The debtor should not be prejudiced by an assignment of which he has no notice. Accordingly if, prior to notice, he pays the debt to the assignor or is released from it by him, or acquires a set-off, or any defence for value, he can use his defence if sued by the assignee;87 and payment without notice of a prior assignment, made in good faith to a subsequent assignee, discharges the debtor within this principle, since the subsequent assignee has in effect a power of attorney from the assignor.88 On the other hand payment to the assignor or other defences acquired by the debtor against the assignor after notice of the assignment are invalid,89 unless the defence, though acquired after notice, is based on a right of the defendant inherent in the contract by its terms. Thus if payments under an executory contract are assigned, the debtor may set up failure of the assignor to fulfil his part of the contract though such failure occurs alter notice of the assignment,90 for the assignor cannot give another
87 Williams v. Sorrell 4 Ves. 389; Cook v. Mutual Ins. Co., 63 Ala. 37; Smith v. Carder, 33 Ark. 709; McCarthy v. Mt. Tecarte Co., 110 Cal. 687, 43 Pan. 391; Ballinger v. Vatee, 26 Colo. App. 116, 140 Pac. 931; Tut-tle v. Fowler, 22 Conn. 58; Gueny v. Ferryman, 6 Ga, 119; Metropolitan Life Ins. Co. v. Lewis, 14 Ga. App. 10, 80 S. E. 17; Parmly p. Buckley, 103 111. 115; Barber v. Barth, 192 111. 460, 61 N. E. 388; Mien v. Charles B. Fuller Co., 167 111. App. 49; Morris v. Hankel Printing Co., 202 111. App. 331; Callanan v. Windsor, 78 Ia. 193, 42 N. W. 652; Bull v. Sink, 8 Kara. App. 860, 57 Pac 853; Clark v. Boyd, 6 T. B. Mon. 293; Kugler v. Taylor, 19 La. Ann. 100; Brown v. Leavitt, 26 Me. 251; Robinson v. Marshall, 11 Md. 251; Connor v. Parker, 114 Mass. 331; Shields p. Taylor, 25 Miss. 13; Weinwiok v. Bender, 33 Mo. 80; Leahi v. Dugdale's Adm'x, 34 Mo. 99; Bart-lett v. Eddy, 48 Mo. App. 32; Washoe County Bank v. Campbell, 41 Nev. 153, 167 Pac. 643; Marsh c. Garney, 69 N. H. 236, 45 Atl. 745; Ingalls v. Bur-lingame, 71 N. H. 19, 61 Atl. 175; Reed v. Marble, 10 Paige, 409; Trustees v. Wheeler, 61 N. Y. 88, 120; Heermans v. Ellsworth, 64 N. Y. 169; Van Keuren v. Corkins, 66 N. Y. 77; Horowits v. David, 145 N. Y. S. 998; Rayburn v. Kurd, 20 Oreg. 229, 25 Pac. 636; Bury v. Hartman, 4 S. ft R. 175,177; Brindle v. M'llvane, 9 8. & R. Tranta v. Brown, 17 8. & R, 287;
Pellman v. Hart, 1 Pa. St. 263, 266; Gaullagher v. Caldwell, 22 Pa. 300, 60 Am. Deo. 86; Commonwealth p. Sides, 176 Pa. 616, 35 All. 136; Ahrens & Ott Mfg. Co. p. Moore, 131 Tenn. 191, 174 S. W. 270; East Texas Ins. Co. v. Coffee, 61 Tex. 287; Alfalfa Lumber Co. v. Brady (Tex. Civ. App.), 149 S. W. 204; Gulf etc. Ry. Co. p. Stubbs (Tex. Civ. App.), 166 S. W. 699; Lampson p. Fletcher, 1 Vt. 168, 18 Am. Dee. 676; Loomis v. Loomis, 26 Vt. 198; Stebbins v. Bruce, 80 Va, 389; Dial v. Inland Logging Co., 62 Wash. 81, 100 Pac. 167; Skobis v. Ferge, 102 Wis. 122, 78 N. W. 426; Stebbins v. Union Pac. R. Co., 2 Wyo. 71. Cf. Stoddart v. Union Trust, Ltd.,  1 K. B. 181; Temey v. Wilson, 46 N. J. L. 282. But a misstatement by the assignee to the debtor of the terms of his assignment will not prevent the assignee from insisting on his full rights unless the debtor has taken prejudicial action relying on the misstatement Weinberg v. Stratton, 163 Mich. 408, 128 N. W. 926. A sub-assignee has also been held to take his rights subject to defences which the debtor bad against the original assignee, Martin v. Richardson, 68 N. C. 256, but the correctness of this may be doubted. The sub-assignee in enforcing the claim is acting on behalf not of his assignor, but of the original assignor, and at common law would sue in the latter' s name.
88 Laughlin v. District of Columbia, 116 U. S. 485, 29 L. Ed. 701,6 Sup. Ct. 472; Mathews v. Hamblin, 28 Miss. 611, 615; and see infra Sec. 435 n. 9.
89Legh v. Legh, 1 B. & P. 447; Brioe v. Bannister, 3 Q. B. D. 660, 678; Liquidation Estates Purchase Co. p. Willoughby,  A. C. 321; Welch v. Mandeville, 1 Wheat. 233, 4 L. Ed. 79; Mandeville v. Welch, 6 Wheat. 277, 283,5 L. Ed. 87; Broadwell v.Imms 14 Ala. App. 437, 70 So. 294; State P. Jennings, 10 Ark. 428; Nance p. Polk, 116 Ark. 588 (not fully reported), 171 S. W. 1195; First Nat. Bank v. Perria Irrigation Co., 107 Cal. 65, 40 Pac. 45; Kitnnger v. Beck, 4 Col. App. 206, 36 Pac 278; Fassett v. Mulock, 5 Col. 466; Chapman v. Shattuck, 8 111. 49, 52; Carr v. Waugh, 28 111. 418; Chicago Title Co. v. Smith, 158 111. 417,41 N. E. 1076; Pearson v. Luecht, 199 111. 475, 483, 65 N. E. 363; Felthousen v. Lan-ward Pub. Co., 159 111. App. 416; Daggett p. Flanagan, 78 Ind. 253; McFadden v. Wilson, 96 Ind. 253; Kithcart v. Kithcart, 145 Ia. 549, 124 N. W. 305, 30 L. R. A. (N. S.) 1062; Marr v. Harma, 7 J. J. Marsh. 642, 23 Am. Dec. 449; Hackett p. Martin, 8 Me. 77; Matthews v. Houghton, 10 Me. 420; Milliken v. Loring, 37 Me. 408; Palmer v. Palmer, 112 Me. 149, 91 Atl. 281; Eastman v. Wright, 6 Pick. 316; Cutler v. Haven, 8 Pick. 490; Jones v. Witter, 13 Mass. 304; St. Johns v. Charles, 105 Mass. 262; St. Andrew v. Manchaug Mfg. Co.,
134 Mass, 42; Schilling v. Mullen, 55 Minn. 122, 56 N. W. 586; Anderson v. Miller, 15 Miss. 586; Wells v. Edwards Hotel Co., 96 Miss. 191, 60 So. 628, 27 L. R. A. (N. S.) 404; Leahey v. Dug-dale's Adm'r, 41 Mo. 517; Lipp p. South Omaha Co., 24 Neb. 692, 40 N. W. 129; Cameron v. Little, 13 N. H. 23; Duncklee v. Greenfield Co., 23 N. H. 245; Sloan v. Sommers, 2 Green (N. J.), 509; Andrews p. Beecker, 1 Johns. Can. 411; Littlefield v. Story, 3 Johns. 425; Manufacturers' Commercial Co. p. Rochester R. Co., 117 N. Y. S. 989; Wilson p. Stilwell, 14 Oh. St. 464, 471; Gaullagher v. Caldwell, 22 Pa. St. 300, 302, 60 Am. Dec. 85. Compare Beran v. Tradesmen's Nat. Bank, 137 N. Y. 450, 33 N. E. 593; First Nat. Bank v. Clark, 9 Baxt 589; Strong v. Strong, 2 Aiken, 373; Upton v Wallace, 44 Ct. 552; Quick p. Colchester South, 20 Ont. 645. See also cases of partial assignments, infra, Sec. 444. Under the Iowa Code, the debtor of an "open account" may discharge himself by paying the assignor at any time prior to suit brought by the assignee though after notice of the assignment, Wing p. Page, 62 Ia. 87. but the debtor is not bound to pay the assignor under these circumstances. Bailey v. Union Pac. Ry. Co., 62 Ia. 354,17 N. W. 567.
90Smith v. Wall, 12 Colo. 363, 21 Pac. 42; Fulton Nat. Bank p. Fulton County, 144 Ga. 691, 87 S. E. 1023; Buttrick Lumber Co. v. Collins, 202 a larger right than he has himself; and breach of warranty may similarly be asserted against the assignee of a non-negotiable note, if the warranty was given at the time when the note was made, though the breach of warranty did not occur until after notice of the assignment.91 Moreover, if the debtor has a defence to a contract good against an assignee thereof, he may even after notice of the assignment rescind the original contract with the assignor and make a new contract with him relating to the same subject-matter, provided that this is not done with the fraudulent purpose of injuring the assignee.92
A difficulty of procedure existed at common law where the debtor had acquired after notice of the assignment a defence good against the assignor. For the assignee under the old procedure was obliged to sue in the name of the assignor. To such a suit a defence good against the assignor seemed valid; but as it was inequitable to allow the debtor to set up the defence under the circumstances, a court of equity formerly would have enjoined the debtor from setting up his defence to the action;93 and after the recognition by courts of law, at the end of the eighteenth century of the equitable rights of the assignee, the plaintiff, without the necessity of applying for an injunction, might reply that the action though nominally on behalf of the assignor, was in fact prosecuted for the benefit of an assignee, and that the defendant had notice of the assignment before he acquired his defence.94 By some form of pleading appropriate to the jurisdiction in question the same result is everywhere reached.95
Mm. 413, 418, 88 N. E. 138; Pacific Rolling Mill Co. p. English, 118 Cal. 123, 50 Put. 383; Grant v. Sicklesteel Lumber Co., 155 Mich. 600,119 N. W. 1092; Boteford v. Lull, 30 Pa. Super. 292; Rockwell p. Daniels, 4 Wis. 432; Whan p. Hope Natural Gas Co., 81 W. Va. 338, 94 S. E. 366. See also Young v. Kitchin, 3 Ex. D. 127; Newfoundland p. Newfoundland R. Co., 13 A. C. 199; Stoddart v. Union Trust, Ltd.,  1 K. B. 181, 189; Boogher v. Roach, 12 App. Cas. D. C. 477; Van Akin p. Dunn, 117 Mich. 421,
75 N. W. 938.
91 Rosenthal v. Rambo, 165 Ind. 584,
76 N. E. 404.
92 In Homer v. Shaw, 212 Mass. 113, 98 N. E. 697, a contractor had assigned the payments to become due on his contract to the plaintiff, and notice of the assignment was given to the defendant, the other party to the contract. Thereafter, the contractor informed the defendant that he would be unable to complete the work for lack of funds, and the defendant made a new arrangement with him for the completion of the work which was in effect a rescission of the original contract, and the substitution of a new one in its stead. The court held that the statement by the contractor of his inability to perform the original contract would have warranted a finding of repudiation and justified the defendant in refusing further performance so that the assignee would hare been entitled to nothing, and added: "The assignor needed immediate financial assistance, and if the defendant might have advanced the money which the evidence shows he furnished to enable him to pay his employees, yet if he had done so the plaintiff's assignment would have been given priority over the loan. Buttrick Lumber Co. v. Collins, 202 Mass. 413, 89 N. E. 138. The parties while they could not modify to his prejudice the terms of the contract assigned without the plaintiff's consent, or by a secret fraudulent arrangement deprive him of the benefit of the assignment, were not precluded from entering into a new agreement if performance by the assignor had become impassible from unforeseen circumstances." See also Tooth p. Hallett, L. R. 4 Ch. 242; Brice v. Bannister, 3 Q. B. D. 569; Ex parte Moss, 14 Q. B. D. 310; Cf. Drew v. Josolyne, 18 Q. B. D. 590.