NOYER, CIRCUIT Judge:

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In England and in some of the states, the rule is adhered to that the only persons who can sue upon a contract are the parties; that a third person for whose benefit a contract is made cannot maintain an action upon it. The reason of the rule is said to be that there is no privity between the contracting party making the promise and the third person and that consideration does not move directly from the latter. The rule has the merit of simplicity but is calculated to permit injustice. It is founded, too, upon wholly artificial distinctions. There is no real and substantial reason why, if the parties to a contract recognize the interest of a third person in it and desire and intend to give him a right of action upon it, they should not be able to do so. And the prevailing doctrine in this country is contrary to the English rule. It is generally held, subject to qualifications, that a third person may sue upon a promise made to another for his benefit. Sometimes the right is based by the courts upon provisions in codes giving 'the real party in interest' the right to prosecute suits. Sometimes it is based upon the theory of a trust; the promisor being regarded as a trustee for the third party. Sometimes it is based upon the theory of agency; the promisee in the contract being considered the agent of the third party who adopts his acts in suing upon the contract. But whatever may be the correct theory one thing is essential to the right and that is that the third person be the real promisee -that the promise be made to him in fact although not in form. It is not enough that the contract operate to his benefit. It must appear that the parties intend to recognize him as the primary party in interest and as privy to the promise."

Question 161: Upon what various theories is a beneficiary allowed to sue upon a contract? Whatever the theory, what is essential to permit a beneficiary to a contract (who is not a party to such contract) to sue upon it?

Case 162. Lawrence v. Fox, 20 New York Reports, 268.

Facts: One Holly, at the request of the defendant loaned him $300, stating at the time that he owed that sum to the plaintiff for money borrowed of him; and that he had agreed to repay it on the following day, and the defendant as a part of the transaction and in consideration for the loan agreed to pay the money to the plaintiff. This is a suit against the defendant by the beneficiary of that agreement, to which he was not a party, and the defense is that not being a party thereto, and there being no privity of contract between plaintiff and defendant, plaintiff cannot sue on the agreement proved.

Point Involved: Whether a beneficiary to a contract between other parties, by which an obligation running to such beneficiary from one of the parties, is assumed by the other, can be enforced in a suit by the beneficiary.

H. GRAY, J.: ***

As early as 1806, it was announced by the Supreme Court of this state "That where one person makes a promise to another for the benefit of a third person, that third person may maintain an action on it.'

Question 162: What was the agreement in this case? the beneficiary allowed to sue?

Was

(Note: Where a vendee assumes the debts of the vendor, the creditor is generally allowed to sue the vendee as beneficiary of such agreement.)

CHAPTER 18

ASSIGNMENT OF CONTRACTS

§ 148. General statement.

§ 149. Power to assign mere contractual rights.

§ 150. Power to assign contractual obligations.

§ 151. Power to assign contractual rights when coupled with personal confidence and liability.

§ 152. Contractual rights to be acquired in future not assignable.

§ 153. Effect of assignment as to assignor.

§ 154. The assignee as the successor to the title of the assignor.

§ 155. Effect of assignment as to other party (debtor.).

§ 156. What constitutes assignment, drafts, checks, orders, etc. § 157. Assignment by operation of law.

§ 148. (Contracts, Sec. 116.) General statement.

(Note: Does a contract operate to empower either party thereto to assign rights or obligations thereunder? If so, to what extent, how is such assignment effected, and what results follow from an attempted exercise of the power?

We must notice that the assignment might be made or attempted either with or without the consent of the other party to the contract. Obviously, it is the case of the lack of consent that presents difficulty, and when we speak of the power to assign rights or obligations we generally assume that the consent of the other party to the contract has not been obtained.

The transfer may be of rights or obligations. B employs A for a stated period on a salary. We have the following rights and obligations:

On A's part: Obligation to work for B. Right to salary on doing the work.

On B's part: Right to A's services. Obligation to pay salary. Here A might attempt to transfer either his right to a salary or his obligation to perform services, or both. As his power of transfer might differ in the one case from that of the other, it becomes necessary to analyze in any case the nature of the thing attempted to be assigned.)

§ 149. (Contracts, Sec. 117.) Power to assign mere contractual rights.

(Note: A right under a contract is assignable by one party to a contract, even without the consent of the other party to the contract, if it is a mere right to money or goods, and by such assignment the contractual obligations, duties and credit of the assignor are unaffected. The right of a merchant to assign his book accounts, of an employee to assign his salary, are good examples. But in any case the right to assign may be forbidden by the contract itself. See following case and cases under following sections.)

Case 163. Mueller v. Northwestern University, 195 Illinois Reports, 236 (1902).

Facts: Sammis made a contract with Northwestern University whereby he agreed to furnish and put in place the marble and mosaic work in the Illinois Trust & Savings Bank Building owned by Northwestern University, for the sum of $27,344. The contract provided "that the contractor shall not sell, assign, transfer or set over this contract, or any part thereof, or interest therein, unto any person or persons whomsoever, without the consent, in writing, of the architects previously had and obtained thereto, and any such sale, assignment or transfer without such written consent of the architects, first obtained thereto, shall be absolutely null and void." Sammis assigned money due under this contract to Mueller, who claims that Northwestern University paid over sums to Sammis after receiving notice of the assignment, and also claims other money still unpaid by Northwestern University.

Point Involved: Whether a party to a contract can effectually make an assignment of moneys due thereunder which will operate to give the assignee a right to hold the debtor for such money where the assignor has in the contract agreed not to assign without the consent of the debtor.

MR. JUSTICE HAND delivered the opinion of the Court: "It is first contended, the assignment to Mueller being

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in express violation of the terms of the contract, as against the University the assignment is void, and that Mueller is entitled to no relief by virtue of said assignment, as against the University. The rule is laid down in Volume 2 of American and English Encyclopedia of Law (2nd Ed., p. 1035) that the parties to a contract may in terms prohibit its assignment, so that an assignee cannot succeed to any rights in the contract by virtue of the assignment to him and the rule thus announced is well supported by the authorities."

(The court reviews the authorities and discusses other points raised by Mueller and decides against Mueller.) Question 163: What was the University's defense to Mueller's claim as assignee of money due from the University? Did the defense prevail? Why?

§ 150. (Contracts, Sec. 118.) Power to assign contractual obligations.

Case 164. Sloan v. Williams, 138 Ill. 43.

Facts: Dupuy, an attorney at law, made a contract with Williams by which Dupuy was to conduct suits, procure releases, etc., in order to perfect the title to certain lots owned by Williams. Dupuy before the performance of his part of the contract, purported to assign to Sloan all his interest therein. Sloan complains that Williams has refused to carry out his part of the contract. Point Involved: Whether an obligation to render services can be assigned without the consent of the party to whom such services are to be rendered.

The main ground

MR. JUSTICE MAGRUDER: 66* (of defense) is that the contract is one that calls for the personal services and skill of one of the parties thereto, and, therefore, not assignable. We think this objection. is well taken. Dupuy was a lawyer * and, by

the terms of the contract, was required to make use of his professional skill in perfecting the title to the lots by instituting and carrying on legal proceedings and by the use of other methods.

A party