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Choses in Action Arising from Torts – In General

Although a claim based in contract is generally assignable, the common law does not favor the assignment of tort claims.[i]  Courts have held that all choses in action arising on contract shall be assignable and the assignee may sue thereon in one’s own name.[ii]  For instance, under California law, a tort cause of action is not assignable before final judgment.  The rule is conclusive and does not distinguish between an absolute assignment and an assignment that creates a lien.  Hence, courts have held that both types of assignments are invalid.[iii]  In addition, there is a statutory prohibition in California invalidating the assignment of tort claims.[iv]  Some jurisdictions still apply the common law prohibition of tort claims and the law remains that tort claims are unassignable prior to judgment unless otherwise provided by a statute.[v]

Courts in some states have taken a contrary view and held that tort claims are assignable.  “An action for damages in excess of the policy limits based on an insurer’s wrongful failure to settle is assignable whether the action is considered as sounding in tort or in contract.”[vi]
Some courts have moved away from the common law position and held that the assignability of things in action is the rule and non-assignability is the exception.  This exception “ confined to wrongs done to the person, the reputation, or the feelings of the injured party, and to contracts of a purely personal nature, like promises of marriage.”[vii]  The Washington court has also held that a tort claim for damage to property is assignable.[viii]

The Maryland court explained the rule and held that a chose in action, whether arising in tort or ex contractu, is generally assignable.  The only limitation, in the absence of a contrary statutory provision, is that the right of action be of a nature that would survive the death of the assignor and could be enforced by his/her personal representatives. [ix]

Thus, the right of assignment includes a chose in action based on tort or contract.

[i] East Orange Lumber Co. v. Christian Feiganspan, 120 N.J.L. 410 (Sup. Ct. 1938)

[ii] Alcman Servs. Corp. v. Bullock, 925 F. Supp. 252, 258 (D.N.J. 1996)

[iii] Weinberger v. Croshier(In re Croshier), 228 B.R. 468 (Bankr. S.D. Cal. 1998)

[iv] Cal. Com. Code § 9104(k)

[v] Dippel v. Hunt, 517 P.2d 444 (Okla. Ct. App. Div. 2 1973)

[vi] Comunale v. Traders & General Ins. Co., 328 P.2d 198 (Cal. 1958)

[vii] Brown v. Guarantee Ins. Co., 155 Cal. App. 2d 679, 694 (Cal. App. 2d Dist. 1957)

[viii] Cooper v. Runnels, 48 Wn.2d 108, 109 (Wash. 1955)

[ix] Summers v. Freishtat, 274 Md. 404 (Md. 1975)

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