organism is to be. It is necessary that the constitutional principles be classified so that a commission need not spend a generation determining what are its powers. It is necessary to develop statutory construction in connection with the constitution to the end that the commission may be checked at the point where its tyranny may begin. These can be made certain only by a well-defined system of administrative law. In any event, here is an angle of approach. It may well be erroneous. But if it is a working hypothesis, presenting an old problem from a point which has profitable suggestion, perhaps it may be of ultimate aid in liberating old administrative machinery from outworn limitations and in guarding the newer instruments from old ideas and older fears. BOSTON, MASS. A. A. Berle, Jr. THE ALIENABILITY OF CHOSES IN ACTION: A REPLY TO PROFESSOR WILLISTON 1 'N a previous number of this REVIEW1 I presented a view of the law relating to the alienability of choses in action at variance with that set forth by the late Dean Ames in his well-known essay entitled "The Inalienability of Choses in Action." The conclusions 1 29 HARV. L. REV. 816. 2 I SELECT ESSAYS IN ANGLO-AMERICAN LEGAL HISTORY, 580; reprinted in LECTURES ON LEGAL HISTORY, 210. -- The intrinsic inalienability of choses in action asserted by Dean Ames is reasserted by Professor Beale in his treatise on the CONFLICT OF LAWS (1916), § 152, as follows: "Transfer and extinguishment of rights of property. — It is a characteristic quality of rights of property that they continue in existence until extinguished by act of law or by destruction of the thing. Such a right must be capable of transfer, at least upon death, since the right is of a nature to outlast human life; and in fact in all civilized communities rights of property are also transferable inter vivos. "A right is transferred when the transferee is put into exactly the same relation toward the thing that the transferor previously occupied. A transfer of title places the same title in the transferee; a transfer of possession puts the transferee in and the transferor out of possession. "Rights in tangible things may of course easily be transferred, by consent of the parties; and the same is true of real intangible things. In the case of commercial paper, a transferee takes the exact place of the transferor by the very terms of the instrument. "Choses in action, including contract rights and debts, are by their very nature incapable of transfer; for they are two-party relations, and the personalities of the parties are fundamental qualities of the relation. A new party could be inserted only by such a complete change in the nature of the obligation as would be a destruction of it and the creation of a new one; and this can be done only by mutual consent of both parties. Such a right, then, is incapable of transfer; it can only be assigned. An assignment is merely a contract that the assignee shall enjoy all the benefits of it, including that of suing. It does not put the assignee into the position of the assignor, or affect his right except collaterally." See my former article, 29 HARV. L. REV. 818, for a discussion of the meaning of such statements. The assertion that the assignment "does not put the assignee into the position of the assignor" is obviously at variance with the decisions of the courts. In the recent case of Portuguese-American Bank v. Welles, 37 Sup. Ct. Rep. 3 (1916), Mr. Justice Holmes said: "When a man sells a horse, what he does, from the point of view of the law, is to transfer a right, and a right being regarded by the law as a thing, even though a res incorporalis, it is not illogical to apply the same rule to a debt that would be applied to a horse." The learned judge was discussing, not whether ordinary choses in action were alienable, but whether an attempted express limitation which I reached in that article may be stated briefly as follows: Common law choses in action, inalienable in the early days of English law, became in the final development of our law fully alienable, at law as well as in equity. The requirement that the suit be brought in the name of the assignor was retained, in the absence of statutes, but was merely a matter of procedural form. In other words, the conclusion was that complete ownership of a chose in action, both at law and in equity, was by an assignment, coupled with notice to the debtor, vested in the assignee. Questions relating to the effects of an assignment upon defenses of the debtor, rights of set-off, "latent equities" of third persons, etc., were left for discussion at a later time. In a recent number of this REVIEW 5 Professor Williston dissents from my conclusions as to the character of the assignee's ownership of the chose in action and argues that it should still be regarded as merely equitable. In doing so, naturally he discusses both the points made in my article and those portions of the subject which I had left for later treatment. In what follows I wish both to give my reasons for still adhering to my views as to the character of the assignee's ownership of the assigned claim, and to discuss to some extent those portions of the law of assignment touched upon by of the power to alienate would be valid. For a thorough analysis of the problems involved and citation of authorities, see the comment on this case in 26 YALE L. J. 304. How Professor Beale comes to make the statement he does can be understood only by a very careful examination of his classification of rights into "static" and "dynamic." At the present time and place I can only say that what he calls "static" rights do not seem to me if I understand his definition of them to be jural relations and so ought not properly to be called rights at all. Even allowing for the unusual terminology used by Professor Beale, it seems clear that the attempted distinction between "static" and "dynamic" rights still leaves it difficult to reconcile his statements as to the alleged contrast between the alienability of negotiable paper obligations and that of ordinary choses in action. 3 Before notice neither assignor nor assignee has complete ownership. 29 HARV. L. REV. 834. It is assumed also that the assignment is of the whole claim. Partial assignments will be discussed separately, as they were in my previous article. 29 HARV. L. REV. 836. 4 29 HARV. L. REV. 821-822. Of course it is understood that there are certain classes of choses in action which are held to be inalienable on grounds of real or supposed policy. These are excluded from the discussion, which deals only with choses in action which are “assignable.” Throughout the discussion it is also assumed that all the requisites of a valid assignment, including formal requisites, consideration, if that be necessary, etc., are present. The law relating to these questions is left for discussion at another time. 5 30 HARV. L. REV. 97. Professor Williston but because of limits of space omitted from my former article. 8 If I understand Professor Williston's position, his argument may be divided into two parts. The first is based upon what he alleges to be the "fundamental characteristic" or "essential characteristic" of "equitable rights," "equitable obligations" or "equitable ownership" which differentiates them from "legal rights,” “legal ownership" or "legal title." The second part is based upon his belief that the recognition of legal ownership in the assignee would require us to attach to the assignment of a chose in action unfortunate jural effects both upon the rights of set-off of the debtor and upon the “latent equities" of third persons and equitable interests of prior partial assignees. The jural effects which the learned writer asserts would, by inevitable logic or necessity, follow from a recognition of the legal character of the assignee's ownership, he conceives to be not only unfortunate but also unsupported by legal principle or weight of authority. Without attempting to determine whether all these results would be so unfortunate as Professor Williston supposes, I shall attempt to show (1) that the part of the learned writer's argument which is based upon the alleged difference in the "fundamental" or "essential characteristics" of legal and equitable "rights" does not in any way disprove the validity of my conclusions; (2) that the jural effects which the learned writer deplores have no necessary or logical connection with the legal or equitable character of the ownership of the assignee, but that, on the contrary, the recognition of the assignee as owner by the court of law as well as by the court of equity is, so far as intrinsic necessity or logic is concerned, entirely compatible with all those jural effects of assignments of which the learned author approves. • The phrases in quotation marks are all used by the learned writer at various points in his argument, apparently without any attempt to discriminate carefully, for example, between such phrases as “equitable right" and "equitable ownership" or "legal right" and "legal ownership." With the desire to be entirely fair to the argument of my learned critic, I have therefore in the text repeated them all. 7 In another place (15 COL. L. REV. 228) I have called attention to the fact that there is no term in common use to describe the consequences or effects of given facts both at law and in equity. "Legal effects" suggests that common law effects only are ncluded. In this article I have adopted the phrase "jural effects" to cover both "legal effects at common law" and "legal effects in equity." 8 See 30 HARV. L. REV. 101, 102, 104, 107, for the passages in question. They will be discussed in detail below. I At the outset I find myself under the necessity of pointing out certain misconceptions of my position under which Professor Williston apparently labors. In the opening sentence of his article my learned friend says: "The interesting article by my friend, Professor Cook, in a recent number of this REVIEW, On the alienability of choses in action, leads me to make some suggestions in opposition to his argument that the assignee of a chose in action should be regarded as having a legal rather than an equitable right." 9 With all deference to Professor Williston, and in full recognition of the fact that he had no desire or intention to misstate my argument, I must hasten to say that this appears to me to be not merely an inadequate but also an erroneous statement of my conclusions. Moreover, it betrays at once the chief reason for the learned writer's dissent, viz., that he has failed to follow the essential features of the analysis presented in my article and so has failed to understand what my conclusions really are. This failure naturally renders him quite unconscious of the fact that he is ascribing to me views which I have never entertained for a moment. In order to clear up this misapprehension of my conclusions, in which some of the readers of Professor Williston's argument may naturally share, the present article will first of all point out specifically the ways in which the learned writer has misstated my position, and in doing so will restate and emphasize those portions of my analysis the overlooking of which has, it seems, led my critic into the error referred to. In the first place, nowhere in my former article is it stated that the assignee ought to be regarded as having merely “a legal right.” Even a superficial reading of my argument will disclose that it is based fundamentally upon the proposition that the "ownership" of a chose in action is a complex aggregate of jural relations and that the word "right" is entirely inadequate to describe the aggregate of rights and other jural relations which, according to the decisions of the courts, are vested in the assignee by virtue of the assignment. In my own thinking I have found it impossible to get along either 9 30 HARV. L. REV. 97. The italics are those of the present writer. |