Summers v. Freishtat

Singley, J., delivered the opinion of the Court. This case involves the question whether the claims of two judgment creditors take precedence over that of the assignee of a partial interest in a cause of action to be instituted subsequent to the assignment by the creditors’ debtor against another person. In Superior Court of Baltimore City (Howard, J.), the assignee prevailed, and the judgment creditors have appealed. We affirm.

A brief chronology of events is helpful to an understanding of the problem. 12/19/68 Charles L. Summers, one of the appellants, obtains judgment for $22,500.00 plus interest and costs against Robert L. Taylor. 1/2/70 Robert L. Taylor and Zena Taylor, his wife, assign to the appellee David Freishtat, their lawyer, an 80% interest in any judgment which the Taylors may recover in a suit against The Equitable Trust Company to be instituted in the Taylors’ behalf by Freishtat. The Taylors also agreed to pay all out-of-pocket expenses thus incurred. 11/16/70 Suit is filed by the Taylors against The Equitable Trust Company. 6/9/71 Albert Gross, the other appellant, obtains judgment for $104,800.00 plus interest and costs against Robert and Zena Taylor. 6/17/71 Albert Gross lays attachment on judgment in hands of The Equitable Trust Company. 5/23/73 This Court reverses Circuit Court for Harford County and enters judgment ⁴⁰⁶ against The Equitable Trust Company in favor of Robert and Zena Taylor for $20,000.00 with interest from 2/26/68. See Taylor v. Equitable Trust Co., 269 Md. 149 , 304 A. 2d 838 (1973). 7/12/73 Charles L. Summers lays attachment on judgment in hands of The Equitable Trust Company. 8/6/73 Appearance of The Equitable Trust Company as garnishee. Confession of assets ($20,000.00 plus interest and costs) filed in Gross and Summers attachment cases. 8/16/73 David Freishtat files claim for $26,736.89 under assignment. 11/5/73 The Equitable Trust Company pays $29,425.24 into court to stop running of interest on judgment. 2/13/74 On motion of David Freishtat claims of Albert Gross and Charles L. Summers are consolidated. 6/26/74 Motion of David Freishtat, claimant, for summary judgment in his favor granted.

In this appeal, Summers and Gross assign four reasons why the judgment of the trial court should be reversed. We now turn to a consideration of these contentions. (i) “The so-called ‘assignment’ of 1970, being but an attempt to transfer a mere possibility or expectancy, not coupled with an interest, in a thing that was non-existent until more than' three years after the attempted ‘assignment;’ namely, in May, 1973, was, therefore, void.” Summers and Gross rely on statements found in our cases that at common law the transfer of a possibility or expectancy, not coupled with an interest, was void, Scott v. First Nat’l Bank, 224 Md. 462, 465 , 168 A. 2d 349, 351 (1961); ⁴⁰⁷ Keys v. Keys, 148 Md. 397, 400 , 129 A. 504, 505 (1925); In re Banks’ Will, 87 Md. 425, 440 , [Godwin v. Banks,] 40 A. 268, 273 (1898); Hamilton v. Rogers, 8 Md. 301, 319 (1855). What this argument overlooks is the modern' rule, evolving from the practices of equity, Adair v. Winchester, 7 G. & J. 114 (1835); 3 S. Williston, Contracts § 410, at 15-18 (1960), recognizing that a chose in action, whether arising in tort or ex contractu, is generally assignable, 6 Am.

Jur. 2d Assignments §§ 27-30, at 211-14 (1963); 6 C.J.S. Assignments § 5, at 1052-53 and §§ 31-32, at 1080-81 (1937). See Welch v. Mandeville, 14 U. S. 233 (1816), see especially 14 U. S. at 237 note a. See generally 1 Restatement of Contracts § 148(2)(a), at 178 and § 151, at 181-82 (1932). The only limitation, in the absence of a contrary statutory provision, 1 is that the right of action be of a sort which would survive the death of the assignor and pass to his personal representatives, 4 A. Corbin, Contracts § 886, at 559-63 (1951).

Scott v. First Nat’l Bank, supra, 224 Md. 462 , while applying Connecticut law, recognized that an assignment of one-half of what the assignor would receive on the death of his father, intestate, would be enforceable in equity, as did Keys v. Keys, supra, 148 Md. 397 . Compare In re Banks’ Will, supra, 87 Md. at 440 , where a contingent interest under a will, an interest which was neither devisable nor descendible, was held not to pass to the insolvent beneficiary’s trustee. Hamilton v. Rogers, supra, 8 Md. 301 stands for what has become the rule of our cases: that the actual or potential existence of a debt or obligation is sufficient to be the subject of a valid and enforceable assignment, since equity will enforce an assignment resting “in mere possibility only.” 2 See In re Talbot Canning Corp., 35 F. Supp. 680, 683 (D. Md. 1940). ⁴⁰⁸ Seymour v. Finance & Guaranty Co., 155 Md. 514, 531-33 , 142 A. 710, 716-17 (1928) upheld an assignment of money to be earned in the future performance of an existing construction contract. Baust v. Commonwealth Bank, 158 Md. 280 , [Baust v. Fairfield Farms Dairy,] 148 A. 236 (1930) upheld an assignment of payments to be made by a dairy to a milk producer, implying the existence of a contract from a course of dealing.

To the same effect is Maryland Cooperative Milk Producers v. Bell, 206 Md. 168 , 110 A. 2d 661 (1955). See Yingling v. Smith, 254 Md. 366 , 255 A. 2d 64 (1969), where we followed the majority rule and held that the right to contest a will was both assignable and descendible. (ii) “In addition, since the so-called ‘assignment’ was an attempt to split up a claim without the consent of the debtor, it is void.”