Illinois Finance Company v. Interstate Rural Credit Association

• Citation: 11 Del.Ch. 349,101 A. 870
• Court: Court of Chancery of Delaware
• Decision Date: 07 August 1917
• Parties: THE ILLINOIS FINANCE COMPANY, v. THE INTERSTATE RURAL CREDIT ASSOCIATION

101 A. 870

11 Del.Ch. 349

THE ILLINOIS FINANCE COMPANY, v. THE INTERSTATE RURAL CREDIT ASSOCIATION

Court of Chancery of Delaware, New Castle

August 7, 1917

STATEMENT OF THE CASE. In substance the bill shows that E. H Watson had made a contract with the defendant company, by which he was given an exclusive agency to sell shares of stock of the defendant company, collect from the purchasers payments for the stock, pay all the expenses of making the sales, such as agents' commissions, office expenses etc., and retain from the proceeds as his compensation a fixed percentage thereof of any sales made by him, or otherwise made. It was agreed that the contract could be assigned by Watson. The capital stock of the company of one million dollars had not then been sold. This contract was afterwards assigned to the complainant, with the knowledge of the defendant company. Thereafter the complainant company sold a large amount of stock of the defendant company, and received certain moneys therefor. Later the defendant company denied that the complainant company had any interest in the contract, and prevented the further performance by the complainant of it, though the specific nature of this claim was unknown to the complainant. It was alleged that over $ 750,000 par value of the stock of the defendant company was unsold, and that the complainant had a right to sell all of this stock and retain commissions amounting to at least $ 500,000, but that the defendant company deprived the complainant of the profits which would have accrued to it under the contract, and has refused to pay the same to the complainant, and owed the complainant at least $ 50,000 more for sales made by the complainant, making the aggregate of the claim of the complainant against the defendant $ 550,000.

The prayers of the bill were (1) to ascertain and establish the rights of the complainant in and to the contract; (2) to cancel a supposed subsequent assignment of the contract by Watson to the defendant company; and (3) that the defendant account for and pay over to the complainant all sums due under the contract.

Attached to the bill were general interrogatories as to what contracts, assignments and other papers relating to the matters contained in the bill are in the possession of the defendant company or any agent, officer or other person subject to the control of the company.

To this bill the defendant demurred (1) for want of jurisdiction there being a remedy at law; (2) because Watson is a necessary party; and (3) there is no ground for equitable relief.

Demurrer to the bill sustained.

Marvel, Marvel, Wolcott and Layton, for the complainant.

Robert H. Richards and James I. Boyce, for the defendant.

OPINION

THE CHANCELLOR

The complainant is the assignee of a contract which, by its terms was made assignable, and the other party to the contract had notice of the assignment. Choses in action are not assignable at common law, and the statute which makes assignable certain kinds of evidences of indebtedness otherwise not assignable and gives to the assignee a right to sue thereon in his own name, does not apply to the contract under consideration. Revised Code of 1915, § 2627, p. 1271.

An assignee of an unassignable contract can sue in equity on the contract in his own name, but at law must sue in the name of his assignor. Whether the provision of the contract making it assignable gave to the assignee thereof a right to sue thereon at law in his own name need not be considered in view of the conclusions reached.

Courts of equity have taken jurisdiction to grant relief to the assignee of a chose in action, because he could there bring the suit in his own name. It is also true that in general the Court of Chancery is not ousted of its jurisdiction simply as Lord Eldon puts it, "because a court of law happens to fall in love with the same or a similar jurisdiction." An interesting and exhaustive statement of this point is to be found in 1 Whitehouse on Equity Practice, §§ 21-24, and the author's conclusions are supported in Story's Equity Jurisprudence, § 80, and Pomeroy's Equity Jurisprudence, §§ 173-189.

The jurisdiction of suits by assignees of unassignable choses in action, formerly exclusive in equity, is not now recognized as even concurrent with law courts, unless it be shown that adequate relief is not afforded at law. 1 Whitehouse on Equity Practice, §§ 18, 22; 1 Pomeroy's Equity Jurisprudence, § 281; 2 Story's Equity Jurisprudence, § 1057b; Ontario Bank v. Mumford, 2 Barb. Ch. (N.Y.) 596; Walker v. Brooks, 125 Mass. 241. In 4 Cyc. 95, 96, and 5 C. J. 203, other authorities are cited. The court in Walker v. Brooks, supra, comments on a passage in an early edition of Story's Equity Jurisprudence, at section 1057 (a), in opposition to the doctrine above stated, and in the later editions a different statement is made. See § 1057(b) of 13th Ed.

Pomeroy (Equity Jurisprudence, [3rd Ed.] § 281) refers to the practical abandonment by equity courts of jurisdiction over suits by the assignee of choses in action as a striking illustration of the change which has taken place, where courts of law have assumed the power to grant a simple, certain and perfectly efficient...