Oberst, Paul Leo

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Kentucky Law JournalVolume 26 | Issue 3 Article 71938Partial Assignments in Kentucky--The Rule inHenry Clay Fire Ins. Co. v. Denker's Exr.Paul Leo OberstUniversity of KentuckyFollow this and additional works at: https://uknowledge.uky.edu/kljPart of the Contracts CommonsRight click to open a feedback form in a new tab to let us know how this document benefitsyou.This Note is brought to you for free and open access by the Law Journals at UKnowledge. It has been accepted for inclusion in Kentucky Law Journal byan authorized editor of UKnowledge. For more information, please contact UKnowledge@lsv.uky.edu.Recommended CitationOberst, Paul Leo (1938) "Partial Assignments in Kentucky--The Rule in Henry Clay Fire Ins. Co. v. Denker's Exr.," Kentucky LawJournal: Vol. 26 : Iss. 3 , Article 7.Available at: https://uknowledge.uky.edu/klj/vol26/iss3/7KENTUCKY IAW JOURNALFurther, the Court holds, that entry and subsequent holding of landthrough mistake as to the true boundary is not adverse holding. Butif, as contended here, such entry and possession should be regardedby the Court as adverse possession, regardless of whether or not theentry was made by mistake, then the Statute of Limitations shouldstart running at the time of such entry.An undesirable result of the Kentucky cases is that they allowacquisition of title to land in cases where the land was willfully taken,thus rewarding the wrongdoer, and deny acquisition in cases wherepossession was taken with no intent to deprive the titleholder of titlewithout compensation, thus penalizing the innocent taker for notintending to take more than that to which he had title. Public policywould seem to require that the innocent taker be given at least asadequate protection as the willful taker. The Statute of Limitationswas not passed to enable wrongdoers to deliberately take another'sland, therefore, something akin to a "felonious" intent should not berequired to acquire title by adverse possession."JAmzs M. TERRYPARTIAL ASSIGNMENTS IN KENTUCKY-THE RULE IN HENRYCLAY FIRE INS. CO. v. DENKER'S EXR.Partial assignments without the consent of the obligor are notenforceable at law, because if the debtor originally contracted to payin soido, the creditor cannot, by partial assignment, subject him tomore than one law suit.'Equity courts, however, have always recognized the partial as-signee- and such has been the growth of the equitable recognitionaccorded him that today he is as adequately protected in most juris:dictions as the total assignee. Equity courts generally allow him abill to enforce an unpaid debt, provided he joins his assignor,3 and ifthe obligor pays the whole debt to the assignor after notice of thepartial assignment, the assignee may hold him liable.4The Kentucky court, for the most part, has been very generous inits recognition of the partial assignee. It shared the common con-fusion of the state courts caused by Mandeville v. Welch,' and saidbroadly in Weinstock v. BeZlwood,7 that no cause of action could ariseon a partial assignment. But in a long line of decisions, and especiallyin those beginning with Columbia Finance and Trwt Co. v. First Nati.Bank,8 the court seemed to follow "the tendency of modern decisions... in the direction of more fully protecting the equitable rights ofthe assignees of choses in action."'A notable and recent exception, however, is the decision in HenryClay Fire Ins. Oro. v. Denker's EBxr.1 In that case there was an assign-ment, by written contract and for valuable consideration, of part ofthe amount due the assignor on a fire insurance policy. Written noticeCo. v. Cline and York, 185 Ky. 528, 215 S. W. 538 (1919); Combs, et al.v. Ezell, et al., 232 Ky. 602, 24 S. W. (2d) 301 (1930).10 City of Rock Springs v. Gus Sturm, 39 Wyo. 494, 273 Pac. 908(1929).STUDENT NOTESof the assignment was given the company, which acknowledged itsreceipt, but did not indicate any acceptance of the assignment. Laterthe insurance company paid the full amount of the policy to the as-signor who converted the whole sum, left the state and was insolventat the time the assignee sued the insurance company. The Court ofAppeals, reversing the decision of the lower court, held that the as-signee could not recover, because a partial assignment without theconsent of the obligor is a nullity as against him, and "no cause ofaction arises in favor of the proposed assignee against the debtor."The court based its holding on a text quotation" and the decisionsin Weinstoce v. Bellwood and Kentucky4 Lumber and Millwork v.Montz," all of which are rather dubious authority for the point. Thetext quotation has been called "clearly erroneous";2" the reference toKentucky Lumber and Millwork v. Montz, is only to what is theredictum;" and the decision of Weinstock v. Bellwood, based on an earlyinterpretation of Mandeville v. Welch, had later been impliedly dis-tinguished by the court itself in Columbia Finance and Trust Co. v.First Natl. Bank, as applying only to the legal rights of a partial as-signee as contrasted with his equitable rights.Moreover, the opinion ignores an excellent line of decisions grant-ing equitable recognition to the partial assignee in many situations.In many of the cases the question of whether acceptance is necessaryto create an effective partial assignment is not at issue, but in Just'sAdmx. v. Woodman," the court held valid an assignment of $200 froma trust fund, of which the obliger had knowledge but which had neverbeen formally accepted by him. The court there said:"An order drawn upon a debtor for valuable consideration, payable12 Williston, Contracts (Rev. Ed., 1937), Sec. 442.22 Williston, Contracts (Rev. Ed., 1937), See. 443.3 2 Williston, Contracts (Rev. Ed., 1937), Sec. 443.'12 Williston, Contracts (Rev. Ed., 1937), See. 444.'Note (Pratt), 13 Corn. L. Q. 129.65 Wheat. 277 (U. S., 1820).175 Ky. (12 Bush) 139 (1876). See also dictum interpretingMandeville v. Welch, in Buckner v. Sayre, 57 Ky. (18 B. Mon.) 746,756 (1857).16 Ky. 364, 76 S. W. 156, 25 K. L. R. 561 (1903).'Risley v. Phenix Bank of the City of New York, 83 N. Y. 318,329 (1881).16218 Ky. 68, 290 S. W. 1047 (1927).n5 C. J. 925: "By the great weight of authority an order drawnon a debtor for a part of a fund in his hands and unaccepted by him,will not operate as an equitable assignment of part of the fund asagainst the drawee, even though drawn on a particular fund specified.""158 Ky. 328, 164 S. W. 935 (1914).o80 A. L. R. 425; Cf. 5 C. J. 925 with 6 C. J. S. 1114."The court here recognized a partial assignment which had beenaccepted. Any statement in regard to unaccepted partial assignmentswas dictum. This dictum is interesting in that the court, in quotingCyc. to prove that partial assignments were recognizable in equity in-cluded a statement which a later court seized upon to show it was not.147 Ky. 493, 144 S. W. 379 (1912).KENTUCKY LAW JOURNALout of a designated fund, or debt, actually due or to become due,operates, when delivered to the payee, as an equitable assignmentor appropriation of such fund pro tanto and no acceptance by thedrawee is necessary to its validity."In cases other than those involving an acceptance by the obligorand where the parties are properly before a court of equity, the rightsof a partial assignee have been recognized and fully protected in manysituations. He has been protected against a subsequent total assign-ment,- and given preference over a subsequent partial assignee.YHe has been preferred over subsequently attaching creditors," and overa subsequent mortgage of the assignor's interests."The question of whether a partial assignee could bring a bill inequity against an obligor to enforce payment of an unpaid obligationhas never been squarely before the Kentucky court. In Snelling V.Boyd,n while it refused to allow an action for specific performanceby two partial assignees, each of whom had a half interest derivedthrough different assignors from the original assignor, the court putthe decision on the ground that the previous assignors should havebeen joined, since in an equitable action all parties to be bound shouldbe before the court. The implication seems clearly to be that thepartial assignee could sue in equity if he joined the other partiesto the transaction. In Miller v. Maloney, the court allowed the partialassignee to bring a bill in equity to have his partial assignment setoff against a judgment secured against him by the obligor. "A chan-cellor," said the court, "is never controlled by the legal assignabilityof the instrument evidencing the demand, but looks to the use andaffords remedy to those who are equitably entitled to the money due."Since Henry Clay Fire Insurance Co. v. Denker's Exr., there hasbeen no clear case to show how far the court will follow its decisionand dictum in that case. In Inter-Ocean Casualty Co. v. Dunn,2 andStewart v. Continental Casualty Co.," the court held that certain wageassignments for payment of insurance premiums were not effective inthe absence of the employers' acceptance, but this would be a necessaryholding under the Kentucky statuteO' requiring an acceptance in thecase of wage assignments.2Lexington Brewing Co. v. Hamon, 155 Ky. 328, 160 S. W. 264(1913).11Columbia Finance and Trust Co. v. First Natl. Bank, supra,n. 8..Newby v. Hill, 59 Ky. (2 Mete.) 530 (1859); Lutter v. Grosse,26 K. L. R. 585, 82 S. W. 278 (1904); Kentucky Lumber and MillWork v. Montz, supra, n. 12."107 Ky. 492, 54 S. W. 854, 21 K. L. R. 1212 (1900). But seeSummers v. Kilgus, 77 Ky. (14 Bush) 449 (1879).21 Ky. (5 T. B. Mon.) 172 (1827).242 Ky. (3 B. Mon.) 105 (1842)."219 Ky. 103, 292 S. W. 742 (1927).-229 Ky. 634, 17 S. W. (2d) 745 (1929)."Ky. Stat. (Carroll, 1936), Sec. 4758a-2: "No such instrument(written assignment of wages to be paid in the future where the con-sideration for the assignment is less than $200) shall be valid againstSTUDENT NOTES 253In Patternson v. Miracle, the court recognized a partial assign-ment as effective over a subsequent attachment, finding an acceptanceof the assignment by the local agent of the insurance company, andpresuming that the local agent had the authority to do so in theabsence of a showing to the contrary. This possibly indicates a desireon the part of the court to avoid the result of the decision in HenryClay Fire Ins. Co. v. Denker's Exr.The rule in Henry Clay Fire Ins. Co. v. Denlcer's Exr., is contraryto the weight of authority in the United States, and in opposition tothe general trend of the law of assignments in the United States andKentucky in particular. Reason, as well as practical considerations ofthe commercial world, is against it. It is submitted that it should berestricted as far as possible in the future, if not directly overruled.PAUL OBERST.CONSTITUTIONAL LAW-TAXATION AS INCOME OF OFFICER'SSALARY EXEMPT FROM DIMINUTION DURING TERM OFOFFICE.The Kentucky Income Tax Act, passed by a special session ofthe General Assembly in 1936, provides:"A tax is hereby annually levied for each taxable year uponevery resident individual of this State upon his entire net incomeas herein defined for purposes of taxation. ... ."Plaintiff, a judge of the circuit court, sought an injunction toprevent defendant, as state commissioner of revenue, from enforcingpenalties against him because of his failure to file an income taxreport in accordance with the requirements of the statute, contendingthat the tax, insofar as it affected his salary as judge, was unconsti-tutional in that it diminished his compensation during his term ofoffice in violation of Sections 161 and 235 of the Constitution of Ken-tucky. Held (three judges dissenting, by a special Court of Appeals,the judges of the regular court having declared themselves disqualifiedto act), that the tax did not diminish plaintiff's compensation duringhis term of office within the meaning of the State Constitution, andthat the act was therefore valid.3 The undiminished compensationguaranteed by the Constitution, the court said, means compensationas such, and not "exemption of public officials from any tax that islevied on any other citizen of Kentucky ... The Commonwealth,the employer of the person to whom such wages are payable unless anduntil said employer shall signify in writing upon said instrument hisassent to said assignment ... "U253 Ky. 347, 69 S. W. (2d) 708 (1934).'Ky. Stats. (Carroll, 1936), § 4281lb14.2Ky. Const., § 161: "The compensation of any city, county, town,or municipal officer shall not be changed after his election or appoint-ment, or during his term of office." Id., § 235: "Salaries of publicofficers shall not be changed during the terms for which they wereelected."'Martin, Commissioner of Revenue v. Wolfford, 269 Ky. 411, 107S. W. (2d) 267 (1937).

Partial Assignments in Kentucky--The Rule in Henry Clay Fire Ins. Co. v. Denker\u27s Exr.

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Partial Assignments in Kentucky--The Rule in Henry Clay Fire Ins. Co. v. Denker\u27s Exr.

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