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Chose (pronounced: , French for "thing") is a term used in
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...
tradition to refer to rights in property, specifically a combined bundle of rights. A chose describes the enforcement right which a party possesses in an object. The use of ''chose'' extends from the English use of French within the courts. In English and commonwealth law, all personal things fall into one of two categories, either choses in action or choses in possession. English law uses a ''chose'' to refer to a bundle of rights, traditionally relating to property which may be utilised in certain circumstances. Thus, a chose in action refers to a bundle of personal rights which can only be enforced or claimed by a chose-holder bringing an action through the court to enforce the action. In English law, this category is enormously wide.WS Holdsworth, ‘The History of the Treatment of Choses in Action by the Common Law’, 33 ''Harvard LR'' 96 This is contrasted with a chose in possession which represents rights which can be enforced or acquired by taking physical possession of the chose. This may be, for example a legal mortgage. Both choses in possession and choses in action create separate proprietary interests. What differs between each is the method in which each chose may be enforced. This is dependent on the possessory nature of the reference object. Alternative, historical uses includes a chose local, a thing annexed to a place, such as a mill; a chose transitory, something movable that can be carried from place to place.


Chose in action

A chose in action or ''thing in action'' is a right to sue. It has been made trite law, since '' Torkington v Magee'', that a ''chose in action'' is a legal expression used to describe all personal rights of property which can only be claimed or enforced by action. It is therefore a categorisation of interests in assets, the enforcement of which cannot be secured without the use of a court. It is an intangible
property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...
right recognised and protected by the law, that has no existence apart from the recognition given by the law, and that confers no present possession of a
tangible Tangibility is the property of being able to be perceived by touch. A commonplace understanding of "tangibility" renders it as an attribute allowing something to be perceptible to the senses. In criminal law, one of the elements of an offense ...
object. 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 Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
, obtain money by way of
damages At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at ...
for breach of
contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...
, 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
bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemica ...
s or other documentary intangibles were themselves ''chose in possession'' because, similar to
promissory notes A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the ''maker'' or ''issuer'') promises in writing to pay a determinate sum of ...
they were negotiable and thus could be physically seised. That is to say, they were transferred solely by delivery of the document themselves. 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
CREST Crest or CREST may refer to: Buildings *The Crest (Huntington, New York), a historic house in Suffolk County, New York *"The Crest", an alternate name for 63 Wall Street, in Manhattan, New York *Crest Castle (Château Du Crest), Jussy, Switzerla ...
, 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 includes
pledge Pledge may refer to: Promises * a solemn promise * Abstinence pledge, a commitment to practice abstinence, usually teetotalism or chastity * The Pledge (New Hampshire), a promise about taxes by New Hampshire politicians * Pledge of Allegianc ...
, negotiables, and custodial
bailment Bailment is a legal relationship in common law, where the owner transfers physical possession of personal property ("chattel") for a time, but retains ownership. The owner who surrenders custody to a property is called the "bailor" and the ind ...
. ''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 is a right of action, but ''not'' a ''chose 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 U.S., 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 In the history of the courts of England and Wales, the Judicature Acts were a series of Acts of Parliament, beginning in the 1870s, which aimed to fuse the hitherto split system of courts of England and Wales. The first two Acts were the Supre ...
, which fused the courts of Equity and the 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 A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
), 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 An assignment is a legal term used in the context of the law of contract and of property. In both instances, assignment is the process e whereby a person, the ''assignor'', transfers rights or benefits to another, the ''assignee''.For the assig ...
could not sue at law in his own name. To this rule there were two exceptions: # the crown 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 Marriage, also called matrimony or wedlock, is a culturally and often legally recognized union between people called spouses. It establishes rights and obligations between them, as well as between them and their children, and between ...
,
death Death is the irreversible cessation of all biological functions that sustain an organism. For organisms with a brain, death can also be defined as the irreversible cessation of functioning of the whole brain, including brainstem, and brain ...
, or
bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
. On the other hand, however, by the
law merchant ''Lex mercatoria'' (from the Latin for "merchant law"), often referred to as "the Law Merchant" in English, is the body of commercial law used by merchants throughout Europe during the medieval period. It evolved similar to English common law as ...
, which is part of the law of England, and which disregards the rules of
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...
,
bills of exchange A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...
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 A statute is a formal written enactment of a legislative authority that governs the legal entities of a city, state, or country by way of consent. Typically, statutes command or prohibit something, or declare policy. Statutes are rules made by le ...
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 An assignment is a legal term used in the context of the law of contract and of property (law), property. In both instances, assignment is the process e whereby a person, the ''assignor'', transfers rights or benefits to another, the ''assignee ...
, 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 A plaintiff ( Π in legal shorthand) is the party who initiates a lawsuit (also known as an ''action'') before a court. By doing so, the plaintiff seeks a legal remedy. If this search is successful, the court will issue judgment in favor of the p ...
or as
defendant In court proceedings, a defendant is a person or object who is the party either accused of committing a crime in criminal prosecution or against whom some type of civil relief is being sought in a civil case. Terminology varies from one jurisdic ...
. The Judicature Acts made the distinction between legal and equitable choses in action of no importance. The Judicature Act of 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 s136 which outlined that assignment must be * In writing * Is absolute, and not by charge only * and written notice has been given to the
obligor A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...
. 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

A chose in possession refers to a bundle of rights and remedies, (which in England are inextricably linked), of an object of
tangible Tangibility is the property of being able to be perceived by touch. A commonplace understanding of "tangibility" renders it as an attribute allowing something to be perceptible to the senses. In criminal law, one of the elements of an offense ...
personal property that can be physically possessed by the owner and can be transferred by delivery. Relation, or rather, capacity of control and apparent dominion is required as the foundation of the alleged ''chose in possession''. This is impossible with incorporeal rights. Possession and possession-based techniques are of little relevance to modern financial markets, but still play a substantial role in commercial and retail lending.D&D Wines International (in liquidation) 014EWCA Civ 215 Therefore a ''chose in possession'' denotes not only the right to enjoy or possess a thing, but also the actual or constructive enjoyment of it. The possession may be absolute or qualified. It is absolute when the person is fully and completely the
proprietor Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different ...
or owner of the thing; it is qualified when he "has not an exclusive right, or not a permanent right, but a right that may sometimes subsist and at other times not subsist", as in the case of animals ''
ferae naturae Unowned property includes tangible, physical things that are capable of being reduced to being property owned by a person but are not owned by anyone. ' (Latin for "ownerless goods") is a legal concept associated with the unowned property, which e ...
'' ("of a
feral A feral () animal or plant is one that lives in the wild but is descended from domesticated individuals. As with an introduced species, the introduction of feral animals or plants to non-native regions may disrupt ecosystems and has, in some ...
nature", or wild). A chose in possession is freely transferable by delivery. Previous to the Married Women's Property Act of 1882, a wife's choses in possession became vested in her husband immediately upon her marriage, while her choses in action did not belong to her husband until he had converted them to possession. However, this difference is now practically obsolete. In practice, there is little difference between the utility of a chose in possession and a chose in action, outside of
insolvency In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet i ...
. However, a Chose in possession is particularly important in view of
insolvency In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet i ...
as the possessory right of the asset allows for enforcement of security irrespective of the solvency of the company. Where an asset is (1) unique and cannot be replicated, such as shares in a company amounting to board control; (2) a proprietary interest wherein account of profits of the original owed item; or (3) procedural remedies; exist, a chose in possession will be crucial in enforcement.


Notes


References

* {{EB1911, wstitle=Chose, volume=6, page=271 Common law
Chose Chose (pronounced: , French for "thing") is a term used in common law tradition to refer to rights in property, specifically a combined bundle of rights. A chose describes the enforcement right which a party possesses in an object. The use of ''chos ...