Assignment of Rights

Case: Fitzroy v. Cave (1905) [pp. 1079-1082]

2 K.B. 364

Facts: Fitzroy was the director of a company called Cork Mineral Development.
Cave was a co-director and local mgr of the company. Fitzroy is dissatisfied with
Cave's work. Cave has various debts against him. Fitzroy decides to take the
assignment of 5 debts owed to 5 different creditors, in order to get an
adjudication in bankruptcy against Cave, and so get him removed from the
directorate of the company. The lower court found for the Df, that the assignment
was not valid. Pl appeals.
○ Main argument that Cave made: He's not doing this for the money, but only
to get rid of me at the company. B/c when he sues me, and I can't pay, I'll be
driven into bankruptcy, and then I'll lose my job.

Issue: Whether the assignment is valid.

Holding/Reasoning: A debt must be regarded as a piece of property capable of

legal assignment in the same sense as a bale of goods. Pl here is merely
asserting a legal right consequential upon the possession of property which has
been validly assigned to him.
○ Court doesn’t care why Fitzroy is doing this.
○ Possession of property - there is a rule about the inalienability of
property
§ The I.O.U./debt is a piece of property, and is assignable
○ Has the assignment put Cave into a different position?
§ The freedom of K - now Cave owes someone he didn’t contract with
§ Still owes same amount of money, but just to different people

RULE: Most rights that anyone wants to assign (e.g. debts) are automatically
assignable without question

Notes: [p. 1081]

○ Irrevocable Gratuitous Assignments - § 332(1) says: "Unless a contrary
intention is manifested, a gratuitous assignment is irrevocable if (a) the
assignment is in a writing either signed or under seal that is delivered by the
assignor; or (b) the assignment is accompanied by delivery of a writing of a type
customarily accepted as a symbol or as evidence of the right assigned.
§ In both parts, one expressly and the other impliedly, the pattern
adopted is consistent with the requirement respecting gifts of chattel that a
symbolic or constructive "delivery" is required.
○ Assignment of "Future Accounts" under Article 9
§ What if this has no present existence (crops to be grown, etc.) - A/R
from future sales? Useful for sellers to assign their expected A/R for future
sales to help seller receive credit.
§ § 321 Assignment of Future Rights
(1) Except as otherwise provided by statute, an assignment of a
right to payment expected to arise out of an existing employment or other
continuing business relationship is effective in the same way as an assignment of
an existing right.
(2) Except as otherwise provided by statute and as stated in
Subsection (1), a purported assignment of a right expected to arise under a
contract not in existence operates only as a promise to assign the right when it
arises and as a power to enforce it.
§ Art 9 (9-204(1)) says: A security agreement may provide that any or
all obligations covered by the security agreement are to be secured by after-
acquired sales.
 □ Under this provision, the secured party may include in the
security agreement an "after-acquired property" clause, file a financing statement
with the proper officer, give value to the debtor and be assured of a perfected
security interest at the time when the debtor obtains rights in the described
collateral - including any "A/R" subsequently acquired.
§ Future Wages - there is a limitation to the assignability of future
wages. Some states prohibit, other regulate it.