Herzog v. Irace

Brief Fact Summary. The Plaintiff and assignee, Dr. John Herzog (Plaintiff), sued the Defendants and obligors, Anthony Irace and Donald Lowry (Defendants), to enforce an assignment made by the assignor Gary Jones (Jones).

Synopsis of Rule of Law. An assignment is valid and enforceable if the assignor makes clear his intent to relinquish a right to the assignee and does not retain any control over the right assigned or any power of revocation.

Facts. Jones was injured in a motorcycle accident, and he retained the Defendants to represent him in a personal injury action. Jones also injured his shoulder in accidents unrelated to the personal injury action. Unable to pay for surgery done by the Plaintiff, Jones assigned his right to part of the settlement equal to the medical bills to the Plaintiff. The Defendants were notified of the assignment. However, pursuant to Jones’s instruction not to pay the Plaintiff out of the settlement, the Defendants did not pay the Plaintiff under the assignment. When Jones refused to pay the Plaintiff, the Plaintiff initiated this suit.

Issue. Did the Defendants’ client properly assign his right to payment to the Plaintiff?

Held. Yes. An assignment is valid and enforceable if the assignor makes clear his intent to relinquish a right to the assignee and does not retain any control over the right assigned or any power of revocation. Once one receives notice of an assignment, he cannot lawfully pay to the assignor the amount assigned and the assignee may enforce the obligation against the obligor. In the present case, the assignor wrote a letter assigning payment to the Plaintiff. The letter gives no indication of an attempt by the assignor to retain control over the funds. Thus, the assignment is valid and enforceable.

Discussion. An assignment must be a complete relinquishment of a right, without any retained control, to be valid.