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Dore! Energy Corp. v. Massari11/10/2004
to his right nor one who assigns his rights to another warrants the solvency of the obligor, an assignment of rights carries an implied warranty of the existence of the debt.
In the second place, subrogation is effective against third persons, including the obligor, from the time it takes place, which is expressed by saying that it produces effects erga omnes, while an assignment of rights requires notice to the debtor or his express acceptance in order to be effective against third persons.
In the third place, an assignee may recover from the debtor the full amount of the assigned claim, regardless of the price he actually paid for the assignment. . . . subrogee may recover only the amount that he actually paid to the obligee.
Saul Litvinoff, The Law of Obligations § 11.32, at 283 (Louisiana Civil Law Treatise, Vol. 5, 1992).
Professor Litvinoff points out several differences between an assignment and subrogation, but the most relevant for our analysis is the designation of an assignment as an onerous transaction.
The main consequence of subjecting subrogation by the obligee to the rules that govern assignment of rights is that, regardless of the amount he paid to the obligee, the third person, or subrogee, may recover from the obligor the full amount originally owed by the obligor to the obligee.
As shown before, traditional law provided a different solution that only allowed the third person to recover the amount he had actually paid to the obligee. That was so because the pertinent provisions of the traditional civil codes contemplate assignment of rights as an onerous transaction from which the third person intends to derive profit by buying the obligee's credit, no doubt for less than its face value, while subrogation by the obligee has traditionally been regarded as resulting from an act gratuitous on the part of the third person, or subrogee, who pays the obligor's debt because he wants to help him and not for the purpose of making any profit.
Saul Litvinoff, The Law of Obligations § 11.34, at 284 (Louisiana Civil Law Treatise, Vol. 5, 1992) (emphasis added). This in-depth analysis provided by Professor Litvinoff references the traditional comprehension of assignments as onerous transactions.
We note that articles in the Louisiana Civil Code and Louisiana case law dovetail with Professor Litvinoff's analysis. In Louisiana Civil Code Article 2652, a sale is equated to an assignment.
Sale of Litigious Rights:
When a litigious right is assigned, the debtor may extinguish his obligation by paying to the assignee the price the assignee paid for the assignment, with interest from the time of the assignment.
La.Civ.Code art. 2652. The use of the terms "sale" in the title and "assigned" in the text of the article suggest an appreciation by the redactors of the similarities between the two types of conveyances as, indeed, they are used interchangeably in this instance.
The delineating characteristic of an assignment is that it is an onerous transaction and it is between an assignor and assignee. Assignments and donations are both methods of transferring ownership, but the defining difference is that a donation is gratuitous, where an assignment is onerous. A donation is a transaction that is "purely gratuitous, or that which is made without condition and merely from liberality." La.Civ.Code art. 1523. The code establishes only one way to dispose of property gratuitously, and that is by donation, not assignment. "Property can neither be acquired nor disposed of gratuitously, unless by donations inter vivos or mortis causa, made in the forms hereafter es
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