A number of hatters agreed to close their shops on Sundays, and for any breach it was agreed that the offender should pay $100 to a specified charitable society. It was held that the society could not recover. The main object of the contract undoubtedly was not to benefit the plaintiff, but to enforce performance of a promise entered into by the parties solely for their own benefit by the imposition of a penalty, but on a certain contingency the promise to pay $100 was performable. If this contingency happened, there was a clear intent that the plaintiff should have the sole benefit. There seems no difficulty in having in the same contract separate promises for the benefit of different persons. The plaintiff might well have been allowed to recover as sole beneficiary of the promise sued upon.34 But nowhere would the mere fact that one not a party to a contract would be benefited by its performance give him a right.35 34 See Sloss-Sheffield S. & I. Co. v. Taylor (Ala. App.), 77 So. 79. 35 Kenfield Publishing Co. v. Baumgartner, 189 Ill. App. 413; Standard Gas Power Corp. v. New England CHAPTER XIV ASSIGNMENT OF CONTRACTS Meaning of assignment. ... Choses in action were not assignable in the early common law. Distinction between assignment of rights and assignment of duties. Enforcement of rights by power of attorney. . . 404 405 406 407 408 Inadequacy of a power of attorney to protect the assignee. 409 Other assignments of rights which are opposed to public policy. 417 Assignable bilateral contracts... 418 Personal responsibility in bilateral contracts as preventing assignment. Orders upon a debtor, unless directing payment on account of a particular debt are not assignments... 425 Whether an unconditional order or bill of exchange may ever be an assignment..... 426 Orders on a drawee to pay when he has collected.. 427 Promises to assign or to pay out of a particular fund are not assignments... Notice to the debtor as affecting the assignee's right against him. 433 ..... Notice to the debtor as affecting the assignee's right against the assignor's creditors. ... 434 Notice to the debtor as affecting the mutual rights of successive assignees.. 435 Notice to the assignee.. 436 What amounts to notice.. 437 Whether the assignee is subject to equities of third persons. A partial assignment gives the assignee no right to sue at law. 442 443 Rights of partial assignee in equity and under codes.... Right of the debtor to settle with his creditor in spite of partial assignments. 444 Implied warranties of the assignor... Procedure.... Distinction between legal and equitable rights.. § 404. Meaning of assignment. 445 446 446a 447 Much of the difficulty regarding assignment of contracts is due to different meanings which may be attached to the word assignment. A promissory note is assignable; so too is a horse. An assignment by a thief or finder of negotiable paper payable to bearer transfers a complete title to a purchaser for value in good faith. This is not true of the assignment of a horse. By the assignment of a horse, however, title to which was procured by fraud, a good title passes to such a purchaser. Even this is generally held not true of the assignment of a chose in action. If it is said then that a chose in action is assignable, probably what is generally understood is that the assignee acquires rights similar to those of the assignor, and is put in the same position as that in which the assignor stood. A trustee in bankruptcy is an assignee of whom this is true, but an ordinary assignee of a contract right is not even so completely protected as this. The rights of a trustee in bankruptcy are not subject to subsequent contingencies whereas the rights of an ordinary assignee of a chose in action are so subject. Thus, defences against the assignor, though arising subsequent to the assignment, if acquired before notice of it to the debtor are available. The assignment for value of an intangible contract right may be most accurately looked upon as creating an irrevocable legal power of attorney to enforce the assignor's right with authority to keep the proceeds when reduced to possession, coupled with an equitable ownership of the right prior to its collection.1 It is impossible, however, to avoid use of the word assignment, and all that can be done to secure clearness of thought is to point out the meaning of the word in connection with choses in action and the possibility of confusion owing to the use of the same word in other connections, where it has a wider meaning. 1 For definition of what is meant by this see infra, § 446a. § 405. Choses in action were not assignable in the early common law. 3 It is a familiar statement in the law books that choses in action are not assignable. This was carried so far in the early law that an assignee of a right in contract acquired absolutely no right as such.2 Coke states as the reason of this principle that the "wisdom and policy of the sages and founders of our law" discouraged maintenance. But had this been the basis of the rule the courts would not have permitted suit by an attorney with power to retain the proceeds of the suit. The true reason for the non-assignability of choses in action in the English Law as well as in the Roman Law seems to have been that the relation between the original obligor and obligee was regarded as a vital part of the obligation which could no more be changed than any other term of the obligation.1 At any rate, in so far as maintenance ever was an objection to the assignment of choses in action, it has ceased to be so.5 2 Mowse v. Edney, Rolle's Abr. 20, plac. 12; Penson & Higbed's Case, 4 Leon. 99. 3 Lampet's Case, 10 Coke, 46a, 48a. Blackstone gives substantially the same reason, 2 Bl. Com. 290. 'Ames' Lectures on Legal History, 258. Professor Ames thus shows the inadequacy of the explanation of maintenance: "The wrong of maintenance lay in executing and exercising the power of attorney. The distinction was established at an early period, that the grant of a power of attorney to a creditor was not maintenance, while a similar grant to a purchaser or donee was maintenance. 34 Hen. VI, 30-15; 37 Hen. VI, 13-3; 15 Hen. VII, 2-3; South v. Marsh (1590), 3 Leon. 234; Harvey v. Beekman (1600), Noy, 52. As late as 16671672 the same distinction prevailed also in equity. 'The Lord Keeper Bridgman will not protect the assignment of any chose in action unless in satisfaction of some debt due to the assignee; but not when the debt or chose in action is assigned to one to whom the assignor owes nothing precedent, so that the assignment is voluntary or for money then given.' Freem. C. C. 145. See Chadwick v. Sprite, Cro. El. 821. In Penson v. Hickbed, Cro. El. 170 (32 El.) an objection was made by counsel that 'this buying of bills of debt is maintenance.' But the court held otherwise, 'for it is usual amongst merchants to make exchange of money for bills of debt, et e contra. And Gawdy, J., said it is not maintenance to assign a debt with a letter of attorney to sue for it, except it be assigned to be recovered, and the party to have part of it.' See S. C. 4 Leon. 99. In Barrow v. Gray, Cro. El. 551 (39 El.) the Court held that 'the assignment of a debt or reconusance to a stranger is an illegal and void consideration; but to assign it to the terre-tenant, by way of discharge of his land, is clearly lawful.' See Michael v. Carden, 1 Vin. Ab. 296, pl. 12; Loder v. Chesleyn, 1 Sid. 212, 1 Keb. 744." 5 Clark v. Grosh, 81 N. Y. Misc. 407, 142 N. Y. S. 966. § 406. Exceptions to the non-assignability of choses in action. The law recognized from early times certain exceptions to the non-assignability of choses in action in the following cases: 1. The crown could make an assignment of a claim due to it, and an assignment to the crown was equally effective. This doctrine has been held applicable to assignments to the United States Government.7 2. Executors and administrators and in some cases heirs were permitted from very early period to enforce contractual rights due to the deceased persons whom they represented, and became subject to the liabilities of such persons to the extent of the assets received. 3. Assignees in bankruptcy were the creation of statute; and bankruptcy statutes have vested in such officers the contractual choses in action of the bankrupts whom they represent. These statutes make the assignee or trustee in bankruptcy the real owner of the chose of action, so that after the day fixed by statute for the transfer of the debtor's estate, a payment to him by one who owed him money would not discharge the debt even though the payment was made in good faith in ignorance of the bankruptcy. Liabilities due from the bankrupt become provable claims against his estate.1 10 4. By virtue of the Law Merchant, bills of exchange and (subsequently) promissory notes are negotiable prior to matu Com. Dig. Assignment, D; Allen's Case, Owen, 113; Lambert v. Taylor, 4 B. & C. 138. 7 United States v. Buford, 3 Pet. 12, 7 L. Ed. 266; United States v. White, 2 Hill, 59, 37 Am. Dec. 374. 8 Y. B. 20 & 21 Edw. I, 304, 374; Wheatley v. Lane, 1 Wms. Saund. 216a. Howard v. Crompton, 14 Blatch. 328; Butler v. Mullen, 100 Mass. 453; Stevens v. Mechanics' Bank, 101 Mass. 109, 3 Am. Rep. 325; Bruce v. Anderson, 176 Mass. 161, 57 N. E. 354; Duffield v. Horton, 73 N. Y. 218. See also more generally on the title transferred by bankruptcy, Willis v. Freeman, 12 East, 656; Cole v. Coles, 6 Hare, 517; Re Calcott, [1898 10 See infra, § 1983 et seq. See |