Wood, V. C., refused to deprive the lender of his security. There are similar decisions in Scotland and in this country.
If the reasons suggested for protecting the purchaser of shares in a company are sound they would seem to furnish a solution of the vexed question as to the rights of the innocent purchaser of a chose in action from one who held it subject to what are called latent equities, i.e., equities in favor of any person other than the obligor; for no solid distinction can be drawn between a transferree of shares, with a power to register himself as owner, and an assignee for value of a chose in action. The so-called assignee is not properly an assignee, i.e., successor, but an attorney with a power to collect or dispose of the claim for his own use. He corresponds to the Roman procurator in rem suam. Both in the Roman and the Teutonic systems of law a contract was conceived of as a strictly personal relation. It was as impossible for the obligee to substitute another in his place as it would have been for him to change any other term of the obligation. This conception, rather than the doctrine of maintenance, is the source of the rule that a chose in action is not assignable. In 1 Lilly’s Ab., 103, it is said: “A statute merchant, or staple, or bond, etc., cannot be assigned over to another so as to vest an interest whereby the assignee may sue in his own name, but they are every day transferred by letter of attorney, etc. Mich., 22 Car. B.R.” It was a consequence of the assignor continuing the legal
- Redfearn v. Ferrier, 1 Dow. 50; Burns v. Lawrie’s Trustees (Scotch), 2 D. 1348; Brewster v. Sime, 42 Cal. 139; Thompson v. Toland, 48 Cal. 112; Winter v. Belmont, 53 Cal. 428; Atkinson v. Atkinson, 8 All. 15; McNeil v. Tenth Bank, 46 N.Y. 325. In Dodds v. Hills, it will be noticed, the lender was able to complete his title under the power without further assistance from the delinquent trustee. If the lender required the performance of some further act on the part of the trustee in order to complete his title, and if before such performance he received notice of the trust, the loss would fall upon him; for in the case supposed he could not obtain the title without making himself a party to the continuance of the breach of trust. Ortigosa v. Brown (47 L.J. Ch. 168) was decided in favor of a defrauded pledgor upon this distinction.
- See 2 Spence, Eq. Jur. 850; Pollock, Contracts, 206; 2 Bl. Com. 442. The wrong of maintenance lay in executing and exercising the power of attorney. The distinction was established at an early period, that the grant of a power of attorney to a creditor was not maintenance, while a similar grant to a purchaser or donee was maintenance. 34 H. VI. 30–15; 37 H. VI. 13–3; 15 H. VII. 2–3; South v. Marsh (1590), 3 Leon, 234; Harvey v. Beekman (1600), Noy, 52. As late as 1667–1672 the same distinction prevailed also in equity. “The Lord Keeper Bridgman will not protect the assignment of any chose in action unless in satisfaction of some debt due to the assignee; but not when the debt or chose in action is assigned to one to whom the assignor owes nothing precedent, so that the assignment is voluntary or for money then given.” Freem. C.C. 145.