The Gazette 1958-61

shows that it can, as also does Alexander v. Steinhardt, Walker & Co. (1903), 2 K.B. 208. Therefore, there is nothing to prevent the transaction from amounting to an assignment, merely because the effective document* is delivered to the debtor instead of as is more usual to the assignee. (ii) There must be a clear intention on the part of the assignor to assign. This is a question of construction of the instrument and Morrell v. Wootten and A/exande v. Steinhardt, Walker & Co. show that this intention may be provided by the order given directly by the creditor to the debtor that the debtor shall pay to a third person the fund or part which the debtor owes to or holds for the creditor. (iii) Notice of the assignment should be given to the debtor. The point of notice is that the assignment is complete as between the creditor and the third party once there is the intention expressed to assign the specific fund in whole or in part. The absence of notice to the debtor does not affect the validity of an equitable assignment but notice of the assign ment is normally given to the debtor for three reasons— (a) so that the debtor shall pay the assignee and not the original creditor; (&) to prevent the assignee from being subject to equities arising between the debtor and the creditor after the assignment; and (e) to preserve priority. In the kind of assignment with which we are here concerned, namely, that effected by the creditor giving the order directly to the debtor, there is no question of the debtor not having notice. Further, the client (the creditor) had informed the third party of the transaction. It is clear that once a debtor or fund holder has received notice of an equitable assignment of the debt or fund he must withold payment to the assignor (or persons claiming through him) unless made with the consent of the assignee and if he pays to or for the assignor without such consent, he will have to pay over again to the assignee (Jones v. Farrell (1857), i de G. & J. 208) To sum up : if the authority given by the client to the solicitor is a mere mandate to pay as in Percival v. Dunn, not specifying any fund out of which payment is to be made and not showing any intention to assign that fund, then it does not amount to an assignment by the creditor, who can countermand his directions and give fresh directions when he pleases. An example of such a mere authority would be : "I hereby authorise you to pay £x to ————." On the other hand, if the so-called authority is a direction to the solicitor to pay a *The instrument appears to attract ad valorem duty at T. .. : 77

authorities similar to the one in question. Neither they nor other firms with whom they have discussed the matter appreciated that an authority can in fact amount to an equitable assignment, and it is thought therefore that the point is of sufficient importance to warrant a note in the Gazette. When a firm of solicitors hold money on behalf of a client, they owe him a debt which is a chose in action capable of assignment by the owner (the client) either at law or in equity. But in the case in question, the fund had not yet come into the hands of the solicitors so that any purported assign ment could only have been an equitable assignment and could not have been a legal assignment under s. 136 of the Law of Property Act, 1925.* (See Joseph v. Lyons (1884), 15 Q.B.D. 280, and cases therein cited). Again, even if the fund had already been in the hands of the solicitors, any purported assignment of part of the fund could have operated only in equity and not as a legal assignment (Forster v. Baker (1910) 2 K.B. 636 ; Re Steel Wing Co. (1921) i Ch. 349; Williams v. Atlantic Assurance Co. (1933) i K.B. 81). The essentials of an equitable assignment of part of a fund are set out in tianbury's Modern Equity (Seventh edition) at pages 71, et seq., and are :— (i) There must be a specified fund out of which payment is to be made. A good example of a case in which a transaction was held not to amount to an equitable assignment for want of this requirement is Percival v. Dunn (1885), 29 Ch. D. 128. There A owed money to B and B to C. B handed to C an order signed by himself and addressed to A which read " Please pay C the amount of his account, £42 145. 6d. for goods supplied." A had notice of the order, but it was held that there was no assignment of any part of the fund owed by A to B, as the order did not specify any fund out of which the payment was to be made. The transaction was described by Bacon, V.-C., as being merely a polite note by B asking A to pay his deist. It will be noted that in Percival v. Dunn the order was given by the first creditor to a third party, or, to equate the parties with the case which prompted the present inquiry, given by the client to the third party. This will be the normal procedure in making assignments. The point, therefore, arises as to whether an order given by the client to the solicitor direct (i.e., by the original creditor to his debtor), telling him to pay a sum to a third party out of the fund held by the solicitor (the debtor) for the client can be an equitable assignment of the fund. The old case of Morrell v. Woatten (1852), 16 Beav., *Corresponding Irish section is Judjcatui-e (Ir.) Act 1877, s. 28 (b). "... . " ... .