Contract With, or Claims Against State and Local Governments

All causes of action arising on contracts are assignable.[i] However, a statute may forbid an assignment of a contract.[ii]

In the absence of language prohibiting assignments, claims against the Government are freely assignable.[iii] In Gordon v. Jefferson, 111 Mo. App. 23 (Mo. Ct. App. 1905), the court held that claims arising out of contracts against a municipality are transferable by assignment unless there is some statute or ordinance forbidding it.  Similarly, in Puget Sound Nat’l Bank v. Dep’t of Revenue, 123 Wn.2d 284 (Wash. 1994), the court held that the legislature has not prohibited the assignment of claims against the state.

Thus, contracts with the state and with municipal corporations are, in the absence of statutory limitation or restriction, assignable.[iv] In Puget Sound Nat’l Bank v. Dep’t of Revenue, 123 Wn.2d 284 (Wash. 1994), the court held that all contracts are assignable unless such assignment is expressly prohibited by statute or is in contravention of public policy.

Where the State and not a municipality has granted an assignable right in perpetuity, the grant is not affected by the status of the city being changed so as to give it the greater rights than when the grant was made.[v]

Where a county accepts performance of contract by assignee, the assignee is entitled to recover and it is immaterial that the contract called for personal services, and that it was assigned before performance.[vi]

Similarly, a contracting party, who claims release from liability because the city consented to an assignment of the contract to a third party, should establish such consent by evidence of some action on the part of the city council.[vii] Proof of consent by the city auditor to such assignment is not sufficient.

Where a contract with a municipality expressly provides that it should not be assigned such provision is enforceable, and an assignee thereof cannot recover the money due there under or any part thereof.[viii] In De Vita v. Loprete, 77 N.J. Eq. 533, 535 (E. & A. 1910), the court held that provision that the contract is not assignable is valid.

A municipality has a dual capacity, one for the exercise of powers of government, and the other more in the nature of a private capacity whereby it contracts for its own betterment; and an ordinance prohibiting the assignment of their wages by its employees is a valid exercise of the latter power.[ix] A provision in a contract of an employee with a municipality that a claim for wages arising thereunder should not be assigned, is valid.[x]

[i] State use of Thrasher v. Heckart, 49 Mo. App. 280 (Mo. Ct. App. 1892)

[ii] Appeal of Duluth, 94 Minn. 95 (Minn. 1905)

[iii] Antilles Industries, Inc. v. Government of Virgin Islands, 529 F.2d 605, 609 (3d Cir. V.I. 1976)

[iv] Puget Sound Nat’l Bank v. Dep’t of Revenue, 123 Wn.2d 284 (Wash. 1994

[v] Louisville v. Cumberland Tel. & Tel. Co., 224 U.S. 649 (U.S. 1912)

[vi] Kenan v. Moon, 221 Ala. 286 (Ala. 1930)

[vii] Sioux City v. Western Asphalt Paving Corp., 223 Iowa 279 (Iowa 1937)

[viii] Murphy v. Plattsmouth, 78 Neb. 163 (Neb. 1907)

[ix] State ex rel. Kansas City Loan Guarantee Co. v. Kent, 98 Mo. App. 281 (Mo. Ct. App. 1903)

[x] id


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