American Bridge Co. v. City of Boston

Hammond, J. This is an action of contract brought by the plaintiffs as assignees of all “ the moneys now due or which may hereafter become due ” to one Coburn, the assignor under two certain building contracts between him and the defendant, dated respectively July 16, 1901, and August 27, 1901. It is brought to recover the amount of two architect’s certificates, one for $2,210 and the other for $3,085.50, each dated November IQ, 1902. The case was heard upon the auditor’s report (which was for the defendant) and certain exhibits, by a judge of the Superior Court, sitting without a jury, who found for the plaintiffs for the full amount claimed; and it is before us upon exceptions taken by the defendant. These exceptions raise the general question whether in this action the defendant may recoup for the damages sustained by the default of the assignor, which occurred after the defendant had notice of the assignment. It is contended by the plaintiffs that these sums were due and payable at the time the defendant received notice thereof, that the plaintiffs’ rights were fixed at the time of notice and could not be changed by the act of the assignor or of the defendant after notice, and consequently that the damages caused to the defendant by the default of the assignor in leaving his contract unperformed, although without any fault or collusion on the part of the defendant, cannot be recouped in this action. It is contended that the only remedy open to the defendant is by way of an action against the assignor. Even if it be conceded in favor of the plaintiffs that the sums were due and payable at the time of the notice, and that the rights of the plaintiffs were fixed at that time, still the conclusion which the plaintiffs seek to draw by no means necessarily follows. We are dealing not with the right of set-off, but with that of recoupment, — an entirely different right. The one is a creation of statute, the other exists at common law and not by statute; — 376 — the one is applicable even where there are. different contracts, 'the other arises only out of the same contract as that under which the claim of the plaintiffs arises. Confusion sometimes has been caused by a neglect to 'note the distinction between these two rights. The principles applicable to a case of set-off are in many respects different from those applicable to a case of recoupment, and some care is required not to be misled by apparent analogies. The assignment of a chose in action conveys, as between the assignor and assignee, merely the right which the assignor then possesses to that thing; but as between the assignee and the ■ debtor it does not become operative until the time of notice to 'the latter, and does not change the rights of the debtor against ' the assignor as they exist at the time of the notice. It becomes necessary to consider the exact relation between the defendant and Coburn, the assignor, at the time of the notice. The auditor has found that written notice of the assignments was given to the defendant on November 14,1902, before the service of any trustee process. At that time there does not seem to have been any default on the part of Coburn. At the time of the notice what were the rights between him and the defendant, so far as respects this contract ? He was entitled to receive these sums, but he was also under an obligation to complete his contract. This right of the defendant to claim damages for the non-performance of the contract existed at the making of the contract and at the time of assignment and of notice, and the assignees knew it, and they also knew that it would become available to the defendant the moment the assignor should commit a breach. Under these circumstances it must be held that the assignees took subject to that right. Coburn, the assignor, abandoned the work in a few days after the notice. This action was not brought until October 30,1906, nearly four years after the breach. Even if the sums were due and payable in November, 1902, at the time of the notice, still if this action had been brought by the assignor after the default, there can be no doubt that the defendant would have had the right to recoup the damages suffered by his default. And the assignees who seek to enforce this claim can stand in no better position in this respect than the assignor. — 377 — The defendant is simply trying to enforce a right existing under the contract at the time of the notice, a right of which the assignees had knowledge; and, since they have delayed suit for these sums until after default, the defendant may recoup against them as it could have recouped against the assignor. It cannot without its own fault or consent be deprived of rights under the contract. Any other conclusion would make the contract different from that into which the defendant entered. The case is very similar to Rockwell v. Daniels, 4 Wis. 432, in the reasoning of which we fully concur. See also Government of Newfoundland v. Newfoundland Railroad, 13 App. Cas. 199. We see nothing in First National Bank v. Perris Irrigation District, 107 Cal. 55, or Wilkinson v. Clements, 42 L. J. Ch. (N. S.) 38, cited by the plaintiffs, which changes our view. They seem to proceed upon the principle of separate contracts. Exceptions sustained.