Rumbin v. Utica Mutual Insurance Co.8/15/2000
eet Development Corp., 170 App. Div. 2d 388, 389, 566 N.Y.S.2d 606 (1991) ("where the language employed constitutes merely a personal covenant against assignments, an assignment made in violation of such covenant gives rise only to a claim for damages against the assignor for violation of the covenant"); Sullivan v. International Fidelity Ins. Co., 96 App. Div. 2d 555, 556, 465 N.Y.S.2d 235 (1983) ("an assignment made in violation of such covenant gives rise only to a claim for damages against the assignor for violation of the covenant"); University Mews Associates v. Jeanmarie, supra, 122 Misc. 2d 440 (holding that contractual clause "must specifically eliminate the power as well as the right to assign the contract . . . otherwise the original obligor is given only the right to damages for its breach, but does not render the assignment ineffective"); Reuben H. Donnelley Corp. v. McKinnon, supra, 688 S.W.2d 614-15 (recognizing that obligor has right to damages for breach of contract term forbidding assignment but does not render assignment ineffective); see also J. Murray, Jr., supra, § 138, p. 807. Thus, courts in numerous jurisdictions have recognized the evenhandedness of the modern approach.
This approach is also adopted in the Restatement (Second) of Contracts. Section 322 (2) (b) of the Restatement (Second), supra, provides that the general rule is " contract term prohibiting assignment of rights under the contract, unless a different intention is manifested . . . (b) gives the obligor a right to damages for breach of the terms forbidding assignment but does not render the assignment ineffective . . . ." See, e.g., Bel-Ray Co. v. Chemrite (Pty.) Ltd., supra, 181 F.3d 442; U.S. Industries, Inc. v. Touche Ross & Co., 854 F.2d 1223, 1233 (10th Cir. 1988); Cedar Point Apartments, Ltd. v. Cedar Point Investment Corp., supra, 693 F.2d 754; Liberty Life Assurance Co. of Boston v. Stone Street Capital, Inc., supra, 93 F. Sup. 2d 637; Wonsey v. Life Ins. Co. of North America, supra, 32 F. Sup. 2d 943; Lomas Mortgage U.S.A., Inc. v. W.E. O'Neil Construction Co., supra, 812 F. Sup. 843-44; Jacquette v. CNA Ins. Cos., supra, Civil Action No. 98-1601; Garden State Buildings, L.P. v. First Fidelity Bank, N.A., supra, 305 N.J. Super. 521; First England Funding, L.L.C. v. Travelers Indemnity Co., supra, Docket No. BER-L-5608-99; University Mews Associates v. Jeanmarie, supra, 122 Misc. 2d 440; Reuben H. Donnelley Corp. v. McKinnon, supra, 688 S.W.2d 615.
In the present case, the annuity contract provided that " o payment under this annuity contract may be . . . assigned" by the plaintiff. This antiassignment provision limited the plaintiff's right to assign, but not his power to do so. The provision did not contain any express language to limit the power to assign or to void the assignment itself. Therefore, in accordance with the modern approach, we conclude that the plaintiff's assignment to Wentworth is valid and enforceable despite the plaintiff's breach of the contract's antiassignment provision. We further conclude, however, that Safeco is free to sue for any damages that it might sustain as a result of the assignment by bringing an action for breach of contract against the plaintiff as assignor. See, e.g., Bel-Ray Co. v. Chemrite (Pty.) Ltd., supra, 181 F.3d 442; Pro Cardiaco Pronto Socorro Cardiologica, S.A. v. Trussell, supra, 863 F. Sup. 137-38; Macklowe v. 42nd Street Development Corp., supra, 170 App. Div. 2d 389; Sullivan v. International Fidelity Ins. Co., supra, 96 App. Div. 2d 556. Alternatively, Safeco may pursue damages from Wentworth, who, as the assignee, "`stands in the shoes of the assignor.'" 3 E. Farnsworth, supra, § 11.8, p. 105; see id., 105-107; 3 S. Williston, Contracts (3d Ed.
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