Little v. City of Portland

• Decision Date: 08 October 1894
• Citation: 26 Or. 235,37 P. 911
• Parties: LITTLE v. CITY OF PORTLAND.
• Court: Oregon Supreme Court

37 P. 911

26 Or. 235

LITTLE v. CITY OF PORTLAND.

Supreme Court of Oregon

October 8, 1894

Appeal from circuit court, Multnomah county; E.D. Shattuck, Judge.

Action by F.C. Little, assignee, against the city of Portland. There was a judgment for plaintiff, and defendant appeals. Affirmed.

J.V Beach, for appellant.

J.B. Cleland, for respondent.

MOORE, J.

This is an action brought by the plaintiff, as assignee of the Oregon Paving & Contract Company, against the city of Portland, for damages caused by the non-payment of certain warrants, amounting to $1,100, drawn by the defendant upon a special fund to be raised by assessment of real property benefited by the improvement of Twelfth street, in said city. The facts out of which the cause of action arose, and upon which the complaint was based, are identical with those stated in the case of Commercial Nat. Bank v. City of Portland (Or.) 33 P 532. The defendant, after denying the material allegations of the complaint, interposed the following defenses: (1) That the city made the improvement without having acquired jurisdiction, and is therefore unable to collect the cost thereof from the owners of the property; (2) That the said contract was entire, and that the assignment to the plaintiff of a part of the amount alleged to be due thereunder was without the assent and against the wish of the defendant that the Commercial National Bank recovered $3,063.59 of the city in an action founded upon similar facts arising out of the same contract; and (3) that the city of Portland was at the time the contract was entered into in debt in a sum exceeding that prescribed by its charter as the limit of its indebtedness. A demurrer to said defenses having been sustained by the court, and the defendant declining to further plead, judgment for the amount claimed was rendered against it, from which it appeals.

The questions presented relate to the alleged error of the court in sustaining the demurrer. It is contended that where a city is not vested by its charter with power to improve streets, and pay the expense thereof out of the general fund, it cannot be held liable on account of a breach of duty on the part of its officers, in a case where the contractor agrees to look for his compensation to the fund to be raised by assessing the property benefited by such improvement, unless the city can reimburse itself from such assessment. This question was fully discussed by Lord C.J., in the case of Commercial Nat. Bank v. City of Portland, supra, and the reason upon which the decision there rests is so potent that it needs no further elucidation here.

It is further contended that, there being a prior recovery of a part of the contract price of the improvement, such recovery is a bar to this action. A chose in action, by the ancient common law, could not be assigned, except by or to the king but courts of equity modified this rule, and protected the assignee of a chose in action as much as the law protected a chose in possession, and for that purpose considered the assignee of a chose in action the trustee of, and authorized to use the name of, the assignor, to recover possession. 2 Bl.Comm. 442. This equitable modification of the ancient common-law rule was an outgrowth of a commercial era, made necessary to adapt it to the condition of a trading people; and the legislative assemblies of most of the states of the Union, in order to keep pace with the growth and expansion of business methods, have enacted laws authorizing the assignee of a chose in action to prosecute the claim in courts of law in his own name. Bank v. McLoon, 73 Me. 498. In our own state, Hill's Code, § 27, provides that every action shall be prosecuted in the name of the real party in interest. Courts of equity have in modern times further modified the rule first adopted, and now enforce partial assignments of choses in action, upon the theory that the interests of all the parties can be determined in a single suit. The debtor, in cases of conflicting claims, if not in default, can bring the entire fund into court, where a decree can be made, awarding proper distribution, without the risk of having a judgment rendered against him for the costs and disbursements of the suit. Bank v. McLoon, supra; James v. City of Newton, 142 Mass. 366, 8 N.E. 122. This, however, is not recognized in actions at law, when such partial assignments are made without the knowledge and consent of the debtor. The debtor's liability usually depends upon an entire contract, and if the creditor could, without the debtor's consent, split up his claim at all, and assign any portion of it, he could do so indefinitely, and thus subject the debtor to many actions, involving great outlay in costs and disbursements, not contemplated by the contract, which was limited to a single liability upon an entire demand. Mandeville v. Welch, 5 Wheat. 277. It is well settled that a creditor cannot, without the knowledge and consent of the debtor, split up an entire demand into distinct parts, and maintain separate actions at law on each. In such a case a recovery in one action bars the others. Smith v. Jones, 15 Johns. 229; Willard v. Sperry, 16 Johns. 121; Marziou v. Pioche, 8 Cal. 536; Herriter v. Porter, 23 Cal. 385. If, however, the assignment of a part of a claim is made with the knowledge and consent of the debtor, the assignee may bring his action upon it without making other holders of the demand parties. Grain v. Aldrich, 38 Cal. 514; Bank v. McLoon, supra. In such cases the rights of the plaintiff as assignee serve as the consideration for the new contract, which becomes the ground of the action. The action is on the defendant's promise to the plaintiff, and not upon the assignment, or upon any right growing out of it. Getchell v. Maney, 69 Me. 442. The right to maintain an action based upon the debtor's assent to a partial assignment of a demand rests upon the theory that the assignment of the property in the sum transferred to the assignee is a good consideration for the debtor's promise to pay the assignee, and that by the promise the indebtedness to the assignor is, pro tanto, discharged. James v. City of Newton, supra.

But defendant's counsel contend that a municipal corporation is not bound, in any case, to accept or recognize a partial assignment of a claim against it, and cites the case of Appeals of the City of Philadelphia, 86 Pa.St. 179. In this case it is conceded that an assignment of a part of a debt is valid in equity between individuals; but the court refused to apply the rule to a debt due from a municipal corporation, on the ground that the policy of the law is against permitting individuals, by their private contracts, to embarrass the principal officers of a municipality. But in James v. City of Newton, supra, the supreme court of Massachusetts held that there was no ground for any such distinction in that commonwealth. Nor can we see any just reason why the contract of a municipal corporation in accepting and agreeing to pay a part of a demand against it to the assignee of its creditor, should, in the absence of any statute to the contrary, be treated in a different manner from the contract of private individuals. The cause of action being upon the agreement of the city, and not upon the creditor's order, it follows that the city would be liable, unless prohibited from making such contracts by its charter. In the case at bar the city of Portland executed warrants, of which the following is a copy: "No. 180. Portland, Or., Oct. 27, 1887. To the Treasurer of the City of Portland: Pay to P.H. Schoulderman & Co., or order, three hundred dollars, out of the funds for Imp. of 12th street, Ord. No. 5246. Attest: W.H. Wood, Auditor and Clerk. John Gates, Mayor. $300." This warrant and others, amounting to $1,100, were delivered to the payees named therein, and by them assigned to the plaintiff. The city by this means split up the demand of the contractors, and ordered the treasurer to pay to them or their order the amounts named in the several warrants. This was an acceptance and agreement on the part of the city to pay a part of the demand, and, having voluntarily assumed the liability, there is no reason why it should now escape...