A clear and distinct remedy was thus afforded private persons for usurpations of the character mentioned in the statute, by information in the nature of quo warranto;25 but in other respects the common law limits for the application of such informations continues, and the common law jurisdiction remains.24 GIDEON D. BANTZ.

23 Tanc. Quo. War., 10-17; Cole Crim. Inf., 113, 114, 122, et seq.

24 Tanc. Quo War., 13, 18, et seq.

ASSIGNMENT-OF PART OF A DEMANDAT LAW—IN EQUITY-INSOLVENT LAWS.

JAMES v. CITY OF NEWTON, AND ROYAL GILKEY, ASSIGNEE, IN INSOLVENCY.*

Supreme Judicial Court of Massachusetts. September 8, 1886.

1. At law, a debtor cannot be compelled to pay an entire debt in parts, either to the creditor or to assginees of the creditor, unless he promises so to do.

2. But it seems that it has not been decided in this State that there cannot be an assignment of a part of a fund or debt which will constitute an equitable lien or charge upon it, and which will be enforced in equity against the debtor or person holding the fund. That the debtor is a municipality makes no difference.

3. In a suit in eqnity, where the debt remained unpaid, and the debtor in its answer asked the court to determine the rights of different claimants to the fund for its payment, and a part thereof had been assigned by the creditor by an order in writing, such assignment not being in fraud of the insolvent law: Held, that the debtor should be decreed to pay to the payee specified in the creditor's order the portion of the money due from it specified therein, and to pay the remainder thereof, after deducting its costs, to the assignee in insolvency of the creditor.

In equity. Reserved for the full court.

Bill in equity by Edward B. James, setting forth that one William H. Stewart, on August 14, 1883, entered into a contract in writing with the city of Newton to build a school house for said city; that Stewart thereupon entered upon the performance of his part of the contract, and had nearly fulfilled the same, when, becoming financially embarassed, on June 13, 1884, a meeting of his creditors was held, and they voted to accept the offer of Stewart, to-wit: the sum of twenty cents on the dollar, in full settlement of their respective claims; that on June 21, 1884, for the purpose of enabling him to carry out his said contract with said city, and to fulfill his agreement with the said several creditors, the said Stewart applied to the said James for a loan of money; whereupon, the said James, in good faith and for the purpose aforesaid, let him *s. C., 2 New England Reporter, 820.

* *

66

have a certain sum, to-wit: $575, and tock an assignment, by the terms of which, in consideration of $600 to be paid by Edward B. James, of Cambridge," said Stewart did "sell, assign, transfer and make over to the said James the sum of $600, now due and to become due and payable to me from the city of Newton under and by virtue of a contract between the said city and myself, for building a grammar-school house, dated August 14, 1883. It is agreed that said sum of $600 shall be paid out of the money reserved as a guaranty by said city, and at the time the same would become payable to me according to the terms of said contract, and that I will finish the said building, and perform my part of said contract, according to its terms." Immediately after the taking of the assignment, the said James notified the city of Newton.

The bill further sets forth that June 26, 1885, the said Stewart, by reason of the refusal of certain creditors, to the amount of about $3,000, to accept the said twenty cents on a dollar, filed a petition in insolvency in the county of Middlesex, and on July 10, following, said Royal Gilkey was duly elected assignee of said Stewart; that before and after the filing of his said petition, said Stewart expended the greater portion of said $575 in the further completion of his said contract with said city, and made a proper and legitimate use of all said sum; that at the time of filing said petition there was due said Stewart under said contract the said sum of $600 or more, though not then payable; that after the said Gilkey was appointed assignee he substantially completed the said contract with the city of Newton, whereby, under said contract, there became due the sum of $3,238 or thereabouts, the most of which sum had been paid to said Gilkey as assignee, the said city reserving, on account of this assignment, a sum sufficient to pay the same; that the said city has been ready and willing to make a severance of the sum due under said contract, to pay the said James the amount of the assignment, and the said Gilkey the balance, if it could legally do so; but has been forbidden so to do by said Gilkey, who, as assignee aforesaid, claimed the whole amount due under said contract, and had begun a suit at law therefor, which was pending at the time of bringing this bill. The prayer of the bill was, that the suit at law pending between said Gilkey, as said assignee, and said city of Newton, be stayed to await the determination of this suit; that the said city of Newton be enjoined from payment of the said sum of $600 to the said Gilkey, and that the said sum of $600 be decreed to be paid to the plaintiff by the said city of Newton.

The defenadant city of Newton in its answer stated that it was and always had been ready and willing to pay said balance to such person or persons as should be justly entitled to receive the same, whether said plaintiff or said Gilkey, as such assignee. The defendant also prayed that

said plaintiff and said Gilkev might interplead, and settle and adjust their demands between themselves.

It was agreed that the plaintiff James, and Wm. H. Stewart, at the time of the execution of the assignment or order, knew that said Stewart was actually insolvent and had called a meeting of his creditors, and that they had voted, or a majority of them, to accept twenty cents on the dollar of their claim; and said Stewart represented to said James that he was obtaining this money to assist him to complete the contract and to effect the composition of twenty cents on the dollar, and assured him that he could do so. No action or vote was ever had or taken upon said assignment by the city of Newton, by the city council, or either branch thereof, by any committee, or by any person authorized to bind the city. The assignee Gilkey, when he was appointed, had substantially no funds of the estate of said Stewart in his possession, and, in order to complete said contract, expended about $1,200 of his own funds in labor and material in finishing the building, and paid off out of the funds in the hands of the city, eventually paid him, mechanics' liens thereon amounting to about $500, besides. Said James actually paid and loaned said Stewart the sum of $575 at the time of the execution of said assignment, which was the sum agreed upon between the two.

The case, after hearing in the superior court before Knowlton J., was reserved for the consideration of the full court.

Mr. C. C. Powers, for complainant; Mr. W. B. Durant, for defendant Gilkey, assignee; Mr. W. Slocum, for defendant city of Newton.

FIELD, J., delivered the opinion of the court: The assignment in this case is a formal assignment for value of "the sum of $600, now due and to become due and payable to me" from the city of Newton, under and by virtue of a contract for building a grammar-school house, and it is agreed that this sum "shall be paid out of the money reserved as a guaranty by said city," and the assignee is empowered "to collect the same.

There is no doubt that it would operate as an assignment, to the extent of $600, if there can be an assignment, without the consent of the debtor, of a part of a debt to become due under an existing contract; and the cases that hold that an order drawn on a general or a particular fund is not an assignment pro tanto, unless it is accepted by the persons on whom it is drawn, need not be noticed. That a court of law could not recognize and enforce such an assignment except against the assignor, if the money came into his hands, is conceded. The assignee could not sue at law in the name of the assignor, because he is not an assignee of the whole of the debt. He could not sue at law in his own name, because the city of Newton has not promised him that it will pay him $600. The $600 is expressly made payable "out of the money reserved as a guaranty by said

city," and, by the contract, the balance reserved was payable as one entire sum; and at law a debtor cannot be compelled to pay an entire debt in parts, either to the creditor or to assignees of the creditor, unless he promises to do so. Courts of law originally refused to recognize any assignments of choses in action made without the assent of the debtor, but now, for a long time, they have recognized and enforced assignments of the whole of a debt by permitting the assignee to sue in the name of the assignor, under an implied power, which they held to be irrevocable. Partial assignments such courts have never recognized, because they hold that an entire debt cannot be divided into parts by the creditor without the consent of the debtor. It is not wholly a question of procedure, although in common-law procedure is not adapted to determining the right of different claimants to parts of a fund or debt. The rule has been established, partially at least, on the ground of the entirety of the contract, because it is held that a creditor could not sue his debtor for a part of an entire debt; and if he brought such an action and recovered judgment, the judgment was a bar to an action to recover the remaining part. There must be distinct promises in order to maintain more than one action. Warren v. Comings, 6 Cush. 103.

It is said that in equity there may be, without the consent of the debtor, an assignment of a part of an entire debt. It is conceded that as between assignor and assignee there may be such an assignment. The law, that if the debtor assents to the assignment in such a manner as to imply a promise to the assignee to pay to him the sum assigned, then the assignee can maiutain an action, rests upon the theory that the assignment has transferred the property in the sum assigned to the assignee, as the consideration of the debtor's promise to pay the assignee; and that by the promise the indebtedness to the assignor is pro tanto discharged. It has been held by courts of equity, which have hesitated to enforce partial assignments against the debtor, that if he brings a bill of interpleader against all the persons claiming the debt or fund, or parts of it, the rights of the defendants will be determined and enforced, because the debtor, although he has not expressly promised to pay the assignees, yet asks that the fund be distributed or the debt paid to the different defendants, according to their rights as between themselyes and the rule against partial assingnments, established for the benefit of the debtor. Supt. of Public Schools v. Heath, 15 N. J. Eq. 22; Fourth Nat. Bank v. Noonan, 14 Mo. App. 243.

In many jurisdictions courts of equity have gone further, and have held that an assignment of a part of a fund or debt may be enforced in equity by a bill, brought by the assignee against the debtor and assignor, while the debt remains unpaid. The procedure in equity is adapted to determining and enforcing all the rights of the

parties; and the debtor can pay the fund or debt into court, have his costs, if he is entitled to them, and thus be compensated for any expense or trouble to which he may have been put by the assignment. But some courts of equity have gone further, and have held that, after notice of a partial assignment of a debt, the debtor cannot rightfully pay the sum assigned to his creditor, and if he does, this is no defense to a bill by the assignee. The doctrine, carried to this exent, effects a substantial change in the law. Under the old rule, the debtor could with safety settle with his creditor and pay him, unless he had notice or knowledge of an assignment of the whole of the debt; under this rule he cannot, if he had notice or knowledge of an assignment of any part of it. It may be argued that if a bill in equity can be maintained against the debtor by an assignee of a part of the debt, it must be on the ground, not only that the plaintiff has a right of property in the sum assigned, but also that it is the debtor's duty to pay the sum assigned to the assignee; and that if this is so it follows that after notice of the assignment the debtor cannot rightfully pay the sum assigned to the assignor. The facts of this case, however, do not require us to decide whether a bill can be maintained after the debtor has paid the entire debt to his creditor, although after notice of a partial assignment.

The city of Newton in its answer says, that it "is willing to pay said balance to such person or persons as should be justly entitled to receive the same, whether said plaintiff, or said Gilkey, as such assignee;" and prays "that said plaintiff and said Gilkey may interplead, and settle and adjust the demand between themselves; and that the honorable court shall order and decree to whom said sum shall be paid." This is in effect asking the aid of the court in much the same manner as if the city of Newton had brought a bill of interpleader; and the proceedings are not open to the objection that the court is compelling the city of Newton to assent to an asssignment against its will.

This is the first bill in equity to enforce a partial assignment of a debt which has been before this court. It has been often declared here that there cannot be an assignment of a part of an entire debt, without the assent of the debtor, but the cases are all actions at law, and in the majority of them the statement was not necessary to the decision.

In Tripp v. Brownell, 12 Cush. 376, the action was assumpsit to recover the amount of the plaintiff's lay as a mariner on a whaling voyage. The defense was an assignment of the balance due, made by the plaintiff and accepted by the defendants. This was held a good defense, the court saying: "It is in terms an assignment of the whole lay; it must be so by operation of law. It is not competent for a creditor to assign part of the debt or create any lien upon it. The debtor or holder of the assignable interest cannot, without his own

consent, be held legally or equitably liable to an assignee for part, and to the original creditor or another assignee for another part. Mandeville v. Welch, 5 Wheat., 277 (18 U. S. bk. 5, L. ed. 87); Gibson v. Cooke, 20 Pick. 45; Robbins v. Bacon, 3 Greenl., 346."

Gibson v. Cooke, ubi supra, was assumpsit brought in the name of Gibson, for the benefit of Plympton, to whom Gibson had given an order on the defendant to pay Plympton $175.33, 66 as my income becomes due." The defendant held property in trust to pay over the "net proceeds once a quarter" to Gibson and others. The court held that it did not appear that," at the time of the assignment, or at any period since, the whole amount due to Gorham Gibson would correspond with the amount of the draft," and that "a debtor is not to have his responsibilities so far varied from the terms of his original contract as to subject him to distinct demands on the part of the several persons, when his contract was one and entire."

Knowlton v. Cooley, 102 Mass., 233, was trustee process, and the trustee had in his hands $147, due the defendant as wages, and the claimant held an order, given by the defendant before the wages were earned, for the payment to him of the defendant's wages, "as fast as they became due, to the amount of $150," which the trustee had accepted. The court held that the order was an assignment of wages, and, not having been recorded, was invalid against trustee process by Stat. 1865, chap. 43, § 2. The court says that "the acceptance of the order by Barton (the trustee) does not change its character. His assent was necessary to give it any validity, even as an assignment. Gibson v. Cooke, 20 Pick., 16."

Papineau v. Naumkeag Steam Cotton Co., 126 Mass. 372, was an action of contract, and the court says: "The order of Couillard on the defendant, in favor of the plaintiff, was not an order for the payment of all that should be due the drawer at the several times when the installments were to be paid. It was not, therefore, an assignment of wages to the plaintiff, unless the defendant saw fit to assent to it as such, but a mere order for money." It is settled that an assignment of a part of a debt, if assented to by the debtor in such a manner as to imply a promise to pay it to the assignee, is good against trustee process or against an assignee in insolvency. Taylor v. Lynch, 5 Gray, 49; Lannan v. Smith, 7 Gray. 150.

In Bourne v. Cabot, 3 Met. 305, the court says: "The order of Litchfield on the defendant was a good assignment of the fund pro tanto to the plaintiff, and the express promise to the assignee to pay him the balance when the vessel should be sold constituted a legal contract." It is also settled that an equitable assignment of the whole fund in the hands of the trustee is good against trustee process, although the trustee has received no notice of the assignment until after the trustee process was served, and has never assented to it. Wakefield v. Martin, 3 Mass. 558; Kingman v.

Perkins, 105 Mass. 111; Norton v. Piscataqua F. & M. Ins. Co., 111 Mass. 532; Taft v. Bowker, 132 Mass. 277; Williams v. Ingersoll, 89 N. Y. 508.

Before, as well as since, Stat. 1865, chap. 43, § 1 (Pub. Stat. chap. 183, § 38), if the assignment was for collateral security, and the assignee was bound to pay immediately to the assignor, out of the sum assigned, any balance remaining after payment of his debt, it has been held that the excess above the debt for which the assignment was security was attachable by the trustee process. Warren v. Sullivan, 123 Mass. 283; Giles v. Ash, 123 Mass. 353; Macomber v. Doane, 2 Allen, 541; Darling v. Andrews, 9 Allen, 106. See Lannan v. Smith, 7 Gray, 150.

In Macomber v. Doane, ubi supra, the court says that "an order constitutes a good form of assignment, it being for the whole sum due or becoming due to the drawer, and it needs not to be accepted to make it an assignment." The order was for one month's wages, which, as subsequently ascertained, amounted to $37.50; but it was given as security for groceries furnished and to be furnished, and on the day of the service of the writ, the defendant owed the claimant for groceries $28.79, and the remaining $8.71 was held by the trustee process. Some of these cases were noticed in Whitney v. Eliot Bank, 137 Mass. 351, and the court then declined to decide "whether in equity there may not be an assignment of a part of a debt."

Without considering the cases upon the effect of orders or drafts for money as constituting assignments of the debt or a part of it, it seems never to have been actually decided in this commonwealth that an assignment for value, of a part of an entire debt, is not good to the extent of the assignment against trustee process. In trustee process, the trustee of the defendant, if charged, is, by the statute, compelled to pay to the plaintiff so much of what he admits to be due to the defendant as is necessary to satisfy the plaintiff's judgment; and as an entire debt may thus be divided, it seems equitable that assignees of a part of the debt should be admitted as claimants, and this is in effect done when the assignment is as collateral security.

Palmer v. Merrill, 6 Cush. 282, was assumpsit against the administrator of Spaulding, who had caused his life to be insured payable to himself, his executors, administrators or assigns, and he, "by a memorandum in writing, indorsed on the policy, for a valuable consideration, assigned and requested the insurers to pay the plaintiff the sum of $400, part of the sum insured by the policy, in case of loss on the same, of which assignment and request the insurers on the same day had due notice." "The policy with this indorsement thereon remained in the custody of Spaulding until his decease," and came into the hands of the administrator of his estate, who collected the whole amount of the insurance, and represented the estate insolvent; and the question was

"whether the case shows an assignment which vested any interest in the policy, legal or equitable, in the plaintiff." The court held that it did not. The court say: "According to the modern decisions, courts of law recognize the assignment of a chose in action, so far as to vest an equitable interest in the assignee, and authorize him to bring an action in the name of the assignor, and recover judgment for his own benefit. But in order to constitute such an assignment, two things must first concur: first, the party holding the chose in action must by some significant act express his intention that the assignee shall have the debt or right in question, and, according to the nature and circumstances of the case, deliver to the assignee or to some person for his use, the security, if there be one, bond, deed, note or written agreement upon which the debt or chose in action arises; and, secondly, the transfer shall be of the whole and entire debt or obligation of which the chose in action consists, etc.;" that "it appears to us that the order indorsed on the policy, and retained by the assured, fails of amounting to an assignment in both these particulars," and that an order "for a part only of the fund or debt is a draft or bill of exchange, which does not bind the drawee, or transfer any proprietary or equitable interest in the fund until accepted by the drawee. It, therefore, creates no lien upon the fund. Upon this point the authorities seem decisive. Welch v. Mandeville, 1 Wheat. 233 (14 U. S. bk. 4, L. ed. 79); s. C., 5 Wheat. 277 (18 U. S. bk. 5, L. ed. 87); Robbins v. Bacon, 3 Greenl. 346; Gibson v. Cooke, 20 Pick. 15.”

Welch v. Mandeville, ubi supra, was an action of covenant broken, brought by Prior, in the name of Welch, against Mandeville, who set up a release by Welch; to which Prior replied that Welch, before the release, had assigned the debt due by reason of the covenant to him, of which the defendant had notice. The court considers the effect of certain bills of exchange, and says: "But where the order is drawn, either on a general or a particular fund, for a part only, it does not amount to an assignment of that part, or give a lien against the drawee, unless he consents to the appropriation, by an acceptance of the draft," etc.; that "a creditor shall not be permitted to split up a single cause of action into many actions without the assent of his debtor," and that "if the plaintiff could show a partial assignment to the extent of the bills, it would not avail him in support of the present suit."

The equitable doctrine now maintained by the Supreme Court of the United States, is shown by Wright v. Ellison, 1 Wall. 16 (66 U. S. bk. 17, L. ed. 555); Christmas v. Russell, 14 Wall. 70 (81 U. S. bk. 20, L. ed. 762); Trist v. Child, 21 Wall. 441 (88 U. S. bk. 22, L. ed. 623); and Peugh v. Porter, 112 U. S. 737 (bk. 28, L. ed. 859).

In Peugh v. Porter, that court ordered that a decree be entered that Peugh, subject to certain rights in the estate of Winder, was entitled to one

fourth of a fund, by virtue of an assignment of one-fourth of a claim against Mexico, made before the establishment of the claim, from which the fund was derived, and before the fund was in existence, and declared the law to be that "it is indispensable to a lien thus created, that there should be a distinct appropriation of the fund by the debtor, and an agreement that the creditor should be paid out of it."

In Robbins v. Bacon, ubi supra, the order was for the payment of the whole of a particular fund, and was held good. The existing law of Maine is declared in National Exchange Bank v. McLoon, 73 Me. 498, by an elaborate opinion, and the conclusion reached is, that an assignment of a part of a chose in action is good in equity and against trustee process.

In England, it is held that the particular fund or debt out of which the payment is to be made must be specified in the assignment (Percival v. Dunn, 29 Ch. Div, 128); but the assignment of a part of a debt or fund is good in equity. The present case is like Ex parte Moss, L. R. 14 Q. B. D. 310, and a stronger case for the plaintiff than Brice v. Bannister, L. R. 3 Q. B. D. 569, where, although the procedure was under the statute of 36 and 37 Vict., chap. 66, the foundation of the liability was, that the assignment was good in equity, and the case at bar is relieved from the difficulties which induced Brett, L. J., in that case, to dissent, and Brice v. Bannister was affirmed in Ex parte Hall, L. R. 10 Ch. Div. 615. The present case also resembles Tooth v. Hallett, L. R. 4 Ch. App. 243, except that there the sums paid by the trustee for creditors in finishing the house exhausted all that became due under the contract. See also Addison v. Cox, L. R. 8 Ch. App. 76.

In Appeals of the City of Philadelphia, 86 Pa. St. 179, it is conceded that the rule, that an assignment of a part of a debt is valid, prevails in equity between individuals; but the court refuses to apply it to a debt due from a municipal corporation, on the ground that "the policy of the law is against permitting individuals by their private contracts to embarrass the principal officers of a municipality," (see Geist's Appeal, 104 Pa. St. 354); but there is no ground for any such distinction in this commonwealth.

2

In New York, the assignment of a part of a debt or fund is good in equity (Field v. Mayor, etc., Selden, 179; Risley v. Phoenix Bank of N. Y. 318); and the same doctrine is maintained in other States. Daniels v. Meinhard, 53 Ga. 359; Etheridge v. Varnoy, 74 N. C. 809; Lapping v. Duffy, 47 Ind. 51; Fordyce v. Nelson, 91 Ind. 447; Bower v. Hadden Blue Stone Co.,30 N. J. Eq. 171; Gard⚫ ner v. Smith, 5 Heisk. 256; Grain v. Aldrich, 38 Cal. 514; Des Moines v. Hinkley, 62 Iowa, 637; Canty v. Latterner, 31 Minn. 239; First Nat. Bank v. Kimberlands, 16 W. Va. 555.

From the examination of our cases it appears not to have been decided that there cannot be an

assignment of a part of a fund or debt which will constitute an equitable lien or charge upon it, and will be enforced in equity against the debtor or person holding the fund. Palmer v. Merrill, ubi supra, may well rest upon the first reason given for the decision. See Stearns v. Quincy Ins. Co. 124 Mass. 63.

The decisions of courts of equity in other jurisdictions are almost unanimous in maintaining such a lien, where the assignment is for value,and distinctly appropriates a part of the fund or debt, and makes the sum assigned specifically payable

out of it.

Without undertaking to decide what is not before us, and confining ourselves to the facts in the case, which are that the debt remains unpaid, and the debtor in his answer asks the court to determine the right of the different claimants, we think that there should be a decree that the city of Newton pay to the plaintiff $600, and that the remainder of the sum due from the city, after deducting its costs, be paid to Gilkey, assignee.

The assignment was not made in fraud of the law relating to insolvency. So ordered.

NOTE. The reason why, at law, an assignment of part of a debt or demand is void unless it has been assented to, or ratified by the debtor is very obvious. The law requires of all parties to a contract due performance of their respective engagements, and it likewise excludes any obligation varying from the true intent and meaning of the contract. Mr. Justice Story says: "He has a right to stand on the singleness of his original contract, and to decline any legal or equitable assignment by which it may be broken into fragments. When he undertakes to pay an integral sum to his creditor, it is no part of his contract that he shall be obliged to pay in fractions to any other persons." It is well settled that a creditor cannot split an entire demand into distinct parts and maintain separate actions at law on each. In such a case a recovery in one action bars the others, and if he cannot do this himself, he cannot, by an assignment, enable others to do it.

If, however, the assignment of part of a demand is made with the knowledge and consent of the debtor, the assignee may sue upon it without making other holders of the demand parties to the suit. What constitutes such knowledge and consent may sometimes become a question. In a Massachusetts case, it was held that a check on a bank for part of the drawer's funds does not become an assignment until it has been presented to, and accepted by the bank, and that the assent by the cashier, when absent from the bank, will not validate the assignment. And if the assent and acceptance of part of a demand is conditional, dependent upon the happening of some future event, the assignment and acceptance were held equally void if the event did not occur.5

1 Mandeville v. Welch, 5 Wheat. 286.

2 Smith v. Jones, 15 Johns. 229; Willard v. Sperry, 16 Johns. 121: Marziou v. Posche, 8 Cal. 536; Herriter v. Porter, 23 Cal. 385.

3 Grain v. Aldrich, 38 Cal. 514.

4 Bullard v. Randall, 1 Gray, 605.

5 Lindsay v. Price, 33 Tex. 280.