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MCCORMACK v. BLOOMFIELD S.S. CO.

July 26, 1974

Howard M. McCORMACK, as Assignee of Arthur K. Schaeffer, Plaintiff,
v.
BLOOMFIELD STEAMSHIP COMPANY, now d/b/a E. P. Shipping Corporation, Defendant



The opinion of the court was delivered by: MOTLEY

Memorandum Opinion and Order

 MOTLEY, District Judge.

 The factual background of this action is complicated, but fortunately not in dispute. Recitation of all the details will serve little purpose here. It suffices to say that plaintiff is the assignee of seaman Arthur K. Schaeffer. Schaeffer sustained injuries while serving on board a vessel owned and operated by Crest Overseas Shipping Company. In 1969, he commenced suit against Crest in this Court (69 Civil 1523), which was settled on or about March 24, 1971 for the sum of $195,000. (A copy of said settlement is appended as Exhibit 1.) As part of that settlement agreement, Schaeffer reserved his rights against the former owner of the vessel on which he was injured, namely Bloomfield, the defendant here. Schaeffer also assigned whatever rights he had against third parties to the plaintiff, as "Trustee-Assignee". Plaintiff is an attorney for the insurance company that paid the settlement entered into between Crest and Schaeffer. During the course of litigation Crest was granted leave to implead Bloomfield but failed to do so in a timely fashion. A further motion extending time to implead was denied.

 Prior to the settlement agreement noted above, Crest brought suit against the former owner of the vessel, Bloomfield (70 Civil 2897). That suit, however, was stayed by order of this Court (Croake, D. J.) filed February 16, 1971. The stay was ordered so as to allow the parties to arbitrate in accordance with their agreement transferring ownership of the vessel.

 Shortly after the Crest v. Bloomfield case was stayed, plaintiff, as assignee of seaman Schaeffer, commenced the present action. Various motions of varying merit have been made by the defendant. Since the court is of the view that defendant's motion to dismiss the complaint is meritorious, the defendant's motion to dismiss is granted and the remaining outstanding motions are dismissed as moot.

 The defendant has moved to dismiss the complaint on the ground that the assignment of this action to plaintiff is void as a matter of law and plaintiff is therefore without standing to bring this suit. Since the action is based on diversity jurisdiction, *fn1" the validity of the assignment is to be decided under New York law. In addition, the assignment itself refers to New York law with reference to its validity. In support of its position, defendant cites New York's General Obligations Law McKinney's Consol.Laws, c. 24-A, 1964, Section 13-101 which reads:

 
"§ 13-101 Transfer of Claims.
 
Any claim or demand can be transferred except in one of the following cases:
 
1. Where it is to recover damages for a personal injury;
 
2. Where it is founded upon a grant, which is made void by a statute of the state; or upon a claim to or interest in real property, a grant of which, by the transferror, would be void by such a statute;
 
3. Where a transfer thereof is expressly forbidden by a statute of the state, or of the United States, or would contravene public policy."

 Defendant argues that plaintiff's action is one to recover damages for a personal injury and as such is nonassignable under General Obligations Law § 13-101(1). Plaintiff replies that the agreement is not an assignment of a cause of action, but instead an assignment of the proceeds of the seaman's claims which may be transferred by assignment in advance of judgment or settlement. See, Aponte v. Maritime Overseas Corporation, 300 F. Supp. 1075, 1077 (S.D.N.Y.1969) and cases collected therein. The terms of the agreement, however, clearly indicate that the cause itself, not merely the proceeds were assigned.

 The nature of the agreement as an assignment of the cause of action is evidenced by the following provisions in that document:

 
1. "[Schaeffer assigns to plaintiff] all of the right, title and interest in and to any and all claims, demands, rights, choses and causes of action in contract, express or implied; warranties, ...

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