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Contract to Assign

A contract to make a future assignment of a right is not an assignment.  Generally, any words or transaction that shows an intention on the one side to assign and the intention on the other to receive and includes valuable consideration, will operate as an effective equitable assignment.  Equity imputes an intention to fulfill an obligation.  This means that where an obligation rests upon one to perform an act and she/he attains the means of performing it, the person will be “presumed to intend to perform through such means, and usually will not be permitted to show the contrary, equity giving effect to the presumed intent.  It has been applied in connection with the maxim that equity regards as done that which ought to be done.”[i]

However, future assignments will not come under this category and an agreement to pay out of a particular fund in the future when the fund comes into existence is not sufficient to constitute an equitable assignment.[ii]  To create an equitable assignment, there must be an intention by the parties “to appropriate on the one hand and to receive on the other and courts determine the question whether an intent to transfer existed by examining the entire transaction.” [iii]

Courts have held that an assignment ordinarily is limited to transfers of choses in action and to rights in or connected with property, as distinguished from the particular item of property.  There is no “contract to assign a right to receive property, since once it is received and in the possession of the beneficiary, there is no longer any right to receive it.  A contract to make an assignment or to pay over after receipt, of course, differs from an assignment, just as a conveyance of land differs from a contract to sell the same land.”[iv]

[i] Fischer v. Klink, 234 Iowa 884, 892-893 (Iowa 1944)

[ii] State Central Sav. Bank v. Hemmy, 77 F.2d 458, 460 (8th Cir. 1935)

[iii] In re WAGNER, 144 B.R. 430, 441 (Bankr. N.D. Iowa 1992)

[iv] In re Estate of Vought, 70 Misc. 2d 781, 786 (N.Y. Sur. Ct. 1972)

Inside Contract to Assign