COMMON LAW 237
Bank was therefore entitled to recover the amount from the official assignee. Held, this was not an equitable assignment. It was not an order given by the debtor to his creditor upon a person owning money or holding funds belonging to the debtor directing the person to pay such funds to the Creditor.
There must be privity between the assignor and assignee in order to constitute an equitable assignment. If there is no privity then there is no assignment even in equity.
Consequently, if the Principal directs his agent to collect money owing to the principal and pay it to a third person such third person is not an assignee in equity if the mandate is not communicated to him. It may be revoked by the principal.
Similarly a Power of attorney or authority to collect money and to pay it to the creditor of the party granting the power does not amount to an equitable assignment. A cheque is not an equitable assignment or appropriation of money in the drawer’s Bank.
Hopkinson vs. Forster, (1874) L. R. 19 Eq. 74.
There can be no valid appropriation or assignment if no specific fund is specified out of which the payment is to be made.
Percival vs. Dunn, (1885) 29 Ch. D. 128
Whether notice is necessary in the case of an equitable assignment ?
An equitable assignment is complete between the assignor and assignee although no notice is given to the debtor.
Notice of the assignment should, however, be given to the debtor for two reasons.
(i) If there is no notice, the debtor will be free to pay to the assignor, the original creditor and will not be liable to the assignee. On the other hand, if he pays to the assignor in disregard of the notice, he will be liable to pay over again to the assignee.
Stocks vs. Dobson (1853) 4 De. G. M & G. 11
(ii) If there is no notice, then the assignee will not be allowed to have priority over subsequent assignee of the same chose in action by the same assignor.
This is called the rule in Dearl vs. Hall (1823) 1 Rsess
1=S. F. C. p. 57.