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make our law more complex, but it will certainly be correspondingly more just. What is needed is teleological rather than formalistic jurisprudence.

Let us restate the problem from this point of view. Originally, probably, the "ownership" of the assignee was exclusively equitable. Gradually it became also legal, i. e., concurrent. While exclusively equitable the chancellor would naturally apply the usual rule that as between equal equities the one prior in time prevails. After the ownership of the assignee has come to be fully recognized by the law court, the chancellor (not the court of common law) is confronted by the question whether the recognition of the assignee by the common law shall lead equity to alter its views. On the one hand the argument is made that where the equities are equal the legal title will prevail; on the other hand it is argued that the assignee's ownership is equitable in origin. What has happened is that some courts have taken one view, others the other, but that there is probably much less conflict than is supposed if we consider particular classes of choses in action separately. 95

The court of equity was confronted with a similar problem when a new kind of legal chose came into existence in the form of commercial paper. Obviously the rule of bonâ fide purchase "free from equities”96 had to be applied to it if transferred before due or it would not circulate freely as commercial paper should. On the other hand, if it were overdue the policy was not so clear. Professor Williston disposes of this by saying that since the title passes it is taken free from collateral equities if transferred to an innocent purchaser for value.97 In some jurisdictions however it has been otherwise decided.98 It is submitted that the decision should rest on a consideration of the real questions of policy involved.

95 Professor Williston's statement on page 104 that “a bona fide purchaser of a certificate of stock is preferred to one having an equitable right against his assignor” is not borne out for England by the case he cites — Colonial Bank o. Cady, L. R. 15 A.C. 267 (1890) — and seems opposed to the decisions in some other cases. See Ireland v. Hart, (1902) 1 Ch. 522. The prevailing American rule is as he states it. Cf. Dueber Watch Case Mfg. Co. o. Daugherty, 62 Ohio St. 589, 57 N. E. 455 (1900).

96 The reference here is to real equitable claims. The common usage which calls the valid legal defenses of the person liable on the instrument "equities” merely because they are “cut off” if the instrument is transferred to a holder in due course is misleading and ought to be abandoned, as it leads only to confusion. The question what defenses are cut off by transfer is purely one of the “law merchant” as enforced by the courts; that of so-called “collateral equities" is a purely equitable problem for the chancellor.

97 30 Harv. L. Rev. 103.

The extension by statutes of the doctrine of innocent purchase for value to the cutting off of legal as well as equitable titles under recording acts, warehouse receipts acts, bills of lading acts, etc., shows that the real problem involved is purely one of business policy and not of logical deduction from supposed intrinsic characteristics of “legal” and “equitable” titles. The same thing is shown by the fact that under both the German and the French civil codes persons in possession of property but without other title may in many cases vest a valid title in innocent purchasers for value.99

Before leaving this part of the subject a few words must be said concerning the following statement of the learned writer:

“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."100

It was long ago pointed out by Dean Ames that estoppel is not an adequate explanation of the results reached in this group of cases.101 It is difficult to see how a written assignment of a chose in action is in fact an assertion that it was obtained fairly or that it is not held in trust for the assignor or some third person. In the case of Shropshire v. The Queen 102 shares of stock were registered on the books of the company in the name of one who was in fact trustee for the corporation in question. The trust was not revealed in any way by anything on the certificates of stock. The trustee in breach of trust deposited the certificates with a third person (who had no notice of the trust) as security for a loan, and

98 See 29 Harv. L. REV. 836, n. 49.

99 FRENCH Civil CODE, $ 2280; GERMAN Civil CODE, S8 929–36. Lack of space will not permit me to set these forth or to comment upon them in detail. The provisions of the German code are clearly explained in SCHUSTER, PRINCIPLES OF THE GERMAN CIVIL LAW, 396–99. The slightest familiarity with provisions such as these must convince anyone that there is no intrinsically necessary connection between the doctrine of innocent purchase for value and so-called “equitable titles” as distinguished from "legal titles.”

30 Harv. L. REV. 104. 101 AMES, CASES ON Trusts, 2 ed., 310. 102 L. R. 7 H. L. 496 (1875).


covenanted to execute a legal mortgage if required. After notice of the trust the creditor obtained from the trustee an instrument authorizing the transfer of the shares. In a mandamus proceeding it was held that the "equitable title" of the original cestui was superior to that of the creditor.

It is submitted that if a written certificate of stock asserting that a certain person owns a certain number of shares of stock is not a representation that the so-called “beneficial interest” is also vested in the “legal owner," then the same thing is true of a written assignment of a chose in action. It merely states that the claim has been or is now assigned; as to whether it is or is not held in trust there is no representation whatever. If there were, the estoppel theory would prove altogether too much, for obviously it would not be necessary for the one advancing money on the faith of the representation to obtain any transfer of the claim in order to assert the estoppel. It would come into operation as soon as the money had been advanced in reliance on the representation.103

This however does not prove that the result reached in the cases referred to by Professor Williston is erroneous. Since the legal as well as the equitable ownership passes to the assignee, we are at liberty to extend the protection of the rule as to innocent purchasers for value to this class of purchasers if it seems good policy so to do.104 Very possibly it is good policy to do so; at least most courts seem to favor that view. After all, the real problem is, How freely do the demands of business, the needs of the business community, require that choses in action shall circulate? Whether we shall apply the doctrine of innocent purchase to a given class of choses in action ought to depend very largely upon the answer to that question.

A similar line of argument will, it is thought, dispose effectually of the third and last alleged unfortunate consequence which Pro

103 If the estoppel theory had been deemed applicable in Shropshire v. The Queen, the estoppel against the equitable claimant would have arisen as soon as the money was advanced in reliance upon the misrepresentation.

104 On Professor Williston's theory that the assignee acquires at law only a “legal power to collect,” the results he contends for can easily be justified if we also assume his doctrine as to innocent purchase for value. This “legal power to collect” having been obtained by fraud is held on a constructive trust. It and not the chose in action is the trust res. But it has always been the view that this legal power is alienable. It follows that an assignee of this trust res the “legal power to collect” — acquire it free from the equities of the defrauded assignor.

fessor Williston foresees as the result of the legal recognition of the assignee. This relates to the relative rights of a prior partial assignee and a subsequent total assignee. On this point he says:

"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.105

Here again we find apparently the same assertion that by some kind of inevitable logic or intrinsic necessity the result stated will follow: If what has been said above is sound, it must be quite obvious that the chancellor (not the common law judge) would not be compelled, after the common law had recognized the assignee, to abandon the theory of priority which had previously been applied. It would be entirely possible to reach the result which my learned critic desires, viz., to protect the prior partial assignee against the subsequent total assignee, and yet at the same time recognize the truth as to the legal character of the assignee's ownership. Time and space are wanting in which to elaborate the argument upon this question. It is believed to be unnecessary if previous points have been made clear.

A few words must, however, be said concerning the case of King Bros. & Co. v. Central of Georgia Ry. Co.106 which held that the subsequent total assignee was entitled to prevail over the prior partial assignee. Professor Williston very properly criticises this case as laying down a rule not adapted to the needs of the business community. It is submitted that the decision of the court was not a necessary result, even under the Georgia code, and that it would not be reached if a sound analysis of the relations between law and equity were more familiar both to writers and to judges. It is a striking example of that formalistic jurisprudence which assumes that it is intrinsically necessary that "legal titles," whether acquired in accordance with common law principles or by virtue of some newly enacted statute, must prevail over “equities.” It is submitted that the method of analysis and line of argument pursued throughout this article would, if followed by the court,


30 HARV. L. REV. 107.


135 Ga. 225, 69 S. E. 113 (1910).

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have led to a rational decision based upon a consideration of the real meaning and object of the code provision in question.

In discussing partial assignments in my original article I made substantially the same statement that Professor Williston does, viz., that nearly everywhere they are enforceable only in equity.107 I am convinced now that this statement needs serious modification. Apparently — chiefly in code states having the “real party in interest" clause - a goodly number of jurisdictions are permitting the partial assignee to join with the assignor in an action at law to collect the claim.108 This of course departs from the common law and is another example of a change of substantive law due, in part at least, to the code provision referred to. The device of the "power of attorney,” by means of which the common law succeeded in making total assignments valid, could not be applied to partial assignments, as obviously there is no basis for permitting the assignee to collect the whole claim. Since the common law was not willing to permit the claim to be split into two or more claims to be enforced separately, the assignee could not sue for his share alone. To permit the assignee to join with the assignor in a suit in the assignor's name, indicating that the suit was in part for the benefit of the assignee, did not meet with approval for various

Chief among these was a difficulty due to common law rules as to joinder of parties. If it were to be admitted that the partial assignee had a legal ownership of a portion of the claim, it would on common law principles be either a joint ownership or an




29 Harv. L. Rev. 836. 108 Evans v. Durango Land & Coal Co., 80 Fed. 433 (1897) (applying Colorado code); Guagler v. Chicago, M. & P. S. Ry. Co., 197 Fed. 79 (1912) (applying Montana code); School District v. Edwards, 46 Wis. 150, 49 N. W. 968 (1879); Watson o. Milwaukee & Madison Ry. Co., 57 Wis. 332, 15 N. W. 468 (1883); 4 Cyc. 101, n. 77; 5 CORP. JUR. 1000, n. 93; Bliss, CODE PLEADING, 3 ed., $8 74–76. The same principle as to joinder of parties plaintiff has been applied to actions for damages brought by tenant for life and remainderman. Schiffer v. Eau Claire, 51 Wis. 385, 8 N. W. 253 (1881). Cf. Tucker v. Campbell, 36 Me. 346 (1853). In an occasional case in a code state, apparently without realizing fully the objections to such a rule, the partial assignee has been allowed to sue the debtor at law for his share of the claim without joining the assignor. Caledonia Ins. Co. v. Northern Pacific Ry. Co., 32 Mont. 46, 79 Pac. 544 (1904); Risley v. Phenix Bank, 83 N. Y. 318 (1881). On the other hand, some code jurisdictions refuse to permit the partial assignee to join with the assignor in an action at law. Pelly v. Bowyer, 7 Bush (Ky.) 513 (1870); Independent School Districts o. Independent School District No. 2, 50 Iowa 322 (1879); Bliss, CODE PLEADING, 3 ed.,


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