passim; especially x66:
p. 166:
"I wa.s
"I was much
much troubled in spirit, in in my first upon the bench, to find
first years upon find how
trackless
trackless waswas the
the ocean which II had
ocean on which had embarked. II sought for certainty.
for certainty.
was oppressed
TI WdS oppressed andand disheartened when II found that quest for
that the quest was
for itit was
futile
futile .. .. . AsAs the
the years
years have
have gone
gone by,
by, and
and as more and
as II have reflected more and
more
more upon
upon the nature of
the nature the judicial process, II have
of the become reconciled to the
have become
uncertainty,
uncertainty, because
because II have
have grown
grown to grown to
as inevitable. II have grown
see itit as
to see to
see
see that
that the
the process inin its highest reaches creation; and
but creation;
discovery, but
reaches is not discovery, and
that
that the
the doubts
doubts and
and misgivings,
misgivings, thethe hopes
hopes and fears, ~e
and fears, part of
are part travail
the travail
of the
of
of mind,
mind, the pangs
pangs ofof birth
birth and
and the
the pangs of of death,
death, in
in which that
principles that
which principles
have
have served
served their
their day
day expire,
expire, and
and newnew princip}es
principles areare born."
born."

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210
210 UNIVERSITY OF
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mination of
mination of the
the legal
legal operation.
operation.of of the the particular events by
particular events by judi-
judi-
cially operating
cially operating becausebecause of of them.
them. No series of
second series
No second events isis
of events
exactly like
exactly like the
the first;
first; and
and even
even ifif itit were, could not
were, itit could not bebe predicted
predicted
with certainty
with certainty that
that a
a second
second court,
court, or
or even
even the
the same
same court,
court, would
would
react to the events in the
react to the events in the same fashion. same fashion. In
In the
the course
course of
of time
time
there are
there are many
many series
series of of events
events with
with many adjudications thereon.
many adjudications thereon.
By using
By using the multitude of
the multitude records aa jurist
of records jurist or scholar can
legal scholar
or legal can
make rules
make rules and and definitions.
definitions. He classifies the
He classifies judicial and
the judicial and execu-
execu-
tive reactions
tive reactions of of society
society (the(the legal operation) and
legal operation) facts that
the facts
and the that
caused these
caused these reactions.
reactions. By careful analysis he
careful analysis he can determine the
can determine the
legal operation
legal operation that certain certain facts will produce and
will produce and can specify the
can specify the
facts that will will produce operation. Thus
produce the operation. Thus be creates stated
be creates stated
rules of
rules of societal
societal action defines facts with
action and defines reference to that
with reference that
action. His chief chief if not only interest is
only interest determine what the
is to determine the
legal operation
legal operation will society will
will be, what society will do about
about it. He is not
not
writing a general
writing general natural history or preparing
natural history preparing a descriptive
descriptive
"movie"
"movie" of of thethe world.
world. If If his
his work
work is well done, however, he
will discover
discover the essentials
essentials in similar series of events, and will de-
similar series
scribe
scribe in photographic
photographic fashion fashion the facts that produce
produce a certain
legal effect.
How, then, shall we describe assignment? Shall
describe an assignment? .the term
Shall.the
include all the facts necessary to produce the legal ef-
be used to include
fect stated in the foregoing definition (the (the substitution of right in
the assignee in place of the assignor), assignor) J or shall it be restricted to
some one or aa few of those facts? This depends solely on usage
and convenience;
convenience; but it is no easy task to determine what "usage" "usage"
is or what "convenience"
"convenience" requires. A A statement of the rules of
law will require aa full and accurate accurate enumeration of the facts that
produce any juristic result, result, and each fact fact so enumerated must be
identified and and described. An attempt attempt at definition
at aa descriptive definition
follows.
follows.
As
As assignment is is an
an expression of intention by
of intention by the assignor
the assignor
that his
that his right shall
shall pass to
to the assignee."
assignee. s
definition, without
This definition,
This going into
without going analysis of act or
fine analysis
any fine
into any or
intent, dedicates
dedicates the the term "assignment" to aa certain
term "assigtirnent" of conduct
bit of
certain bit conduct
'For this form
For this definition the
of definition
form of to Professor
indebted to
writer isis indebted
the writer Samuel
Professor Samuel
Will;slon.
Will;sion.

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ASSIGNMENT OF
ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT RIGHTS 21I

byby the
the assignor,
assignor, the the objective expression of
objective expression of an intention to
an intention to sub-
sub-
stituteaa new
stitute right-holder. ItIt might
new right-holder. might be be criticised because itit tells
criticised because tells
usus absolutely
absolutely nothing
nothingabout about thethelegal operation of
legal operation thisexpression
of this expression
ofof the
the assignor,
assignor, sincesince courts
courts and lawyers are
and lawyers interested in
are interested in facts
facts
only with
only with respect
respect to to their
their legal operation (excluding
legal operation for the
(excluding for the pres- pres-
ent "evidential"
ent "evidential" facts).
facts). But convenient to
not convenient
But ititisis not include irin the
to include the
definition
definition all
all the
the facts
facts necessary
necessary to
to produce
produce the
the substitution
substitution of
of aa
new right-holder, because
new right-holder, because more more than
than one
one combination
combination of
of facts
facts will
will
produce that
produce that result.
result. "The "The law" cannot be
law" cannot compressed into
be compressed into aa defi-
defi-
nition. ItIt isis convenient
nition. convenient to to pick
pick out central fact
the central
out the common to
fact common to all
all
such combinations,
such combinations, describe
describe it
it as
as in
in the
the definition
definition above,
above, and
and then
then
to proceed
to proceed to to state
state what
what other facts in
other facts combination with
in combination this one
with this one
will produce
will produce the substitution mentioned.
the substitution mentioned.
In order
In order thatthat an expression of
an expression of an mtention by an
an intention an assignor
assignor
may be operative
may be operative to substitute
substitute a right in
in the assignee,
assignee, there
there must
must
existing right
be an existing right that
that can be be assigned, and the expression of
and the expression of
intention by the
intention assignor must be in
the assignor mode that has been
in a mode been adju-
dicated to be effective. Several Several modes have been held effective; effective;
but wewe cannot say assurance that other
say with assurance modes will not be
other modes
.so held. An assignment is operative operative if the assignor's expression expression.
is accompanied consideration paid; if it consists the deliv-
accompanied by a consideration of
ery, along with words of gift, of a "document "document of title" (a docu-
ment executed by the debtor acknowledging acknowledging his duty and describ-
performance, due); or if
ing the performance. if the assignor's intention is ex-
pressed by aa written and delivered delivered documentary assignment
(sealed
(sealed oror unsealed).
unsealed). There is a strong strong tendency for for the courts
the courts
to give
give legal operation to any
any oral
oral expression of present intent
intent to
assign.
assign. An exact determination of
of the facts
facts that
that will be
be recog-
recog-
nized
nized asas operative
operative will will not
not be be undertaken in in the present article;
present article;
but
but aa distinction between
between an assignment
assignment and promise to assign
and a promise assign
will be briefly
will be briefly noted.
noted.

PROMISES
PROMISES TO
TO MAKE
MAKE AN ASSIGNMENT
AN AsSIGNMENT

If
If the
the holder
holder ofof aa contract right makes
contract right promise for
makes aa promise suf-
for aa suf-
ficient
ficient consideration
consideration to toassign
assign ititto
toanother, is the legal opera-
what is the legal opera-
another, what
tion
tion of
of the
the transaction?
transaction? Beyond question such
Beyond question promise isis aa
such aa promise
valid contract ifif there
valid contract there isis no
no legal impediment to
legal imp"ediment to the assignment
the assignment

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212
212 UNIVERSITY OF
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LAW REVIEW

of such a.a right as that involved.


of involved. There wouldwould bebe aa legally
legally en-
en-
forceable duty
forceable duty toto the
the promisee to to perform inin accordance with the the
promise as as in the
the case other contract. 44 But how
case of any other how does
does such
such
aa promise to assign affect the
to assign affect the legal legal relations of
of the
the obligor (the
(the
debtor) to to the assignor and and the assignee?
assignee? It is quite impossible
impossible
to answer this question in
to in one general statement, because the term
assign" has several distinct meanings.
"promise to assign"
In some cases the "promise to assign" has has been held to be be
itself a completed assignment, extinguishing the right of the as-
itself" as-
signor against the debtor and creating aa similar right in the prom-
isee. In such cases the "promise"promise to assign" is self-executing
self-executing and
"promisee" in
makes the "promisee" in fact an assignee. Such a holding is quite
correct if the words and conduct accompanying the "promise "promise to
assign" express an
assign" express an intentionintention to convey the right immediately.
That
That thethe assignor's
assignor's words are in promissory form is not conclu-
sive to the contrary. It is clear that such an intention may exist
sive to the contrary. exist
and may be expressed, even though the parties contemplate contemplate the
subsequent execution of a documentary
subsequent documentary assignment. In such case
the
the document is to be a
a mere memorial of an already operative
transaction
transaction and is not operative assignment. 5II
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
4 Hughes v. Burwell,
Burwell, 113II3 Va. 598, 75 S. S. E. 230 (1912).
(1912).
Where for a valuable consideration
consideration a promise
promise was made to assign cer-
tain insurance
tain policies, it
insurance policies, it has been held that a subsequent
subsequent formal assignment
assignment
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),
146 (formal assignment delayed
(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 (1902); In re Dier,
II6 Fed. 276 (9o2); Dier, 296
296 Fed. 816816
(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 toto assign
assign the
the stock to the lender).
lender).
'Carey
Carey v.v. Chase, 197 Iowa
Chase, 197 1239, 175
Iowa 1239, 175 N.N. W.W. 6o60 (xgig),
(1919), (promise
(promise by by aa
surety
surety that whatever
whatever she she might
might get from a certain certain company
company she would apply apply
in
in payment
payment of that company's
company's debt to the plaintiff);
plaintiff); Stock Growers
Growers Bank
Bank
v.
v. Milisich,
Milisich, 233 Pac.
Pac. 4141 (Nev. 1925), (promise
(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., 1922), (promise
(Tex., 1922), (promise to to pay
pay a debt
debt with
with proceeds
proceeds of of sale
sale of crops)
crops) ; Hobbs
Hobbs
v.
v. McLean,
McLean, 117 II7 U.U. S.
S. 567
567 (1885),
(1885), (a (a promise
promise to to pay
payoutout of
of moneys
moneys to be be
received
received on on a contract
contract with
with the United
United States
States isis not
not within the federal
federal stat-
utory regulation
regulation of assignments).
assignments). .

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ASSIGNMENT OF
ASSIGNMENT OF CONTRACT
CONTRACT RIGHTS
RIGHTS 2 13

promisor's right
promisor's right against
against the debtor isis not
the debtor thereby extinguished,
not thereby extinguished,
nor isis aa right
nor right against
against thethe debtor created in
debtor created promisee. Such
the promisee.
in the Such aa
promise isis aa promise
promise promise to collect and
to collect and toto pay
payoutout of the proceeds.
of the proceeds.
Words of
Words of present
present assignment, however, are
assignment, however, are not made inoperative
not made inoperative
as aa present
as present assignment
assignment by by the
the fact assignor at
the assignor
that the
fact that the same
at the same
time promises
time promisesto to collect
collectthe money due
the money due as agent of
an agent
as an the assignee
of the assignee
and to
and to pay
pay itit over
over to him. 7
to him.r
For an
For an effective
effective assignment necessary that
assignment itit isis necessary that the right as-
the right as-
signed shall
shall be
be clearly
clearly identified.
identified. A88 promise to
A promise to assign book
assign book ac- ac-
signed
counts as
counts as security
security is is not
not operative
operative as as aa present assignment ifif the
present assignment the
accounts are
accounts are not
not clearly indicated and
clearly indicated and the terms of
the terms the assign-
of the assign-
ment are
ment are left
left toto future agreement or
future agreement or if parties understand
the parties
if the understand
that the
that the promisor
promisor is is to
to be privileged to
be privileged collect the accounts and
to collect the accounts and use
use
the money
the money in in his 9
affairs. In
his own affairs. there is
case there
such aa case
In such great prob-
is great prob-
ability that the agreement
ability that agreement is is too uncertain in
too uncertain in subject matter or
subject matter or
terms to be regarded
terms to be regarded even
even as a valid contract
contract between
between the
the prom-
prom-
isor and the promi~ee.
the promisee.

AsSIGNEE NOT AN
ASSIGNEE AGENT OR ATTORNEY
AN AGENT

It was once believed that a right could


once believed assigned. A
could not be assigned.
"right" was conceived of as a sort
"right" was conceived of as a sort of of nebulous, ethereal, personal
personal
relation.110 nat1lre of things it could not be assigned. This
0 In the nature

A promise to pay an attorney compensation out of the proceeds


A promise proceeds of the liti-
gatIOn
gation is not an assignm.ent, because it creates only a right in the attorney
assignment, because
against the
against the client
client and does not createcreate aa right in the attorney against the party
who is being sued: Cameron v. Boeger, 200 I11.
who Ill. 84, 65 N. E. E. 690
69o (1902);
(9) ; Trist
v.
v. Child, 21 Wall. 441 (U. (U. S.,
S., 1874).
1874).
'Cogan
Cogan v. Conover Mfg. Co., 69 N. J. Eq.
Mfg. Co., Eq. 8og,
8o9, 64 64 Atl. (19o6).
At. 973 (1906).
'Thus,
Thus, aa promise by aa mortgagor to keep the property insured for the
benefit
benefit of of the
the mortgagee
mortgagee is not an assignment, even even though mortgagor
though the mortgagor
shouid
should thereafter
thereafter cause
cause aa policy to be executed
executed inin his own name. There There waswas
no promise to
no promise to assign some
some designated and and identified right. Steams Quincy
Stearns v. Quincy
Ins.
Ins. Co.,
Co., 124
124 Mass. 61 6I (1878).
(1878).
"In
In re
re Stiger, 2022o2 Fed.
Fed. 791
791 (1913),
(913), 209209 Fed. 148.148.
The rule
1."The rule that
that aa "chose
"chose in action"
action" was
was not
not assignable
assignable "is explained
"is better explained
as
as aa logical consequence of the
logical consequence the archaic
archaic view
view of of aa contract
contract as creating aa
as creating
strictly
strictly personal obligation." POllOCK,
personal obligation." POLLOcK, CONTRACTS
CoNTRAcTs (Williston's
(Williston's ed., 1906) 278.
i9o6) 278.
"A
"A personal
personal relation
relation in
in the
the very
very nature
nature ofof things
things cannot
cannot be assigned ......
be assignea
where
where one one has
has aa mere
mere right
right against
against another,
another, there
there is is nothing that is
nothing that capable
is capable
of
of transfer."
transfer." Ames, Ames, TheThe blalie/lability
Inalienability of of Choses
Choses in in Action, LEcruas ON
in LECTURES
Action, in ON
LEGAl.
LEGM. HISTORY,
HISTORY, 210.210. Dean
Dean Ames
Ames seems
seems toto have
have been
been subconsciously defining
subconsciously defining
"assIgnment"
"assignment" as as aa physical tradition of
physical tradition of some
some sort
sort ofof subject matter. As
subject matter. As de-de-
fined
fined herein,
herein, its
its operation
operation isis to
to extinguish
extinguish andand toto create, just as
create, just as in case
the case
in the
of any conveyance
of ailY conveyance of of property
property in in land
land oror cpattels-.
chattels-. AA contract
contract right no
right isis no

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214
214 UNIVERSITY OF
UNIVERSITY OFPENNSYLVANIA LAWREVIEW
PENNSYLVANIA LAW REVI4W

supposed difficulty
supposed difficulty isis entirely eliminated by
entirely eliminated by aa closer analysis of
closer analysis of
the concepts expressed
the concepts expressed by "right" by "right" and
and "relation."
"relation." Just
Just as
as in
in the
the
scienceof
science ofphysics,
physics, such
such an an analysis
analysis shows
showsthat ethereal'nebula
the ethereaf
thatthe nebula
has substance
has substance perceivable
perceivable by bythe
thesenses.
senses.
In the
In the simple
simple illustration
illustration given above, AA had
given above, had aa right that BB
right that
should pay him $100.
should pay him $ioo. This is This is now
now analyzed
analyzed to
to mean
mean nothing
nothing
more than
more than that
that the
the agents
agents of of organized society will
organized society assist A
will assist A inin
inducing or
inducing or compelling
compelling BB to to pay
pay over
over certain money. There
certain money. There are are
various modes
various modes in in which
which thisthis societal
societal assistance given. It
assistance isis given. is this
It is this
great fact of societal
great fact of societal ~sistance
assistance that
that constitutes
constitutes the
the legal
legal "relation"
"relation"
of "right"
of "right" and and "duty."
"duty." While While jurists were for
jurists were some centuries
for some centuries
saying that
saying that aa right
right cbuld
could not not be assigned, they
be assigned, were as judges
they were as judges
going steadily
going steadily on on transferring
transferring their their societal assistance from
societal assistance from the the
assignor
assignor to
to the
the assignee. In
In order
order to make
make this
this court
court action
action ap-
pear to
pear to bebe consistent
consistent with their their theory that a right
theory that cannot be
right cannot be as-
as-
signed, the jurists
signed, jurists said
said that the the "right"
"right" was was still
still in the assignor,
assignor,
but that
but that he he had given to the assignee a power
had given power of attorney to
of attorney to
enforce
enforce it for
for him. A having assigned to C his right
right that BB
should pay $100, $xoo, when asked whether thereafter
thereafter C had a right
right
against B the jurists said "no"; but when when asked whetherwhether 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
suit and could give a valid discharge they said "yes"; and when
asked
asked by the executing sheriff to whom he should pay the money
collected, they said "pay "pay it to c."C."
In
In invoking judicial or executive compulsion compulsion against B, is C
(the assignee)
(the assignee) acting
acting as the
the agent
agent or attorney for for A? 12 12 As-As-
suredly not.
suredly not. Such Such an idea never
idea never enters
enters the
the head of
of either
either AA or
C,
C, and for for centuries
centuries not not aa word expressing intention
expressing an intention to make to make
cC the agent
agent of of A has
has been required
required or or used
used in assignment. An
in assignment.

different
different in in this
this respect
respect from
from aa land
land right
right or
or aa horse right. See
horse right. Professor
See Professor
Walter
Walter W. W. Cook,
Cook, The
The Alienability
Alienability of of Choses
ChoSes ill Action, 29
i Actioll, HAnv. L.
29 HARV. Rsv. 816
L. REv. 816
(1915).
(19W5).
Welch v.v. Mandeville,
U"Welch Mandeville, I i Wheat.
Wheat. 233233 (U.
(U. S., Legh v.v. Legh,
1816);: Legh
S., 1816) Bos.
Legh, I i Bos.
&&P447
P. 447 (1799).
(x799). .
This was
U"This was the
the particular
particular fiction accepted in
fiction accepted times; and
early times;
in early per-
has per-
and itit has
~istcd
qisted to
to aa considerable
considerable extent
extent even
even to the present
to the time. The
present time. The view stated
here stated
view here
isis prel'ented
presented with
with careful analysis by
careful analysis Cook, loco
Professor Cook,
by Professor loc.cit., note 10.
cit., note 1o.

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ASSIGNMENT OF
ASSIGNMENT CONTRACTRIGHTS
OF CONTRACT RIGHTS 215
:U5

agent isis one


agent onewhowho isisacting
actingininhis principal's behalf;
his principal's behalf; CC isisacting
acting
.solely
solely for for his
his own
own interest. Because of the interest of the prin-
interest. Because of the interest of the prin-
cipal that
cipal that isis being
being served,
served, an agent isissaid
an agent said to occupy aa fiduciary
tooccupy fiduciary
relationand
relation andto to owe
owe duties
dutiesto to the
the principal connotedby
principal connoted the word
bythe word
"fiduciary."
"fiduciary." After After an
an assignment
unconditional,assigmnent
unconditional to
to C,
C, A
A has
has no
no
further interest
further interest to to be served, A's
be served, A's jural relations are not
jural relations are not intended intehlded
tobe
to affectedby
beaffected byC'sC'saction,
action, and
and CCowes owesno no fiduciary duties to
fiduciary duties to A.
A.
In some
In some jurisdictions
jurisdictions itit maymay still proper for
be proper
still be for CC toto bring
bring
suitin
suit Nsname;
in A's name; but but this
thisin
in no
no way affects what
way affects stated above."'
whatisis stated above. 18
If there are still cases
If there are still cases where where it
it is
is necessary
necessary for
for CC to
to sue
sue in A's
in A's
name, this
name, this isis aa mere
mere empty formality, as
empty formality, as itit long was in the
long was in the former former
courts of
courts common law.
of common law.
It isis no
It no longer
longer even "proper" to
even "proper" sue in
to sue name of
the name
in the of A A in
in
states where
states where by by statute
statute the
the suit be in the name
must be in the name of "the real
suit must of "the real
party in
party in interest." On On proof
proof that
that the right has been
the right assigned, the
been assigned, the
suit
suit will
will be dismissed
dismissed unless
unless it
it is shown
shown that
that AA is suing
suing as the
the
agent and attQrney
agent attQrney of the assignee C and and thatthat C is the real real plain-
plain-
tiff.
tiff. 1U ' SoSo far from the assignee being
being the
the agent
agent of
of the
the assignor,
it now appears that
now appears that the assignor
assignor can can sue only only as agent of the
as the agent
assignee. If
assignee. "assignee" merely holds a power of attorney
If the "assignee" attorney or
is
is anan assignee for collection
collection and remission of proceeds
proceeds to the
assignor, he is not the "real "real party interest"
in interest" in whose name the
the.
15
suit
suit must,
must, under many statutes, be brought. lIS

JlI It
It appears
appears that in Connecticut
Connecticut the assignee may
the assignee sue in
still sue
may still assignor's
in the assignor's
name
name and and thereby
thereby prevent the defendant from
the defendant from counterclaiming in the same
the same
action 011
acUOI1 on a separate claim which which he against the assignee, thereal
has against
he has plaintiff.
the real plaintiff.
Lowndes
Lowndes v. v. City
City Bank,
Bank, 79 79 Colin.
Codln. 693,693, 166 Atl. 514 (1907).
166 AtL (907). It should be
It should ob-
be ob-
served that this
served this isis not aa holding that that thethe assignee is.a is a mere agent enforcing
agent enforcing
the right of
the right of the assignor. Its
the assignor. Its effect that itit gives
effect isis that assignee an
the assignee
gives to the addi-
an addi-
tioaal advantage, one
tional advantage, one that
that in States he
other States
in other would not
he would and one
have and
not have one to which
to which
the conmon notions
the COIijD1OI1 notions of justice would
of justice would not not entitle him.
entitle him.
U Parker
JI Parker v. Simon, ~31
v. Simon, 231 N. X. Y. 503, 133
Y. 503, 33 N.N. E. E. 503
5o3 (1921) Whiting v.
(192);j Whiting v.
Gliss, ~17
Gliss, 217 N.N. Y.Y. 333, I N.
333, III N. E. E. 1082 Looney v.
(1g6);j Looney
xo82 (1916) Dist. of
v. Dist. Col., II3
of CoL, 113
U.U. S.S.~s8 (88s).
2s8 (I88S).
sa Spencer
Spencer v. v. Standard Corp., ~37
Standard Corp., N. Y.
237 N. Y. 479,
479, 144144 N. E. 479
N. E. 479 (1924) Crum
(1924) j ; Crum
v.v. Stanley,
Stanley, SS Neb. 351,
55 Neb, 7s N.
351, 7S N. W. W. 85 (1898).
8s (18gB).
An
An as.ignee
assignee i.is not agent or
an agent
not an or attorney agent or
mere agent
conversely, aa mere
attorney;j conversely, attor-
or attor-
ney isisnot
ney not an assignee. If
anassignee. expressed that
clearly expressed
If ititisis clearly that the agent isis to
the agent and
collect and
to collect
by .stICh
isis by juck colketitm
collecion to to effect
effect an assignment, there
an assignment, no assignment
there isis no the
before the
assignment before
act of
act of collection.
collection. See Farmers' L.
See Fanners' L.&&T. Winthrop, 238
Co. v.v. Winthrop,
T. Co. 238 N. Y. 477, 144
N. Y.477, 144
N.N. E.E.686 (x924).
686 (1924).

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216
216 UNIVERSITY OF
UNIVERSITY OF PENNSYLVANIA
PENNSYLVANIA LAW
LAW REVIEW
REVIEW

ASSIGNMENT OF DUTIES
ASSIGNMENT DUTIES

Before proceeding to to detennine


determine what rights are assignable
and what are not assignable, the easier problem of of the assignment
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 ad-
statement
here to our description of an assignment as a unilateral expression
of the assignor. Applying that definition to duties instead of
rights, we have: An assignment is an expression
expression of intention by
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 "as-
signment," the debtor's duty remains absolutely unchanged. The
signment,"
performance
perfonnance required by a duty can often be delegated; but by
such a delegation the duty itself is not escaped.16 16
Suppose the following cases: i. A is under contract with B
I. A
compensation a ton of coal to B's house. A
to deliver for compensation A em-
ploys C to deliver it for him. By so doing A A is not a repudiator
'epudiator
of his contract; but he is still bound by the contractual
contractual duty. If
C delivers the coal, A has a right to payment of the compensa-
tion by B. If C does not deliver the coal, B has a right to dam-
ages against A for breach of duty. C's failure to deliver the coal
may also give
give to both A and B a right to damagesdamages against C.
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, '
breach,17 and nearly everywhere
everywhere B can sue
C as an obligee-beneficiary
obligee-beneficiary of his contract with A.

U "It has been uniformly


.. "It has been uniformly held that aa man
held that man cannot assign his
cannot assign his liabilities
liabilities under
under
a contract, but one who is bound
a contract, but one who is bound so as to so as to bear
bear an unescapable liability
liability may
delegate the performance
delegate the performance of his obligation to another, if the liability be
be of
such a nature
nature that its performance
performance by another will be substantially
substantially the same
thing as
thing as performance
performance by by the promisor
promisor himself. In such circumstances the
performance of the third party is the act of the promisor, who
performance who remains liable
under the contract and answerable
answerable in damages
damages if the performance
performance be not in
strict fulfillment of
strict fulfillment of the
the contract." Crane Ice
contract." Crane Ice Cream
Cream Co. v. Terminal Freez-
ing
ing Co., 128 At.
Co., 128 280, 283
AU. 280, 283 (Md. i925). In
(Md. 1925). In the
the foregoing, "liability"
"liability" means
means legal
duty.
~~ .
"Explosive Chemical Co. v. Gray & Co., 2o7
1f Explosive Chemical Co. v. Gray & !Co., N. Y.
20'/ N. Y. Supp.
Supp. 638, 124 Misc.
638, 124 Mise.
333
333 (1g25).
(1925) .

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ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT
ASSIGNMENT OF RIGHTS 217

2. A
2. A isis under
under contract with BB to
contract with part of
the part
play the
to play Hamlet inin
of Hamlet
B's theater.
B's theater. In In B's employs CC to
absence, AA employs
B's absence, Hamlet and
play Hamlet
to play and CC
actually does
actually does so. so. In
In this
this case
case AA has
has no
no right
right to
to the
the agreed
agreed com-
com-
pensation; and
pensation; and instead
instead BB has right to
has aa right damages from A for
to damages from A for
breach of
breach of contract.
contract. No more than
No more in the
than in first case
the first could A
case could A es-
es-
cape his
cape his duty
duty by by such
such an arrangement with
an arrangement with C; but in
C; but addition, A
in addition, A
could not perform
could not perform vicariously
vicariously as
as he
he could
could and
and did
did do
do in
in the
the first
first
case.
case.
A duty
A duty cancan never 'be escaped
never -be escaped by assignment or
by assignment or delegation;
delegation;
but any
but any duty
duty cancan be extinguished by
be extinguished performance. Some
by performance. Some duties
duties
require a performance
require a performance by
by a
a specific
specific person;
person; others
others do
do not.
not. In
In
the coal
the coal case,
case, the
the performance required was the delivery
performance required was the delivery of coal of coal
at B's house,
at house, andand itit made
made no no difference whether by
difference whether team or
by team or by
by
truck or
truck or by
by whom
whom driven.
driven. In In the
the Hamlet case, the performance
Hamlet case, performance
required was
required was the physical
physical acting involving the
acting of A, involving the co-ordina-
co-ordina-
of A's
tion of A's trained body and brain. Whether
trained body Whether or or not a contractual
contractual
requires personal
duty requires performance by a specific
personal performance individual can
specific individual can be
interpreting the
determined only by interpreting
determined used in the light of ex-
words used
the words
perience. In many many cases there will be ample room for a differ-
ence of opinion. But But whether the performance required is a per-
performance required
performance or not, the legal duty is not escaped by an
sonal performance
assignment or delegation performance. IS8
delegation of performance.'
It is easy to put striking cases where the performance re-
quired is not solely the personal action of the contractor. A con-
tracts with B that C'willC will not expose a trade secret or that D will
play Hamlet. Here A A can neither escape his duty by assignment,
performance to ,a new
delegate performance new person, nor satisfy his duty duty byby
performing himself. The The contract puts neither C C nor D under
any duty whatever;
whatever; but but the
the duty of A can be
of A be satisfied only by the
by the
silence ofof C andand the acting of of D.
, S"This ordinarily is
.. "This ordinarily is all books mean
the books
all the they state
when they
mean when proposition
the proposition
state the
in
in general
general terms-that
terms--that aa contract
contract imposing
imposing liability cannot
cannot be be assigned; that
assigned; that
the assi~ent
the assignment of of such
such aa contract
contract does
does not,
not, as
as aa rule,
rule, relieve the assignor
relieve the from
assignor from
responsibility." Atlantic &
responsibility." Atlantic & N.N. C. R. Co.
C. R. Co. v. Atlantic &
v. Atlantic & N.N. C. Co., 147
C. Co., 147 N. C.
N. C.
368,
368, 61 S. E.
61 S. 185 (I~).
F. ISS (i08).
"What
"What isis meant
meant is,
is, not
not that -contracts involving
that-contracts involving obligations
obligations not and
special and
not special
personal
personal cancan be be assigned
assigned in in the
the full
full sense
sense ofof shifting
shifting the
the burden
burden of of an obli-
an obli-
gation
gation on on toto aa substituted
substituted contractor,
contractor, any any more than when
more than when it and
special and
it isis special
personal;
personal; but but that
that in
in the
the first
first case
case the
the assignor
assignor maymay rely on the
rely on act of
the act another
of another
as
as performance
performance by by himself,
himself, whereas
whereas in in the
the second
second case
case hehe cannot." Tolhurst
cannot." Tolhurst
v.v.Associated
Associated Mfrs., [i9o2] 22 K.
Mfrs., [1902] K. B.
B. 660, 669. --
66o, 669.

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218
218 UNIVERSITY OF
UNIVERSITY OFPENNSYLVANIA
PENNSYLVANIA LAW
LAW REVIEW
REVIEW

IIff itit is
is impossible
impossible forfor AA to
to assign
assign his
his duty,
duty, how
how cancan he
he get
get
rid of it?
rid of it? Only Only byby some
some one
one of
of the
the recognized
recognized methods
methods byby which
which
aa contractual
contractual duty duty isis discharged.
discharged. Most Most of
of these
these require
require the
the as-
as-
sent of the obligee, the party having the right correlative
sent of the obligee, the party having the right correlative to the to the
duty to
duty to be be discharged.
discharged. One One ofof these
these methods
methods isis called
called "nova-
"nova-
tion," by which, with the obligee's assent,
tion," by which, with the obligee's assent, aa substitutionsubstitution of
of debtors
debtors
is effected.
is effected. This This is
is not
not assignment.
assignment.

WHAT RIGlITS
WHAT RIGHTS ARE
ARE ASSIGNABLE
ASSIGNABLE
It is
It is almost
almost safe to say say that all contract
contract rights
rights are assignable
-almost but
-almost but not
not quite.
quite. WeareWe are far far removed from from the notion
notion
that all rights are strictly
that all rights are strictly personal and personal and therefore not assignable;
not assignable;
but itit is
but is still
still often
often said
said that some rights are so so personal in char-
acter as
acter as to to bebe non-assignable.
non-assignable. It It is
is believed that this latter limi-
tation on
tation on assignability
assignability has has no more foundation than the earlier
and more general one. one.
Let us consider
Let us consider aa few few specific
specific cases. I. I. A contracts
contracts with B
to act as B's valet.
to act as B's valet. Surely, Surely, it it will
will be
be said, B's right is so personal
that it
that it cannot
cannot be be assigned. But no, the contrary is believed to be
correct although
correct although no no decision
decision pro or con has been seen by the
writer. By this statement
writer. By this statement it is not meant to say that the char-
acter of
acter of thethe service
service cancan in in any way be changed
changed by assignment.
The right
The right of of B B is
is that
that A A shall act as
shall act as B's
B's valet, not that A shall
act as
act valet for
as valet for whom
whom it it may concern. Anyone ought to know
that serving as valet to
that serving as valet to a cross, a cross, ill, miserly, old curmudgeon
ill, nUserly, curmudgeon is not not
the same performance
the same performance as serving a healthy, happy-go-lucky,
happy-go-lucky, gen-
erous,
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
A, he must assign it as it is. He cannot by assignment C cre-by assignment to cre-
ate
ate in
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
different
different rightright to to aa different
different performance.
performance. But B can can assign
assign to
C the
C the right
right that that AA shall
shall serve
serve asas B's valet;
valet; and
and if
if A
A shall commit
commit
aa breach it will be C who gets the damages measured
breach it will, be C who gets the damages measured by the value by the value
of 19
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
of assignment
assignment thatthat he
he was
was no
no longer
longer to
to be
be regarded
regarded as
as the
the possessor
possessor ofof 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
substitution of of aa new
new beneficial
beneficial right-holder
right-holder was
was intended.
intended.

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ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT
ASSIGNMENTOF RIGHTS 2 19

SUppose that
2.2. Suppose contracts with
that AA contracts with BB to supply all
to supply the coal
all the coal
that B may
that B may need need in
in aa business
business that
that BB is
is then
then conducting
conducting or
or all
all the
the
coalthat
coal thatBBmay mayneedneedininhis household use. Just as in the caseof
hishousehold use. Just as in the case of
thevalet,
the valet,B's B's right
rightisis assignable
assignable;20 ;20 but cannotby
butBB cannot assignmenttoto
by assignment
CC create
create in in CC aa right
right that
that AA shall supply all
shall supply all the that CC may
coal that
the coal may
need in his
need in his businessbusiness or
or his
his household.
household. This
This is
is true
true even
even though
though
at the
at the time
timeof of the
the attempted assignment BB sells
attemptedassignment sells his business or
his business or hishis
house to
house to CC and
and CC continues therein. The
continues therein. The needs of a business or
needs of a business or
a house
a house run
run by
by CC are
are not
not identical
identical with
with those
those of
of the
the same
same business
business
or house
or house run run byby B.B. B's B'g power
power of of assignment, therefore, is
assignment, therefore, is lim-
lim-
ited to the creation in C
ited to the creation in C of the very of the very same
same right
right that
that BB possessed,
possessed,
namely, the
namely, the right
right that
that B'sB's needs shall be
needs shall be supplied.
supplied.
Of course,
Of course, it it is
is possible
possible for A A to contract with
to contract with B B soso as as toto
give
give B a right that
right that AA shall
shall valet
valet any
any person
person or
or shall
shall supply
supply aa cer-
cer-
tain house
tain house withwith coal
coal without regard to
without regard to its occupant. This
its occupant. This right,
right,
like the
like the previous
previous ones,ones, cancan be assigned, the
be assigned, the performance
performance after after as-
as-
21
remaining exactly
signment remaining exactly the same same as before assignment.
before assignment. 21
signment
To show
show thatthat the decision in the the foregoing cases cases is not fan-
ciful
ciful let us consider two more cases. 3. C wishes that his son
that-his son
shall have a valet, but not that B shall
B shall shall have
have a legal right. C
therefore contracts with A that A shall serve B as valet, and also
therefore
that the primary legal right and the secondary secondary right to the value
of
of the services shall be in C alone. No
Noone one would doubt that this
is a valid contract, th~t that C has aa right that A shall serve B as valet,
or that C C has a right to the the value of of the services in case of breach
by A. This is exactly the result produced produced in in case I. i. No suffi-
cient
cient reason
reason appears why they they ca~ot
cannot produce this result by
result by as-
signment
signment as well as direct contract. No doubt itit may
as by direct be
may be some some
disadvantage
disadvantage to to AA toto owe
owe aa c1uty
duty to severe, hard-hearted, old
severe, hard-hearted, old Mr.Mr.
C instead of to young,
C instead of to young, easy-going easy-going B;
B; but
but it
it is
is no more
more so
so in
in this
this

,."Here again, itit isis assumed


Here again, assumed that means the
that BB means damages to
the damages to go the
with the
go with
primary
primary right.
right.
Thus where
J1'Thus where thethe defendant
defendant contracted
contracted withwith X and his
X and "successors or
his "successors or
assigns"
assigns" to to supply
supply his premises "222
his premises "222 Main
Main St.St. all
all electric
electric service lighting,
for lighting,
service for
fans
fans andand heating
heating reqUIred
required by by the consumer," itit was
the consumer," held that
was,held defendant
the defendant
that the
was
was bound
bound toto supply
supply the
the promised
promised service
service to
to the
the plaintiff, an assignee
plaintiff, an occupying
assignee occupying
the
the premises.
premises. LeaderLeader Co.
Co. v.v. Little Rock R.L&&E.
Little Rock Co., 120
E. Co., 12o Ark. 221, 179
Ark. 221, 179 S. W.
S. W.
358
358 (1915). There was
(xgi5). There was aa similar
similar holding
holding inin Tolhurst Associated Port.
Tolhurst v.v. Associated Cem.
Port. Cem.
Mfrs;,
Mfrs., [1903].A. C. 414.
[r9o3] A. C.414- .

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220
220 UNIVERSITY OF
UNIVERSITY OFPENNSYLVANIA
PENNSYLVANIA LAW
LAW REVIEW
REVIEW
kind of
kind of aa case
case than
than in in any
any other
other assignment.
assignment. The The social
social service
service
rendered
rendered by bythe
the assignability
assignability of of rights
rights so so far
far overweighs
overweighs the thedis-
dis-
advantage to the debtor incidental to a change
advantage to the debtor incidental to a change in creditors that in creditors that
the latter
the latter isis disregarded.
disregarded. In In no
no case
case however,
however, isis thethe actual
actual serv-
serv-
ice required
ice required of of AA changed
changed by by the
the assignment.
assignment.
4. CC wishes
4. wishes thatthat hishis son
son BB shall
shall have
have an an ample
ample supply
supply of of
coal, but
coal, but that
that BB shall
shall have
have no no legal
legal right.
right. C C therefore
therefore contracts
contracts
with A
with 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
coal, the primary right to delivery
coal, the primary right to delivery and the and the secondary
secondary right
right toto the
the
value of
value of the
the coal
coal inin case
case of of breach
breach to to be
be inin C C alone.
alone. This
This creates
creates
in C
in C exactly
exactly thethe same
same rightright that
that was
was produced
produced by by the
the assignment
assignment
in case
in case 2. 2. Further,
Further, C's C's right
right that A A shall
shall supply
supply B B with
with coal
coal is is
assignable by C. On
assignable by C. On C's death his C's death his right would pass to
would pass to his per-his per-
sonal representative.
sonal representative. This This in in itself shows
shows that there is is nothing
nothing
in the
in the nature
nature of of aa right
right that
that A A shall
shall serve or supplysupply B to make it it
22
non-assignable.
non-assignable. 22
In almost
In almost allall cases
cases where
where aa "contract"
"contract" is said to be non-as non-as-
signable because it is
signable because it is "personal," "personal," what is meant is not that the
contractor's right
contractor's right is is not
not assignable
assignable but that the performance
performance re re-
quired
quired by by his
his duty
duty is is aa personal
personal performance
performance and that an attempt
to perform by
to perform by aa substituted
substituted person person would not discharge discharge the con con-
tractor's duty. In this sense
tractor's duty. In this sense the statementthe statement is correct if a proper
proper
interpretation
interpretation of of the
the agreement
agreement shows shows that
that thethe performance
performance by by a
particular person is
particular person is required. required.
A
A second
second possible
possible correct
correct meaning
meaning is is that
that personal
personal perform-
perform-
ance
ance by
by the
the contractor
contractor is is aa condition
condition precedent
precedent to his his right to per-per-
formance by the other party, and
formance by the other party, and an assignee of an assignee of that right
right will
' It should be observed that the contracts between C and A in cases 3 and
44 might.. should be observed that the contracts between C and A in cases 3 and
Ithave
might
BB would have been
been ofof aa very
very different
different sort.
sort. They
They might
might have
have been
been made
made so so that
that
would be
be aa donee-beneficiary
donee-beneficiary in
in each
each case.
case. IfIf soso made, in in nearly
nearly allall juris-
juris-
dictions
dictions there
there would
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 rightright 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
that was assigned in
in cases
cases iI and
and 2.2. NoNo doubt,
doubt, also,
also, the
the right
right ofof BB (the
(the donee-
donee-
beneficiary)
beneficiary) could
could be be assigned;
assigned; but but BB was
was not
not aa donee-beneficiary
donee-beneficiary in in any
any ofof the
the
four cases
fourservices put--such
cases put-such was was notnot inin 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; onon performance
performance of of the
the
service
service or delivery
or delivery of of the
the coal
coal A A could
could maintain
maintain an an action
action ofof debt
debt against
against C C
for
for the
the price,
price, and
and on
on breach
breach by by A A the
the sole
sole right
right toto damages
damages would
would be be in
in C.C.
The point
The pointexactlymade is that however
made is that however unusual unusual aa result
result may
may be be reached
reached by by anan as-as-
signment,
signment, exactly the the same
same result
result maymay 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 inin either
either case.
case.

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ASSIGNMENT OF CONTRACT RIGHTS
ASSIGNMENT OF 221

fail in case
case of non-fulfilment
non-fulfilment of this condition. In this case, as
in the preceding performance cannot be
preceding one, performance delegated. 2233 If
be delegated. If it
it
should be meant that the assignee of the right would fail even
though the contracting assignor himself performs
performs as originally
agreed, thus fulfilling the condition precedent, the statement
condition precedent, statement is
entirely erroneous. '
correct meaning is that in a bilateral
A third possible correct bilateral con-
both 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 con-
perfonned by the con-
tract are coupled with obligations to be performed
confidence that it
tractor and involve such a relation of personal confidence
must have been intended that the rights should
should be exercised 24
be exercised 24
and the obligations performed by him alone, the contract, includ-
obligations performed includ-

performance due was held to be personal and


so In the following cases the performance
not delegable to another person in such manner manner that his performance
performance would
discharge the assignor's duty or fulfil a condition precedent to the as-
either discharge as-
Wooster v. Crane, 73 N. J.
compensation; Wooster
signor's right to compensation; J. Eq.
Eq. 22, i66 At!.
22, 166 AtI.
Io93 (i9o7),
1093 (1907), (services Callaghan & Co.,
publisher); Foster v. Callaghan
(services as printer and publisher);
(igi8), (same);
248 Fed. 944 (1918), Abstract Co. v. Beechley, 124 Iowa
Linn Co. Abstract
(same); Linn Iowa
146, 99 N. W.702
W. 702 (1904),
(9o4), (services titles) ; Corson
(services as abstractor of titles) Corson v. Lewis,
77 Neb. 446, 109 iog N. W. 735 (19o6), (services as attorney at law); N. Y.
(1906), (services
Bank Note Co. v. Hamilton Bank Note Co., i8o 180 N.
N. Y. Y. 280, 73 N. E. 48
(services as selling agent) ; Paige v. Faure, 229 N. Y. II4,
(i9o5), (services
(1905), '14, 129 N. E.
129 N.
(192o), (same);
(1920), Barber Agency Co. v. Co-op. Barrel
(same); Barber Barrel Co., 133 Minn.Minn. 207, 158.i58.
W.38
N. W. 38 (1916), (same); New England Cabinet
(i916), (same); Cabinet Works v. v. Morris,
Morris, 226 Mass.
115 N. E. 315 (1917),
246, II5 (services in designing
(1917), (services designing and installing druggists'
fixtures) ; Deaton v. Lawson, 40 Wash. 486, 82 Pac. 879 (1905),
fixtures); (services as
(i9o5), (services
Thomas-Bonner Co. v. Hooven, 284 Fed. 386 (1922),
physician);; Thomas-Bonner
physician) (sales agency
(1922), (sales
contract) ; Beard v. Beard, 254 S.
contract) S. W. 430, 2002oo Ky. 4 (1923), (services in giv-
(1923), (services
ing support and a home for a mother with her son). son).
performance due was held not to be personal;
In the following cases the .performance personal;
performance by the substitute to whom the assignor delegated
the performance delegated it was held held
to discharge the duty of the assignor and to fulfil the condition precedent precedent to to
assignee: Atlantic &
the right assigned to the assignee: & N. C. R. Co. v. Atlantic Co., 147 147
N. C. 368, 6i (iqo8), (delivery
61 S. E. 185 (1908), cordwood); Browne
(delivery of cordwood); Browne & & Co. v.
Sharkey Co., 58 Or. 480, lIS ii5 Pa. 156 (igii),
(19II), (printing booklets) ;
(printing advertising booklets)
Galey v. Mellon, 172 i72 Pa. 443, 133
133 AtI.
Atl. 56o
560 (x896), wells) ; Overby
(x896), (drilling oil wells) Overby
v. Mona Trust, 240 S. W. 581 (Tex., 1922), (same); Devlin v. Mayor, etc.,
(Tex., 1922),
of N. Y., 63 N. Y. 8, 23 N. Y. Supp. 891 (1875), (cleaning
Bgl (1875), streets).
(cleaning city streets).
"In
Sf In its proper sense, a "right" is a claim to certain conduct conduct by anotTlcr
another
person, enforced by society. It
person, It ,is evident that, in this sense, the possessor
is evident possessor
of a right never "exercises" it. It
never "exercises" It is always the other party, the one one owing
owing
the correlative duty, who is to perform or "exercise.""exercise." The form of language
used shows that the court was thinking of performance performance by the contractor who
hardly at all of that contractor's right to performance
assigns, and hardly performance by an-
other. .

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m
222 UNIVERSITY OF PENNSYLVANIA
UNIVERSITY PENNSYLVANIA LAW
LAW REVIEW
REVIEW

ing both
ing both his
his rights
rights andand his
his obligations
obligations cannot assigned." 25
cannot be assigned." 25
As has
As has been seen previously, aa legal
been seen cannot be
legal duty cannot escaped by
be escaped by
assignment; and, as has just been
assignment; been said, personal perform-
said, a truly personal perform-
ance cannot
ance cannot be delegated.
be delegated.
It is sometimes
It sometimes said said that where the contract
where the makes it the
contract makes the
duty of
duty of one
one party
party thereto
thereto to render a personal
to render service, special
personal service, special
trust and confidence
trust confidence beingbeing reposed assignment isis
valid assignment
reposed in him, a valid
impossible "as long
impossible long as suchsuch contract C?Cecutory on the part of
contract is executory of
party in whom such
the party
the confidence is
trust and confidence
such trust is reposed."
reposed." 2626
While this is correct
While this is correct if the assignment is meant
assignment is meant to include
include both
both
duties and
duties and rights, it is not
not correct meant to say that a right
correct if it is meant right
cannot assigned as long as a duty of the assignor, requiring
cannot be assigned requiring
personal performance
his personal performance remainsremains executory. The assignor's
assignor's
right
right is assignable
assignable in spite
spite of the ~rsonal
personal character
character of the per-
the
formance he is is still under render; but if it is a right that
under a duty to render;
conditional upon some personal
was conditional
was performance by the assignor,
personal performance assignor,
remains so conditional after the assignee gets the right by as-
it remains
signment.2217 Thus, a school teacher wages to be-
teacher can assign his wages

.. Delaware Co. v. Diebold Safe &


=Delaware 133 U. S.
& Lock Co., 133 (189o).
S. 473, 488 (1890).
This was quoted in Burck v. Taylor, 152 (1893), by Brewer,
152 U. S. 634 (1893), I., who
Brewer, /.,
added: "the
"the contr&ctor transferred an interest in it to the
contractor could never have transferred
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
to take part" show that Brewer also was thinking thinking of the performance
performance due
performance by a
contractor who was the assignor, and meant that performance
from the contractor
substituted party would not have fulfilled a condition precedent to the right
substituted
to payment. Judge Jackson, in a dissenting opinion, distinguishes more clearly clearly
between
between performance of duty and the enforcement enforcement of right against another
"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 au-
thority that holds that where a firm is a contractor to do certaincertain work a mem-
ber of the firm cannot
cannot assign or transfer his share of the profits to arise there-
from?" The case is no doubt well decided for the reason that the the defendant, a
second assignee, had fully performed the building contract under a novation novation
made with the State.
_PAGE,
sa PAGE, CONMACTS, (2d
CONTRACTS, (2d ed.),
ed.), 2248.
2248.
American Lith. Co. v.
"American
It 103 N. E. 909
v. Ziegler, 216 Mass. 287, 103 (1x14). In
909 (19i4). In
Montgomery v. 153 Calif. 509, 96 Pac. 305
v. DePicot, 153 (igo8), the vendee of land
3o5 (1908),
on credit tendered his ovm own notes secured by the agreed mortgage (and at the
trial the notes of the the assignor also) and got a decree for specific
specific performance
against the vendor.
vendor. In American Bon.ding
Bonding & & T.
T. Co. v.
v. Baltimore & & Ohio R.
Co., 124
124 Fed. 866 (1903),
(x9o3), the
the court said: "There
"There isis nothing in the existence
existence
of such
such counter
counter obligation to prevent an assignment by the the creditor of hishis
right after
after he
he has performed that obligation,
obligation, and
and thus perfected his right,
right, or,
or,
even before, if no no attempt is made
made to
to shift the duty of performing it from from
himself to the assignee."

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ASSIGNMENT OF
ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT RIGHTS

come due
come dueunder
under an an existing
existing contract though his
even though
contract even services are
his services are
still to
still to be rendered; but
be rendered; but the
the assignee's right will be exactly
assignee's right will be exactly the the
same as
same as the
the assignor's, conditional upon
assignor's, conditional upon proper performance of
proper performance of
the work
the work by by the
the teacher
teacher in in person.
person.
Of course,
Of course, even
even in in cases
cases where
where thethe required perfonnance isis
required performance
not "personal,"
not "personal," the the non-personal perfonnance that isis required
non-personal performance that requ1red
may be
may be aa condition
condition precedent
precedent to to the right to
the right payment contracted
to payment contracted
for in
for in return.
return. In In such
such cases
cases the
the. right before ful-
assignable before
right isis assignable ful-
fillment of the condition
fillment of the condition precedent;
precedent; and
and the
the fact
fact that
that fulfillment
fulfillment
of this
of this condition
condition is is delegated
delegated toto the assignee of
the assignee of the to pay-
right to
the right pay-
28
ment does
ment does not
not in way affect
any way
in any the validity of the assignment.
affect the validity of the assignment. 28
Thus, where
Thus, where the the duty
duty to paypay for coal is
for coal conditional on
is conditional on certain
certain
instalment deliveries
instalment deliveries being
being made, the
the making
making of
of these
these deliveries
deliveries
condition precedent
is a condition precedent to the the seller's payment by
right to payment
seller's right by the
buyer; but
buyer; but the
the making
making of of these deliveries is
these deliveries sense a personal
is in no sense personal
perfonnance. A
performance. delivery by
A tender of delivery assignee of
an assignee
by an of the seller's
seller's
right would fulfill the condition precedent and the
condition precedent assignee could
the assignee could
then enforce
then enforce the right against buy~.
against the buyer.
An attempt by the assignor to assign both his right and his his
It been supposed
It has been supposed that the right was too personal to be be assigned in Amer-Amer-
ican Smelting & & R. Co. v. Belden
Belden Min. Co., Co., 127 U. S. 379 (1888).(1888). The troubletrouble
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
continued readiness to perform in person. Had he fulfilled this condi-
upon his continued
tion, the assignee should should have won the suit. The right to delivery was not non-
The right
assignable.
..="In
"In principle it would not impair impair thethe rights of the assignee, or destroy
the assignable
assignable quality of of the contract or claim, that the assignee, as
claim, that as between
himself and and the assignor,
assignor, has assumed
assumed some duty in performing the condi-
tions precedent to to aa perfected cause of
perfected cause of action, or or is made the agent or sub-
stitute of
stitute of the assignor
assignor in in the
the performance
performance of contract. If
the contract.
of the If the service to
the service to be
rendered or
rendered or the condition
condition to to be
be performed
performed is necessarily personal, and
is not necessarily and such
as
as can
can only
only with
with due
due regard to to the intent of
the intent of the parties, and
the parties, the rights of
and the the
of the
adverse
adverse party,
party, be rendered or
be rendered or performed
performed by the original
by the contracting party, and
original contracting and
the latter has not
the latter not disqualified
disqualified himself
himself fromfrom the performance of
the performance contract,
the contract,
of the
the
the mere
mere factfact that
that the
the individual
individual representing
representing and and acting for him
acting for assignee,
is the assignee,
him is
and
and notnot the
the mere agent or
mere agent or servant,
servant, will
will not operate as
not operate rescission of,
as aa rescission of, or con-
or con-
stitute
stitute aa cause
cause for terminating the
for terminating the contract. Whether the
contract. Whether the agent performing
for performing
agent for
the
the contract
contract actsacts under
under aa naked power, or
naked power, or aa power with an
coupled with
power coupled interest,
an interest,
cannot
cannot affect
affect the character or
the character vary the
or vary the effect
effect ofof the delegation of
the delegation power by
of power by
the
the original
original contractor.
contractor. Hackley,
Hackley, the the original
original contractor, was at
contractor, was at no dis-
time dis-
no time
charged
charged from from hishis obligations
obligations to to the
the city,
city, nor was he
nor was for the
disqualified for
he disqualified per-
the per-
formance of
formance of the
the contract,
contract, but was at
but was at all
all times
times in position to
in aa position perform his
to perform part
his part
of
of this
this agreement."
agreement." Devlin Devlin v. v. Mayor,
Mayor, etc., of N.
etc., of N. Y.Y. 63 N. Y.
63 N. 23 N.
Y. 8,8, 23 N. Y.Y.
Supp. 891
Supp. 891 (1875).
(1875). .

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224
224 UNIVERSITY OF
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duty under
duty under aa bilateral
bilateral contract will sometimes be be interpreted as
aa repudiation of of his duty,
duty, particularly where the the performance
required by
required by the duty
duty is personal to to the
the assignor and not possible
of delegation.
of delegation. ThisThis will prevent any enforcement
enforcement of thethe right
right
by the assignee thereof, 29
by the assignee thereof,29 unless the right is wholly wholly independent
independent
of the
of the duty
duty and not conditional upon performance or readiness
to perform.
to
A contract
A contract right is hardly ever made non-assignable
non-assignable by the
fact that
that it is conditional 80 80 or is for some other reason not en-
forceable until aa future date. A A right to money not yet due can can
be assigned.
be assigned. A right to the payment of money to become due on
condition of services yet to be rendered 31
condition 81 and on condition that
the obligee does
the obligee does not not drink intoxicants is an assignable right. The
right of the assignee
right of the assignee is, of course, subject to the same conditions
as was the right of the assignor.
The power
The power of of assignment may exist before all of the facts
necessary to the
necessary to the enforceability of the right exist, as appears in
the preceding
the preceding paragraph;
paragraph; but at least so~e some of the operative facts
must exist.
must exist. If A, expecting that he will thereafter make a loan loan
to B,
to B, assigns
assigns to C his right to repayment, C gets no right against against
B
B atat the
the time
time of the assignment
of the assignment because A A had none to assign.
The same is true
The same is true even even though B had asked for such a loan. There

"See
... Crane Ice
See Crane Ice Cream
Cream Co. Co. v.v. Terminal
Terminal Freezing Co., Co., 128 AUt.
AU. 280, 285
(Md., 1925)
(Md., S925);American Smelting
; American Smelting & & R. Co.Co. v. Belden Min. Co., .supra;
v. Belden supra; ANSON,
ANSON,
CONTRACTS (Corbin's
CONTRACTS (Corbin's ed. 1924), 303,
ed. 1924), 303, n. 2.
Where aa party
Where party has obtained aa rescission
has obtained rescission ofof his duties under
his duties under a bilateral
bilateral con-
tract,
tract, his his rights
rights dependent
dependent upon
upon thethe fulfilment
fulfilment ofof such duties
duties will
win normally be be
rescinded
rescinded also also by by implication.
implication. In In such
such case, by aa separate
case, by separate assignment of the
rights the assignee gets nothing. Tarr
('9,s).the assignee gets nothing.
rights Tarr v. Veasey,
Veasey, 125 Md. Md. 199, 93-Atl. 428
i99, 93AU.
(19 15). .
.. The
The only
only exception
exception to the general
to the general rule seems to be in the case of a right right
created
created by by an
an aleatory contract where
aleatory contract where thethe promisor's
promisor's dutyduty of performing
performing is is
conditional upon an uncertain
conditional upon an uncertain event and theevent and the assignment
assignment to a new party party might
considerably increase the probability
considerably increase the probability of of the happening
happening of this this event. ForFor this
reason
reason the the right
right of of an
an insured
insured under
under aa policy
policy of
of fire
fire insurance
insurance has been been held
held
not assignable.
not assignable. VANCE, INSURANCE, 50. In
VANCE, INsURANCE, 50. In such a case, an assignment
assignment of the the
right cannot be made without changing
right cannot be made without changing materially materially the conditions
conditions andand extent
extent ofof
the correlative
correlative duty.
. 11
' It has been held
It has been held that that such
such anan assignment
as~ignment remains
remains effective
effective even
even though
though
the
the assignor
assignor is is discharged
discharged in in bankruptcy
bankruptcy after the the assignment
assignment but but before
before the
wages
wages are are earned.
earned. Citizens
Citizens Loan
Loan Assn.
Assn. v.v. Boston
Boston & & M.M. 1.
R. R.,
R., I96
196 Mass.
Mass. 528.
528,
82 N.
82 N. E.
E. 696 (1907); Mallin
(i9o7); Mallin v. v. Wenham,
Wenham, 209 209 Ill. 2,52, 7o
III. 252, 70 N. E. 564 564 (1904).
(1904).
Contra:
Contra: LeitchLeitch v. v. Northern
Northern Pac.
Pac. R.,
R., 95
95 Mimn.
Minn. 35, IO3 N.
35, 103 N. W. 704 (1905);
W. 704 (1905); Hupp
Hupp
v.
v. Union
Union Pac. Pac. R.,R., 99
99 Neb.
Neb. 654,
654, 157
157 N.
N. W.W. 343
343 (1916).
(1916).

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ASSIGNMENT OF CONTRACT
ASSIGNMENT OF CONTRACT RIGHTS 225

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


assignment; accept-
ance 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
C.8822 There seems to be nothing in the interests
interests of A and "B-B-
the assignor and the debtor--to
debtor-to prevent such a result; but in giv-
ing effect to such an assignment the interests of A's creditors
should be protected.
protected. Assignments in advance
advance of the creation
creation of
of
the right assigned
assigned may easily be used in fraud of creditors.
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 as-
signment is against
against the public interest. There are some statutes
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
been held non-assignable.
non-assignable.88
88

PROHIBITION ASSIGNMENT.
PROHIBITION OF ASSIGNMENT.

The parties a contract


parties to a' contract may themselves agree
agree that a right
created
created thereby shall npt
not be assignable. It may be regarded
regarded as
doubtful
doubtful whether
whether a mere oral agreement
agreement to this effect would in-
validate a subsequent assignment to an assignee who had no no-
tice of the agreement. But a provision of this sort in a written
contract
contract may properly be regarded as notice to any assignee
assignee of a
right based on that contract. There are many cases wherewhere 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 en-
force the right. Thus where
where an employee's
employee's time pay check was

' Field v,
"'Field v. Mayor
Mayor ofof N.
N. Y.,
Y., 6-N. (1852); Tailby v. Official
i79 (1852);
6'N. Y. 179 Receiver,
Official Receiver,
13 Apll. Cas. 523 (1888).
App. Cas. (1888).
"Stewart
Stewart v. Sample,
Sample, 168 Ala. 270,
270, 53 So.
So. 182
18a (1910);
(igio) ; Anderson v. Bran-
strom, 173
strom, 173 Mich. 39 N.
I57, 139
Mich. 157, N. W. 40 (1912);
W.40 (1912); Roesch
Roesch v. Worthen Co.,
v. Worthen Co., 95 Ark.
95 Ark.
482, S. W. 55!
I3o S.
482,130 551 (I91o).
(1910). f .

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226
226 UNIVERSITY OF
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PENNSYLVANIA LAW
LAW REVIEW

its face
on its face made payable
payable only
only to the
the named
named payee and declareddeclared
non-transferable, and and where
where on the
the detached
detached stub of of such
such pay
pay
check the employee
employee had signed an agreement that he he would pre-
pre-
sent thethe check in in person and would not transfer
transfer it, it, it
it was held
held
that an assignee
assignee got nono enforceable right.3344 The like has
enforceable right. has been
held in
held in several
several cases
cases where trading
trading stamps have been marked marked
on
on their face "not transferable"
face "not transferable." 3~85 This has been assumed to be
be
as a matter
matter ofof course in many cases. 3 6
36
the rule as
In one
In one case,
case, however,
however, the United States SupremeSupreme Court has
said that aa prohibition against assignment contained in aa writ- writ-
ten contract
ten contract waswas ineffective, likening the contract right to per- per-.
sonal chattels.37 87 There has been aa strong tendency to hold that
goods and chattels cannot be made inalienable.
goods inalienable According
According to
expressions used by the Supreme Court, not only are already exist-
expressions
ing contract
ing contract rights not inalienable; they cannot even be made in-
alienable ab
alienable ab initio
initio by the party who is their original creator.

.."Barringer
Barringer v. v. Bes
Bes LineLine Const.
Const. Co.,
Co., 23 131, 99 Pac. 775 (9o9).
23 Okla. 131, (1909). In
accord: Joint
accord: Joint School
School Dist. Dist. v.v. Marathon
Marathon Bank, 204 204 N. W. 471 (Wis., 1925); 1925);
Bonds-Foster L. Co. v. No.
Bonds-Foster L. Co. v. No. Pac. R. Co., Pac. R. Co., 5353 Wash.
Wash. 302, (1o9) ;
1o Pac. 877 (1909);
302, 101
State v. Kent,
State v. Kent, 98 98 Mo.
Mo. App.App. 281,
281, 71
7, S.
S. W.W. 1066
io66 (1902);
(ixo2); Tabler & & Co. v.v. Shef-
field Coal
field Coal Co.,
Co., 7979 Ala.
Ala. 377377 (1885). Contra: Aldridge
(1885). Contra: Aldridge L. Co. v. v. Graves, 131
S. W. 846 (ipxo);
S. W. 846 (1910); Bewick Lumber Co.
Bewick Lumber Co. v. v. Hall,
Hall, 94 94 Ga. 539, 21 21 S. E. 154154
(1894), relying
(1894), relying on on aa statute
statute declaring
declaring that
that choses
choses inin action
action shall be assignable.
But Oklahoma had a similar
But Oklahoma had a similar statute, and the statute, and the court rightly said
court rightly said that
that it was
was only
only
for
for the purpose of
the purpose nullifying the
of nullifying the old common law rule against assignment,
old common assignment, not
for the purpose of invalidating
for the purpose of invalidating express agreements that the contract right shall
express agreements
not be assignable.
assignable
.."Sperry
Sperry & & Hutchinson
Hutchinson Co. Co. v. Siegel,
Siegel, Cooper & Co., 225 Ill. App. 54o
Co., 225 540
1922) ;; holding
((1922) holding that that thethe assignee
assignee gotgot no primary
primary right by delivery
delivery with intent
to assign, and also that
to assign, and also that such delivery such delivery did not assign
assign thethe secondary right to
damages for
damages for anticipatory
anticipatory breach breach in absence
absence of evidence
evidence to show intent to do
this. In
this. In accord:
accord: SperrySperry & & Hutchinson
Hutchinson Co. Co. v. Weber & & Co., 161 161 Fed. 219219
(Igo8).
(1908). Cf. Ct. Same
Same v. v. Fenster,
Fenster, 219219 Fed.
Fed. 755755 (I915),
(1915), saying:
saying: "The
"The right
right to re-
deem the stamps is a property right transferable
deem the stamps is a property right transferable by possession by possession while the license
license
to use them
to use them forfor advertising
advertising purposes
purposes is is not
not transferable." The prqvision against
prQvision against
assignment
assignment is not
not discussed.
NSee
.. See discussion
discussion in in the
the excellent case of
excellent case American Bonding
of American Bonding & & T.T. Co.
Co. v.
v.
Baltimore &
Baltimore & Ohio R. Ohio Co., 124
R. Co., 124 Fed.
Fed. 866 (i9o3).
(1903).
'Portuguese Bank v.
IT Portuguese Bank v. Welles,
Welles, 242242 U.
U. S. S. 7 (1916).
(1916). The supposed
supposed policy on on
which
which this this statement
statement was was based
based cannot
cannot be said to
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 bebe 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 hehe isis willing
willing to to abandon
abandon his his immunity,
immunity, the the assignee
assignee maymay 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, 52 N.
277, 52 N. Y. Supp. 872 872
(1895).
(1895).

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ASSIGNMENT CONTRACT RIGHTS
ASSIGNMENT OF CONTRACT 227

There are
There are some
some cases
cases that definitely hold
that definitely prohibition against
hold aa prohibition against
33s
8
assigmnent of
assignment a right to be invalid.
of right to be invalid. '
Express provisions
Express assigmnent are
against assignment
provisions against are usually found in
usually found in
bilateral contracts
bilateral contracts and
and are some such
are in some such generaf words as "this
generaf words "this
contract shall
contract shall not
not be
be assignable."
assignable." In In the paypay check and trading
check and trading
stamp cases
stamp this was not the
cases this the case, for there
there the contracts were
the contracts were
unilateral and
unilateral and the prohibition was
the prohibition clearly directed
was clearly against the
directed against
holder of
holder of the right alone'
the right Such a general
alone: Such prohibition in
general prohibition in a bi-
lateral contract
lateral contract is much more likely
much more likely to to be directed against at-
directed against
tempts to
tempts to delegate performance of a duty by the promisor
delegate performance promisor rather
rather
assigmnent of a right by
against assignment
than against by the promisee. For For such a
always be held
purpose they should always
limited purpose
limited valid; but
held valid; should
but they should
be interpreted
not be assigmnent of contract rights. S99
interpreted to forbid assignment of contract rights."

AsSIGNMENT DoES
ASSIGNMENT NOT AFFECT PERFORMANCE,
DOES NOT PERFORMANCE,

action or forbearance, that


The performance, whether action
The that an
obligor is under a duty to render cannot be changed in any mate-
obligor
asSigmnent of the right by the obligee. It must be
rial way by assignment
admitted that it is some disadvantage
disadvantage to a'debtor
a debtor that his creditor
creditor

The Iowa Code, 9452, provides: 'Wten


"The ''When byby the terms of an instrument
instrument
its assignment is prohibited, an assignment nevertheless be valid."
assignment thereof shall nevertheless valid."
provision in a policy
A provision insurance that it shall not be assigned before
policy of fire insurance before
because the risk is not the same with a new owner. But a pro-
loss is valid, because
policy shall be void if assigned
vision that the policy after loss is not valid, since
assigned after since
the risk is not affected by.such an assignment. Spare v. Home Mut. Ins. Co.,
17 Fed. 568 (1883);
(1883); Pennebaker Tomlinson, Ii Tenn. Ch. 5gB
Pennebaker v. Tomlinson, (1874), (sem-
598 (1874), (sem-
ble) ; Nease v. Insurance Co., 32 W. Va. 283, 99 S. Eo E. 233 (i889), (semble) ;
(Il!8g), (semble);
May, Insurance (3d ed.) 386. Where a bank issued a pass book expressly
(3d ed.)
thereafter in the bank-
subject to all rules and regulations that might be posted thereafter bank-
ing room, and later the bank posted a rule that money was payable only to to
depositor in per~on,
the depositor person, this rule was held void as against an aSsignee assignee of the
entire deposit. Bank of U. S. S. v. Public Bank, 151 N. Y. Supp. 94 (1915). (iiS).
" In Lockerby v. v. Amon, 64 Wash. 24, 1i6 u6 Pac. 463 (19U),
(i91i), a contract for
the sale of land provided that '"no "no assignment of this agreement shall be valid
without the consent of Amon." It argued that this was inserted
It was vigorously argued
payment and that on tender of payment in full by the as-
in order to secure payment
signee Amon
Anon must convey to him; but the the court held otherwise. In In accord
accord is
Omaha v. Oil Co., 55 Neb. 337, 75 N. W. 859 (18gB).
v. Standard Oil (1898). In a note,
35 L. R. A. (N. S.) S.) 1064,
io64, it is said that the against
the great weight of authority is against
this decision. See Cheney v. v. Bilby, 7474 Fed. (1896); Wagner v.
Fed. 52 (18g6); v. Cheney,
16
x6 Neb. 202, 20 2o N. W. 222 (1884); Johnson v. v. Eklund, 72 Minn. 195,
72 Minn. 195, 75 N.
(1898). In Butler v.
W. 14 (18gB). v. San
San Francisco
Francisco Gas & & E. Co., 168i68 Calif. 32, the
court
court said: "The contract expressly providedprovided that no no assignment
assignment of should
of it should
be made by Butler (the (the building
building contractor) portion of the work
contractor) nor any portion
sublet
sublet byby him." The court court held that this prohibition went only
that this only to the per-
formance of the work and and did not
not apply to the right to to payment.

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228
228 UNIVERSITY OF
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LAW REVIEW

has power
has power to to substitute
substitute aa new new creditor without the the debtor's
debtor's con-
con-
sent.
sent. It would
would be a
a much greater disadvantage, without
greater disadvantage, without any par-
ticular gain
ticular gain to thethe community,
community, to give the the creditor
creditor power to to
change the
change the perfonnance
performance due due from
from thethe debtor.
debtor. \VeWe have seenseeh
above that
above that if B hashas aa right
right that A A shall
shall serve
serve as his
his valet, he can-
can-
not by assignment
not by assignment make it A's duty to
it A's duty serve Cserve C as valet; also that
also
if B
if B has
has aa right
right that A A shall supply his needs needs for coal he cannot
make it
make it A's duty to supply the needs of c.
A's duty 40
C.40 In like manner, if
AA owes
owes B B aa debt
debt ofof $100
$ioo payable
payable at the First National Bank on on
May i, B can
May I, B can assign assign his right to the Second National Bank; but
he cannot
he cannot make it it A's duty to pay at the Second Bank Bank or on any
other day than
other day than May 1. May i. If A sells his stock of hardware, busi-
ness, and
ness, and good
good will to B and promises to forbear from competi- competi-
tion for
tion for five
five years,
years, B B can
can assign his right along with the business
to C;
to C; but but hehe cannot
cannot by by such
such assignment make it A's duty to
forbear to solicit hardware business in any greater territory than
the business
the business covered
covered previously, even though C's C's business may be
more widely extended.
In
In certain classes of
certain classes of cases
cases and to a verylimitedextent,
very limitedextent, it seems
that the
that the actual performance
perfonnance by the obligor can be changed
changed by an
assignment. Thus, if
assignment. Thus, no particular particular place is specified
specified for the pay-
ment
ment of of aa debt,
debt, the
the debtor
debtor must search for his creditor and pay
him
him in person. If the creditor should assign his right, it seems
in person.
that the debtor must now seek the assignee in order order to make pay-
ment. This might
ment. This might require require the assignee
assignee to pay at a much more
distant place.
distant place. There There is an equal
equal possibility, however, that it is
the
the original obligee and
original obligee and not the assignee who goes to the distant distant
place;
place; and and in in such case the assignment
such case assignment would
would save trouble. As
business
business is now conducted,
conducted, it is not difficult to pay at a distant distant
".. Crane Cream Co. v. Terminal
Crane Ice Cream Terminal Freezing
Freezing Co., 128
x28 Ati. 280 (Md.,
Atl. 28o (Md., 1925),
1935),
(one having
(one having aa right
right toto all
all the
the ice
ice he
he may
may use in his
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
its business)
business) ;; Frankfort
Frankfort & C. R.
& C. R. Co. v. Jackson, 153 534, 156 S. W. io3
153 Ky. 534, 103
(1913); Kemp
(1913); Kemp v.v. Baerselman, [1906] 22 K. B.
Baerselman, [i9o6] B. 6o4,
604. (B
(B agreed
agreed to supply K
with "all fresh
with "all fresh eggs
eggs that
that he shall require
require for manufacturing
manufacturing purposes
purposes for one
year);; Lansden
year) Lansden v. McCarthy, 45
v. McCarthy, 45 Mo. 106io6 (186g), ("all fresh beef
(1869), ("all beef . .. .. that
might
might be be ordered
ordered oror required
required byby B.
B. && K. for the useuse 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. R.
(R. R. contracted
contracted to
to haul
haul all
all lumber
lumber cut
cut by
by H.
H. &
& S.). ct.
S.). Cf. Leader
Leader Co. v. Little
Rock R.
Rock R. &
& E.
E. Co., 120 Ark.
Co., 12o Ark. 221, 179 S.
221, 179 S. W.
W. 358 (1915) ; Tolhurst
358 (xg5) Tolhurst v. Associated
Associated
Port.
Port. Cem.
Cem. Mfrs., [1903] A.
Mfrs., [x9o3] A. C. 414.
C.414-

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ASSIGNMENT OF
ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT RIGHTS

place through
place through the thebanks
banksor orother
other established agencies. The
established agencies. The pos-pos-
sible added burden
sible added burden put
put upon
upon the
the debtor
debtor by
by the
the assignment
assignment is
is sel-
sel-
domgreat,
dom and thus
great, and thus farfar itit has
has been disregarded by the courts inin
been disregarded by the courts
theinterest
the interestof of the business community.
thebusiness community.
Wherever the
Wherever the promised performance consists
promised performance partly inin the
consists partly the
creation of new
creation of new legal legal relations
relations in
in the
the obligee-as
obligee-as in
in the
the case
case of
of aa
sale of goods-it
saleof goods-it may may be said that
be said that the
the assignment causes the
assignment causes the per- per-
formance to
formance to differ
differ in in that
that these
these legal must now
relations must
legal relations now be be cre-
cre-
ated in
ated in aa different
different party.
party. This This difference immaterial to
difference isis immaterial to the
the
09
44oa
debtor.
debtor.
In cases
In cases where
where the performance of
the performance the obligor
of the not changed
obligor isis not changed
in any
in any way
way byby the
the assignment,
assignment, itit may reasonably be
may reasonably that the
said that
be said the
right
right of
of the
the assignee
assignee is
is the
the same
same right
right as
as that
that previously
previously held
held by
by
the assignor; but to the
the assignor; but to the extent extent that
that the
the right
right can
can be
be and
and is
is slightly
slightly
changed by
changed by assignment,
assignment, the assignee's right
the assignee's must be
right must said to
be said to bebe aa
new right
new similar in all
pro tanto, similar
right pro ways to that
other ways
all other that previously
previously
held by thethe assignor.

DEFENSES AND "EQUITIES"


DEFENSES AND "EQUITIES"

The great difference between instruments


difference between ordinarily de-
instruments ordinarily
"negotiable" and contracts not so described is that the
scribed as "negotiable"
holder of aa negotiable instrument frequently has power to create
aa right in a transferee when he has none himself. No such power power
exists
exists in any case of.of. assignment as distinguished from negotia-
tion. An
tion. assignor
An assignee never gets -aa better right than the assignor
had. If
had. If for
for any reason
reason the assignor's claim void, voidable,
claim was void,
unenforceable, or or conditional,
conditional, so also
also is
is the claim
claim of the as-
the as-
signee. 41
4 1 If
If the
the debtor had any
any defense, counterclaim, or set-off
defense, counterclaim, or set-off

-Usually can be
' Usually itit can be made
made the the duty
duty ofof the
the obligor
obligor toto deliver into the
goods intothe
deliver goods
possession of
possession of anan assignee;
assignee; not not so,
so, however, where the
however, where delivery to
the delivery assignor
the assignor
to the
was
was to
to enable
enable him
him to to render
render aa purely
purely personal performance for
personal performance the benefit
for the the
of the
benefit of
obligor
obligor and
and delivery
delivery into
into the
the hands
hands of
of an
an assignee
assignee would
would make
make this
this impossible.
impossible.
American Smelting &
American Smelting &R. P.Co.
Co. v.v. Belden Min. Co.,
Belden Min. supra, n.
Co., supra, 27.
n. ~7.
U Thus, if
'Thus, if the the assignor's
assignor's claim was based
claim was based onon anan informal without
promise without
informal promise
sufficient right. If the assignor's
If the was
claim was
assignor's claim
sufficient consideration,
consideration, the the assignee
assignee hashas no
no right.
promised
has promised
voidable for
voidable for fraud
fraud or or infancy,
infancy, so so also
also isis the assignee's. If
the assignee's. If AA has
BB $1000,
sooo, payable
payable after
after thethe completion
completion of of specified work by
specified work and
person and
by BB inin person
only after
only after A's
As ship
ship comes
comes in, in, the
the right
right of
of any
any assignee from BB will
assignee from will be condi-
be condi-
tional
tional on
onthe completion of
the completion of the
thework
work by and on
by BB and arrival of
the arrival
on the of A's ship.
A's ship.
If the
If the defects
defects in
in the
the assignor's
assignor's right
right were
were removable
removable (e.
(e. g.,
g., by
by a ratifica-
a ratifica-
tion),
tion), they
they remain removable after
remain soso removable after assignment.
assignment.

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230
230 UNIVERSITY OF
UNIVERSITY OF PENNSYLVANIA LAW REVIEW
PENNSYLVANIA LAW REVIEW

good against
good against the assignor, it is
the assignor, also against
good also
is good the assignee,
against the
provided it
provided before notice
existed before
it existed assignment is
of the assignment
notice of received by
is received by
the debtor.42
the 42
If a first assignee
If assignee assigns to a second
assigns to assignee, any
second assignee, any
defense that the debtor
defense that debtor had against assignor is
first assignor
the first
against the is good
good
against both
against both the
the first
first and and any
assignees; and
second assignees;
and second additional de-
any additional de-
counterclaim, or set-off
fense, counterclaim, that the debtor
set-off that had against
debtor had against the the
assignee while he was in
first assignee possession of
in possession the claim, or
of the or after
after
assignment but before
second assignment
the second before notice thereof by
notice thereof by the debtor,
against the second
good against
is good second assignee.43 43
Such is
Such is the case even
the case even
though
though the
the assignee
assignee in
in question,
question, or any
any previous
previous assignee,
assignee, is a
purchaser for value without notice. A debtor
purchaser cannot by assign-
debtor cannot assign-
ment be put in in a worse
worse position except so far as
respect, except
position in any respect,
result from being
this may result indebted to a new and more pressing
being indebted pressing
creditor.
A difference must be respect to so-called
be taken, however, with respect so-called
equities." These
"latent equities."
"latent These are claimsclaims of third persons, persons
than the debtor. The rule followed by the majority of
other than
other of
"latent equity"
courts is that the "latent person does not sur-
equity" of a third person
vive an assignment to an innocent purchaser for value. 44
innocent purchaser 44 Thus
if the assignor is a mere trustee for X, but he holds a document document
reasonably leads the assignee
that reasonably assignee to believe that the assignor is
unlimited owner and to pay value value to him for the assignment, the
claims of X are inferior to those of the assignee. Again, if a
claims
" WILLISTON, CONTRAcrs, 433.
"WILUSTON, CONTRACTS, 433
"The was well
point was
.. The point argued in
well argued Metzgar v.
in Metzgar Rawle 227
Metzgar, 1I Rawle
v. Metzgar, (Pa.,
227 (Pa.,
"Notice puts an end to all privity between
1829). Counsel said: "Notice
1829). assignor
between the assignor
and obligor, and the assignee becomesbecomes 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
action no more negotiable than it was in the hands of the obligee. If If he
transfers it, he does so liable to all the equity arising from the contract be-
tween him and the obligor. If not the case, the effect of
If this be not of an assignment
assignment
agreed, Gibson, C.
negotiable." The court agreed,
would be to make the instrument negotiable." J.,
C. J.,
saying: "At the time time of the assignment, the (set-off)
the right of defalcation (set-off)
existed in in full force between the obligor and the intermediate assignee. By
the obligor By
right, then, can the latter put
what right, subsequent assignee in a more advan-
put aa subsequent
himself? In this
than he held himself?
situation than
tageous situation this state, no assignee, whether
legal or equitable, can affect to be prejudiced by want of notice; notice; it being his
duty, as established by many decisions, to sound the obligor before he parts
duty,
with hishis money, as to the amount actually due." due." In In accord
accord is Martin v. v. Rich-
Rich-
ardson, 68 N. C. 255 (1873).
ardson, (1873). (A (A owed B B on bond. B B assigned to C, C, who
at that time already owed
at owed A A on another bond. Later C
on another assigned back to B,
C assigned B,
who had had no C's debt
no notice of C's to A. Held, A has
debt to set-off against B.)
has aa set-off
.."Ames, for Value
Purchasefor
Ames, Purchase Value Without Notice, 1I HARv.
Without Notice, HAv. L. L. REv. (i886).
7,8 (1886).
REV. 7,

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ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT
ASSIGNMENT OF RIGHTS 231

creditor, the
creditor, the holder
holder of induced by
right, isis induced
of aa right, by the fraud of
the fraud of XX to
to
assign the
assign the right
right to X, and
to X, and X thereafter assigns to an innocent
X thereafter assigns to an innocent pur- pur-
chaser for value,
chaser for value, the latter isis not
thelatter affected by
not affected by the "equities" of
the "equities' of the
the
45 The debtor is not the
defrauded creditor-the first
defrauded creditor-the first assignor.
assignor.45 The debtor is not the
possessor of
possessor of these "equities." He
these "equities." have no
would have
He would sure defense
no sure defense
even as against X, the defrauder;
even as against X, the defrauder; although
although if
if he
he has
has knowledge
knowledge
of the
of the fraud
fraud he he would
would be be well
well advised
advised to interplead X
to interplead and the
X and the
defrauded creditor.
defrauded creditor. InIn such
such an interpleader the
an interpleader the latter could win
latter could win
as against
as against X, butbut not
not (by
(by the
the majority rule) as
majority rule) the inno-
against the
as against inno-
cent second
cent second assignee.
assignee. This This is the rule in the case of other
the rule in the case of other kinds kinds
of property,
of ~d there
property, and there seems
seems to to be sufficient reason
be no sufficient for apply-
reason for apply-
different rule
ing a different in the
rule in the case
case of contract rights. They, too,
of contract too, are
"property." The
:'property." reasons for
The reasons protecting an
for protecting innocent purchaser
an innocent purchaser
value are
for value are the same
same in classes of
in both classes cases and
of cases uniformity is
and uniformity is
desirable.

SuccEssivE By THE
AsSIGNMENTS BY
SUCCESSIVE ASSIGNMENTS SAME ASSIGNOR
THE SAME ASSIGNOR

Where the holder


Where successive assign-
holder of a right makes two successive
thereof to two different
ments thereof different persons.there much con-
been much
persons.there has been
flict in the solution of the problems Involved. Some of this con-
problems inrolved.
explained away. Thus, the English rule is that the
flict cannot be explained
right against the debtor belongs to that thit assignee who first gives
gives
446
6 Most of the American
notice to the debtor of his assignment.
jurisdictions refuse to follow
jurisdictions rule,47 and hold that the right
follow: this rule,47
is in the first assignee except in two classes of cases, as follows:
belohgs to the second assignee if the prior as-
i. The right belongs
I.
itself inoperative for any reason and no such reason
signment was itself

"Putnam v.
"Putnam v. Clark, N. J. Eq
29 N.].
Clark, 29 Eq 412
412 (1878), (bond and
(1878), (bond mortgage) ; Ever-
and mortgage); Ever-
sole v. Maull,
Maull, 50 5o Md.
Md. 95 (1878);
(1878) ; Ambrose v. Evans, 66
v. Evans, Calif. 74.
66 Calif. Pac. 960
74, 44 Pac. 96o
(1884),
(1884), (certificate
(certificate of Guild, 57
Contra: Cutts v. Guild,
stock). Contra:
of stock). 57 N. Y. Y. 229 (1874),
2a9 (1874),
debt); Blackman v.v. Lehman, 63 Ala. 547
(judgment debt);
(judgment 547 (1879), assigned
(bonds assigned
(i879), (bonds
by
by bailee);
bailee) ; Commercial
Commercial Bank v. Burch, 40
v. Burch, 40 III. App. 505
Ill. App. 505 (1890); Sutherland
(18o); Sutherland
v.
v. Reeve,
Reeve, 41 41 Ill. App. 295 (I~O),
App. 295 Ill. 384, 38
151 III.
(i8po), 151 38 N.N. E.E. 130 ('894). Some
130 (1894). Some
of
of the
the cases contra can
cases contra can doubtless
doubtless be reconciled
reconciled on the the ground assignor
ground that the assignor
did
did not have
have the indicia ownership.
of ownership.
indicia of
"DearIe
"Dearle v. v. Hall,
Hall, 33 Russ. Foster v.
(823) ; Foster
Russ. I1 (1823); Cockerell, 33 Cl.
v. Cockerell, 456,
F. 456,
Cl. && F.
(H.
(H. L.,L., 1835);
1835); Adamson
Adamson v. v. Paonessa,
Paonessa, 180 i57, 179
Calif. 157,
i8o Calif. Pac. 880
179 Pac. (igig).
88o (1919).
Salem Trust
d'Salem Trust Co.
Co. v.
v. Mfrs.
Mfrs. Finance
Finance Co.,
Co., 264 U. S.
264 U. S. 182
182 (1924), discussed
(1924), discussed
in 33 YALE
in 33 YALE L. L. ]. 767 (1924)
J. 767 (1924);; Muir v. Schenck,
Muir v. Hill, 228
Schenck, 33 Hill, 228 (N. Y., 1842).
(N. Y., 1842).

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a32
232 UNIVERSITY OF PENNSYLVANIA
UNIVERSITY PENNSYLVANIA LAW REVIEW

exists as to the second.


exists second. This is self-explanatory. An example is
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
2. assignee's right will be extinguished and the
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
in on aa document evidencing the existence
of the right in the assignor and48negligently left in the assignor's
possession by the the prior assignee. 48
prior assignee.
An innocent assignee for value should be protected against
a prior assignee who made it possible for the assignor to perpe-
trate a fraud. If If the prior assignee knew or ought to have known
of the existence of a document evidencing evidencing the existence of the
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 doc-
ument may be either a negotiable non-negotiable instrument.
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 char-
acter is that it must be a document document that is so customarily sur-
rendered upon payment or assignment that the inference inference of non-
payment and non-assignment
payment and non-assignment may reasonably
reasonably be drawn from its
continued possession by the assignor.
For the
For the second
second assignee
assignee to to be preferred, there must be an
element of "estoppel"
element of "estoppel" in the broad general
general use of that word.
word,.
Merely
Merely obtaining
obtaining possession of such a document document with actual
knowledge of
knowledge of an earlier assignment or without paying value in in
reliance
reliance on it will not make
make the second
second assignment superior to the
first.
first. It is believed
It is believed that
that it
it is no longer
is no longer sound to prefer
prefer the sec-

"Herman v.
"Herman v. Conn.
Conn. Mut.
Mut. L. Ins. Co.,
L. Ins. Co, 218
2x8 Mass. 181, 105
Mass. 181, ioS N. E. 45o
N. E. (1914) ;
450 (1914);
Bridge
Bridge v. same, isa
v. same, 152 Mass.
Mass. 343,
343, 25
25 N.
N. E.E. 612
62 (i8go)
(1890);; Maybin
Maybin v. v. Kirby,
Kirby, 44 Rich.
Rich.
Eq. 105 (S.
Eq. 105 (S. C., x851). The
C, 1851). The second assignee may
second assignee may also
also be
be preferred
preferred if he
he made
made
inquiry
inquiry of
of the
the debtor
debtor and
and was
was induced
induced toto become
become aa purchaser
purchaser for value by
tor value by the
the
fact
fact that
that the
the debtor
debtor had
had received
received nono notice
notice of
of aa prior
prior assignment.
assignment. SeeSee Salem
Salem
Trust Co. v. Mfrs. Finance Co.,
Trust Co. v. Mfrs. Finance Co., supra. supra.

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ASSIGNMENT CONTRACT RIGHTS
OF CONTRACT
ASSIGNMENT OF RIGHTS 233

aSsign~on
ond assignee
ond onthe
thebasis
basis of
of the ancient distinction
the ancient between "equi-
distinction between "equi-
49
able" and
able" "legal" title.
and "legal" title. 9
It has
It has also
also been said that
been said assignee isis in
second assignee
the second
that the all juris-
in all juris-
dictions preferred
dictions preferred overover the first ifif he is an innocent purchaser for
the first he is an innocent purchaser for
value and
value and gets payment, gets
gets payment, judgment, or
gets aa judgment, or enters into aa nova-
enters into nova-
tion with
with the
the debtor.
debtor}SO 50 In In these whatever right
however, whatever
cases, however,
these cases, right
tion
the second
the second assignee
assignee has has isis aa very from the
right from
different right
very different one that
the one that
the creditor purported
the creditor purported to assign to assign to
to him.
him. His
His rights
rights are
are either
either
rights 51
"property" rights
"property" "judgment" rights
or "judgment"
lSI or rights or "novation" rights,
or "novation" rights,
determined solely
determined solely by by the
the new transaction and
new transaction not by
and not the assign-
by the assign-
ment. The
ment. The assignment
assignment to to him gave him
him gave him the power to
the power to discharge
discharge
the
the debtor, as long
as long the as the debtor
debtor had
had no
no notice
notice of
of the
the first
first assign-
assign-
ment and
and nono longer. 2
iS2
power to discharge
This power
This is not
discharge not restricted restricted
ment
to the
to three methods
the three methods above named. A sealea
above named. release, an
sealed release, an accord
accord
and
and satisfaction,
satisfaction, a judgment
judgment on the
the merits
merits in
in favor of the
the debtor,
award of
and an award arbitrator would
of an arbitrator would all operate to
all operate discharge the
to discharge
debtor. 3 By
5III By a sealed release or by a judgment
sealed release judgment or award award in in
favor of the debtor, the second
favor assignee would get no rights what-
second assignee
ever. By By the other methods he would get the rights appropriate
method, but not the right of an assignee-the
to the method, assignee-the same right right
substance against the debtor
in substance debtor that the assignorassignor had.
It
It should be observed that this power to discharge the debtor debtor
is not dependent upon the second assignee's being innocent. It
second assignee's It
is exactly the same power that the guilty creditor had prior to no-
tice to the debtor. It depends upon the debtor's lack of of notice
of the first assignment and upon the fact that the debtor is jus-
tified in believing that the second assignment is aa valid one. If,
the second
however, the secondsecond assignee is not an innocent purchaser for
is
value, he he will
will have
have to to account to the first assignee for
first assignee whatever
for whatever
he gets out of the the newnew transaction
transaction whereby the the debtor is dis-

aSee
See 33 YA.E L.
33 YALE L. ].J.768
768 (1923),
(1923), Do n. 15. There is no
i5. There no res or "fund"
res or to
"fund" to
"title" can
which "title"
which exist.
can exist.
"Aus,
AllES, CASES
CASES ON TRUSTS, 328
o TRUSTS, n.
328 n.
He may
a He may keep
keep the
the money
money paid to him
paid to him in
in good
good faith
faith by
by the debtor. Rabin-
the debtor. Rabin-
owitz
owitz v.
v. People's
People's Bank,
Bank,235 235 Mass.
Mass. 102,
io2, 126
136 N. E. 425
N. E. (192o).
425 (1920).
SWnasToN, CONTRAMCS, 433.
WILLISTON, CoNTllAcrs, 433.
"Two
Two of of these,
these, of
of course,
course, are
are not
not the exercise of
the exercise "power" by
of aa "power" as-
the as-
by the
signee;
signee; nor, indeed, is
nor, indeed, is aa judgment
judgment inin favor
favor of
of .the
the assignee.
assignee.

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234 UNIVERSITY OF PENNSYLVANIA
UNIVERSITY OF PENNSYLVANIA LAW
LAW REVIEW

instances the second assignee may be


charged. Indeed in some instances be
liable in damages to the first as for a tort. In this respect, if he
knowledge of the first assignment, he is in the same position
had knowledge
creditor would be in if he should discharge the
as the guilty creditor
debtor after having assigned to an assignee.
If the debtor has notice of the first assignment, the second
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,
using a bill of interpleader
interpleader when necessary. A A voluntary pay-
ment to the second assignee would not affect the right of the prior
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-
signee would have the same "property," "judgment," or "nova-
"property," "judgment," "nova-
tion" rights against
against the debtor that he would have had if his as-
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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