some States, however, the courts have followed an early statement of Chancellor Kent,10 which is now overruled in New York," to the effect that an assignee is not bound by equities in favor of third persons since, though he can make inquiries of the debtor before taking the assignment and thereby acquaint himself with any defences the debtor may have, no such procedure is possible in regard to equities of unknown third persons.12 A distinction must be taken where the chose in action has a tangible form, especially if it is by law assignable. The assignment of an overdue negotiable promissory note though often likened to that of an ordinary chose in action does not properly involve such a discussion as is contained in this article. Even after maturity the transfer of such a note by the holder unquestionably transfers a legal title and though the circumstance that the transfer is after maturity puts the taker of the note on inquiry as to any defence the maker may have (since if he had had no defence the instrument would presumably have been paid) yet the fact that the instrument is overdue gives no reason to suppose that there are collateral equities affecting the transferor's title. In such a case, therefore, the bonâ fide purchaser of the note is protected.13 A principle is applicable also to other choses in action having tangible form like certificates of stock, policies of insurance, non-negotiable bonds, somewhat similar to that which is

South Royalton Bank, 39 Vt. 25 (1866). See also Western Nat. Bank v. Maverick Nat. Bank, 90 Ga. 339, 16 S. E. 942 (1892); Osborn v. McClelland, 43 Ohio St. 284, I N. E. 644 (1885).

10 In Murray v. Lylburn, 2 Johns. Ch. (N. Y.) 441 (1817). See also Livingston v. Dean, 2 Johns. Ch. (N. Y.) 479 (1817).

11 See New York decisions stated supra, note 9.

12 First National Bank v. Perris Irrigation District, 107 Cal. 55, 40 Pac. 45 (1895); Ohio Life Ins. Co. v. Ross, 2 Md. Ch. 25 (1848); Duke v. Clark, 58 Miss. 465 (1880); Williams v. Donnelly, 54 Neb. 193, 74 N. W. 601 (1898); DeWitt v. VanSickle, 29 N. J. Eq. 209 (1878); Mifflin County Nat. Bank's Appeal, 98 Pa. 150 (1881); Huber's Assigned Estate, 21 Pa. Sup. Ct. 612, 615 (1902). In a few of these decisions which relate to mortgages and judgments, it is not clear how far the court intended to lay down broadly a principle covering all non-negotiable choses in action.

13 Moore v. Moore, 112 Ind. 149, 13 N. E. 673 (1887); Eversole v. Maull, 50 Md. 95 (1878); Etheridge v. Gallagher, 55 Miss. 458 (1877); Lee v. Turner, 89 Mo. 489, 14 S. W. 505 (1886); Neuhoff v. O'Reilly, 93 Mo. 164, 6 S. W. 78 (1887); Osborn v. McClelland, 43 Ohio St. 284, 1 N. E. 644 (1885); Kernohan v. Durham, 48 Ohio St. 1, 26 N. E. 982 (1891); Patterson v. Rabb, 38 S. C. 138, 17 S. E. 463 (1892). See also Combs v. Hodge, 21 How. (U. S.) 397 (1858), and the argument in POMEROY, EQUITY JURIS., § 707 et seq. But see Foley v. Smith, 6 Wall. (U. S.) 492 (1867); Owen v. Evans, 134 N. Y. 514, 31 N. E. 999 (1892).

applied to them when they are made the subject of gift. The owner of the document is regarded as possessing if not a kind of legal ownership to the chose in action represented by it, at least a legal ownership of a paper which necessarily accompanies legal ownership, and the lack of which is notice of an infirmity of title. Accordingly a bonâ fide purchaser of a certificate of stock,14 a non-negotiable bond or note,15 or a policy of insurance,16 is preferred to one having an equitable right against his assignor. Furthermore, it has been held that a written assignment of a chose in action by one who seeks to avoid the assignment later on equitable grounds estops the claimant as against a bona fide purchaser who bought the chose in action on the faith of that writing." An assignor who has no legal title but is a mere bailee of a non-negotiable tangible chose in action it need hardly be said can give no right even to a bonâ fide purchaser which can stand against the depositor's claim.18

3. It is almost, if not quite, universally admitted that a partial assignee has merely an equitable right. If then, the total assignee has a legal right, a subsequent total assignment prevails over a prior partial assignment. This monstrous result has actually been reached on this reasoning, under the Georgia Code, which is held

14 Colonial Bank v. Cady, L. R. 15 A. C. 267 (1890); Ambrose v. Evans, 66 Cal. 74, 4 Pac. 960 (1884); Arnold v. Johnson, 66 Cal. 402, 5 Pac. 796 (1885); Otis v. Gardner, 105 Ill. 436 (1883). But see Taliaferro v. First Nat. Bank, 71 Md. 200, 214, 17 Atl. 1036.

15 Rimmer v. Webster, [1902] 2 Ch. 163; Cowdrey v. Vandenburgh, 101 U. S. 572 (1879); Adams v. District of Columbia, 17 Ct. Cl. 351 (1881); International Bank v. German Bank, 71 Mo. 183 (1879); Putnam v. Clark, 29 N. J. Eq. 412 (1878); Grocers Bank v. Neet, 29 N. J. Eq. 449 (1878); Combes v. Chandler, 33 Oh. St. 178 (1877); Taylor v. Gitt, 10 Barr (Pa.) 428 (1849). But see Blackman v. Lehman, 63 Ala. 547 (1879); Covell v. Tradesman's Bank, 1 Paige (N. Y.) 131 (1828); Patterson v. Rabb, 38 S. C. 138, 17 S. E. 463 (1892).

16 Plummer v. People's Nat. Bank, 65 Iowa 405, 21 N. W. 699 (1884). But see Brown v. Equitable Life Assur. Soc., 75 Minn. 412, 78 N. W. 103, 671, 79 N. W. 968 (1899); Culmer v. American Grocery Co., 21 N. Y. App. Div. 556, 48 N. Y. Supp. 431 (1897).

17 See Cowdrey v. Vandenburgh, 101 U. S. 572 (1879); Campbell v. Brackenridge, 8 Black. (Ind.) 471 (1847); Thurston v. McLellan, 34 App. D. C. 294 (1910); Cochran v. Stewart, 21 Minn. 435 (1875); Moore v. Metropolitan Nat. Bank, 55 N. Y. 41 (1873); Mifflin County Nat. Bank's Appeal, 98 Pa. 150 (1881); State Bank v. Hastings, 15 Wis. 75 (1862). But see Owen v. Evans, 134 N. Y. 514, 31 N. E. 999 (1892); Central Trust Co. v. West India Improvement Co., 169 N. Y. 314, 324, 62 N. E. 387 (1901).

18 Blackman v. Lehman, 63 Ala. 547 (1879); Midland Railroad Co. v. Hitchcock, 37 N. J. Eq. 549 (1883). See also Combs v. Hodge, 21 How. (U. S.) 397 (1858).

to give the total assignee legal ownership.19 Whatever may be the necessity of the decision under the Georgia Code, the case would probably not be generally followed even in jurisdictions which allow or require an assignee of an entire claim to sue in his own name.20 The result of the three classes of cases just referred to may then be considered under the headings of what the law actually is, and of what it ought to be. As to the first it seems impossible to doubt that the great weight of authority supports results which involve the conclusion that the assignee's right is not legal but equitable; and this conclusion is supported also by decisions relating to the effect of statutes permitting the assignee to enforce his rights in his own name.

The statutes fall into several classes, providing respectively that, 1. An assignee under a written assignment may enforce his rights in his own name or at law. Under such a statute the effect of oral assignments is unchanged.

2. The real party in interest must be plaintiff in any litigation. 3. A chose in action is assignable so as to vest title therein in the assignee.

How far a particular statute works a change other than one merely of procedure, is open to argument in each case. It would seem certainly that a mere provision that the real party in interest must bring suit in his own name can effect only a change of procedure. As to statutes in a different form the matter is not so clear. The power of the legislature to make the assignee a legal owner must, of course, be conceded; but generally the change effected by modern statutes has been held procedural only and does not alter the substantial rights of the parties.2

21

19 King Bros. & Co. v. Central of Georgia Ry. Co., 135 Ga. 225, 69 S. E. 113 (1910). See also The Elmbank, 72 Fed. 610 (1896).

20 In Fairbanks v. Sargent, 104 N. Y. 108, 9 N. E. 870 (1887); 117 N. Y. 320, 22 N. E. 1039 (1889), it was held after elaborate consideration, that a prior partial assignee prevailed over a subsequent assignee of the whole claim who took in good faith and without notice. The same result was reached in Gillette v. Murphy, 7 Okla. 91, 54 Pac. 413 (1898). In Bridge v. Connecticut Mut. Life Ins. Co., 152 Mass. 343, 25 N. E. 612 (1890), a prior partial assignee would apparently have been preferred over a subsequent total assignee had he not been guilty of laches.

21 Carozza v. Boxley, 203 Fed. 673 (1913); Glen v. Busey, 5 Mackey (D. C.) 233 (1886); Leach v. Greene, 116 Mass. 534 (1875); Beckwith v. Union Bank, 9 N. Y. 211 (1853); Myers v. Davis, 22 N. Y. 489 (1860); Fuller v. Steiglitz, 27 Oh. St. 355, 358, (1875); Bentley v. Standard Fire Ins. Co., 40 W. Va. 729, 23 S. E. 584 (1895); Watkins v. Angotti, 65 W. Va. 193, 63 S. E. 969 (1909).

Consequently, whether an assignee can maintain an action in his own name, depends upon the lex fori, not the lex loci contractus. It is a matter not of right but of remedy.22 Statements, therefore, which are occasionally found to the effect that complete legal ownership passes to the assignee of a legal chose in action,23 must be regarded as exceptional and, if not clearly required by the terms of a particular statute in question, as opposed to the current of authority.

I am, however, more interested in what the law on the point ought to be than what the actual weight of authority may be; and, therefore, the most serious question is whether the decisions in the three classes of cases, of which I have spoken, are rightly decided.

As to the right of set-off, I think most persons will feel that it would be improper to allow one who had a claim subject to a setoff, to escape the set-off by selling his claim. The only way to prevent it is by subjecting the assignee to the set-off. Certainly I believe the general rule allowing the set-off to be used is a desirable one. In a system of law where the smaller of two mutual debts cancels the other pro tanto,24 it would not be necessary to deny the assignee legal ownership of the assigned claim in order logically to reach this result; but in the common law a cross-claim is not payment or part payment of the original claim,25 the right of set-off is

22 Joseph Dixon Crucible Co. v. Paul, 167 Fed. 784 (1900); Richardson v. New York Central R. Co., 98 Mass. 85, 92 (1867); American Lithograph Co. v. Ziegler, 216 Mass. 287, 103 N. E. 909 (1914); Tully v. Herrin, 44 Miss. 626 (1870); Lodge v. Phelps, 1 Johns. Cas. (N. Y.) 139 (1799); Northwestern Mut. Life Ins. Co. v. Adams, 155 Wis. 335, 144 N. W. 1108 (1914).

23 In Fitzroy v. Cave, [1905] 2 K. B. 364, 373, the Court said: "Henceforth in all Courts a debt must be regarded as a piece of property capable of legal assignment in the same sense as a bale of goods.” It is unfortunate that the idea expressed in Walker v. Bradford Old Bank, 12 Q. B. D. 511, 515 (1884), should not rather prevail, "section 25, sub-s. 6 of the Judicature Act, 1873, does not, in my view, give any new rights, but only affords a new mode of enforcing old rights." See also Close v. Independent Gravel Co., 156 Mo. App. 411, 138 S. W. 81 (1911).

24 It was an axiom in the later Roman law that set-off took place ipso jure. The meaning of this was disputed; one school maintaining that without any act of the parties the set-off took place at the instant of the coexistence of the two debts; the other school holding that such cancellation took place only when asserted by one of the parties. DERNBURG, COMPENSATION, 2d ed., 283. The former view finds expression in the FRENCH CIVIL CODE, Art. 1290, and even under the latter view, the assertion of a party, not a decree of court, is all that is necessary for cancellation. See Swiss CODE OF OBLIGATIONS, Art. 122-124. Under the German Code it is necessary that the claims shall have arisen out of the same legal relation. BÜRG. GESETZBUCH, § 273.

25 In Searles v. Sadgrave, 5 El. & Bl. 639 (1855), to an action for money had and received, the defendant pleaded a tender of a certain sum, and the plaintiff made replica

rather in the nature of a cross-action. Certainly it seems impossible to say, that it is a legal limitation of the claim, and if it is only an equity, it would be cut off by the assignment if the assignee became the legal owner of the claim.

Perhaps the chief reason (other than a blind revolt at the assertion that choses in action are not transferable when in fact they are transferred every day) why the view is advocated that the assignee of a chose in action acquires legal ownership is because thereby so-called latent equities against the claim would be cut off, and it is thought unfair to subject the assignee to equities which he is unable to discover. On the other hand, it is to be observed that intangible choses in action are not primarily intended for merchandising, as chattels are. The rule in regard to latent equities has no importance not only where negotiable paper is concerned, but where choses in action having tangible form like policies of insurance, savings bank books, or non-negotiable notes are in question. The delivery of the document will cut off the equity. If, therefore, the parties desire to put an obligation in a merchantable form they can (if they wish) do so, and can do so without making the obligation negotiable. For such property, then, as an intangible chose in action, I see little reason to prefer the assignee to a previously defrauded owner of the claim. Where the sale of property is a necessary function of commercial activity, it is socially desirable to protect the new purchaser at the expense of a former innocent victim; but the desirability of this policy seems limited to that class of property.

It is, however, because of its effect on partial assignments that I am chiefly opposed to such a development of the law as shall give the assignee the legal ownership of the claim. The enormous weight of authority is to the effect that a partial assignee has but an equitable right. While this rule persists it is impossible to deny that a subsequent total assignee if his ownership is legal will prevail over a prior partial assignment. I have called such a rule monstrous, and so it seems to me because, in effect, it destroys the value of partial assignments almost completely. To say that an assignee

tion that a larger entire sum was due from the defendant. To this the defendant rejoined that the plaintiff was indebted to the defendant in a sum equal to the whole of the larger sum except to the amount which had been tendered. On demurrer the rejoinder was held bad.