Donovan v. Middlebrook

Brief Fact Summary. Individual 1 was employed by someone to find a buyer of a certain parcel of real estate.  Individual 1 was guaranteed a commission if a transaction was consummated.  Individual 1 assigned half of his commission to Individual 2, who subsequently allegedly assigned his portion to individual 3.  Individual 3 brought suit for his portion of the commission.

Synopsis of Rule of Law. The test for determining whether there is a valid assignment is "whether the debtor would be justified in paying the debt or the portion contracted about to the person claiming to be assignee."

Facts. The Defendants, Middlebrook and others (the "Defendants"), employed Joseph Tach ("Mr. Toch"), to find a buyer for a certain parcel of real estate.  If Mr. Toch was successful in procuring a buyer, he was to receive a commission of 2%.  Mr. Toch, with the assistance of an individual named Salo A. Horowitz ("Mr. Horowitz"), found a buyer willing to pay $325,000 for the parcel.  Mr. Toch entered into an agreement on April 6, 1903 with Mr. Horowitz promising to pay him half his total commission, which was $3,250.  This agreement effectively assigned half of Mr. Toch's commission to Mr. Horowitz.  The Defendants were informed of this arrangement.  Mr. Horowitz assigned his stake in the commission to the Plaintiff, Donovan (the "Plaintiff").  The Plaintiff sued the Defendants based on the agreement between Mr. Toch and Mr. Horowitz.  The trial court dismissed the Plaintiff's complaint.

Issue. Was there a valid assignment from Mr. Horowitz to the Plaintiff?

Held. No.  "To constitute a valid assignment there must be a perfected transaction between the parties intended to vest in the assignee a present right in the thing assigned." The test for determining whether there is a valid assignment is "whether the debtor would be justified in paying the debt or the portion contracted about to the person claiming to be assignee."  The April 6, 1903 agreement the Plaintiff relies upon solely makes reference to the fact that Mr. Toch assigned half of his commission to Mr. Horowitz.  There is no reference to the Plaintiff in that document whatsoever.  Therefore, there is not a valid assignment to the Plaintiff.

Discussion. This case discusses the requisite evidence needed to prove that an assignment actually took place.  Here, there was no indication in the operative document that the individual suing had any interest in the monies being sued for.