File No. 3593 | S.D. | Aug 7, 1915
This- is an action for damages for deceit in procuring subscriptions for the capital .stock of the Evarts State Bank, claimed to have been induced 'by the false representations of the defendant, as president of. said bank, that the notes constituting a part of the assets of the bank were good and collectible. There, are three causes of action. The first cause is based upon representations made to the plaintiff. The third cause is based upon representations made to- W. V. Wade, the right of action for which was assigned to the plaintiff. The second cause of action was decided favorably to the defendant, and we are not now concerned therewith. The court made findings of fact and conclusions of law, from- which it appears- that the plaintiff suffered damage to the amount of $1,006 under the first cause of action, and that the said W. V. Wade suffered -damage to the amount of $200 under the claim set forth in the third cause of action. From the judgment entered pursuant thereto, and' an order denying a new- trial, the defendant has appealed.
“Sec. 383. A thing in action is a right to> recover money or other personal property, by a judicial proceeding.
“Sec. 384. A thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner. Upon the death of the owner, it passess to his personal representatives, except where, in the cases provided by law, it passes to his devisees or successor in office.”
In sections 1114 and 1115, Civil Code, we find “obligation” defined as follows:
“Sec. 1114. An obligation is a legal duty by which a person is bound to do or not to do a certain thing.
“Sec. 1115. An obligation arises either from:
“1. The contract of the parties; or,
“2. The operation of law.
“An obligation arising from an operation of law may be enforced in the manner provided by law, or by civil action or proceeding.”
Division third of our Civil Code embraces sections 1114 to 2283, inclusive, dealing with the subject of “Obligations.” This division is subdivided into four parts. Part I relates to obligations in geenral. Part II relates to contracts. Part III relates to obligations imposed by law. Part IV relates to obligations arising from particular transactions. It is under part III, §§ 1291-1293, that the present cause of action arises.
We are of the opinion that the word “obligation” in section 384, C. C., was used by the Legislature in its broad sense, as covering all of the matters embraced within division third of the Civil Code and as defined in section 1114 and 1115, C. C. Section 2444, C. C., provides:.
*55 “Whenever the meaning of a word or phrase is defined in any statute, such definition is applicable to the same word or phrase wherever it occurs, except where a contrary -intention plainly appears.”
See, also, In re State Bonds, 7 S. D. 42, 46, 63 N.W. 223" court="S.D." date_filed="1895-05-02" href="https://app.midpage.ai/document/in-re-state-bonds-6684158?utm_source=webapp" opinion_id="6684158">63 N. W. 223; State ex rel. Holmes v. Shannon, 7 S. D. 319, 322, 64 N.W. 175" court="S.D." date_filed="1895-08-15" href="https://app.midpage.ai/document/state-ex-rel-holmes-v-shannon-6684240?utm_source=webapp" opinion_id="6684240">64 N. W. 175; Sutherland on Statutory Construction, § 255. Our conclusion that the word “obligation” in section 384 means the same as defined in section 1114, C. C. is also fortified by section 1134, C. C., which appears under part I of division third of the Civil Code, viz., Obligations in General, and is as follows:
“A right arising out of an obligation is the -property of the person to whom it is due, and may be transferred as such.”
From its context it is certain that the word “obligation” in thi-s section means the same as defined in sections 1114 and 1x15, C. C. It is also observed that the -proposed Field New York Civil Code contains this section as No. 690, and in the note thereto reference is made to section 367, which is the same as our section 384, C. C. It would thus appear that all causes of action arising out of a violation of a right of property, or out of an obligation arising from contract, or out of an obligation arising by operation of law, are assignable. Generally speaking, that is so. But the several sections of the Codes must be read and interpreted together. An assignment of a cause of action must conform to the fundamental tests applied to any contract prescribed by section 1189, C. C. It would therefore seem to- us that in states having a provision similar to our section -384, C. C. (not modified by other provisions), the criterion as to the assignability of a causo of action is whether it is lawful to make the assignment. For. instance, it must not be within the inhibition of sections 918 and 919, C. C., as to subject-matter. It must not violate section 1271, C. C.; that is to say, the assignment must not be; (a) Contrary to the express provisions of law; (b) contrary to- the policy of express law thereof, though not expressly prohibited; (c) contrary to good morals. It is true that at common law, and at present in a large number of the states, a cause of action for deceit was not and is not assignable. 2 R. C. L-. p. 610; 1 Corpus Juris, pp. 174-215,- particularly page 194, no-tes 78 and 79. The violation of the rule 'against champerty and maintenance was
While under our Codes, as is the general rule, the assignability of a thing in action and the survival of a thing in action are “convertible terms,” the one is not, with us the test of the other, but both are to be tested by the legality of such assignment as defined by law or by the doctrine of public policy. We are aware that this court in Erickson v. Brookings County, 3 S. D. 434, 53 N.W. 857" court="S.D." date_filed="1892-12-19" href="https://app.midpage.ai/document/erickson-v-brookings-county-6683356?utm_source=webapp" opinion_id="6683356">53 N. W. 857, 18 L. R. A. 347, and the California courts in many cases, have, in effect, ignored the provisions of section 384, C. C., and adopted the old criterion of assignability, yet that does not justify us in continuing the error. The decision in the Brookings County Case seems to have been based largely -upon the discussion of the subject by that learned author, John- Norton Pomeroy, in his work on Remedies and Remedial Rights. In the sections quoted.the author was dealing with the law generally and he expressly said in section 146:
“In some states there may be statutes expressly dealing with the subject of assignments inter vivos.”
So- Sutherland in his work (Code PL, Pr. & Forms, §§ 3270, 3272) refers to the section corresponding to- our section 80, C. C. P., but entirely ignores the provisions of section 954, C. C. Cal., the same as our section 384, C. C. Section 384, C. C., was first set forth by David Dudley Field in the proposed New York Civil 'Code. Of it he said:
“This section is proposed to establish one rule for the assign-ability and the survivorship- of things in action.”
It may also be observed that the California decisions cited in the Brookings County case were all decisions rendered prior to the adoption in California of the Field Code. In Cross v. Sacramento Savings Bank, 66 Cal. 462" court="Cal." date_filed="1885-02-27" href="https://app.midpage.ai/document/cross-v-sacramento-sav-bank-5442004?utm_source=webapp" opinion_id="5442004">66 Cal. 462, 6 Pac. 94, the court, while not referring to the Code sections’, decided that the right to impeach an account stated was not assignable: (a) Because there was no valid enforceable possibility or expectancy (see section 918 of our Civil Co-de) ; and (b) because it was contrary to sound policy (see section 1271 of our Civil Code). Yet we find the California court in Rued v. Cooper, 109 Cal. 682, 34 Pac. 98, referring to .survivability as the test of assignability.
Is it contrary to -public policy to allow an assignment of a cause of action for deceit? In the states having provisions similar
In Wisconsin, until lately, it has been consistently held that actions for deceit did not survive and were not assignable. But in 1907 the Legislature amended their survival statute (section 4253, St. Wis.) by making it apply to “all damages done to’ the property rights or interests of another.” It was held in Harris v. Welch, 148 Wis. 441" court="Wis." date_filed="1912-02-20" href="https://app.midpage.ai/document/harris-v-welch-8190492?utm_source=webapp" opinion_id="8190492">148 Wis. 441, 134 N. W. 1041, under that statute, that a cause of action for deceit survived. It is difficult' to see any difference in meaning between the Wisconsin amendment and the words “out of the violation of a right of property” contained in section 954, C. C. Cal., and our section 384, C. C. The Legislature of this state having declared that a cause of action “arising out of the violation of a right of property or out of an obligatin,” -whether a contract obligation or an obligation imposed by law, is assignable, it is not our province to say that the subject-matter of such an assignment is not assignable because such assignment is in violation of public policy. The Legislature has made its declaration of public policy. It may, however, be that, even when the subject-matter is properly assignable, the transaction by the parties may be such that the enforcement of such an assignment would violate the statutes against champerty and maintenance. It would be our province to consider any such violations, but no such violation-is shown or claimed in this case.
“Every action must be prosecuted in the name of the real party in interest, except as otherwise provided' in section 82 of this Code; but this section shall not be deemed to authorize the assignment of a thing in action not arising out of contract. * * *”
Both of said states have this same section, as well as sections corresponding to our- section 384, C. C., and both courts held in the cases cited that the section in the Code of Civil Procedure-recognized the limitation which existed' at common law, and inferentially, at least, provided that a chose in action arising out of a pure tort was not assignable,'notwithstanding their sections similar to our section 384, C. C. It seems to us that these courts have utterly mistaken the force and effect of the Civil Procedure section. It seems- to us that Mr. Pomeroy, in his discussion of the -subject in sections 124-144, Remedies and Remedial Rights (2d Ed.), has set forth the true interpretation of section 80 of our Code of -Civil Procedure. In section 125 he said:
“One effect — and perhaps the principal effect of this statutory provision — is that all assignees of. things in action which are assignable may sue upon them in their own names, and are no longer obliged to sue in the names of the original assignors. It is not strictly correct to say that the provision itself renders any thing in action assignable, that it creates any attribute of assign-ability; but, for the purpose of defeating such possible interpretation, the second clause was added in many of the Codes. This limiting clause, however, is only negative in its form and meaning. It merely forbids a certain construction to be placed upon the preceding language. It does not say that no thing in action is assignable .unless it arises out of contract.”
In section 144 he said:
“Even the clause which follows in some of the states, ‘but this section shall not be deemed to authorize the assignment of things in action not arising out of contract,’ although doubtless intended to limit the effect of -the -preceding general requirement, has really no- practical effect. The section does not authorize the assignment of any things in action, either growing out of tort or out of contract, and it was therefore an empty legislative prohibi*59 tion to say that it should not be deemed to authorize the assignment of those arising out of tort. It is not said that those things in action arising out of tort shall not be' assigned, but only that the authority for such a transfer shall not be found in this particular section of a single statute. If the right to assign such demands is conferred by other statutes, or by any rules of the law independent of statute, it is not taken away by these apparently restrictive clauses.”
We therefore conclude that, whether we consider the tort in question as one violating a right of property or as arising out of the violation of an obligation imposed by law, in either case, the assignment of the third cause of’ action did not violate any express provision of law, nor the policy of express law, nor good morals.
Appellant also urges that the evidence is insufficient to sustain the findings. A reproduction of the substance of this evidence would cover many pages and would not be a benefit to anybody. A careful examination and consideration of the evidences convinces us that the trial court was warranted in finding that the defendant made representations to the plaintiff and Wade that the notes and discounts of the Evarts State Bank were good and worth par, and that such was not the case, and that the plaintiff and Wade relied upon such representations.
The judgment and order denying a new trial are affirmed.