A
chose in action or
thing in action, also known as a
chose in suspense, is a right to sue. It has been made
trite law, since
Torkington v Magee, that
chose in action is a legal expression used to describe all personal rights of property that can be claimed or enforced only by
legal action. It is a categorisation of interests in assets, therefore, the enforcement of which cannot be secured without the use of a court. Since incorporeal assets such as claims for repayment of debts, or assigned rights in contracts cannot be subject to possession, they cannot be categorised as choses in possession. In certain circumstances, the chose in action creates a separate proprietary right, independent from the property in which it may reference. This new property can be subject to charges or can be assigned. For example, a right to enforce and receive payment for a
debt, obtain money by way of
damages for breach of
contract, or receive recompense for a wrong is a chose in action. Two consequences result from this. Firstly, they are claims which cannot be executed by the chose-holder without the enforcement of legal proceedings. Second, these examples may be themselves
assigned,
novated, or otherwise used by the chose-holder if the economic value of the asset is the right to sue. Historically, documents which represented a title to a chose in action of a particular kind, such as
bonds or other
documentary intangibles, were themselves choses in possession because, similar to
promissory notes, they were
negotiable and thus could be physically
seised. That is to say, they were transferred solely by delivery of the document itself. Today, most bonds and other financial instruments have been
dematerialised and are issued as a single
global note. The consequence of this is that most financial instruments are now choses in action held by the beneficial party against the broker holding assets in a securities depository such as
CREST, where investors own interlocking interests in trusts, rather than the actual issued note. The development of dematerialised securities brings some objects which are termed as
chose in action today full circle, such as bonds or bill of lading which the court first developed as choses in action, and which, without the use of a negotiable instrument no longer operate as choses in possession. Currently, claims which are treated as being "locked up" inside the paper include
pledges,
negotiable instruments, and custodial
bailment. Choses in action are particularly crucial to the assignment of interests in law, and thus play a crucial role in the operation and coordination of the financial markets. Certain rights, such as a claim to rescission of a mortgage, are rights of action, but
not choses in action or part of one that can be assigned. Because the category is often broadly construed, there have been numerous attempts to expand the category to allow new intangible assets to fall within the chose in action. In the United States, the
Supreme Court has held in
Mullane v. Central Hanover Bank & Trust Co. that a property right can vest in a cause of action over property, and later, in
Logan v. Zimmerman Brush Co., in a discrimination claim.
Effect of fusing of chancery and common law The chose can either be legal or equitable. Before the
Judicature Acts, which fused the courts of equity and common law into one jurisdiction, where the chose could be recovered only by an action at law as a debt (whether arising from contract or
tort), it was termed a legal chose in action; where the chose was recoverable only by a suit in equity, as a legacy or money held upon a trust, it was termed an equitable chose in action. Before the Judicature Acts, a legal chose in action was not assignable, i.e., the
assignee could not
sue at law in his own name. To this rule there were two exceptions: •
the Crown (i.e. central government) had always been able to assign choses in action that are certain, such as an ascertained debt, but not those that are uncertain; and • assignments valid by operation of law, e.g., on
marriage,
death, or
bankruptcy; on the other hand, however, by the
law merchant, which is part of the law of England, and which disregards the rules of common law,
bills of exchange were freely assignable. Before this point, the courts of equity could not enforce a legal chose in action and vice versa. The consequence was that, with these and certain
statutory exceptions (e.g., actions on policies of insurance), an action on an assigned chose in action must have been brought at law in the name of the
assignor, though the sum recovered belonged in equity to the assignee. All choses in action being in equity assignable, except those altogether incapable of being assigned, in equity the assignee might have sued in his own name, making the assignor a party as co-
plaintiff or as
defendant. The Judicature Acts made the distinction between legal and equitable choses in action of no importance. The
Supreme Court of Judicature Act 1873, s. 25 (6), enacted that the legal right to a debt or other legal chose in action could be passed by absolute assignment in writing under the hand of the assignor. This was later updated by the
Law of Property Act 1925 s. 136 which outlined that for an assignment to be valid: • it must be in writing; • it must be absolute, and not by charge only; and • written notice must be given to the
obligor. These requirements are significant because without notice, it prevents the assignee from suing on the debt. Until the debtor has given notice,
set-offs continue to arise between the assignor and the debtor, the debtor does not know to pay anyone other than the assignor; and the assignee may lose priority to subsequent assignees who do provide notice. The difference between present and future choses in action has been likened to the difference between a tree and its fruit. ==Chose in possession==