## Facts

- Cave owed money to five creditors.
- The five creditors executed a deed assigning their debts against Cave to Fitzroy.
- Under the deed, Fitzroy was to sue Cave to recover the debts and then pay the assignors what he recovered, net of necessary costs.
- Fitzroy and Cave were directors of the same company; Cave also served as a local manager.
- Fitzroy took the assignments in order to pursue bankruptcy proceedings against Cave and facilitate Cave’s removal from corporate management.
- The trial court characterized the deed as transferring only a bare right to litigate for an ulterior purpose and entered judgment for Cave.
- Fitzroy appealed.

## Issues

1. Whether the deed transferred the creditors’ debts to Fitzroy as a valid legal assignment permitting Fitzroy to sue Cave in his own name.
2. Whether the deed was invalid as an assignment of a bare right of action or as champertous trafficking in litigation because Fitzroy would remit recoveries to the assignors and had an ulterior motive.

## Decision

- The appellate court reversed the trial court and held the assignment valid.
- The court held that the subject matter was existing debts—property capable of legal assignment—rather than a bare right of litigation.
- Fitzroy acquired legal title to the debts and could sue Cave in his own name, even though he was obliged to account to the assignors for proceeds net of costs.
- Fitzroy’s ulterior purpose (to use creditor status to seek bankruptcy and removal) did not invalidate an otherwise valid assignment.

## Legal Principles

- A debt (a right to receive money under a contract) is property capable of legal assignment in the same sense as tangible property.
- An assignment of an existing chose in action is not rendered invalid merely because the assignee must remit recoveries to the assignor after costs.
- The distinction between an impermissible assignment of a bare right of action and a valid assignment turns on whether a proprietary interest in an existing debt is transferred.
- An assignee’s motive, including a strategic intent to institute bankruptcy or other collateral proceedings, does not defeat a genuine assignment of debts.

## Conclusion

The court treated contractual rights to payment as transferable property and upheld the deed as a valid assignment of existing debts, permitting the assignee to sue in his own name notwithstanding repayment obligations to the original creditors and an aggressive collateral purpose.


Fitzroy v. Cave, [1905] 2 K.B. 364 (Ct. App.)