UNIVERSITY OF LAGOS

LL.B (HONOURS)/ 2019/2020 ACADEMIC SESSION

LECTURER: Nwudego Nkemakonam Chinwuba, LL.B; BL; LL.M; Ph.D.

CHOSES IN ACTION AND THEIR ASSIGNMENT

I start my commentary here with the thoughts of Hamilton on Locke and Sutherland: “In the
history of ideas the names of John Locke and George Sutherland stand somewhat apart. The
one was the author of a celebrated “chapter on property”; the other was the voice of the
United States Supreme Court in the declaration of the invalidity of the minimum wage law;
and nearly a quarter of a millennium separates the two intellectual events. 1 Assignment of
choses concern both- one positively, and the other negatively, in commands of law.

I also mention Parker J in Glegg v. Bromley2: “Equity on the grounds of public policy did not
give validity to the assignment of what is in the cases referred to as a bare right of action, and
this was so whether the bare right were legal or equitable. The question was whether the
subject matter of the assignment was, in view of the Court, property with an incidental
remedy for its recovery, or was a bare right to bring an action at law or in equity”.

The earliest recognised rights are the idea of the freedom of the individual in person and
property. The remarkable references are the history of ideas and intellectual events. The idea
of judges and lawyers in impacting the society for development, order, rational thinking, and
civility in human interactions. Honesty of purpose and in obligations are prime focal points of
the intervention of equity, a fortiori, law, lawyers, and justice. There seems to be a sense in
which the precedents in the nation are mostly the oracle of what the judge would on the
persuasion of lawyers, say. This idea which has generally been unevaluated or rejected in
Nigeria, as the true basis for justice or the principle of law, stands as an antithesis to the
promotion of justice between humans. It is thus, pertinent that, as Ayoola JSC noted, the
judiciary as well as the bar pay close attention to the intellectual and idealistic aspects of law
as the basis for justice delivery in the quest for justice in the nation. Where this is not the
case, the law remains just the oracle of what the judges say without persuasion from the bar.
In delivering his judgement in the case of Abimbowo v Lateef Abiodun Ogunjimi3 Nweze JSC
stated “……Regrettably, neither the appellants counsel nor the respondents counsel poked

1
W. Hamilton ‘Property – According to Locke’ 41 Yale L.J. 864 (1931-1932).
2
[1912] 3 KB 474, 489-490.
3
Unreported Suit No. CA/L/304/08 of 22/03/2013.
into the protracted debate. This was notwithstanding the flirtation with the lexical meaning of
the term. In fact the parties in their briefs did not even faintly broach the contested status of
easements under the contemporary Real Property Jurisprudence. We are therefore hamstrung
as we cannot, on our own dredge up the said debate in this judgement”.4

Writing on the notions of adjudication and justice delivery, Hamilton notes again:

It has become axiomatic that an understanding of the office of the judiciary as

overlord of the legislature invites an ideological journey far into the past. Some will
say that Sutherland did no more than invoke “the great tradition” of the freedom of
the individual in person and in property…Others will insist that the Justice, a firm
believer in the article of faith which makes business immune from public control,
expressed his own judgement and in justification set down the most respectable
arguments he could muster. An intermediate group… discounting both
explanations, will be disposed to contend that jurists are moved by ideas in their
heads, as well as by rules of law in the books, loyalties to social groups, and
prevailing states of the judicial digestion. They are inclined to inquire how practical
notions which emerged in England as an intellectual by-product of a struggle
against an irresponsible monarchy help to fix the current limits of the province of
government.

Hohfeld's contribution was to simplify; he created a very precise analysis which distinguished
between fundamental legal concepts and then identified the framework of relationships
between them. His work offers a sophisticated method for deconstructing broad legal
principles into their component elements. By showing how legal relationships are connected
to each other, the resulting analysis illuminates policy implications and identifies the issues
which arise in practical decision making.
Hohfeld noticed that even respected jurists conflate various meanings of the term right,
sometimes switching senses of the word several times in a single sentence. He wrote that
such imprecision of language indicated a concomitant imprecision of thought, and thus also
of the resulting legal conclusions. In order to both facilitate reasoning and clarify rulings, he
attempted to disambiguate the term rights by breaking it into eight distinct concepts. To
eliminate ambiguity, he defined these terms relative to one another, grouping them into four
pairs of Jural Opposites and four pairs of Jural Correlatives.

(1)      (2)      (3)      (4)     

 
Right Privilege Power Immunity
JURAL OPPOSITES
No-right Duty Disability Liability

4
See further, I. Umezulike ABC of Contemporary Land Law in Nigeria (Snaap Press Nigeria Ltd. 2013) 460-461.
     (1)      (2)      (3)      (4)     
Right Privilege Power Immunity
JURAL CORRELATIVES
Duty No-right Liability Disability

Jurisprudence is the branch of philosophy which deals with principles of law and the legal
systems through which the law is applied. The subject gives teeth to the understanding and
trajectory of law as the compass of human interaction within society and is therefore proferrs
a viable background for all branches of law.
The work of lawyers in bringing principles to bear on practice, therefore, is a primary one.
Thus, the connecting dots in understanding choses and the development of their assignment
by courts of chancery is property.
The law of property is an engaging phenomenon- so intricately woven and intense. Almost all
of civil law from contract, tort, family, succession etc. is woven around property. Much of
jurisprudence and political philosophy is also woven on, or around property. Property, writes
Penner, “is a bore”.
It rarely contributes meaningfully to a conversation. It is annoying
old idea that, given half the chance, will sit down beside you and
maunder an about its past glory, its veneration by Locke and
Blackstone, or its running battles with Marx and Proudhon. Ah those
were the days! Mention something topical though, and property will
be at a loss; property suffers from a distinct collapse of self-esteem
which attends any identity crisis, property, will be more than happy
to inform you. Property has been on the couch for years now. It’s
been pulled apart and reassembled so many times it is a wonder it
knows its own name.5

We find features of property rights in the jurisprudence of assignment of choses in action.

Two are of vital importance, certainty in the form of identification and notice.

Choses in action
A chose is a thing, derived from French which was the language of the Courts in England at
the time.

The expression ‘choses in action’ or ‘thing in action’ in the literal sense means a thing
recoverable by action, as contrasted with a chose in possession which is a thing of which a
person may have not only, ownership but also, actual physical possession. The meaning has
varied from time to time but is now used to describe all personal rights of property which can
5
J E Penner The Idea of Property in Law (Oxford University Press, 1997) 1.
only be claimed or enforced by action, and not by taking possession. It is used in respect of
both corporeal and incorporeal personal property which is not in possession.

Equity readily recognised and accepted new forms of property in its evolution. It treated
‘rights’ as that of property, making it easy to recognise the right of a beneficiary under a trust,
to stocks or shares. There were also rights under a contract or covenant, all which were then
grouped as choses in action. Equity would assist an assignee of a right under a contract,
provided he had given consideration, although the assignee must take subject to equities and
the debtor could safely pay the assignor till, he had notice of the assignment.

Choses in action have been variously classified, sometimes, according to the incidents of the
rights or property concerned, at other times, according to their assignability, and yet again
according to the mode of procedure necessary for reducing them into possession. The last is
the contemporary basis of classification. Thus choses in action are classified into:

1. Legal choses in action.

2. Equitable choses in action.
3. Statutory choses assignments
It must, however, be noted that there are choses in action which are not enforceable in any
court, but are dependent for their reduction into possession, if they are so reducible at all, on
circumstances and conditions. Thus, in the Supreme Court of Judicature Act, 1873, section
25(6) was employed with a special and peculiar meaning. It provides: the legal right to a debt
or other legal chose in action could be passed by absolute assignment in writing under the
hand of the assignor. Personal contracts and personal licenses are not assignable.

Effect of the Judicature Act, 1873

A chose can either be legal or equitable, determining the form its transfer will take. Before
the Judicature Acts, which fused the jurisdictions of the courts of Equity and the Common
law into one, a legal chose such as debt, could be recovered only by an action at law,
requiring the consent of the debtor. Where the chose was recoverable only by a suit in equity,
as a legacy or money held upon a trust, it was termed an equitable chose in action. Before the
Judicature Acts, a legal chose in action was in principle, not assignable, as the assignee could
not sue at law in his own name. To this rule there were two exceptions:

1. the crown had always been able to assign choses in action that are certain,
such as an ascertained debt, but not those that are uncertain; and
 2. assignments valid by operation of law, e.g., on marriage, death,
or bankruptcy.
3. By the law merchant, which is part of the law of England, and which
disregards the rules of common law, bills of exchange were freely assignable.
Before this point, the courts of equity could not enforce a legal chose in action and vice versa.
The consequence was that, with these and certain statutory exceptions (e.g., actions on
policies of insurance), an action on an assigned chose in action must have been brought at
law in the name of the assignor, though the sum recovered belonged in equity to the
assignee. All choses in action being in equity assignable, except those altogether incapable of
being assigned, in equity, the assignee might have sued in his own name, making the assignor
a party as co-plaintiff or as defendant.

The major import of the Judicature Act was making the distinction between legal and
equitable choses in action of no practical consequence. To reiterate, the Judicature Act of
1873, by Section 25(6), enacted that the legal right to a debt or other legal chose in
action could be passed by absolute assignment in writing under the hand of the assignor. This
was later updated by the Law of Property Act 1925, Section 136 which outlined formalities
for a legal assignment.
The effect of the Judicature Act and subsequent amendments is that an assignee can sue in his
own name as the assignee becomes owner of the chose at law. Secondly, consideration is not
an essential requirement.
Section 25(6) has been repealed by the Law of Property Act, 1925 which by section 136
refers to legal thing in action, pointing the way to the merger for formalities and simplifying
the understanding and practice of all choses in action, equitable and legal. An equivalent
provision appears in section 150 Property and Conveyancing Law, Western Nigeria.

Section 136 provides:

Any absolute assignment by writing under the hand of the assignor (not purporting
to be by way of charge only) of any debt or other legal thing in action, of which
express notice in writing has been given to the debtor, trustee or other person from
whom the assignor would have been entitled to claim such debt or thing in action, is
effectual in law (subject to equities having priority over the right of the assignee) to
pass and transfer from the date of such notice—

(a) the legal right to such debt or thing in action;

(b) all legal and other remedies for the same; and
(c) the power to give a good discharge for the same without the concurrence of the assignor:
 Provided that, if the debtor, trustee or other person liable in respect of such debt or
thing in action has notice—
(a) that the assignment is disputed by the assignor or any person claiming under him; or
(b) of any other opposing or conflicting claims to such debt or thing in action; he may, if he
thinks fit, either call upon the persons making claim thereto to interplead concerning the
same, or pay the debt or other thing in action into court under the provisions of the MI
Trustee Act, 1925.
The most important outcomes of the provisions are that; the term ‘chose’ is simplified as
‘thing’; notice remains important, the assignment must be absolute and not by charge; the
concurrence of the assignor or need for his participation in the suit is dispensed with,
preceding equities remain vital, discharge can be given in the hands of the assignee and
interpleading may be initiated by the assignee.

The Nigerian situation does not encompass all the provisions unless so provided by
subsequent statutes or varied by the Court. The basic principles in Nigeria are therefore
drawn from the Judicature Act, a Statute of general application. The principles are the
assignment must be
 in writing
 be absolute, and not by charge only
 and written notice has been given to the obligor.
The requirements in both Statutes are significant because without notice, the assignee is
prevented from suing on the debt. Until the debtor has been given notice, set offs continue to
arise between the assignor and the debtor, as the debtor does not know who to pay other than
the assignor; and the assignee may lose priority to subsequent assignees who do provide
notice. 
What constitutes an absolute assignment can be seen from the case of Western Nigeria
Finance Corp. v. West Coast Builders [1971] 1 WLR 93. To be absolute, means it must not
be conditional on any event or circumstance. Notice means to notify 'any person from whom
the assignor would have been able to claim such debt' i.e the borrower and any guarantors.
Notice
Notice is a particularly important feature of rights in property. An assignee takes subject to all
equities but not; where the equity is arising after notice has been given or a claim that arises
independently of the transaction of assignment.
Negotiable instrument given for value but before maturity. Negotiable instruments even if
defective in the hands of the transferor stands good once not overdue.
All set off arising before notice is given stands valid. In Christie v. Taunton Delmard Lane &
Co. (1893) 2 Ch. 175, A held both partly paid shares and a debenture of the X Co. He
assigned his debenture for value to B, who gave notice to the X Co. The Company was
wound up shortly afterwards, and it was held that in the winding-up, there could be set-off of
the amounr of any call on the shares made after the X Co. had received notice of the
assignment of the amount of the debenture since that would prejudice B. In this case, the
claim arose out of a contract which was independent of that which created the debenture
which was assigned. If, however, the set-off had arisen directly out of the same transaction as
the chose assigned, the debtor could have pleaded the set-off against the assignee, even if the
right did not accrue to him until after notice of the assignment.

The Judicature Act merged the jurisdiction of equity and law. This created the problem of the
effect of the Statute on equitable assignment. In William Brandt’s Sons & Co. v. Dunlop
Rubber Co. Ltd. [1905] AC 454, 461, the House of Lords made it clear that the Statute did
not forbit or bar equitable assignments. In consequence, if an assignment does not meet up
with the statutory requirements it may take effect as an equitable assignment.

Formalities with respect to equitable assignment

Despite the lack of formal requirements, there must be some transaction which sufficiently
manifests an intention to assign. Thus, to assure or transfer a mere mandate or authority is not
enough. For instance, if A owes money to B. Then, B, directs C to receive the money and pay
it over to D. Although, C promises to do so, there is no assignment. The same position will
apply with respect to a cheque or revocable nomination of rights in a pension fund which is
not to take effect until the death of the nominator. Although, there are no specific forms an
equitable assignment should take, they normally fall into the following forms:

 A direct assignment to the assignee or to trustees for the assignor or a similar contract
to assign.
 A declaration of trust by the assignor for the assignee.
 A direction to the trustees to hold in trust for the assignee.
 The chose must be clearly identified or identifiable.
 The assignment must be communicated to the assignee and is therefore revocable
until that is done.
 Children or issues of marriage are considered consideration for equitable assignments.
Consideration is required for equitable assignments where it is in respect of an expectancy or
where it is expected to operate by way of charge. In other circumstances the means of transfer
has to be complied with and the assignor must have done everything required of him.

Capacity to make or take assignments

A person’s capacity to take an assignment of personal property is governed either by the law
of his domicile or by that of the country where the assignment of personal property takes
place. Where the law of the country of domicile and the law of the country where the
assignment takes place are different, it is doubtful which law should prevail.
See Re: Anziani Herbert v. Christopherson [1930] 1 Ch. 407; Republica De Guatemala v.
Nuner [1927] 1 KB 669.
In the case of debts, the debtor’s residence governs assignment of debts. The reason for
assigning this locality to a simple contract debt was that the place where the debtor resides
was in nearly every case the place where it was recoverable. Even in earlier times, it might, of
course occasionally have happened that judgment could be obtained against a debtor in a
country where he did not reside. But it was probably thought desirable for the sake of
uniformity to adopt in all cases, the test of residence rather than the test of recoverability. The
test of recoverability at any rate, would fail with cross country assignments and the context of
reciprocity of enforcement of judgments.
See Deustche Bank Und v. Banque Des Marchands de Moscou; Attorney General v.
Bouwens (1838) Exchequer Trinity Term 174;
New York Life Insurance Company v. Public Trustee [1924] 2 Ch. 101.
Assignment of Possibilities
A possibility is a mere expectation that some beneficial interest will be received by the
assignor in the future. Agreements to assign future property require consideration. An
example of a possibility is a provision in a Will of a person who is still living. The interest as
is obvious, may be liable to destruction by revocation of the Will or operation of the doctrine
of lapse. Assignment under such circumstances remain possible since a contract is created
immediately under which there is to be automatic transfer of the property when it does come
into existence. The law recognises that an interest of a kind in property has passed. Specific
performance can be sought at the time property comes into existence.

In Re Lind [1915] 2 Ch. 345, A made two mortgages of his share of his mother’s estate on her
intestacy (the mother being still alive). The mortgagor went bankrupt, but neither mortgagee
proved for his debt. After the mortgagor’s discharge, he made a further assignment of his
expectancy, and later his mother died intestate. The Court of Appeal held that, as the
assignment of an expectancy passed the expected property automatically to the assignee as
soon as the property vested in the assignor, such an assignment was not a mere contract
pending the property falling in, and therefore the two mortgagees’ interests being treated as
mortgages and not contracts survived the bankruptcy and prevails over the post-bankruptcy
assignment. In Tailby v. Official Receiver (1888) 13 App. Cas. 523, Lord Macnaghten stated
that the basis was conscience- conscience of the assignor which had been tainted with the
equity of the assignment and equity considering as done that which ought to be done will
enforce it.

Bare Rights of Action

The Law considers bare right of action as an advancement of maintenance and promotion of
champerty. A bare right to sue is not actionable although a right to sue for damages from a
contract has been upheld. The difference between assignment of bare right of action and
fruits of litigation is akin to the difference between a tree and its fruit.
In Ogdens Ltd. v. Weinberg [1906] 95 LT 567, the House of Lords held that a right to sue for
damages for breach of contract was assignable and, in this case, had been successfully
assigned. A right to sue for the fruits of litigation has also been held assignable. In Glegg v.
Bromley [1912] 3 KB 474, Mrs G sued B for defamation. By a deed, Mrs G assigned ‘all that
the interest, sum or money, or premises to which she is or may become entitled under or by
virtue of any verdict, compromise …’ to her husband, Mr G.. She later won. A creditor of
Mrs G sought (as a garnishee) to take the verdict while Mr G claimed that he was entitled to
the verdict.
Vaughan Williams LJ said: I know of no rule of law which prevents the assignment of the
fruits of an action. Such an assignment does not give the assignee any right to interfere in the
proceedings in the action. The assignee has no right to insist on the action being carried on …
There is in my opinion nothing resembling maintenance or champerty in the deed of
assignment.
Bare rights to litigate – genuine commercial interest If the assignee has a genuine commercial
interest in taking the assignment of a bare right to litigate, then the assignment is valid.
See Trendex Corp. v. Credit Suisse [1980] QB 629; Condiffe v. Hislop [1996] 1 WLR 753.
In the latter the plaintiff, a bankrupt, pursued libel proceedings. He was being financed by his
mother who had limited resources. She undertook to pay any order for costs, but the Master
ordered a stay under the inherent jurisdiction of the court to prevent abuse of process unless
the plaintiff provided security. The plaintiff appealed and the mother withdrew her
undertaking. The judge reversed the order, holding that, even if there were jurisdiction, he
would have exercised it in the plaintiff’s favour. The Court disposed of the case shortly on
the facts on the basis that the mother’s position was one long since recognised as a lawful
justification to maintain, sharing as she did a common interest with the plaintiff on the
grounds of kinship.
Priorities of Successive Assignments: the rule in Dearle v. Hall

The priority of successive assignees in equity of a chose in action depends upon what is
generally known as the rule in Dearle v. Hall (1828) 3 Russ 1, (1828) Eng. Rep 574, (1823,
1827, 1828) 3 Russ 1, (1828) 38 ER 475.

The rule gives prior interest by way of the giving of notice tp the debtor rather than by
creation pf the assignment. The doctrine known as the rule in Dearle v. Ha1l is said to have
originated in the cases of Dearle v. Hall (1823) 3 Russ and Loveridge v. Cooper (1823) Ch.)
3 Russ. 30. In the former case it was laid down by Sir Thomas Plumer, M.R., that if an
assignor, who has a beneficial interest in a fund invested in the name of trustees, assigns it for
valuable consideration to a first assignee, who neglects to give notice of the assignment to the
trustees, and subsequently the assignor purports to assign the same interest to a second
assignee, who has no notice of the prior encumbrance but who gives notice to the trustees of
the assignment, the second assignee's interest will he given priority over that of the first. The
principle upon which the Master of the Rolls chiefly relied in formulating the rule appeared
to be that the plaintiffs, who were the prior encumbrancers in point of time, had been
negligent, and that in consequence of their negligence third parties had suffered injury. In
addition, because of this negligence a cestui que trust would be put into a position where he
could more easily perpetrate a fraud on subsequent encumbrancers. It was the opinion of the
Master of the Rolls that "under such circumstances the general rule of priority ought to be
qualified.

In Ward v. Duncombe (189) A.C. 369. the House of Lords was asked to extend the doctrine
to a situation not already covered by authority. Their Lordships, after inquiring into the
principles upon which the rule was based, held that these principles were not so clear nor so
convincing that the rule ought to be extended to such a new case. Lord Macnaghten observed
that "the rule in Dearle v. Hall has on the whole produced at least as much injustice as it has
prevented” and indicated that it should be confined to its present limits.
It would surely be anomalous if the doctrine, which arose chiefly out of a desire to prevent
fraudulent dealings by assignor or cestuis que trust at the expense of bona fide subsequent
assignees, were to be allowed to be used as a tool to perpetrate frauds by the subsequent
assignees. Re Dallas (1904) 2 Ch. 385, shows that this situation could occur, for example, by
the subsequent assignee persuading a trustee to relinquish his trusteeship and by then being
the first to give notice to the new trustee. Undoubtedly the doctrine is binding law and cannot
now be altered without legislative intervention, but to allow an extension beyond its present
limits could cause grave injustice. Re Dallas, it is felt, should be regarded as the limit of the
rule's extension and any attempt to overreach this should be rejected.
It must be noted that the implication of the rule is that the principle of the first in time rule
will not apply if the equities are not equal into an absolute rule that the first to give notice
will take priority unless the later assignee was a volunteer or was aware of the earlier
assignment at the time he obtained his assignment. The rule applies even if the later assignee
made no enquiries of the trustees and even if the first assignee was not negligent in failing to
give notice, for instance because he was not aware of it or because there was no one to whom
notice could be given. The rule in Dearle v. Hall applies priority of dealings regardless of the
conduct of the competing assignees.

NOVATION
Generally, as a rule, common law preferred novation to assignment of choses in action. A
novation is a completely new agreement entered into between the parties to the original
contract.
A novation ordinarily arises when a new individual assumes an obligation to pay that was inc
urred by the original party to the contract. It is distinguishable from the situation that occurs 
when another individual makes a guarantee that a debtor will pay what he or she owes to a cr
editor. In the case of a novation, the original debtor is totally released from the obligation, wh
ich is transferred to someone else. The nature of the transaction is dependent upon the agreem
ent between the parties.
A novation also takes place when the original parties continue their obligation to one another,
but a new agreement is substituted for the old one.
Under English law, an assignment is a transfer of rights; unlike a novation, it does not
transfer obligations.