Trubowitch v. Riverbank Canning Co

In Trubowitch v. Riverbank Canning Co. (1947) 30 Cal.2d 335, the California Supreme Court concluded that a general assignment clause does not preclude the assignment of a cause of action for breach of contract. "'Where a bilateral contract in terms forbids assignment, it becomes a matter of interpretation as to what is meant. Is it intended that a duty under the contract shall not be delegated, or is it intended that a right shall not be assigned, or are both prohibitions intended?' Even if it is assumed that the prohibition against assignments relates to rights rather than duties, it does not necessarily apply to all claims under the contract or to all transfers of the contract rights. It is established that in the absence of language to the contrary in the contract, a provision against assignment does not govern claims for money due or claims for money damages for nonperformance ... ." (Id. at p. 344.) The California Supreme Court said: "The field of arbitration is a limited one and presupposes a judicial determination of any disputed issue which concerns the question as to whether there is a valid contract between the parties at the time of the demand for arbitration. Professor Williston states the law in this regard as follows: 'When the claim, however, is that the contract is invalid because of fraud, duress, failure of consideration, rescission, cancellation, accord and satisfaction, there is much doubt on the matter, but it is probable that the court will first pass on the issue of fraud, etc., even if the arbitration clause seems broad enough to allow the arbitrators themselves to pass on those issues of fraud.' In a footnote to this statement, he adds: 'It seems clear that the court should first pass on these issues before ordering arbitration....' (Williston on Constracts, 1920, pp. 5370, 5371.) "This rule rests upon fundamental principles. In the event that a defendant in resisting a proceeding to compel arbitration pleads a defense concerning the validity of the contract which would bar an award against him upon the merits of the controversy, a finding in his favor by arbitrators would destroy the only basis of their jurisdiction, which is a valid contract to arbitrate. Such an issue, therefore, requires judicial determination. 'If the defendant is found correct in his contention, judgment for the defendant could be granted....'"