Assigment Of Choses In Action

Question 1

What is a chose in action

Answer 1

A chose in action has been defined as a rights of proceeding in a court of law, to procure the payment of a sum of money or to recover, pecuniary damages for the infliction of a wrong or non-performance of a contract.

Question 2

Give example of legal and equitable choses

Answer 2

He chose may be legal, e.g. a debt, a bill of exchange,insurance policy shares in the company. It may be the equitable e.g. a beneficial interest in a trust fund in Legacy♠️. 

Question 3

At common law a chose could not be assigned unless the debtor agreed to it. Explain the historical development of this chose

Answer 3

At Common Law a chose could not be assigned unless the debtor agreed to it: furthermore, only legal choses were recognised. But Equity from an early date gave effect to assignments of both equitable and legal choses. An assignee of an equitable chose was land still is) allowed to sue in his own name in Equity to enforce his interest: whereas an assignee of a legal chose had to sue in a Common Law court in the name of the assignor, Equity compelling the assignor to permit the use of his name in this way.
Today, a legal (statutory) assignee of a legal or equitable chose sues in his own name. An equitable assignee of an equitable chose also sues in his own nume, unless the assignment is not absolute.
But an equitable assignee of a legal chose must join the assignor in the action, either as co-plaintiff or as co-defendant.”

Question 4

What are the classifications of assignment today

Answer 4

The old Common Law rule against assignments was finally removed by the Judicature Act 1873, section 25(6), which provided that “any debt or legal thing in action”
• may be assigned at law.
This provision has been judicially construed as extending to equitable as well as legal choses.’ and so there are four categories of assignment today:
(i) Legal (statutory) assignments of legal choses. (ii) Legal (statutory) assignments of equitable choses. (iii) Equitable assignments of legal choses. (iv) Equitable assignments of equitable choses.

Question 5

What are the requirements for a valid statutory assignment of a legal or equitable chose

Answer 5

1. Assignment must be in writing, signed by the assignor.
2. Assignment must be absolute, and not by way of charge only
3. Written notice of the assignment must be given to the debtor or trustee.
   [Judicature Act 1873, s. 25(6); Property and Conveyancing Law’s. 1505 (Western and Mid-Western States).]
   Any assignment which fails to comply with these requirements will not be a valid legal assignment, but may take effect as an equitable assignment.

Question 6

The old common law rules against assignments was finally removed by the what??

Answer 6

Judicature act of 1873 and this extends to both legal and equitable choses in action. See Jones v Humphrey 1902.

Question 7

An equitable assignee of a legal chose must join the assignor in the action, either as co-plaintiff or as co-defendant. Name two cases that support this

Answer 7

Performing Right Society v. London Theatre of Varieties (1924}
Laibru v. B. & C. E. Contractors.

Question 8

What is the first requirement for a valid statutory assignment of a legal or equitable chose

Answer 8

The assignment must be in writing, signed by the assignor.

Question 9

Explain the statement that an assignment must be absolute

Answer 9

a) An assignment by way of charge (which merely gives the assignee the right to be paid out of the fund owed and which does not transfer the whole fund to him) is not absolute.*
See Jones v Humphrey 1902
Mercantile Bank v Evans 1899

Question 10

Give two cases that corroborate the following statement “b)On the other hand, an assignment by way of mortgage, whereby the whole debt is assigned to the mortgagee with a provision for re-assignment on repayment of the money lent is absolute. Which is under an assignment must be absolute

Answer 10

Tancred v Delagoa and East Africa rly co (1889). Onashile v Idowu 1961

Question 11

What sis the case of Re steel Wong co 1921. Under an assignment must be absolute

Answer 11

C) The assignment of part of the debt even of a definite part is not absolute, for it is deemed to be mere a charge in the whole debt.

Question 12

What happened in western Nigeria finance Corpn v west coast builders

Answer 12

In Western Nigeria Finance Corpn. v. West Coast Builders,” the plaintiffs sued the defendants for the balance of loans amounting tO N44,000. The defendants plead d that, under the loan agreement. they had assigned to the plaintif 25 per cent. of monies due to them (the defendants) from the Ministry of Works; that this was a legal assignment; and that the plaintiffs should have sued the Ministry for the amount assigned. It was held that even though the assignment was of a definite part of the monies due from the Ministry, this did not amount to an absolute assignment within the meaning of section 150 of the Property and Conveyancing Law. 10 It was an assignment of only part of a debt, and was therefore not a valid legal assignment. At best, it might take effect as an equitable assignment. 100, Laws of Western Nigeria. This section 150 of the property and conveyance law is identical with s. 136 of the English Law of Property Act 1925 which reproduces s. 25(6) of the Judicature Act 1873

Question 13

What case also establishes an
Assignment must be absolute

Answer 13

See also Acera Perfumery Co. Lid. v. Thomas,
(1947) 12 W.A.C.A. 160.

Question 14

Name the third requirement for valid statutory assignment of a legal or equitable chose.

Answer 14

C. There must be a written notice of assignment it must be given to the debtor or a trustee.

Question 15

What was established in the case of Udakason Enterprise Ltd v Olisa.

Answer 15

The question of what form of notice necessary for a valid assignment under the statute was investigated in the udekanson case a partnership was owed N 5,320 by the defendant by goods sold to him. Then the partner of the firm entered into an agreement dissolving the partnership and converting the partnership into a limited liability company, with the agreement to transfer all assets and lability to the new company. The defendant as written a letter to inform him of the change of the status of the company and deal with the new company henceforth. On being sued for the debt N 5320 that he owed the new company the defendant to plead that:

(i) that the dissolution agreement was not a sufficient assignment of the debt: (ii) that even if the assignment were valid, the letter written to the defendant informing him of the change was not a valid notice of that assign-ment. Umezinwa J. rejected both contentions. defence contends that (the dissolution agreement) is no assignment but a mere agreement between the shareholders of the dissolved partnership. (The agreement) undoubtedly was inelegantly drafted but, that notwithstanding. the contents show clearly that all the assets and liabilities of the dissolved partnership have been transferred to the plaintiff (company).”

Question 16

What did Umezinwa further submit when it comes to the matter of notice.

Answer 16

(company).” Further, as regards notice: “The law does not require any particular form of notice of assigment.
In order that the assignee may obtain the benefit of the Judicature Act 1873, a all that is required as to notice is express notice in writing of the assign. ment. (There was a letter to the defendant by the plaintiffs informing him that (the partnership) has been registered as a limited liability company, and henceforth to deal with the plaintiff company.
I hold that (the letter) constitutes sufficient notice to the defendant that the assets (which include the defendant’s debt) of the dissolved partnership have been assigned to the plaintiff.” It was further held that this being a valid legal assignment, the assignee could sue in his own name without having to join the assignor.

Question 17

What are the effects of a legal chose

Answer 17

1. The assignee becomes the owner of the chose at Law and may sue the debtor without making the assignor a party to the action.
2. The assignee need not have given consideration for the assignment.

Question 18

What is an equitable assignment ?

Answer 18

An assignment which does not comply with one or more of the requirements of the statutes (e.g. where it is not absolute or where notice has not been given to the debtor or trustee) may take effect as a valid equitable assignment.

Question 19

What is the first requirement for an equitable chose

Answer 19

(i) No particular form necessary
Because of the maxim “Equity looks to the intent rather than to the form.” no particular form is necessary for an equitable assign-ment, and, except where the interest assigned is an equitable interest within s. 9 of the Statute of Frauds 1677 or s. 78(1)(c) of the Property and Conveyancing Law, it need not even be in writing. It may be addressed to the assignee or to the debtor. If it is addressed to the latter: “It may be couched in the language of command. It may be a courteous request. It may assume the form of a mere permission. The language is immaterial if the meaning is plain.
All that is necessary is that the debtor should be given to understand that the debtor should be given to some third person. See Brandt’s Sons & Co v Dunlop Rubber Co 1905.

Question 20

Explain the case of Thomas v Harris and what does it established

Answer 20

An example where the assignment was addressed to the assignee is Thomas v. Harris.15 A father handed to his son certain assurance policies on his (the father’s) life requesting the son to erect a tombstone in his memory out of the policy monies. No notice was given to the insurance company.
It was held that the father had effectively assigned the policies to his son by way of charge for the cost of the tombstone. It was a valid equitable assignment.
It can thus be seen that all that need be proved is an intention to assign, the form which the assignment takes being immaterial

Question 21

Explain the concept of there must an identify chose??

Answer 21

The assignment must sufficiently identify the chose which is being assigned; in other words, in order to constitute a valid equitable assignment, there must be a specified fund out of which payment is to be made. If the assignor merely requests the debtor to pay a sum of money to the assignee, this will not constitute an assigoment of the sum. But it will be sufficient if the request is to pay the assignee, e.g.
“out of monies due from you to me. Brice v Bannister 1878

Question 22

Is writing an requirement of equitable assignment

Answer 22

Writing is not required for an equitable assignment unless it is an assignment of an equitable interest, such as a beneficial interest in a trust in which case it must be in writing, by Statute of Frauds.
s. 9 and Property and Conveyancing Law, s. 78(1 MC).

Question 23

Is consideration a requirement for an equitable chose

Answer 23

Consideration is required for an equitable’ assignment in the following two instances
(i) Where the assignment is of an expectancy (a right over property not yet in existence) such as a legacy hoped for under the will of a living person.
(i) Where the assignment is not absolute, but by way of charge only.
The reason is that such assignments are based on there being a contract that the property shall be assigned (in the case of (i)) or stand charged (in the case of (in)). and Equity will not enforce a contract which is not supported by consideration, as expressed in the sub-maxims “Equity will not aid a volunteer” and “Equity will not perfect an imperfect gift.” Consideration is probably not required for other equitable assignments, whether of a legal or equitable chose, provided the assignor has done everything required to be done by him to transfer the chose. Thus it has been held that a voluntary equitable assignment of a legal chose which failed to be a statutory assignment only because notice had not been given to the debtor, was valid although unsupported by consideration.!° Consideration is therefore prob. ably not necessary for the assignment of an equitable chose such as a legacy already obtained or an existing beneficial interest in a trust, provided the assignment is complete.

Question 24

An equitable assignment made between assignor and assignee is complete and binding even though no notice has been given to the debtor or trustee, but it is desirable to give such notice for what reasons.

Answer 24

1. To prevent the debtor or trustee from paying the original creditor or beneficiary (i.e. the assignor). The debtor or trustee will be under no liability to the assignee if he pays the original creditor before he has notice of the assignment,20 but if notice is given to him and he disregards it, he will be liable to pay over again.
2. To prevent the debtor or trustee from setting up against

the assignee any new and independent equities which may arise between the debtor and the assignor.?1
3. To preserve priority over subsequent assignees. If the chose assigned is equitable (e.g. a beneficial interest under a trust of pure personality) this is governed by the rule in Dearle
v. Hall.?

Question 25

What is the rule in Dearle v Hall

Answer 25

Where successive equitable assignments? are made of an existing equitable interest in pure personalty (including land held upon trust for sale), priority as between the assignees depends not upon the order in which the assignments are made, but upon the order in which notice of the assignments is given to the trustees or other persons responsible for the distribution of the property. Thus the rule will apply e.g. where a beneficiary under a trust for sale of land or a trust comprising personalty assigns or mortgages his equitable interest in the property.
Since the rule is governed by equitable principles, there is a qualification in that an assignee who had notice (actual, constructive or imputed) of a previous assignment when his own was made, cannot obtain priority over the previous assignment by being the first to give notice.? But if he only acquires the notice after his own assignment was made, then this knowledge will not bar him from gaining priority by giving notice first.

Question 26

The form of notice include

Answer 26

1) it should be clear and not ambiguous section 52 (2) property and common law of western state which stated that the notice should be in writing
2) when an assignment involves a trustee notice should be given to all trustee so the property is effective against all other assignments

Question 27

What is the meaning of expectancy

Answer 27

This denotes property not yet acquired but hoped to be acquired in the future. Examples are: property hoped to be acquired under the will or intestacy of a living person, copyright in books not yet written; future royalties; freight not yet earned; a lease of land hoped to be acquired.

Question 28

What is an assignment of Expectancies?

Answer 28

At Common Law such assignments were invalid, for no-one could assign what he had not got. But Equity treated such an assignment as a contract to assign of which a decree of specific performance could be granted, provided it were made for valuable consideration.
If the assignor did acquire the property he would be deemed to hold it as trustee for the assignee, who thus acquired a beneficial interest in the property,
A case in which there was an assignment of an expectancy is Ukatta v. Emembo’ In January 1954 the defendant had agreed in writing to assign to the plaintiff the lease of a plot of land at Aba as soon as he himself obtained an assignment from the Crown lessee. The plaintiff paid N2000. the full purchase price, to the defendant. It was held (inter alia) that this agreement was a valid assignment of an expectancy which, since the plaintift had given value, was in Equity treated as a contract to assign of which specific performance would be granted. As soon as the defendant acquired the expectancy (in October 1954) he became a trustee of the lease for the plaintiff. The court therefore ordered specific performance of the agreement of January 1954.
It may be noted that, since the legal interest remains in the assignor until the assignment has been completed, if the assignor in the meantime transfers the property to a bona fide purchaser with no notice of the contract to assign, the title of the purchaser will prevail.

Question 29

How was a chose in action defined in Torkington v. Magee (1902) 2 K

Answer 29

A chose in action can be defined as a well know legal expression used to describe all personal rights of property which can only be claimed or forced by way of action and not by taking physical possession

Question 30

What’s the difference between a legal and equitable chose

Answer 30

A chose in action may be either legal or equitable. A legal chose in action is a right enforceable and recoverable by an action at law e.g. a debt, benefit under a contract.
An equitable chose in action or a chose in equity is a right which owes its existence to a subject matter which before 1873 would have been recognised only by the Chancery Court.
Such right was enforceable and recoverable only by what was formally called a suit in equity. Examples are, rights and interests of a beneficiary in trust fund, interest under a legacy and right to a relief against forteiture of a lease for non-payment of rents, beneficial interest in a partnership and, reversionary interest under a will. Generally these choses arise out of proprietary rights in respect of which the Chancery court formally exercised exclusive jurisdiction.

Question 31

What is Novation ?

Answer 31

The question of consent brings out the fun. damental distinction between assignment and novation. A valid assignment of a debt may be made between the assignor and the assig. nee without the consent or even knowledge of the debtor, but in the case of novation consent of the debtor is a sine qua non to its validity, it. all the parties concerned must give their consent, since the effect of nova. tion which is a tripartite agreement, is to rescind the original agreement between two parties and replace it by a new contract. Thus a new creditor may be substituted for the original creditor or a new debtor for the orig. inal debtor. In all cases the original contract will cease to exist. In G. B. Ollivant & Co.
v. Effioms Transport, # the West African Court of Appeal held that the defendants, a party to the original contract, could not be held liable under the contract because there had been novation, a new contract between the plaintiffs and a new firm, (known at first as ‘Effioms Transport and Engineering Com-pany’ and later, after the necessary formalities had been completed, as ‘Effioms Transport and Engineering Co. Ltd.’) having been substituted for the original contract between the plaintiffs and the defendants with the consent of all the parties.