Donaldson v. Farwell was a United States Supreme Court case that addressed the issue of whether a debtor could be held liable for a debt that had been assigned to another party. The case involved a dispute between a debtor, William Donaldson, and his creditors, Farwell and others. Donaldson had assigned his debt to another party, and the creditors argued that they were still entitled to payment from Donaldson. The Supreme Court held that Donaldson was not liable for the debt, as the assignment of the debt to another party had extinguished his liability. The Court reasoned that the assignment of the debt was a valid contract, and that the creditors had no right to demand payment from Donaldson. The Court also noted that the creditors had not taken any steps to protect their rights, such as filing a suit against the assignee. The Court's decision in Donaldson v. Farwell established that a debtor is not liable for a debt that has been assigned to another party. This decision has been cited in numerous subsequent cases, and has become an important precedent in contract law.

In Donaldson v. Farwell, the Supreme Court was asked to decide whether a contract between two parties could be enforced after it had been assigned by one of them to another party. The majority opinion held that the assignee did not have standing to enforce the contract because he was not a party to it and therefore lacked privity with either of the original contracting parties. Justice Field dissented from this decision, arguing that an assignment should be treated as if both contracting parties had agreed in advance that any third-party assignees would also have standing under their agreement. He argued further that allowing assignments would encourage contracts and benefit society by providing greater security for creditors who might otherwise hesitate before entering into agreements due to fear of nonpayment or breach on behalf of debtors.