UniversityUniversity ofof PennsylvaniaPennsylvania LawLaw ReviewReview AndAnd AmericanAmerican LawLaw RegisterRegister FOUNDEDFOUNDED 18521852 PublishedPublished Moasthly.Moathly. NovemberNOYClDber toto June,JIlIIe, byby thethe UnivenmtyUninnit)' ofof PennsylvaniaPel1lll11nni. LawLaw School,School. atat 34th34th andaDd ChestnutCbettnut Streets,Streeb, Philadelphia,Philadelphia, Pa.P••

VOL.VOL. 74.74. JANUARY,JANUARY, 1926.1926. " No.NO·3· 3-

ASSIGNMENTASSIGNMENT OFOF CONTRACTCONTRACT RIGHTSRIGHTS ThisThis subject hashas beenbeen muchmuch discusseddiscussed underunder thethe headingheading "alienability of choses inin action."action." InIn continuingcontinuing thethe discussiondiscussion ourour first stepstep should bebe toto abandonabandon altogetheraltogether thethe termtenn "chose in action." ItsIts linguisticlinguistic construction isis faulty, inin thatthat itsits individualindividual wordswords lead one toto thinkthink of somethingsomething very different fromfrom thatthat which the expression as a whole now denotes. There is no "chose" or thing or res.rcs. There isis a right (or claim): against some person. In this article we shall speak in terms of rightsrights (or claims) and not about "choses." It isis even more important that we should cease to use such a phrase as "assignment of contract." Whatever definition we choose for thethe word "contract," itit is not possible to construct accurate rulesrules by the use of such aa phrase. If a contract isis de­de- fined as consisting of thethe facts operating toto create a binding obli­obli- gation-offer, acceptance,acceptance, consideration, etc.-these facts are merely a part 0off recordedrecorded history and surely cannot bebe assigned.assignedL It isis meaninglessmeaningless toto speakspeak of assigning a pastpast event. IfIf aa con­con- tracttract isis defineddefined asas aa promisepromise enforceableenforceable atat law,law, wewe are merelymerely placingplacing emphasisemphasis uponupon oneone ofof thethe operativeoperative factsfacts andand indicatingindicating thatthat itit isis inin factfact operative.operative. AA promisepromise isis merelymerely aa pastpast eventevent andand cannotcannot properlyproperly bebe saidsaid toto bebe assignableassignable byby thethe promisee;promisee; muchmuch ·lessless cancan aa promisepromise bebe assignedassigned byby thethe promisorpromisor whowho mademade it,it, andand itit wouldwould bebe equallyequally erroneouserroneous toto saysay thatthat eithereither partyparty toto aa bilateralbilateral contractcontract cancan assignassign botkboth promises.promises. IfIf contractcontract isis defineddefined asas de-de- (207)(207)

HeinOnline -- 74 U. Pa. L. Rev. 207 1925-1926 2082o8 UNIVERSITYUNIVERSITY OFOFPENNSYLVANIA PENNSYLVANIA LAWLAW REVIEWREVIEW notingnoting thethe legallegal relationsrelations ofof thethe partiesparties createdcreated byby agreementagreement oror promise,promise, itit isis againagain erroneouserroneous toto saysay thatthat thethe "contract""contract" cancan oror cannotcannot bebe assigned.assigned. SomeSome ofof thethe legallegal relationsrelations cancan bebe assignedassigned andand somesome cannot.cannot. TheThe legallegal relationsrelations createdcreated byby anyany particularparticular contractcontract mustmust bebe analyzedanalyzed andand thethe assignabilityassignability ofof eacheach oneone mustmust bebe consideredconsidered separately.separately. TheThe legallegal relationsrelations createdcreated byby aa contractcontract areare inin variousvarious com­com- binations;binations; theythey cancan alwaysalways bebe analyze4,analyzed, however,however, intointo rights,rights, powers,powers, privileges,privileges, andand immunities,immunities, eacheach havingshavings itsits necessarynecessary cor­cor- relative.relative. TheThe presentpresent articlearticle willwill notnot considerconsider thethe assignabilityassignability ofof powers,powers, privilegesprivileges oror immunities.immunities. TheyThey maymay inin somesome casescases bebe assignable. InIn thethe lawlaw ofof agencyagency isis toto bebe foundfound thethe oldold maximmaxim "delegatus"delegatwu delegaredelegarenon non potest,"potest," indicatingindicating thatthat thethe powerpower ofof anan agent isis not assignable.assignable. We know,know, however, thatthat thisthis maxim does notnot tell thethe wholewhole story.1story.' TheThe most importantimportant of the legallegal relationsrelations createdcreated by contract is thethe relation of right and duty.duty. The problem of assignment inin connection with thisthis relationrelation is th~the subject of the present article; and it isis restricted toto rights and du­du- ties that are created by contract.

DEFINITION To say that one person has a "right" against another means that he has thethe aid of organized society inin controlling the conductcond,!ct of that other person inin some respect. Exactly thethe same ideaidea. isis expressed when we say that that that other person is under a legal duty toto thethe first.first. The one who has thethe right isis in the superior oror moremore advantageous position; thethe dutyduty bearer isis inin thethe inferior or lessless advantageousadvantageous position. AA contract maymay createcreate inin thethe one personperson rightsrights toto moremore thanthan one performance;performance; also,also, itit may createcreate rightsrights inin each of thethe contractingcontracting partiesparties againstagainst thethe other.other. LetLet usus determinedetermine firstfirst whatwhat' isis meantmeant byby thethe assignmentassignment ofof aa right.right. AA simplesimple illustrationillustration willwill bebe ofof service.service. LetLet usus supposesuppose thatthat AA hashas aa rightright thatthat BB shallshall paypay himhim $ioo.$IOO. ItIt isis establishedestablished lawlaw thatthat AA hashas powerpower toto assignassign thisthis rightright toto C.C.

'In Barber Agency Co. v. Co-op. Barrel Co., 133 Minn. 207, i58 N. W. 38 1 In Barber Agency Co. v. Co-op. Barrel Co., 133 Minn. 207, Is8 N. W. 38 (igs6),(1916), itit isis said:said: "It"It isis thethe universaluniversal rulerule thatthat anan agentagent cannotcannot transfertransfer toto anotheranother powerspowers callingcalling forfor thethe exerciseexercise 6fof discretion,discretion, skill,skill, oror judgment."judgment."

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ItIt isis alsoalso establishedestablished lawlaw thatthat thethe assignmentassignment isis operativeoperative withoutwithout thethe consentconsent ofof B.B. AfterAfter thethe assignmentassignment B isis underunder thethe samesame dutyduty asas before;before; thatthat is,is, hehe mustmust stillstill paypay $ioo$100 at thethe timetime andand place specified.specified. TheThe correlativecorrelative right,right, however, isis nono longerlonger inin A;A; itit isis in C.C. The social assistance formerly at A's command isis now available toto CC andand isis notnot available toto A. ' If the foregoingforegoing isis correct,correct, anan assignment ofof anan existing right is an act of the possessor of thatthat rightright which operates to ex-ex­ tinguishtinguish the rightright of thethe'assignor assignor and toto create an exactlye."<:actl:· similar rightright inin thethe assignee. ThisThis definitiondefinition is inin termsterms of legal opera-opera­ tion-oftion--of thethe effect of the assignor's act upon.the action of organ-organ­ izedized society. It is not a descriptive definition enabling us to recognizerecognize an act of assignment when we see one. Such a definition as the foregoing renders some service, but it isis not sufficient standing alone. In order to predict legal opera­opera- tiontion we must be able toto recognize the facts that will bring it about. This is true even though the courts do not start in the beginning with completed descriptive definitions of facts and definite rules of law determining the legal operation of those facts. 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, is never actually reached.22 In every decision of a case the court may assume a definition.definition and assert a rule; but thethe facts and decision of that very case add ,toto the inductive basis used by the next court in remaking thethe definition and correcting the rule. The law does not start with definitions and general rules already crystallized and put into definite words. Instead,Instead, some eventsevents occur;occur; A acts and B complainscomplains thereofthereof to aa court. The court must determine what society will do about it;it; this is a deter-

•'TheThe NatllreNature ofof thethe JlldicialJudicial Process (1921),(92), passim;passim; especiallyespecially atat p.p. 166:x66: "I"I wa.swas muchmuch troubledtroubled inin spirit, inin my firstfirst years uponupon thethe bench, toto findfind how tracklesstrackless waswas thethe oceanocean on whichwhich I hadhad embarked. II sought forfor certainty.certainty. TI WdSwas oppressedoppressed andand disheartened when II foundfound thatthat thethe questquest forfor itit waswas futilefutile ..•. .. AsAs thethe yearsyears havehave gonegone by,by, andand asas II have reflectedreflected moremore andand moremore uponupon thethe naturenature ofof thethe judicialjudicial process, II havehave becomebecome reconciledreconciled toto thethe uncertainty,uncertainty, becausebecause II havehave growngrown toto seesee itit asas inevitable.inevitable. II have growngrown toto seesee thatthat thethe process inin itsits highest reachesreaches isis not discovery,discovery, butbut creation;creation; andand thatthat thethe doubtsdoubts andand misgivings,misgivings, thethe hopeshopes andand fears,fears, ~eare partpart ofof thethe travailtravail ofof mind,mind, thethe pangspangs ofof birthbirth andand thethe pangs ofof death,death, inin whichwhich principlesprinciples thatthat havehave servedserved theirtheir dayday expire,expire, andand newnew princip}esprinciples areare born."born."

HeinOnline -- 74 U. Pa. L. Rev. 209 1925-1926 210210 UNIVERSITYUNIVERSITY OFOF PENNSYLVANIAPENNSYLVANIA LAWLAW REVIEWREVIEW minationmination ofof thethe legallegal operation.operation.of of thethe particularparticular eventsevents byby judi-judi­ ciallycially operatingoperating becausebecause ofof them.them. NoNo secondsecond seriesseries ofof eventsevents isis exactlyexactly likelike thethe first;first; andand eveneven ifif itit were,were, itit couldcould notnot bebe predictedpredicted withwith certaintycertainty thatthat aa secondsecond court,court, oror eveneven thethe samesame court,court, wouldwould reactreact toto thethe eventsevents inin thethe samesame fashion.fashion. InIn thethe coursecourse ofof timetime therethere areare manymany seriesseries ofof eventsevents withwith manymany adjudications thereon.thereon. ByBy usingusing thethe multitudemultitude of recordsrecords aa juristjurist oror legallegal scholarscholar cancan makemake rulesrules andand definitions.definitions. HeHe classifiesclassifies thethe judicialjudicial andand execu-execu­ tivetive reactionsreactions of societysociety (the(the legallegal operation) and thethe factsfacts thatthat caused thesethese reactions.reactions. By carefulcareful analysis hehe cancan determinedetermine thethe legallegal operationoperation that certain facts willwill produce and can specify thethe facts that willwill produceproduce the operation. Thus be createscreates stated rulesrules of societal action and defines facts with referencereference toto that action. His chiefchief if not only interestinterest isis toto determine what thethe legallegal operation will be, what society will do about it. He is not writing a general natural history or preparing a descriptive "movie" of the world. If his work is well done, however, he will discover the essentials in similar series of events, and will de-de­ scribe in photographic fashion the facts thatthat produce a certain legal effect. How, then, shall we describe an assignment? ShallShall.the .the term be used to include all thethe facts necessary to produce the legal ef-ef­ fect stated in the foregoing definition (the substitution of right in the assignee in place of the assignor),assignor) J or shall it be restricted to some one or a few of thosethose facts? This depends solely on usage and convenience; but it is no easy task toto determine what "usage" is or what "convenience" requires.requires. A statement of thethe rulesrules of law will require aa fullfull and accurateaccurate enumeration of the facts that produce any juristic result,result, andand each factfact so enumeratedenumerated must be identifiedidentified andand described. An attemptattempt atat aa descriptive definitiondefinition follows.follows. AsAs assignment isis anan expression ofof intentionintention byby thethe assignorassignor thatthat hishis rightright shallshall pass toto thethe assignee.assignee."s ThisThis definition,definition, withoutwithout goinggoing intointo anyany finefine analysisanalysis of actact oror intent,intent, dedicatesdedicates thethe termterm "assigtirnent""assignment" toto a certaincertain bitbit ofof conductconduct

•'ForFor thisthis formform ofof definitiondefinition thethe writerwriter isis indebtedindebted toto ProfessorProfessor SamuelSamuel Will;slon.Will;sion.

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byby thethe assignor,assignor, thethe objectiveobjective expressionexpression ofof anan intentionintention toto sub-sub­ stitutestitute aa newnew right-holder.right-holder. ItIt mightmight bebe criticisedcriticised becausebecause itit tellstells usus absolutelyabsolutely nothingnothing aboutabout thethe legallegal operationoperation ofof thisthis expressionexpression ofof thethe assignor,assignor, sincesince courtscourts andand lawyerslawyers areare interestedinterested inin factsfacts onlyonly withwith respectrespect toto theirtheir legallegal operationoperation (excluding(excluding forfor thethe pres-pres­ entent "evidential""evidential" facts).facts). ButBut itit isis notnot convenientconvenient toto includeinclude irin thethe definitiondefinition allall thethe factsfacts necessarynecessary toto produceproduce thethe substitutionsubstitution ofof aa newnew right-holder,right-holder, becausebecause moremore thanthan oneone combinationcombination ofof factsfacts willwill produceproduce thatthat result.result. "The"The law"law" cannotcannot bebe compressedcompressed intointo aa defi-defi­ nition.nition. ItIt isis convenientconvenient toto pickpick outout thethe centralcentral factfact commoncommon toto allall suchsuch combinations,combinations, describedescribe itit asas inin thethe definitiondefinition above,above, andand thenthen toto proceedproceed toto statestate what other factsfacts inin combinationcombination withwith thisthis oneone willwill produceproduce thethe substitution mentioned.mentioned. In order thatthat anan expression ofof an intentionmtention by anan assignor maymay bebe operativeoperative to substitute a right inin the assignee,assignee, there mustmust be an existing right thatthat can bebe assigned, and thethe expression ofof intention by the assignor must be inin a mode that has been adju-adju­ dicated toto be effective. Several modes have been held effective; but we cannot say with assurance that other modes will not be ..soso held. An assignment is operative if the assignor's expressionexpression. is accompanied by a consideration paid; ifif it consists of the deliv-deliv­ ery, along with words of gift, of a "document of title" (a docu­docu- ment executed by the debtor acknowledging his duty and describ­describ- ing the performance.performance, due); or ifif thethe assignor's intention isis ex­ex- pressed by a written and delivereddelivered documentary assignment (sealed(sealed oror unsealed).unsealed). ThereThere isis a strongstrong tendency forfor thethe courtscourts to givegive legallegal operationoperation toto anyany oraloral expression of presentpresent intentintent toto assign.assign. An exactexact determination ofof thethe factsfacts thatthat willwill bebe recog­recog- nizednized asas operativeoperative willwill notnot bebe undertaken inin thethe presentpresent article;article; butbut aa distinction betweenbetween anan assignmentassignment andand aa promisepromise toto assignassign willwill bebe brieflybriefly noted.noted.

PROMISESPROMISES TOTO MAKEMAKE ANAN AsSIGNMENTASSIGNMENT IfIf thethe holderholder ofof aa contractcontract rightright makesmakes aa promisepromise forfor aa suf­suf- ficientficient considerationconsideration toto assignassign itit toto another,another, whatwhat isis thethe legallegal opera­opera- tiontion ofof thethe transaction?transaction? BeyondBeyond questionquestion suchsuch aa promisepromise isis aa validvalid contractcontract ifif therethere isis nono legallegal imp"edimentimpediment toto thethe assignmentassignment

HeinOnline -- 74 U. Pa. L. Rev. 211 1925-1926 212212 UNIVERSITYUNIVERSITY OFOF PENNSYLVANIAPENNSYLVANIA LAWLAW REVIEW ofof suchsuch a.a rightright as thatthat involved.involved. There wouldwould bebe a legallylegally en­en- forceableforceable dutyduty toto thethe promisee toto perform inin accordanceaccordance with thethe promise asas inin thethe casecase of any otherother contract.44 But howhow doesdoes suchsuch a promise toto assignassign affectaffect thethe legallegal relationsrelations ofof thethe obligor (the(the debtor) toto the assignorassignor andand thethe assignee?assignee? ItIt isis quite impossibleimpossible toto answer thisthis question inin one general statement, because thethe termterm "promise toto assign"assign" has several distinct meanings. InIn some cases the "promise to assign" hashas been held to be itself"itself a completed assignment, extinguishing thethe rightright of thethe as­as- signor against the debtor and creatingcreating a similar right inin thethe prom­prom- isee. In such cases the "promise toto assign" is self-executing and makes thethe "promisee" inin fact an assignee. Such a holding isis quite correct if the words and conduct accompanying thethe "promise"promise to assign" express an intention to convey the right immediately.immediately. That thethe assignor's words are in promissory form is not conclu­conclu- sive to the contrary. It is clear that such an intention may exist and may be expressed, even though thethe parties contemplate the subsequent execution of a documentary assignment. In suchsuch case the document is to be a mere memorial of an already operative 5 transaction and is not itself to be the operative assignment.II On the other hand a promise that the promisor will on his own behalf collect the money due him and thereafter pay that specific money over to the promisee is not an assignment.86 The

'Hughes4 Hughes v. Burwell, 113II3 Va. 598, 75 S. E. 230 (1912). • Where for a valuable consideration a promise was made to assign cer­cer- tain insurance policies, it has been held that a subsequent formal assignment of the policies was not in fraud of creditors or an illegal preference, since thethe: assignee's right really dated from the time of the promise: In re Grandy, 146 Fed. 318 (19o6),(1906), (formal assignment delayed because insurance company required certain forms); Wilder v. Watts, 138 Fed. 426 (i9o5),(1905), (here the promise was toto insureinsure certain property and toto assignassign the policy so obtained). See also McDonald v. Daskam, z16II6 Fed. 276 (9o2);(1902); InIn re Dier, 296 Fed. 816 (924),(1924), (here a delivery of stock certificates was not anan illegalillegal preference, because in consideration of a loanloan thethe borrower had promised to incorporatemcorporate and toto assign thethe stock to the lender).lender). 'Carey• Carey v. Chase, 197 Iowa 1239, 175 N. W. 6o60 (xgig),(1919), (promise by a surety that whatever she might get from a certain companycompany she would apply inin payment of that company'scompany's debt to the plaintiff); Stock Growers Bank v. Milisich, 233 Pac. 4141 (Nev. 1925), (promise(promise toto a lender toto repayrepay outout of a third person'sperson's notesnotes held by thethe promisor)promisor); ; Patterson v.v. Bank, 236 S. W. 13o130 (Tex., 1922), (promise(promise toto pay a debtdebt withwith proceedsproceeds ofof salesale of crops)crops) ;; Hobbs v. McLean, 117II7 U. S. 567 (1885), (a(a promise toto paypayout out ofof moneys toto bebe received on a contractcontract with the United States isis notnot within the federal stat- utory regulationregulation of assignments).assignments). .

HeinOnline -- 74 U. Pa. L. Rev. 212 1925-1926 ASSIGNMENTASSIGNMENT OFOF CONTRACTCONTRACT RIGHTSRIGHTS 2 13 promisor'spromisor's rightright againstagainst thethe debtordebtor isis notnot therebythereby extinguished,extinguished, nornor isis aa rightright againstagainst thethe debtordebtor createdcreated inin thethe promisee.promisee. SuchSuch aa promisepromise isis aa promisepromise toto collectcollect andand toto paypayout out ofof thethe proceeds.proceeds. WordsWords ofof presentpresent assignment,assignment, however,however, areare notnot mademade inoperativeinoperative asas aa presentpresent assignmentassignment byby thethe factfact thatthat thethe assignorassignor atat thethe samesame timetime promisespromises toto collectcollect thethe moneymoney duedue asas anan agentagent ofof thethe assigneeassignee andand toto paypay itit overover toto him.rhim.7 ForFor anan effectiveeffective assignmentassignment itit isis necessarynecessary thatthat thethe rightright as-as­ signedsigned shallshall bebe clearlyclearly identified.identified.88 AA promisepromise toto assignassign bookbook ac-ac­ countscounts asas securitysecurity isis notnot operativeoperative asas aa presentpresent assignmentassignment ifif thethe accountsaccounts areare notnot clearlyclearly indicatedindicated and thethe termsterms ofof thethe assign-assign­ mentment are leftleft toto futurefuture agreementagreement or ifif thethe partiesparties understandunderstand thatthat thethe promisorpromisor isis toto bebe privileged toto collectcollect thethe accountsaccounts andand use thethe moneymoney inin hishis own affairs.affairs. 9 In suchsuch aa casecase therethere isis great prob-prob­ abilityability thatthat the agreement isis tootoo uncertainuncertain inin subjectsubject matter or termsterms toto be regardedregarded eveneven as a valid contractcontract between thethe prom-prom­ isor and thethe promisee.promi~ee.

ASSIGNEEAsSIGNEE NOT AN AGENT OR ATTORNEY It was once believed that a right could not be assigned. A "right" was conceived of as a sort of nebulous, ethereal, personal relation.1010 In the naturenat1lre of things itit could not be assigned. This

A promise to pay an attorney compensation out of the proceeds of the liti­liti- gatIOngation is not an assignm.ent,assignment, because it creates only a right in thethe attorney against the client and does not create a rightright inin the attorney against thethe party who is being sued: Cameron v. Boeger, 200 I11.Ill. 84, 65 N. E. 69069o (1902);(9) ; Trist v. Child, 21 Wall. 441 (U. S.,S., 1874).1874). •'CoganCogan v. Conover Mfg. Co., 69 N. J. Eq. 8og,8o9, 6464 Atl.At. 973 (1906).(19o6). •'Thus,Thus, a promise by a mortgagor toto keep thethe property insured for the benefit of thethe mortgageemortgagee is not an assignment, eveneven thoughthough thethe mortgagor shouidshould thereafterthereafter causecause a policy toto be executedexecuted inin his own name. ThereThere waswas nono promisepromise toto assign somesome designated andand identifiedidentified right. SteamsStearns v. QuincyQuincy Ins.Ins. Co.,Co., 124124 Mass. 616I (1878).(1878). •"InIn re Stiger, 2022o2 Fed.Fed. 791791 (1913),(913), 209209 Fed. 148.148. 1."TheThe rulerule thatthat aa "chose"chose inin action"action" waswas notnot assignableassignable "is"is better explainedexplained asas aa logicallogical consequenceconsequence of thethe archaicarchaic viewview ofof aa contractcontract asas creatingcreating aa strictlystrictly personalpersonal obligation."obligation." POllOCK,POLLOcK, CONTRACTSCoNTRAcTs (Williston's(Williston's ed.,ed., 1906)i9o6) 278.278. "A"A personalpersonal relationrelation inin thethe veryvery naturenature ofof thingsthings cannotcannot bebe assigneaassigned ...... wherewhere oneone hashas aa meremere rightright againstagainst another,another, therethere isis nothingnothing thatthat isis capablecapable ofof transfer."transfer." Ames,Ames, TheThe blalie/labilityInalienability ofof ChosesChoses inin Action,Action, inin LECTURESLEcruas ONON LEGAl.LEGM. HISTORY,HISTORY, 210.210. DeanDean AmesAmes seemsseems toto havehave beenbeen subconsciouslysubconsciously definingdefining "assIgnment""assignment" asas aa physicalphysical traditiontradition ofof somesome sortsort ofof subjectsubject matter.matter. AsAs de­de- finedfined herein,herein, itsits operationoperation isis toto extinguishextinguish andand toto create,create, justjust asas inin thethe casecase ofof ailYany conveyanceconveyance ofof propertyproperty inin landland oror cpattels-.chattels-. AA contractcontract rightright isis nono

HeinOnline -- 74 U. Pa. L. Rev. 213 1925-1926 214214 UNIVERSITYUNIVERSITY OFOF PENNSYLVANIAPENNSYLVANIA LAWLAW REVIEWREVI4W supposedsupposed difficultydifficulty isis entirelyentirely eliminatedeliminated byby aa closercloser analysisanalysis ofof thethe conceptsconcepts expressedexpressed byby "right""right" andand "relation.""relation." JustJust asas inin thethe sciencescience ofof physics,physics, suchsuch anan analysisanalysis showsshows thatthat thethe ethereafethereal' nebulanebula hashas substancesubstance perceivableperceivable byby thethe senses.senses. InIn thethe simplesimple illustrationillustration givengiven above,above, AA hadhad aa rightright thatthat BB shouldshould paypay himhim $ioo.$100. ThisThis isis nownow analyzedanalyzed toto meanmean nothingnothing moremore thanthan thatthat thethe agentsagents ofof organizedorganized societysociety willwill assistassist AA inin inducinginducing oror compellingcompelling BB toto paypay overover certaincertain money.money. ThereThere areare variousvarious modesmodes inin whichwhich thisthis societalsocietal assistanceassistance isis given.given. ItIt isis thisthis greatgreat factfact ofof societalsocietal assistance~sistance thatthat constitutesconstitutes thethe legallegal "relation""relation" ofof "right""right" andand "duty.""duty." WhileWhile juristsjurists werewere forfor somesome centuriescenturies sayingsaying thatthat aa rightright cbuldcould notnot be assigned, theythey werewere as judgesjudges going steadily onon transferringtransferring theirtheir societalsocietal assistanceassistance fromfrom thethe assignorassignor toto thethe assignee. InIn orderorder toto make thisthis court actionaction ap-ap­ pear toto be consistent with their theorytheory thatthat a rightright cannot bebe as-as­ signed,signed, the juristsjurists saidsaid that thethe "right""right" waswas still in thethe assignor,assignor, but thatthat hehe had given to thethe assignee a power of attorney toto enforce it for him. A having assigned to C hishis right that B should pay $100,$xoo, when asked whether thereafterthereafter C had a right against B the jurists said "no"; but when asked whether A could control the suit against B or could give B a valid discharge they also said "no"; 11 and when asked whether C could control the suit and could give a valid discharge they said "yes"; and when asked by the executing sheriffsheriff to whom he should pay thethe money collected, they said "pay"pay itit to c."C." InIn invokinginvoking judicialjudicial oror executive compulsioncompulsion againstagainst B, isis C (the(the assignee) actingacting as thethe agentagent or attorney forfor A? 1212 As­As- suredlysuredly not.not. SuchSuch an ideaidea nevernever entersenters thethe head ofof eithereither AA or C,C, andand forfor centuriescenturies notnot aa wordword expressingexpressing an intentionintention toto makemake ·cC thethe agentagent ofof A hashas been requiredrequired oror usedused inin assignment.assignment. An differentdifferent inin thisthis respectrespect fromfrom aa landland rightright oror aa horsehorse right.right. SeeSee ProfessorProfessor WalterWalter W.W. Cook,Cook, TheThe AlienabilityAlienability ofof ChosesChoSes illi Actioll,Action, 2929 HARV.HAnv. L.L. REv.Rsv. 816816 (19(19W5).15). U"WelchWelch v.v. Mandeville,Mandeville, Ii Wheat.Wheat. 233233 (U.(U. S.,S., 1816)1816);: LeghLegh v.v. Legh,Legh, Ii Bos.Bos. &&P·447 P. 447 (1799).(x799). . per- U"ThisThis waswas thethe particularparticular fictionfiction acceptedaccepted inin earlyearly times;times; andand itit hashas per­ ~istcdqisted toto aa considerableconsiderable extentextent eveneven toto thethe presentpresent time.time. TheThe viewview herehere statedstated isis prel'entedpresented withwith carefulcareful analysisanalysis byby ProfessorProfessor Cook,Cook, locoloc.cit., cit., notenote 10.1o.

HeinOnline -- 74 U. Pa. L. Rev. 214 1925-1926 ASSIGNMENTASSIGNMENT OFOF CONTRACTCONTRACT RIGHTSRIGHTS 215:U5 agentagent isis oneone whowho isis actingacting inin hishis principal'sprincipal's behalf;behalf; CC isis actingacting .solelysolely forfor hishis ownown interest.interest. BecauseBecause ofof thethe interestinterest ofof thethe prin-prin­ cipalcipal thatthat isis beingbeing served,served, anan agentagent isis saidsaid toto occupyoccupy aa fiduciaryfiduciary relationrelation andand toto oweowe dutiesduties toto thethe principalprincipal connotedconnoted byby thethe wordword "fiduciary.""fiduciary." AfterAfter anan unconditionalunconditional,assigmnent assignment toto C,C, AA hashas nono furtherfurther interestinterest toto bebe served,served, A'sA's juraljural relationsrelations areare notnot intehldedintended toto bebe affectedaffected byby C'sC's action,action, andand CC owesowes nono fiduciaryfiduciary dutiesduties toto A.A. InIn somesome jurisdictionsjurisdictions itit maymay stillstill bebe properproper forfor CC toto bringbring suitsuit inin A'sNs name;name; butbut thisthis inin nono wayway affectsaffects whatwhat isis statedstated above."'above.18 IfIf therethere areare stillstill casescases wherewhere itit isis necessarynecessary forfor CC toto suesue inin A'sA's name,name, thisthis isis aa meremere emptyempty formality,formality, asas itit longlong waswas inin thethe formerformer courtscourts ofof commoncommon law.law. ItIt isis nono longerlonger even "proper""proper" toto suesue inin thethe namename ofof AA inin statesstates wherewhere byby statutestatute thethe suit mustmust bebe inin thethe namename ofof "the realreal party inin interest."interest." OnOn proofproof thatthat thethe rightright has been assigned,assigned, thethe suitsuit will be dismisseddismissed unlessunless itit is shown thatthat AA is suing as thethe agent and attQrney of the assignee C and thatthat C is the realreal plain-plain­ tiff.1U' So far from thethe assignee being thethe agent of thethe assignor, it now appears thatthat thethe assignor can sue only as the agent of the assignee. If the "assignee" merely holds a power of attorney or is an assignee for collection and remission of proceeds to the assignor, he is not the "real party in interest" in whose name the.the 15 suit must, under many statutes, be brought.lIS

JlI It appears thatthat inin ConnecticutConnecticut thethe assigneeassignee may stillstill suesue inin the assignor's namename andand therebythereby prevent thethe defendantdefendant fromfrom counterclaimingcounterclaiming inin the samesame acUOI1action 011on a separateseparate claim whichwhich hehe hashas againstagainst thethe assignee,assignee, the·realthe real plaintiff. LowndesLowndes v.v. CityCity Bank,Bank, 7979 Colin.Codln. 693,693, 166166 AtLAtl. 514 (1907).(907). It should be ob­ob- servedserved thatthat thisthis isis not aa holding thatthat thethe assigneeassignee is.ais a mere agentagent enforcingenforcing thethe rightright ofof thethe assignor.assignor. ItsIts effecteffect isis thatthat itit givesgives toto thethe assigneeassignee anan addi­addi- tioaaltional advantage,advantage, oneone thatthat inin otherother StatesStates hehe wouldwould notnot havehave andand oneone toto which thethe COIijD1OI1conmon notionsnotions ofof justicejustice wouldwould notnot entitleentitle him.him. JIU ParkerParker v.v. Simon,Simon, ~31231 N.X. Y.Y. 503,503, 13333 N.N. E.E. 5035o3 (1921)(192);j WhitingWhiting v.v. Gliss,Gliss, ~17217 N.N. Y.Y. 333,333, IIII N.N. E.E. 1082xo82 (1916)(1g6);j LooneyLooney v.v. Dist.Dist. ofof CoL,Col., II3113 U.U. S.S.~s8 2s8 (I88S).(88s). sa SpencerSpencer v.v. StandardStandard Corp.,Corp., ~37237 N.N. Y.Y. 479,479, 144144 N.N. E.E. 479479 (1924)(1924) j ; CrumCrum v.v. Stanley,Stanley, SS55 Neb,Neb. 351,351, 7S7s N.N. W.W. 858s (18gB).(1898). AnAn as.igneeassignee i.is notnot anan agentagent oror attorneyattorney;j conversely,conversely, aa meremere agentagent oror attor­attor- neyney isisnot not anan·assignee. assignee. IfIf itit isis clearlyclearly expressedexpressed thatthat thethe agentagent isis toto collectcollect andand isis byby .stIChjuck colketitmcollecion toto effecteffect anan assignment,assignment, therethere isis nono assignmentassignment beforebefore thethe actact ofof collection.collection. SeeSee Fanners'Farmers' L.L.&& T. T. Co.Co. v.v. Winthrop,Winthrop, 238238 N.N. Y.477,Y. 477, 144144 N.N. E.E. 686686 (1924).(x924).

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ASSIGNMENT OF DUTIES Before proceeding toto detenninedetermine what rights are assignable andand what are not assignable, thethe easier problem ofof thethe assignment ofof duties will be disposed of. This disposaldisposal consists of thethe flat statementstatement thatthat no duty can ever be effectively assigned, ifif we ad­ad- here to our description of an assignment as a unilateral expression of thethe assignor. Applying that definition toto duties instead of rights,rights, we have: An assignment is an expression of intention by the assignor that his duty shallshall immediately pass toto·the the assignee. Many a debtor wishes thatthat 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 suchsuch a hoped-for result. ItIt does not cause society to relax its compulsion against him and direct it towardtoward the assignee as his substitute. In spite of such an "as­"as- signment," thethe debtor's duty remainsremains absolutely unchanged. The performanceperfonnance required by a duty can often be delegated; but by such a delegation the duty itself is not escaped.16 Suppose thethe following cases: i.I. A is under contract with B to deliver for compensation a ton of coal to B's house. A em­em- ploys C to deliver it for him. By so doing A is not a repudiator'epudiator of his contract; but he is still bound by the contractual duty. IfIf C delivers the coal, A has a right to payment of the compensa­compensa- tion by B. If C does not deliver the coal, B has a right to dam­dam- ages against A for breach of duty. C's failure to deliver the coal may also give to both A and B a right to damages against C. This depends on whether C made a valid contract with A; if he did, A can sue for its breach,breach,17 '7 and nearly everywhere B can sue C as an obligee-beneficiary of his contract with A.

U "It has been uniformly held that a man .."It has been uniformly held that a man cannot assign his liabilities under a contract, but one who is bound so as to bear an unescapable liability may delegate the performance of his obligation to another, if the liability be of such a nature that its performance by another will be substantially the same thing as performance by the promisor himself. InIn such circumstances the performance of the third party is the act of the promisor, who remains liable under the contract and answerable in damages if the performance be not in strict fulfillment of the contract." Crane Ice Cream Co. v. Terminal Freez-Freez­ ing Co., 128 At.AU. 280, 283 (Md. 1925).i925). In thethe foregoing, "liability" means legallegal duty.~~ . !Co., 2o7 "Explosive1f Explosive Chemical Co. v. Gray & Co., 20'/ N. Y. Supp. 638, 124 Misc.Mise. 333 (1g25).(1925)· .

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2.2. AA isis underunder contractcontract withwith BB toto playplay thethe partpart ofof HamletHamlet inin B'sB's theater.theater. InIn B'sB's absence,absence, AA employsemploys CC toto playplay HamletHamlet andand CC actuallyactually doesdoes so.so. InIn thisthis casecase AA hashas nono rightright toto thethe agreedagreed com-com­ pensation;pensation; andand insteadinstead BB hashas aa rightright toto damagesdamages fromfrom AA forfor breachbreach ofof contract.contract. NoNo moremore thanthan inin thethe firstfirst casecase couldcould AA es-es­ capecape hishis dutyduty byby suchsuch anan arrangementarrangement withwith C;C; butbut inin addition,addition, AA couldcould notnot performperform vicariouslyvicariously asas hehe couldcould andand diddid dodo inin thethe firstfirst case.case. AA dutyduty cancan nevernever -be'be escapedescaped byby assignmentassignment oror delegation;delegation; butbut anyany dutyduty cancan bebe extinguishedextinguished byby performance.performance. SomeSome dutiesduties requirerequire aa performanceperformance byby aa specificspecific person;person; othersothers dodo not.not. InIn thethe coalcoal case,case, thethe performanceperformance requiredrequired was thethe delivery ofof coalcoal atat B's house,house, andand itit mademade nono differencedifference whetherwhether byby teamteam oror byby trucktruck or byby whomwhom driven. InIn thethe HamletHamlet case,case, the performance requiredrequired was thethe physical acting of A, involving thethe co-ordina-co-ordina­ tion of A's trainedtrained body and brain. Whether oror not a contractual duty requires personal performance by a specificspecific individual cancan be determined only by interpreting thethe words used in the light of ex-ex­ perience. In many cases there will be ample room for a differ­differ- ence of opinion. But whether thethe performance required is a per-per­ sonal performance or not, the legal duty is not escaped by an 8 assignment or delegation of performance.'performance.IS It is easy to put striking cases where thethe performance re­re- quired is not solely thethe personal action of thethe contractor. A con-con­ tracts with B that C'willC will not expose a tradetrade secretsecret oror thatthat D will play Hamlet. HereHere A can neither escape his duty by assignment, delegate performance to ,a,a newnew person, nor satisfy his dutyduty byby performing himself. TheThe contractcontract puts neither CC nor DD underunder any dutyduty whatever;whatever; butbut thethe dutyduty ofof A can bebe satisfied onlyonly byby thethe silence ofof C andand the acting ofof D. ,S"This.."This ordinarilyordinarily isis allall thethe booksbooks mean whenwhen theythey statestate thethe propositionproposition inin generalgeneral terms-thatterms--that aa contractcontract imposingimposing liabilityliability cannotcannot bebe assigned;assigned; thatthat thethe assi~entassignment ofof suchsuch aa contractcontract doesdoes not,not, asas aa rule,rule, relieverelieve thethe assignorassignor fromfrom responsibility."responsibility." AtlanticAtlantic && N.N. C.C. R.R. Co.Co. v.v. AtlanticAtlantic && N.N. C.C. Co.,Co., 147147 N.N. C.C. 368,368, 6161 S.S. E.F. ISS185 (I~).(i08). "What"What isis meantmeant is,is, notnot thatthat-contracts-contracts involvinginvolving obligationsobligations notnot specialspecial andand personalpersonal cancan bebe assignedassigned inin thethe fullfull sensesense ofof shiftingshifting thethe burdenburden ofof anan obli­obli- gationgation onon toto aa substitutedsubstituted contractor,contractor, anyany moremore thanthan whenwhen itit isis specialspecial andand personal;personal; butbut thatthat inin thethe firstfirst casecase thethe assignorassignor maymay relyrely onon thethe actact ofof anotheranother asas performanceperformance byby himself,himself, whereaswhereas inin thethe secondsecond casecase hehe cannot."cannot." TolhurstTolhurst v.v.Associated Associated Mfrs.,Mfrs., [1902][i9o2] 22 K.K. B.B. 660,66o, 669.669. --

HeinOnline -- 74 U. Pa. L. Rev. 217 1925-1926 218218 UNIVERSITYUNIVERSITY OFOFPENNSYLVANIA PENNSYLVANIA LAWLAW REVIEWREVIEW IIf f itit isis impossibleimpossible forfor AA toto assignassign hishis duty,duty, howhow cancan hehe getget ridrid ofof it?it? OnlyOnly byby somesome oneone ofof thethe recognizedrecognized methodsmethods byby whichwhich aa contractualcontractual dutyduty isis discharged.discharged. MostMost ofof thesethese requirerequire thethe as­as- sentsent ofof thethe obligee,obligee, thethe partyparty havinghaving thethe rightright correlativecorrelative toto thethe dutyduty toto bebe discharged.discharged. OneOne ofof thesethese methodsmethods isis calledcalled "nova­"nova- tion,"tion," byby which,which, withwith thethe obligee'sobligee's assent,assent, aa substitutionsubstitution ofof debtorsdebtors isis effected.effected. ThisThis isis notnot assignment.assignment.

WHATWHAT RIGlITSRIGHTS ARE ASSIGNABLEASSIGNABLE ItIt isis almostalmost safesafe toto saysay thatthat allall contractcontract rightsrights are assignableassignable -almost butbut notnot quite.quite. WeareWe are farfar removed fromfrom thethe notionnotion thatthat allall rightsrights areare strictlystrictly personalpersonal andand thereforetherefore notnot assignable;assignable; butbut itit isis stillstill oftenoften said that some rightsrights are soso personalpersonal inin char­char- acteracter asas toto bebe non-assignable. ItIt isis believedbelieved thatthat thisthis latter limi­limi- tationtation on assignability has no more foundation than thethe earlier andand more general one.one. Let us consider a few specific cases. I. A contracts with B to act as B's valet. Surely, it will be said, B's right is so personal that itit cannot be assigned. But no, thethe contrary is believed to be correct although no decision pro or con has been seen by the writer. By this statement it is not meant to say that the char-char­ acter of the service can in any way be changed by assignment. The right of B is that A shall act as B's valet, not that A shall act as valet for whom it may concern. Anyone ought to know thatthat serving as valet to a cross, ill, nUserly,miserly, old curmudgeon is not thethe same performance as serving a healthy, happy-go-lucky, gen-gen­ erous, young prince. Therefore, when B assigns his right against A,A, he must assign itit as it is. He cannot by assignment toto C cre-cre­ ate inin C a rightright thatthat AA shall act asas C's valet.valet. That would be a different rightright to a different performance. But B can assign toto CC the rightright that A shall serve asas B's valet; and ifif AA shall commit a breachbreach itit willwill, be C whowho gets thethe damages measured byby thethe valuevalue 1199 ofof thethe promisedpromised service.service. "

".. .This,This, ofof course,course, isis oil011 thethe assumptionassumption thatthat BB mademade itit clear byby hishis wordswords ofof assignmentassignment thatthat hehe waswas nono longerlonger toto bebe regardedregarded asas thethe possessorpossessor ofof aa rightright againstagainst A,A, eithereither toto performanceperformance oror toto damages--thatdamages-that aa truetrue assignmentassignment byby sustitutionsubstitution ofof aa newnew beneficialbeneficial right-holderright-holder waswas intended.intended.

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2.2. SupposeSUppose thatthat AA contractscontracts withwith BB toto supplysupply allall thethe coalcoal thatthat BB maymay needneed inin aa businessbusiness thatthat BB isis thenthen conductingconducting oror allall thethe coalcoal thatthat BB maymay needneed inin hishis householdhousehold use.use. JustJust asas inin thethe casecase ofof thethe valet,valet, B'sB's rightright isis assignableassignable ;20;20 butbut BB cannotcannot byby assignmentassignment toto CC createcreate inin CC a a rightright thatthat AA shallshall supplysupply allall thethe coalcoal thatthat CC maymay needneed inin hishis businessbusiness oror hishis household.household. ThisThis isis truetrue eveneven thoughthough atat thethe timetime ofof thethe attemptedattempted assignmentassignment BB sellssells hishis businessbusiness oror hishis househouse toto CC andand CC continuescontinues therein.therein. TheThe needsneeds ofof aa businessbusiness oror aa househouse runrun byby CC areare notnot identicalidentical withwith thosethose ofof thethe samesame businessbusiness oror househouse runrun byby B.B. B'sB'g powerpower ofof assignment,assignment, therefore,therefore, isis lim-lim­ itedited toto thethe creationcreation inin CC ofof thethe veryvery samesame rightright thatthat BB possessed,possessed, namely,namely, thethe rightright thatthat B'sB's needsneeds shallshall bebe supplied.supplied. Of course,course, itit isis possiblepossible forfor AA toto contractcontract withwith BB soso asas toto givegive B a rightright thatthat AA shallshall valet anyany personperson oror shallshall supplysupply aa cer-cer­ taintain househouse with coalcoal without regard toto itsits occupant.occupant. ThisThis right,right, performance after as- like thethe previous ones, can be assigned,assigned, thethe performance after21 as­ signment remainingremaining exactly the same as before assignment. 21 To show thatthat thethe decision inin thethe foregoing cases isis not fan-fan­ ciful let us consider twotwo more cases. 3. C wishes that-histhat·his son B shall have a valet, but not that B shall have a legal right. C therefore contracts with A that A shall serve B as valet, and also that the primary legal right and the secondary right to the value of the services shall be in C alone. NooneNo one would doubt that this is a valid contract, th~tthat C has a right that A shall serve B as valet, or thatthat CC has a rightright to thethe value ofof the services inin case of breach by A. This is exactly the resultresult producedproduced inin casecase I.i. No suffi­suffi- cientcient reasonreason appears why theythey ca~otcannot produce this resultresult byby as­as- signmentsignment asas wellwell asas by directdirect contract. No doubt itit maymay bebe somesome disadvantagedisadvantage toto A toto oweowe aa c1utyduty toto severe,severe, hard-hearted,hard-hearted, oldold Mr. CC insteadinstead ofof toto young,young, easy-goingeasy-going B;B; butbut itit isis nono moremore soso inin thisthis

,."Here Here again,again, itit isis assumedassumed thatthat BB meansmeans thethe damagesdamages toto gogo withwith thethe primaryprimary right.right. J1'ThusThus wherewhere thethe defendantdefendant contractedcontracted withwith XX andand hishis "successors"successors oror assigns"assigns" toto supplysupply hishis premisespremises "222"222 MainMain St.St. allall electricelectric serviceservice forfor lighting,lighting, fansfans andand heatingheating reqUIredrequired byby thethe consumer,"consumer," itit waswas, heldheld thatthat thethe defendantdefendant waswas boundbound toto supplysupply thethe promisedpromised serviceservice toto thethe plaintiff,plaintiff, anan assigneeassignee occupyingoccupying thethe premises.premises. LeaderLeader Co.Co. v.v. LittleLittle RockRock R.L& &E. E. Co.,Co., 12012o Ark.Ark. 221,221, 179179 S.S. W.W. 358358 (1915).(xgi5). ThereThere waswas aa similarsimilar holdingholding inin TolhurstTolhurst v.v. AssociatedAssociated Port.Port. Cem.Cem. Mfrs;,Mfrs., [1903].A.[r9o3] A. C.414-C. 414. .

HeinOnline -- 74 U. Pa. L. Rev. 219 1925-1926 220220 UNIVERSITYUNIVERSITY OFOFPENNSYLVANIA PENNSYLVANIA LAWLAW REVIEWREVIEW kindkind ofof aa casecase thanthan inin anyany otherother assignment.assignment. TheThe socialsocial serviceservice renderedrendered byby thethe assignabilityassignability ofof rightsrights soso farfar overweighsoverweighs thethe dis­dis- advantageadvantage toto thethe debtordebtor incidentalincidental toto aa changechange inin creditorscreditors thatthat thethe latterlatter isis disregarded.disregarded. InIn nono casecase however,however, isis thethe actualactual serv­serv- iceice requiredrequired ofof AA changedchanged byby thethe assignment.assignment. 4.4. CC wisheswishes thatthat hishis sonson BB shallshall havehave anan ampleample supplysupply ofof coal,coal, butbut thatthat BB shallshall havehave nono legallegal right.right. CC thereforetherefore contractscontracts withwith AA thatthat AA shallshall supplysupply B'sB's businessbusiness oror B'sB's householdhousehold withwith coal,coal, thethe primaryprimary rightright toto deliverydelivery andand thethe secondarysecondary rightright toto thethe valuevalue ofof thethe coalcoal inin casecase ofof breachbreach toto bebe inin CC alone.alone. ThisThis createscreates inin CC exactlyexactly thethe samesame rightright thatthat waswas producedproduced byby thethe assignmentassignment inin casecase 2.2. Further,Further, C'sC's rightright thatthat AA shallshall supplysupply BB withwith coalcoal isis assignableassignable byby C.C. OnOn C'sC's deathdeath hishis rightright wouldwould passpass toto hishis per­per- sonalsonal representative.representative. ThisThis inin itselfitself showsshows thatthat therethere isis nothingnothing in the nature of a right that A shall serve or supply B to make it in the nature of22a right that A shall serve or supply B to make it non-assignable.non-assignable.22 InIn almost all cases where a "contract""contract" isis said toto be non-as·non-as- signable because itit isis "personal," what is meant is not that the contractor's right isis not assignable but that the performance re·re- quired by his duty is a personal performance and that an attempt to perform by a substituted person would not discharge the con·con- tractor's duty. In this sense the statement is correct if a proper interpretation of the agreement shows that the performance by a particular person is required. A second possible correct meaning is that personal perform-perform­ ance by the contractor is aa condition precedent to his right to per-per­ formance by thethe other party,party, and anan assigneeassignee of that right will

' It should be observed that the contracts between C and A in cases 3 and 4 might..It should be observed that the contracts between C and A in cases 3 and 4 mighthavehave beenbeen ofof aa veryvery different sort.sort. They mightmight havehave beenbeen mademade soso thatthat BB wouldwould bebe aa donee-beneficiary inin eacheach case.case. IfIf soso made, inin nearlynearly allall juris-juris­ dictionsdictions therethere wouldwould bebe createdcreated inin BB bothboth aa primaryprimary rightright toto performanceperformance andand (in(in casecase ofof breach)breach) aa secondarysecondary rightright toto damages.damages. NoNo doubtdoubt suchsuch aa rightright asas C (the promisee) gets in this case could be assigned; but this is not the right thatC (the was promisee) gets in this case could be assigned; but this is not the right that was assignedassigned inin casescases iI andand 2.2. NoNo doubt,doubt, also,also, thethe rightright ofof BB (the(the donee-donee­ beneficiary)beneficiary) couldcould bebe assigned;assigned; butbut BB waswas notnot aa donee-beneficiarydonee-beneficiary inin anyany ofof thethe fourfour casescases put--suchput-such waswas notnot inin factfact thethe contractcontract made.made. InIn casescases 33 andand 4,4. thethe servicesservices andand thethe coalcoal werewere soldsold toto CC andand notnot toto B;B; onon performanceperformance ofof thethe serviceservice oror deliverydelivery ofof thethe coalcoal AA couldcould maintainmaintain anan actionaction ofof debtdebt againstagainst CC forfor thethe price,price, andand onon breachbreach byby AA thethe solesole rightright toto damagesdamages wouldwould bebe inin C.C. TheThe pointpoint mademade isis thatthat howeverhowever unusualunusual aa resultresult maymay bebe reachedreached byby anan as-as­ signment,signment, exactlyexactly thethe samesame resultresult maymay be.reachedbe. reached byby aa directdirect contract.contract. ThatThat thethe resultresult isis anan unusualunusual oneone isis irrelevantirrelevant inin eithereither case.case.

HeinOnline -- 74 U. Pa. L. Rev. 220 1925-1926 ASSIGNMENT OF CONTRACT RIGHTS 221 fail in case of non-fulfilment of this condition. In this case, as 23 in the preceding one, performance cannot be delegated. 23 If it should be meant that the assignee of the right would fail even though the contracting assignor himself performs as originally agreed, thus fulfilling the condition precedent, the statement is entirely erroneous. ' A third possible correct meaning is that in a bilateral con­con- tract the contractor has no power to assign bpthboth his right and his duty. Thus it has been said: "When rights arising out of a con­con- tract are coupled with obligations to be performedperfonned by the con­con- tractor and involve such a relation of personal confidence that it 24 must have been intended that the rights should be exercised 24 and the obligations performed by him alone, the contract, includ-

so In the following cases the performance due was held to be personal and not delegable to another person in such manner that his performance would either discharge the assignor's duty or fulfil a condition precedent to the as-as­ signor's right to compensation; Wooster v. Crane, 73 N. J. Eq. 22, 166i66 At!.AtI. 1093Io93 (i9o7),(1907), (services as printer and publisher); Foster v. Callaghan & Co., 248 Fed. 944 (1918),(igi8), (same); Linn Co. Abstract Co. v. Beechley, 124 Iowa 146, 99 N. W.702W. 702 (1904),(9o4), (services as abstractor of titles) ; Corson v. Lewis, 77 Neb. 446, 109iog N. W. 735 (19o6),(1906), (services as attorney at law); N. Y. Bank Note Co. v. Hamilton Bank Note Co., i8o180 N. Y. 280, 73 N. E. 48 (1905),(i9o5), (services as selling agent) ; Paige v. Faure, 229 N. Y. II4,'14, 129 N. E. (1920),(192o), (same); Barber Agency Co. v. Co-op. Barrel Co., 133 Minn. 207, 158.i58. N. W.W.38 38 (1916),(i916), (same); New England Cabinet Works v. Morris, 226 Mass. 246, II5115 N. E. 315 (1917), (services in designing and installing druggists' fixtures);fixtures) ; Deaton v. Lawson, 40 Wash. 486, 82 Pac. 879 (1905),(i9o5), (services as physician)physician);; Thomas-Bonner Co. v. Hooven, 284 Fed. 386 (1922), (sales agency contract) ; Beard v. Beard, 254 S. W. 430, 2002oo Ky. 4 (1923), (services in giv­giv- ing support and a home for a mother with her son). In the following cases the .performanceperformance due was held not to be personal; the performance by the substitute to whom the assignor delegated it was held to discharge the duty of the assignor and to fulfil the condition precedent to the right assigned to the assignee: Atlantic & N. C. R. Co. v. Atlantic Co., 147 N. C. 368, 6i61 S. E. 185 (1908),(iqo8), (delivery of cordwood); Browne & Co. v. Sharkey Co., 58 Or. 480, lISii5 Pa. 156 (igii),(19II), (printing advertising booklets) ; Galey v. Mellon, 172i72 Pa. 443, 133 AtI.Atl. 56o560 (x896), (drilling oil wells) ; Overby v. Mona Trust, 240 S. W. 581 (Tex., 1922), (same); Devlin v. Mayor, etc., of N. Y., 63 N. Y. 8, 23 N. Y. Supp. 891Bgl (1875), (cleaning city streets). Sf"InIn its proper sense, a "right" is a claim to certain conduct by anotTlcranother person, enforced by society. It ,isis evident that, inin thisthis sense, the possessor of a right never "exercises" it. It is always the other party, the one owing the correlative duty, who is to perform or "exercise." The form of language used shows that the court was thinking of performance by the contractor who assigns, and hardly at all of that contractor's right to performance by an- other. .

HeinOnline -- 74 U. Pa. L. Rev. 221 1925-1926 222m UNIVERSITYUNIVERSITY OF PENNSYLVANIAPENNSYLVANIA LAWLAW REVIEWREVIEW inging bothboth hishis rights andand hishis obligations cannot be assigned."assigned." 2525 As hashas been seen previously, aa legallegal duty cannot bebe escaped byby assignment; and, as has justjust beenbeen said,said, a trulytruly personalpersonal perform-perform­ anceance cannot bebe delegated. It is sometimes said that where thethe contractcontract makesmakes itit thethe dutyduty of oneone party theretothereto toto render a personalpersonal service, special trusttrust and confidence being reposedreposed in him, a validvalid assignment isis impossibleimpossible "as longlong as suchsuch contract isis executoryC?Cecutory on the part ofof 26 thethe party inin whom such trusttrust and confidence is reposed." 26 While thisthis isis correct if the assignment isis meant to include both dutiesduties andand rights, it is not correct if itit is meant to say that a right cannot be assigned as long as a duty of the assignor, requiring his personal performance remainsremains executory. The assignor's rightright is assignable in spite of the personal~rsonal character of thethe per-per­ formance he isis still under a duty toto render;render; but if it isis a right that was conditional upon some personal performance by thethe assignor, it remains so conditional after the assignee gets the right by as­as- signment.2217 Thus, a school teacher can assign his wages to be-

=Delaware..Delaware Co. v. Diebold Safe & Lock Co., 133 U. S. 473, 488 (1890).(189o). This was quoted in Burck v. Taylor, 152 U. S. 634 (1893), by Brewer, /.,I., who added: "the contr&ctorcontractor could never have transferred anan interest in it to the plaintiff so as to vest in him a right toto take part in the work or a subsequent right to recover from the State on completion of the work." The words "right to take part" show that Brewer also was thinking of the performance due from the contractor who was the assignor, and meant that performance by a substituted party would not have fulfilled a condition precedent to the right to payment. Judge Jackson, in a dissenting opinion, distinguishes more clearly between performance of duty and the enforcement of right against another when he says:says: "There isis a class of cases where the services toto be rendered are of such a personal character that they cannot be assigned; but where isis the au­au- thority thatthat holds thatthat where a firm isis a contractor to do certain work a mem­mem- ber of the firm cannot assign or transfertransfer his share of the profits to arise there­there- from?"from?" The case isis no doubt well decided for the reason thatthat thethe defendant, a second assignee, had fullyfully performed thethe building contract under a novation made with thethe State. sa PAGE,_PAGE,CONTRACTS,CONMACTS, (2d ed.), §2248.§2248. It"AmericanAmerican Lith. Co. v. Ziegler, 216 Mass. 287, 103103 N. E. 909909 (19i4).(1x14). InIn Montgomery v.v. DePicot, 153153 Calif. 509, 9696 Pac. 3053o5 (1908),(igo8), thethe vendee of land on credit tendered his ovmown notes secured by thethe agreed mortgage (and at the trial thethe notes of thethe assignorassignor also) and got a decree for specific performance against the vendor.vendor. InIn American Bon.dingBonding & T. Co. v. Baltimore & Ohio R. Co., 124124 Fed. 866 (1903),(x9o3), thethe court said: "There isis nothing inin the existenceexistence of suchsuch countercounter obligation toto prevent an assignment by thethe creditor of his right afterafter hehe has performed thatthat obligation,obligation, andand thusthus perfected his right,right, or,or, even before, ifif nono attempt is made toto shift thethe duty of performing it fromfrom himself toto the assignee."

HeinOnline -- 74 U. Pa. L. Rev. 222 1925-1926 ASSIGNMENTASSIGNMENT OFOF CONTRACTCONTRACT RIGHTSRIGHTS comecome duedue underunder anan existingexisting contractcontract eveneven thoughthough hishis servicesservices areare stillstill toto bebe rendered;rendered; butbut thethe assignee'sassignee's rightright willwill bebe exactlyexactly thethe samesame asas thethe assignor's,assignor's, conditionalconditional uponupon properproper performanceperformance ofof thethe workwork byby thethe teacherteacher inin person.person. OfOf course,course, eveneven inin casescases wherewhere thethe requiredrequired performanceperfonnance isis notnot "personal,""personal," thethe non-personalnon-personal performanceperfonnance thatthat isis requiredrequ1red maymay bebe aa conditioncondition precedentprecedent toto thethe rightright toto paymentpayment contractedcontracted forfor inin return.return. InIn suchsuch casescases thethe. rightright isis assignableassignable beforebefore ful-ful­ fillmentfillment ofof thethe conditioncondition precedent;precedent; andand thethe factfact thatthat fulfillmentfulfillment the right to pay- ofof thisthis conditioncondition isis delegateddelegated toto thethe assignee ofof the right to pay­28 mentment doesdoes not inin anyany wayway affectaffect thethe validityvalidity ofof thethe assignment.assignment.28 Thus,Thus, wherewhere thethe dutyduty toto pay forfor coalcoal isis conditional on certaincertain instalmentinstalment deliveries beingbeing made, thethe making ofof thesethese deliveriesdeliveries is a conditioncondition precedentprecedent toto thethe seller's rightright toto payment byby the buyer; butbut thethe making of thesethese deliveries isis in no sensesense a personal performance.perfonnance. AA tender of delivery byby an assignee of the seller's right would fulfill the condition precedent and thethe assignee could thenthen enforce the right against the buyer.buy~. An attempt by the assignor to assign both his right and his

It has been supposed that the right was too personal toto be assigned in Amer-Amer­ ican Smelting & R. Co. v. Belden Min. Co., 127 U. S. 379 (1888). The trouble was, however, that the assignor not only assigned his right to delivery of ore, but also became unready to perform his purely personal duty of crushing, sampling, and assaying the ore soso as to determine the amount to be paid. His right to delivery (and therefore the right of the assignee also) was conditional upon his continued readinessreadiness to perform in person. Had he fulfilled thisthis condi­condi- tion,tion, the assignee shouldshould have won the suit. TheThe rightright toto delivery was not non­non- assignable. ..="In"In principle it would not impairimpair thethe rights of the assignee, or destroy thethe assignableassignable quality ofof thethe contract or claim,claim, thatthat the assignee, asas between himself andand the assignor,assignor, has assumedassumed some duty inin performing thethe condi­condi- tions precedent toto a perfectedperfected causecause ofof action, oror isis made thethe agentagent or sub­sub- stitutestitute ofof thethe assignorassignor inin thethe performanceperformance ofof thethe contract.contract. IfIf thethe serviceservice toto be renderedrendered oror thethe conditioncondition toto bebe performed isis not necessarilynecessarily personal, andand such asas cancan onlyonly withwith duedue regardregard toto thethe intentintent ofof thethe parties,parties, andand thethe rightsrights ofof thethe adverseadverse party,party, bebe renderedrendered oror performedperformed byby thethe originaloriginal contractingcontracting party, andand thethe latterlatter has notnot disqualifieddisqualified himselfhimself fromfrom thethe performanceperformance ofof thethe contract,contract, thethe meremere factfact thatthat thethe individualindividual representingrepresenting andand actingacting forfor himhim isis thethe assignee,assignee, andand notnot thethe meremere agentagent oror servant,servant, willwill notnot operateoperate asas aa rescissionrescission of,of, oror con­con- stitutestitute aa causecause forfor terminatingterminating thethe contract.contract. WhetherWhether thethe agentagent forfor performingperforming thethe contractcontract actsacts underunder aa nakednaked power,power, oror aa powerpower coupledcoupled withwith anan interest,interest, cannotcannot affectaffect thethe charactercharacter oror varyvary thethe effecteffect ofof thethe delegationdelegation ofof powerpower byby thethe originaloriginal contractor.contractor. Hackley,Hackley, thethe originaloriginal contractor,contractor, waswas atat nono timetime dis­dis- chargedcharged fromfrom hishis obligationsobligations toto thethe city,city, nornor waswas hehe disqualifieddisqualified forfor thethe per­per- formanceformance ofof thethe contract,contract, butbut waswas atat allall timestimes inin aa positionposition toto performperform hishis partpart ofof thisthis agreement."agreement." DevlinDevlin v.v. Mayor,Mayor, etc.,etc., ofof N.N. Y.Y. 6363 N.N. Y.Y. 8,8, 2323 N.N. Y.Y. Supp.Supp. 891891 (1875).(1875). .

HeinOnline -- 74 U. Pa. L. Rev. 223 1925-1926 224224 UNIVERSITYUNIVERSITY OFOF PENhSYLVPENNSYLVANIAANIA LAWLAW REVIEWREVIEW dutyduty under a bilateralbilateral contract willwill sometimes bebe interpretedinterpreted as aa repudiationrepudiation ofof his duty,duty, particularly wherewhere thethe performance requiredrequired byby thethe dutyduty isis personal toto thethe assignor and not possiblepossible of delegation. ThisThis will prevent any enforcementenforcement of thethe rightright byby thethe assigneeassignee thereof,29thereof, 29 unless the right isis whollywholly independentindependent ofof the duty and not conditional upon performance or readiness toto perform. A contract rightright is hardly ever made non-assignablenon-assignable byby thethe factfact thatthat itit isis conditional 80 or isis forfor some other reasonreason not en­en- forceable until a futurefuture date. A rightright to money notnot yet due cancan be assigned. A right to thethe payment of money to become due on conditioncondition of servicesservices yet toto be rendered 3181 and on condition thatthat the obligee does not drink intoxicants is an assignable right. The rightright of thethe assignee is,is, of course, subject to the same conditions as was thethe right of the assignor. The power of assignment may exist before all of the facts necessary to the enforceability of the right exist, as appears inin the preceding paragraph; but at least so~esome of the operative facts must exist. IfIf A, expecting that he will thereafterthereafter make a loan to B, assigns to C his right to repayment, C gets no right against B at the time of the assignment because A had none to assign. The same is true even though B had asked for such a loan. There

..."SeeSee Crane Ice Cream Co. v. Terminal Freezing Co., 128 AUt.AU. 280, 285 (Md., 1925)S925);; American Smelting & R. Co. v. Belden Min. Co., .supra;supra; ANSON, CONTRACTS (Corbin's ed. 1924), §303, n. 2. Where a party has obtained a rescission of his duties under a bilateral con­con- tract, his rights dependent upon the fulfilment of such duties willwin normally be rescinded also by implication. In such case, by a separate assignment of the rights rights('9,s).the assignee gets nothing. Tarr v. Veasey, 125 Md. 199,i99, 93·AU.93-Atl. 428 (1915). • . ..The only exception to the general rule seems to be in the case of a right created by an aleatory contract where thethe promisor's duty of performing isis conditional upon an uncertain event and thethe assignment to a new party might considerably increase the probability of the happening of thisthis event. For this reason the rightright of an insured under a policy of firefire insuranceinsurance has beenbeen held not assignable.assignable. VANCE, INsURANCE,INSURANCE, 50. InIn such a case, an assignment of thethe right cannotcannot be made without changing materially thethe conditions and extent of the correlative duty. . ' It has been held • 11 It has been held thatthat such anan assignmentas~ignment remainsremains effective eveneven though the assignor is discharged inin bankruptcy after thethe assignmentassignment but before the wages are earned. Citizens Loan Assn. v. BostonBoston & M. 1.R. R., I96196 Mass. 528.528, 82 N. E. 696¥ (i9o7);(1907); Mallin v.v. Wenham, 209 Ill.III. 252,2,52, 7o70 N. E. 564 (1904).(1904). Contra: Leitch v. NorthernNorthern Pac. R.,R., 95 Mimn.Minn. 35, 103IO3 N. W.W. 704 (1905);(1905); Hupp v.v. Union Pac. R., 99 Neb. 654, 157157 N. W. 343343 (1916).(1916).

HeinOnline -- 74 U. Pa. L. Rev. 224 1925-1926 ASSIGNMENT OF CONTRACT RIGHTS 225 must at least be a contract at the time of the assignment; accept­accept- ance as well as offer must have taken place. On the other hand, if the right against B that A purported to assign to C afterwardsaftenvards comes into existence, the assignment has been held in a number of cases to transfer the right at once to C.8822 There seems to be nothing in the interests of A and "B­B- the assignor and the debtor--todebtor-to prevent such a result; but in giv-giv­ ing effect to such an assignment the interests of A's creditors should be protected. Assignments in advance of the creation of the right assigned may easily be used in fraud of creditors. Thus far, with the exception mentioned in note 30, we have discovered no contract right that is not assignable. There are a few cases, however where the welfare of the public is believed to be involved and where the substitution of a new obligee by as­as- signment is against the public interest. There are some statutes forbidding assignment; and other assignments have been held invalid by the courts on some supposed principle of public policy. Thus, a right to a Federal pension has been made non-assignable; and the right of a public officer to future salary not yet due has been held non-assignable.non-assignable.8888

PROHIBITION OF ASSIGNMENT. The parties to a'a contract may themselves agree that a right created thereby shall nptnot be assignable. It may be regarded as doubtful whether a mere oral agreement to this effect would in­in- validate a subsequent assignment to an assignee who had no no-no­ tice of the agreement. But a provision of this sort in a written contract may properly be regarded as notice to any assignee of a right based on that contract. There are many cases where such a prohibition in writing has been held operative to prevent any power to assign and where the assignee failed in his action to en­en- force the right. Thus where an employee's time pay check was

"'Field' Field v,v. Mayor of N. Y., 6-N.6'N. Y. 179i79 (1852); Tailby v. Official Receiver, 13 Apll.App. Cas. 523 (1888). •"StewartStewart v. Sample, 168 Ala. 270, 53 So. 18218a (1910);(igio) ; Anderson v. Bran-Bran­ strom, 173 Mich. 157,I57, 13939 N. W.W.40 40 (1912); Roesch v. Worthen Co., 95 Ark. 482,482,130 I3o S. W. 55!551 (I91o).(1910). •f .

HeinOnline -- 74 U. Pa. L. Rev. 225 1925-1926 226226 UNIVERSITYUNIVERSITY OFOF PENNSYLVANIAPENNSYLVANIA LAWLAW REVIEW on itsits faceface mademade payablepayable onlyonly toto thethe namednamed payee and declareddeclared non-transferable, andand wherewhere onon thethe detacheddetached stubstub ofof suchsuch paypay check thethe employeeemployee had signedsigned an agreement that hehe would pre­pre- sentsent thethe check inin person and would not transfertransfer it,it, itit was heldheld thatthat an assigneeassignee got nono enforceableenforceable right.right.34 TheThe likelike hashas been heldheld inin severalseveral casescases where tradingtrading stamps have been markedmarked on their faceface "not"not transferable."transferable" 3~85 This has been assumed toto bebe the rulerule asas a mattermatter ofof course inin many cases.336 6 In one case,case, however, thethe United States SupremeSupreme Court has said thatthat a prohibitionprohibition against assignment containedcontained inin a writ­writ- ten contract was ineffective,ineffective, likening the contract right to per­per-. sonalsonal chattels.3877 There has been a strongstrong tendency to hold thatthat goods and chattels cannot be made inalienable.inalienable According to expressions used by the Supreme Court, not only are already exist­exist- ing contract rightsrights not inalienable;inalienable; they cannot even be made in­in- alienable ab initio by thethe party who is theirtheir original creatorcreator..

.."BarringerBarringer v. Bes Line Const. Co., 23 Okla. 131, 99 Pac. 775 (9o9).(1909). In accord: Joint School Dist. v. Marathon Bank, 204 N. W. 471 (Wis., 1925);1925); Bonds-Foster L. Co. v. No. Pac. R. Co., 53 Wash. 302, 1011o Pac. 877 (1909);(1o9) ; State v. Kent, 98 Mo. App. 281, 717, S. W. 1066io66 (1902);(ixo2); Tabler & Co. v. Shef-Shef­ field Coal Co., 79 Ala. 377 (1885). Contra: Aldridge L. Co. v. Graves, 131 S. W. 846 (1910);(ipxo); Bewick Lumber Co. v. Hall, 94 Ga. 539, 21 S. E. 154 (1894), relying on a statute declaring that choses inin action shall be assignable. But Oklahoma had a similar statute, and the court rightly said that it was only for the purpose of nullifying thethe old common law rule against assignment, not for the purpose of invalidating express agreements that the contract right shall not be assignable.assignable• .."SperrySperry & Hutchinson Co. v. Siegel, Cooper & Co., 225 Ill. App. 54o540 ((1922)1922) ; holding that the assignee got no primaryprimary right by delivery with intent to assign, and also that such delivery did not assign thethe secondary right to damages for anticipatory breach in absence of evidence to show intent to do this. In accord: Sperry & Hutchinson Co. v. Weber & Co., 161 Fed. 219 (Igo8).(1908). Cf.Ct. Same v. Fenster, 219 Fed. 755 (I915),(1915), saying: "The rightright to re­re- deem the stamps is a property right transferable by possession while the license to use them for advertising purposes is not transferable."transferable." The prqvisionprQvision against assignment is not discusseddiscussed.. NSee.. See discussion inin thethe excellent case of American Bonding & T. Co. v. Baltimore & Ohio R. Co., 124 Fed. 866 (i9o3).(1903). IT'PortuguesePortuguese Bank v. Welles, 242 U. S. 7 (1916). The supposed policy on which this statement was basedbased cannot be said to have been demonstrated. See Comment, 26 YALzYALE L. J., 304 (1917). ItIt should be observed thatthat in this case the obligor did notnot object toto the assignment, but paidpaid thethe money intointo court. If he is willingwilling toto abandon his immunity,immunity, thethe assignee may well getget thethe money as against other claimants. The prohibition waswas notnot forfor theirtheir protection. To thethe same effecteffect isis FortunatoFortunato v.v. Patten, 147147 N.N. Y. 277, 52 N. Y. Supp. 872872 (1895).(1895).

HeinOnline -- 74 U. Pa. L. Rev. 226 1925-1926 ASSIGNMENTASSIGNMENT OF CONTRACT RIGHTS 227 There areare somesome cases thatthat definitelydefinitely holdhold aa prohibitionprohibition againstagainst 38 assignmentassigmnent ofof a rightright toto be invalid.invalid.3s ' Express provisions againstagainst assignmentassigmnent are usuallyusually foundfound inin bilateral contracts andand are inin somesome suchsuch generaf wordswords as "this"this contract shall not bebe assignable." InIn thethe pay check and tradingtrading stamp cases thisthis was not thethe case, forfor therethere thethe contracts werewere unilateral and the prohibition was clearly directed against thethe holder of thethe rightright alone'alone: Such a general prohibition inin a bi-bi­ lateral contractcontract is muchmuch moremore likely toto be directed against at-at­ tempts toto delegate performance of a duty by the promisorpromisor ratherrather than against assignmentassigmnent of a right by the promisee. ForFor such a limitedlimited purpose they should alwaysalways be held valid; but but they should 9 not be interpreted to forbid assignmentassigmnent of contract rights."rights.S9

ASSIGNMENTAsSIGNMENT DoESDOES NOT AFFECT PERFORMANCE, The performance, whether action or forbearance, thatthat an obligor is under a duty to render cannot be changed in any mate­mate- rial way by assignmentasSigmnent of the right by the obligee. It must be admitted that it is some disadvantage to a'debtora debtor that his creditor

•"TheThe Iowa Code, §9452, provides: 'Wten''When by the terms of an instrument its assignment is prohibited, an assignment thereof shall nevertheless be valid." A provision in a policy of fire insurance that it shall not be assigned before loss isis valid, because the risk is not the same with a new owner. But a pro­pro- vision that the policy shall be void if assigned after loss is not valid, since the risk is not affected by.such an assignment. Spare v. Home Mut. Ins. Co., 17 Fed. 568 (1883); Pennebaker v. Tomlinson, Ii Tenn. Ch. 5gB598 (1874), (sem-(sem­ ble) ; Nease v. Insurance Co., 32 W. Va. 283, 9 S. EoE. 233 (i889),(Il!8g), (semble);(semble) ; May, Insurance (3d(3d ed.) §386. Where a bank issuedissued a pass book expressly subject to all rules and regulationsregulations that might be posted thereafter inin the bank-bank­ ing room, and later the bank posted a rule that money was payable only to the depositor in per~on,person, this rule was held void as against an aSsigneeassignee of the entire deposit. Bank of U. S. v. Public Bank, 151 N. Y. Supp. 9494 (1915).(iiS). •" In Lockerby v. Amon, 64 Wash. 24, 1i6u6 Pac. 463 (19U),(i91i), a contract for the sale of landland provided that '"no"no assignment of this agreement shall be valid without the consent of Amon." ItIt was vigorously argued thatthat this was insertedinserted in order to secure paymentpayment and that on tender of payment in fullfull by thethe as­as- signee AmonAnon must convey to him; but thethe courtcourt held otherwise. InIn accordaccord is Omaha v. Standard OilOil Co., 55 Neb. 337, 7575 N. W. 859 (18gB).(1898). InIn a note, 35 L. R. A. (N.(N. S.) 1064,io64, itit is said that thethe great weight of authority is against thisthis decision. See Cheney v. Bilby, 7474 Fed. 52 (18g6);(1896); Wagner v. Cheney, 16x6 Neb. 202, 202o N. W. 222 (1884);(1884); Johnson v. Eklund, 7272 Minn.Minn. 195,195, 75 N. W. 14 (18gB).(1898). In Butler v. SanSan Francisco Gas & E. Co., 168i68 Calif. 32, thethe courtcourt said: "The contract expressly providedprovided thatthat nono assignmentassignment ofof itit shouldshould be made by Butler (the(the buildingbuilding contractor)contractor) nor any portionportion of thethe work subletsublet by him." The courtcourt held thatthat thisthis prohibition went onlyonly toto thethe per­per- formanceformance of the work andand did notnot apply to thethe rightright toto payment.

HeinOnline -- 74 U. Pa. L. Rev. 227 1925-1926 228228 UNIVERSITYUNIVERSITY OFOF PENNSYLVANIAPENNSYLVANIA LAW REVIEW hashas powerpower toto substitutesubstitute aa newnew creditor without thethe debtor'sdebtor's con­con- sent.sent. ItIt wouldwould be aa muchmuch greatergreater disadvantage,disadvantage, withoutwithout anyany par­par- ticularticular gaingain toto thethe community,community, to give thethe creditorcreditor power toto changechange thethe perfonnanceperformance duedue fromfrom thethe debtor. \VeWe have seenseeh aboveabove thatthat ifif B hashas aa rightright thatthat A shallshall serveserve as hishis valet, he can­can- not byby assignmentassignment make itit A'sA's dutyduty toto serveserve CC asas valet; alsoalso thatthat ifif BB has a right thatthat AA shall supplysupply his needsneeds forfor coal he cannot make it A's dutyduty toto supplysupply thethe needs of c.C.4040 In likelike manner, ifif AA owes BB aa debtdebt ofof $100$ioo payablepayable at thethe First NationalNational Bank onon May I,i, B can assignassign his right to the Second NationalNational Bank; but he cannot make itit A's dutyduty toto pay at thethe Second BankBank or on any other day than May 1.i. If A sells his stock ofof hardware, busi­busi- ness, andand good will toto B and promises toto forbear fromfrom competi­competi- tion forfor five years, B can assign his right along with the business to C; but he cannotcannot by suchsuch assignment make itit A's duty to forbearforbear to solicit hardware business in any greater territory than the business covered previously, even though C's business may be more widely extended. In certain classes of cases and toto a very limitedlimitedextent,extent, it seems that the actual perfonnanceperformance by the obligor can be changed by an assignment. Thus, ifif no particular place isis specified for the pay­pay- ment of a debt, the debtor must search for his creditor and pay him in person. If the creditor should assign his right, it seems that the debtor must now seek the assignee in order to make pay­pay- ment. This might require the assignee to pay at a much more distant place. There is an equal possibility, however, that it is the original obligee and not the assignee who goes to the distant place; and inin such case thethe assignment would save trouble. As business is now conducted, it is not difficult to pay at a distant

".. Crane Ice Cream Co. v. Terminal Freezing Co., 128x28 Ati.Atl. 28o280 (Md., 1925),1935), (one having a rightright toto all thethe ice he may use in his business for threethree years cannot create in an assignee aa right to allall thethe ice such assignee may use in itsits business) ; Frankfort & C. R. Co. v. Jackson, 153 Ky. 534, 156 S. W. io3103 (1913); Kemp v. Baerselman, [i9o6][1906] 2 K. B. 6o4,604. (B agreedagreed to supply K with "all fresh eggseggs thatthat he shall require for manufacturing purposes for one year)year); ; Lansden v. McCarthy, 45 Mo. 106io6 (186g),(1869), ("all("all fresh beef ...... that might be ordered or required byby B. & K. for the use and consumption of said hotel"); Tifton, etc., R. Co. v. Bedgood,Bedgood, 116 Ga. 945,945, 43 S. E. 257 (1903),(1903), (R. R. contractedcontracted to haul all lumberlumber cut by H. & S.). Cf.ct. Leader Co. v. Little Rock R. & E. Co., 12o120 Ark. 221, 179 S. W.W. 358 (xg5)(1915) ;; Tolhurst v. Associated Port. Cem. Mfrs.,Mfrs., [x9o3][1903] A. C.C.414- 414.

HeinOnline -- 74 U. Pa. L. Rev. 228 1925-1926 ASSIGNMENTASSIGNMENT OFOF CONTRACTCONTRACT RIGHTSRIGHTS placeplace throughthrough thethe banksbanks oror otherother establishedestablished agencies.agencies. TheThe pos-pos­ siblesible addedadded burdenburden putput uponupon thethe debtordebtor byby thethe assignmentassignment isis sel-sel­ domdom great,great, andand thusthus farfar itit hashas beenbeen disregardeddisregarded byby thethe courtscourts inin thethe interestinterest ofof thethe businessbusiness community.community. WhereverWherever thethe promisedpromised performanceperformance consistsconsists partlypartly inin thethe creationcreation ofof newnew legallegal relationsrelations inin thethe obligee-asobligee-as inin thethe casecase ofof aa salesale ofof goods-itgoods-it maymay bebe saidsaid thatthat thethe assignmentassignment causescauses thethe per-per­ formanceformance toto differdiffer inin thatthat thesethese legallegal relationsrelations mustmust nownow bebe cre-cre­ atedated inin aa differentdifferent party.party. ThisThis differencedifference isis immaterialimmaterial toto thethe 0 debtor.debtor.44oa9 InIn casescases wherewhere thethe performanceperformance ofof thethe obligorobligor isis notnot changedchanged inin anyany wayway byby thethe assignment,assignment, itit maymay reasonablyreasonably bebe saidsaid thatthat thethe rightright of thethe assigneeassignee isis thethe samesame rightright asas thatthat previouslypreviously heldheld byby thethe assignor;assignor; but toto thethe extent thatthat thethe rightright cancan bebe andand isis slightlyslightly changedchanged by assignment, thethe assignee'sassignee's rightright mustmust bebe saidsaid toto bebe aa new rightright propro tanto,tanto, similarsimilar inin allall other ways toto thatthat previouslypreviously held by the assignor.

DEFENSES AND "EQUITIES" The great difference between instruments ordinarily de-de­ scribed as "negotiable" and contracts not so described is that the holder of a negotiable instrumentinstrument frequently has power to create a right inin a transfereetransferee when he has none himself. No such power exists in any case of. assignment as distinguished fromfrom negotia­negotia- tion.tion. AnAn assignee never gets -a better right thanthan the assignor had. IfIf forfor anyany reasonreason thethe assignor's claimclaim was void,void, voidable, unenforceable, oror conditional,conditional, so alsoalso isis thethe claimclaim of thethe as­as- signee.signee.414 1 IfIf thethe debtordebtor hadhad anyany defense,defense, counterclaim,counterclaim, oror set-offset-off

-Usually' Usually itit cancan bebe mademade thethe dutyduty ofof thethe obligorobligor toto deliverdeliver goodsgoods into·theinto the possessionpossession ofof anan assignee;assignee; notnot so,so, however,however, wherewhere thethe deliverydelivery toto thethe assignorassignor waswas toto enableenable himhim toto renderrender aa purelypurely personalpersonal performanceperformance forfor thethe benefitbenefit ofof thethe obligorobligor andand deliverydelivery intointo thethe handshands ofof anan assigneeassignee wouldwould makemake thisthis impossible.impossible. AmericanAmerican SmeltingSmelting &&R. P.Co. Co. v.v. BeldenBelden Min.Min. Co.,Co., supra,supra, n.n. ~7.27. U Thus, if the assignor'sassignor's claimclaim waswas basedbased onon anan informalinformal promisepromise withoutwithout 'Thus, if the was sufficientsufficient consideration,consideration, thethe assigneeassignee hashas nono right.right. IfIf thethe assignor'sassignor's claimclaim was voidable for fraud oror infancy,infancy, soso alsoalso isis thethe assignee's.assignee's. IfIf AA hashas promisedpromised voidable for fraud and BB $1000,sooo, payablepayable afterafter thethe completioncompletion ofof specifiedspecified workwork byby BB inin personperson and onlyonly afterafter A'sAs shipship comescomes in,in, thethe rightright ofof anyany assigneeassignee fromfrom BB willwill bebe condi­condi- tionaltional onon thethe completioncompletion ofof thethe workwork byby BB andand onon thethe arrivalarrival ofof A'sA's ship.ship. IfIf thethe defectsdefects inin thethe assignor'sassignor's rightright werewere removableremovable (e.(e.g.,g., byby aa ratifica­ratifica- tion),tion), theythey remainremain soso removableremovable afterafter assignment.assignment.

HeinOnline -- 74 U. Pa. L. Rev. 229 1925-1926 230230 UNIVERSITY OFOF PENNSYLVANIA LAWLAW REVIEW goodgood against thethe assignor,assignor, it isis good also againstagainst thethe assignee, provided itit existedexisted before notice of the assignment isis receivedreceived byby thethe debtor.4242 If a first assignee assignsassigns toto a second assignee,assignee, any defense thatthat thethe debtordebtor had against thethe firstfirst assignorassignor isis good against bothboth thethe firstfirst andand secondsecond assignees;assignees; and anyany additional de-de­ fense, counterclaim, or set-offset-off thatthat thethe debtordebtor had against thethe firstfirst assigneeassignee while he was inin possession of thethe claim, oror after the secondsecond assignment but before notice thereofthereof by the debtor, isis good against the second assignee.4343 Such isis thethe case even though thethe assignee inin question, or anyany previous assignee, is a purchaser for value without notice. A debtor cannot by assign-assign­ ment be put inin a worse position in any respect,respect, except so far as this may result from being indebted to a new and more pressing creditor. A difference must be taken, however, with respectrespect to so-called "latent equities." These are claims of third persons, persons other thanthan the debtor. The rule followed by the majority of courts is that the "latent equity" of a third person does not sur-sur­ vive an assignment to an innocent purchaser for value.44 Thus if the assignor is a mere trustee for X, but he holds a document that reasonably leads the assignee to believe that the assignor is unlimited owner and to pay value to him for the assignment, the claims of X are inferior to those of the assignee. Again, if a

" WILLISTON, CONTRAcrs, §433. "WILUSTON, CONTRACTS, §433• "The in v. Metzgar, I Rawle 227 (Pa., .. The point was well argued in Metzgar v. Metzgar, 1 Rawle 227 (Pa., 1829). Counsel said: "Notice puts an end to all privity between thethe assignor and obligor, and the assignee becomes the owner of the bond, subject to any existing equity against the obligee. After notice of thethe assignment, a new contract arises between the obligor and the assignee, who holds a chosechose in action no more negotiable than itit was in the hands of the obligee. If he transfers it, he does so liable to all the equity arising from the contract be­be- tween him and the obligor. IfIf this be notnot the case, thethe effect ofof an assignment would be toto make thethe instrument instrument negotiable." The court agreed,agreed, Gibson, C. J., saying: "At thethe timetime of the assignment, thethe right of defalcation (set-off)(set-off) existed inin full force between thethe obligorobligor and thethe intermediateintermediate assignee. By what right,right, then, can can thethe latterlatter putput aa subsequentsubsequent assignee inin a more advan­advan- tageoustageous situationsituation thanthan he held himself?himself? In thisthis state, no assignee, whether legallegal or equitable,equitable, can affect toto be prejudiced by want of notice;notice; it being his duty, asas established by many decisions, to sound thethe obligor before he parts with hishis money, as to thethe amount actually due."due." InIn accordaccord isis Martin v. Rich­Rich- ardson,ardson, 68 N. C. 255 (1873).(1873). (A owed BB on bond. BB assigned to C,C, who atat that timetime already owedowed A onon anotheranother bond. Later CC assignedassigned back toto B, who hadhad nono notice of C'sC's debtdebt toto A. Held, A hashas a set-offset-off against B.) .."Ames,Ames, Purchase for Value Without Notice,Notice, 1I HARv.HAv. L.L. REv.REV. 7, 8 (1886).(i886).

HeinOnline -- 74 U. Pa. L. Rev. 230 1925-1926 ASSIGNMENTASSIGNMENT OFOF CONTRACTCONTRACT RIGHTSRIGHTS 231 creditor,creditor, thethe holderholder ofof aa right,right, isis inducedinduced byby thethe fraudfraud ofof XX toto assignassign thethe rightright toto X,X, andand XX thereafterthereafter assignsassigns toto anan innocentinnocent pur-pur­ chaserchaser forfor value,value, thethe latterlatter isis notnot affectedaffected byby thethe "equities'"equities" ofof thethe defraudeddefrauded creditor-thecreditor-the firstfirst assignor.assignor.4545 TheThe debtordebtor isis notnot thethe possessorpossessor ofof thesethese "equities.""equities." HeHe wouldwould havehave nono suresure defensedefense eveneven asas againstagainst X,X, thethe defrauder;defrauder; althoughalthough ifif hehe hashas knowledgeknowledge ofof thethe fraudfraud hehe wouldwould bebe wellwell advisedadvised toto interpleadinterplead XX and thethe defraudeddefrauded creditor.creditor. InIn suchsuch anan interpleaderinterpleader thethe latterlatter couldcould winwin asas againstagainst X, butbut notnot (by(by thethe majoritymajority rule)rule) asas againstagainst thethe inno-inno­ centcent secondsecond assignee. This isis thethe rulerule inin thethe casecase of otherother kinds of property, and~d therethere seems toto bebe no sufficientsufficient reason forfor apply-apply­ inging a different rulerule inin thethe casecase of contractcontract rights. They, too,too, are :'property.""property." The reasonsreasons forfor protectingprotecting an innocentinnocent purchaser for valuevalue are the samesame inin both classesclasses of cases andand uniformity is desirable.

SuccEssivESUCCESSIVE ASSIGNMENTSAsSIGNMENTS BYBy THE SAME ASSIGNOR Where the holder of a right makes twotwo successive assign-assign­ ments thereofthereof to two different persons.therepersons.there has been much con-con­ flict in the solution of the problems inrolved.Involved. Some of this con-con­ flict cannot be explained away. Thus, the English rule is that the right against the debtor belongs to thatthit assignee who first gives notice to the debtor of his assignment.4646 Most of the American jurisdictions refuse to followfollow: this rule,47rule,47 and hold that the right is in the first assignee except in two classes of cases, as follows:follows: I.i. The right belongsbelohgs to the secondsecond assignee if the prior as­as- signment was itselfitself inoperative forfor any reason and nono such reason

"Putnam"Putnam v. Clark, 2929 N.].N. J. EqEq 412412 (1878),(1878), (bond(bond andand mortgage);mortgage) ; Ever­Ever- solesole v. Maull,Maull, 505o Md.Md. 9595 (1878);(1878) ; Ambrose v. Evans, 6666 Calif.Calif. 74.74, 44 Pac.Pac. 96096o (1884), (certificate(certificate ofof stock).stock). Contra: Cutts v. Guild,Guild, 5757 N. Y. 2292a9 (1874),(1874), (judgment debt);debt); Blackman v.v. Lehman, 6363 Ala. 547547 (1879),(i879), (bonds assignedassigned byby bailee);bailee) ; CommercialCommercial Bank v.v. Burch,Burch, 4040 III.Ill. App.App. 505505 (1890);(1 8o); SutherlandSutherland v.v. Reeve,Reeve, 4141 Ill.Ill. App. 295295 (I~O),(i8po), 151151 III.Ill. 384, 3838 N.N. E.E. 130130 (1894).('894). SomeSome ofof thethe casescases contracontra cancan doubtlessdoubtless be reconciledreconciled on thethe groundground thatthat thethe assignorassignor diddid not havehave thethe indiciaindicia ofof ownership.ownership. "DearIe"Dearle v.v. Hall,Hall, 33 Russ.Russ. I1 (1823);(823) ; FosterFoster v.v. Cockerell,Cockerell, 33 Cl.Cl. && F.F. 456,456, (H.(H. L.,L., 1835);1835); AdamsonAdamson v.v. Paonessa,Paonessa, 180i8o Calif. 157,i57, 179179 Pac.Pac. 88088o (1919).(igig). d'SalemSalem TrustTrust Co.Co. v.v. Mfrs.Mfrs. FinanceFinance Co.,Co., 264264 U.U. S.S. 182182 (1924),(1924), discusseddiscussed inin 3333 YALEYALE L.L. ].J. 767767 (1924)(1924);; MuirMuir v.v. Schenck,Schenck, 33 Hill,Hill, 228228 (N.(N. Y.,Y., 1842).1842).

HeinOnline -- 74 U. Pa. L. Rev. 231 1925-1926 232a32 UNIVERSITYUNIVERSITY OF PENNSYLVANIA LAW REVIEW existsexists as toto the second.second. This is self-explanatory. An example is a case in which the firstfirst assignmentassignment was a mere oral expression of gift andand thethe secondsecond was for value. 2. The prior assi~ee'sassignee's right will be extinguished and the duty of the obligorobligor will be toto the subsequent assigneeassignee inin case the latter pays value without knowledge ofof the prior assignmentassignment andand inin reasonable reliance onon a document evidencing the existence of thethe rightright in the assignor and negligently left in thethe assignor's 48 possession by the prior assignee.48 An innocent assignee forfor value should be protected against a prior assignee who made itit possible for the assignor to perpe­perpe- trate a fraud. IfIf the prior assignee knew or ought toto have known of thethe existence of a document evidencing the existenceexistence of the right in the assignor and that its possession would enable the assignor toto induceinduce a reasonably prudent person to pay value for another assignment, the lawlaw compels the prior assignee toto bear the loss (unless he can collect from the defrauder), and confers the right upon the subsequent innocent assignee for value. The doc­doc- ument may be either a negotiable or a non-negotiable instrument.instrument. It may be a formal bond, a certificate of stock, a savings bank book, or an insurance policy. The only limitation upon its char­ char- acter is that itit must be a document that is so customarily sur­sur- rendered upon payment or assignment that the inference of non­non- payment and non-assignment may reasonably be drawn from its continued possession by the assignor. For thethe second assignee to be preferred, there must be an element of "estoppel" in the broad general use of that word.word,. Merely obtaining possession of such a document with actual knowledge of an earlier assignment or without paying value in reliance on it will not make the second assignment superior to the first. It is believed that it is no longer sound to prefer the sec-

"Herman v. Conn. Mut. L. Ins. Co.,Co, 2182x8 Mass. 181, 105ioS N. E. 45o450 (1914);(1914) ; Bridge v. same, isa152 Mass. 343, 25 N. E. 61262 (i8go)(1890); ; Maybin v. Kirby, 4 Rich. Eq. 105 (S. C.,C, 1851).x851). The second assignee may also be preferred if he made inquiry of the debtor and was induced to become a purchaser fortor value by the fact that the debtor had received no notice of a prior assignment. See Salem Trust Co. v. Mfrs. Finance Co., supra.

HeinOnline -- 74 U. Pa. L. Rev. 232 1925-1926 ASSIGNMENTASSIGNMENT OFOF CONTRACTCONTRACT RIGHTSRIGHTS 233 ondond assigneeaSsign~ onon thethe basisbasis ofof thethe ancientancient distinctiondistinction betweenbetween "equi-"equi­ 49 able"able" andand "legal""legal" title.title.·9 ItIt hashas alsoalso beenbeen saidsaid thatthat thethe secondsecond assigneeassignee isis inin allall juris-juris­ dictionsdictions preferredpreferred overover thethe firstfirst ifif hehe isis anan innocentinnocent purchaserpurchaser forfor valuevalue andand getsgets payment,payment, getsgets aa judgment,judgment, oror entersenters intointo aa nova-nova­ tiontion withwith thethe debtor.debtor}SO50 InIn thesethese cases,cases, however,however, whateverwhatever rightright thethe secondsecond assigneeassignee hashas isis aa veryvery differentdifferent rightright fromfrom thethe oneone thatthat thethe creditorcreditor purportedpurported toto assignassign toto him.him. HisHis rightsrights areare eithereither 51 "property""property" rightsrights lSI oror "judgment""judgment" rightsrights oror "novation""novation" rights,rights, determineddetermined solelysolely byby thethe newnew transactiontransaction andand notnot byby thethe assign-assign­ ment.ment. TheThe assignmentassignment toto himhim gave himhim thethe powerpower toto dischargedischarge thethe debtor, as longlong as thethe debtordebtor hadhad nono noticenotice of thethe firstfirst assign-assign­ mentment andand no longer.longer. iS22 This powerpower toto discharge is not restrictedrestricted toto thethe threethree methods above named. A sealeasealed release, an accordaccord andand satisfaction, aa judgmentjudgment on thethe meritsmerits inin favor of thethe debtor, and an award ofof an arbitrator would all operate toto discharge thethe debtor.5III3 By a sealedsealed release or by a judgmentjudgment or award in favorfavor of the debtor, the second assignee would get no rights what-what­ ever. By the other methods he would get the rights appropriate to the method, but not the right of an assignee-the same right in substance against the debtor that the assignor had. It should be observed that this power to discharge the debtor isis not dependent upon the second assignee's being innocent. It isis exactly the same power that the guilty creditor had prior to no­no- ticetice to thethe debtor. ItIt depends upon the debtor's lack of notice of thethe firstfirst assignment and upon thethe fact that the debtordebtor isis jus-jus­ tifiedtified inin believing thatthat thethe secondsecond assignmentassignment isis aa validvalid one. If, however, the secondsecond assignee isis not an innocent purchaserpurchaser for value,value, hehe willwill havehave toto account toto thethe firstfirst assigneeassignee forfor whatever hehe getsgets out of thethe newnew transactiontransaction wherebywhereby thethe debtor isis dis-

•aSeeSee 3333 YALEYA.E L.L. ].J.768768 (1923),(1923), Don. 15.i5. ThereThere isis nono resres oror "fund""fund" toto whichwhich "title""title" cancan exist.exist. •"Aus,AllES, CASESCASES ONo TRUSTS,TRUSTS, 328328 n.n. a HeHe maymay keepkeep thethe moneymoney paidpaid toto himhim inin goodgood faithfaith byby thethe debtor.debtor. Rabin­ Rabin- owitzowitz v.v. People'sPeople's Bank,Bank,235235 Mass.Mass. 102,io2, 126136 N.N. E.E. 425425 (1920).(192o). • SWnasToN,WILLISTON, CoNTllAcrs,CONTRAMCS, §433.§433. •"Two Two ofof these,these, ofof course,course, areare notnot thethe exerciseexercise ofof aa "power""power" byby thethe as­as- signee;signee; nor,nor, indeed,indeed, isis aa judgmentjudgment inin favorfavor ofof .thethe assignee.assignee.

HeinOnline -- 74 U. Pa. L. Rev. 233 1925-1926 234 UNIVERSITY OF PENNSYLVANIA LAW REVIEW charged. Indeed in some instances the second assignee may be liable in damages to the first as for a tort. In this respect, if he had knowledge of the first assignment, he is in the same position as the guilty creditor would be in ifif he should discharge the debtor after having assigned to an assignee. If the debtor has notice of the first assignment, the second assignee has no power of discharge, however innocent he may be. A debtor with notice must fight all other claimants at his peril, using a bill of interpleader when necessary. A voluntary pay­pay- ment to the second assignee would not affect the right of the prior assignee; nor would a judgment obtained by the second assignee or a new contract in the form of a novation. Yet the second as-as­ signee would have the same "property," "judgment," or "nova­"nova- tion" rights against the debtor that he would have had if his as­as- signment had itself been effective. These rights are not the rights of an assignee. Arthur L. Corbin. Yale University Law School.

HeinOnline -- 74 U. Pa. L. Rev. 234 1925-1926