Right of Assignee Against Remote Assignor

In common law, privity of contract exists between the assignor and his/her immediate assignee and the remedy of the assignee is against his/her immediate assignor alone.[i] An assignee who sustained damages as a result of the assignment through defect of title, fraud, or other cause will have recourse only against the immediate assignor and not against a remote assignor because of the lack of privity.

In the absence of a statute that alters the common law and an express assignment of the warranties of an assignor, this rule will prevail.  Therefore, the rights of an assignee are limited as against a remote assignor.

An assignee of stock, by coming into privity with the company is equally liable as the former holder to pay the full par value of the stock.[ii] An owner of shares of stock cannot sue on the stock to recover any money.  When dividends or other money is recovered by an owner of stock there must be some corporate action authorizing the payment.  Shares of stock do not import payment of money on which a suit can be maintained for that purpose, so as to allow an assignee to maintain an action against a remote assignor.[iii]

[i] Young v. Garred, 90 W. Va. 767 (W. Va. 1922)

[ii] Brinkley v. John A. Hambleton & Co., 67 Md. 169 (Md. 1887)

[iii] Young v. Garred, 90 W. Va. 767 (W. Va. 1922)

Inside Right of Assignee Against Remote Assignor