Case ID: ohio-st_73/html/0250-01.html
Source: Caselaw Access Project
Author: {"author": "Spear, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Serhant and Pearce v. Haker.
    
      Right of set-off — Sections 5066 to 5077, Revised Statutes — Right cannot he defeated hy other exemption sections, when— Gross demands are to he deemed compensated, when — Law of exemptions.
    
    1. The right of set-off is controlled by the sections of the Revised Statutes relating to that subject, (sections 5066 to 5077), and the rights there given are not subject to be defeated by the provisions of other sections relating to exemptions.
    
      2. The provision of section 5073 that when cross-demands have existed between persons under such circumstances that if one had brought an action against the other a set-off could have been set up, and that the two demands must be deemed compensated so far as they equal each other, forbids the allowance to one of the demand against him on a claim of exemption even though such claimant may be entitled under the exemption statutes to hold exempt a sum equal to the demand against him.
    (No. 9400
    Decided February 2, 1906.)
    Error to the Circuit Court of Cuyahoga county.
    March 7,1903, Carl J. Haker commenced an action in the court of common pleas of Cuyahoga county for the purpose of having set off against a judgment which had been recovered against him, February 1, 1900, by the defendant John Serhant for $24.03, a ■certain judgment which, the plaintiff had recovered February 6, 1900, against Serhant for $30.40.
    February 18, 1900, Serhant assigned, sold and transferred to Berkeley Pearce the judgment rendered in favor of Serhant and against Haker, and the petition alleged that at the date of the commencement of the action in the court of common pleas Berkeley Pearce was the owner of the judgment.
    
      John Serhant had not at any time since the recovery of the judgment against him had any property subject to levy and sale on execution.
    March 19, 1904, Serhant and Pearce filed an amended, answer in the court of common pleas in which they averred that on the 20th of January, 1904, the defendant Pearce duly assigned all his right, title and interest in the judgment first described in the petition, and all rights thereunder, to the defendant Serhant, who thereupon became the absolute ■owner thereof; that on the 20th day of February, 1904, Serhant, still being the owner of the judgment, •duly selected and claimed the said judgment and all his rights, title and proceedings thereunder, as ■exempt from execution, attachment, levy and sale under Part 3, Title 1, Division 5 and Chapter 1 of the laws of Ohio, and thereupon and on said day he -duly assigned, sold, transferred and set over all his rights, title and interest in the said judgment and all rights and proceedings thereunder to the defendant Pearce, who thereupon and thereby became the absolute owner thereof.
    At the time of making said selection and transfer the defendant Serhant had a wife and family of which he was the head and support and he and his wife were living together, residents of Ohio, and did not own or have a family or other homestead, and that when the selection was made the defendant Serhant did not have as much property as he was ■entitled to hold exempt from levy and sale or levy ■or sale on execution or attachment or other process, by virtue of the statute in such cases made and provided, and that said judgment was a part of the personal property which he then had and owned.and which he was entitled to hold exempt as aforesaid.
    
      A general demurrer to this answer was sustained by the court of common pleas and judgment rendered for the plaintiff Haker. This judgment was affirmed by the circuit court. Serhant and Pearce bring error to this court.
    
      Mr. Berkeley Pearce, for plaintiffs in error.
    The plaintiffs in error, Serhant and Pearce, claim that property may be claimed as exempt at any time before it is disposed of by legal process or decree, and cite in support thereof the following. Exempt property may be selected at any time before sale by the sheriff. Close v. Sinclair, 38 Ohio St., 530; Frost v. Shaw, 3 Ohio St., 270; Hoover v. Haslage, 7 O. D., 98; 4 N. P., 90; Muse v. Darrah, 2 Dec. Re., 604; 4 W. L. M., 149; Donahue v. Steele, 1 Dec. Re., 130; 2 W. L. J., 402.
    It may be selected at any time before its application upon the creditor’s debt. Chilcote v. Conley, 36 Ohio St., 545.
    Plaintiffs in error therefore claim that as Serhant claimed his judgment against Haker as exempt property before final decree in the suit brought by Haker to obtain a set-off of the two original judgments, the selection, was made in time and must be recognized as effective and binding.
    Exempt property may be disposed of by the debtor and the purchaser takes a clear title. Genell v. Hirons, 70 Ohio St., 309; Tracy v. Cover, 28 Ohio St., 61. A debt selected as exempt may be assigned. Day v. Burnham, 82 Mo. App., 538. A judgment claimed as exempt can not be reached by set-off. Atkinson v. Pittman, 47 Ark., 464.
    The fraudulent placing of the title to the land in controversy in his wife, by the judgment debtor, did not, as against the judgment creditor, har the right of the debtor to demand a homestead or an exemption in lieu of a homestead. Roig v. Schultz, 42 Ohio St., 165; Sears v. Hanks, 14 Ohio St., 300. See many cases to same effect cited in notes to Cent. Annotated Ed., Ohio St. Rep.
    If the means of accomplishing the set-off are not in possession, an action must he brought, and the action is-a personal action, strictly. The set-off must he pleaded and requires a burden of proof to establish it. Some authorities hold that the assignee must be made a party. Gildersleeve v. Burrows, 24 Ohio St., 204.
    An assignee of a judgment usually takes subject to the judgment debtor’s right of set-off against the judgment creditor. 17 Am. & Eng. Ency. Law (2 ed.), 885.
    Claims against the assignor can not he technically counter-claimed against the assignee, because he is not liable thereon. 25 Am. & Eng. Ency. Law (2 ed.), 605.
    The set-off sections of the statutes do not apply where a judgment could he held as exempt property. Diehl v. Friester, 37 Ohio St., 476.
    The set-off sections of the statutes confer rights in action; the exemption sections, rights after judgment. Kepner v. Pierce, 3 Circ. Dec., 239; 5 C. C. R., 489; affirmed without opinion, in Pierce v. Kepner, 52 Ohio St., 615.
    The right of exemption defeats the right of set-off. Gieske v. Schrakamp, 8 Dec., 610; 6 N. P., 299.
    A court of equity will not decree a set-off of a judgment against a debt due from the judgment creditor to the judgment debtor, where at law the debtor would be entitled to claim tbe debt as exempt. Thall’s Appeal, 119 Pa., St., 425; sec. 5073, Rev.. Stat.
    
      Mr. J. F. Walsh, for defendant in error, filed no-brief.
   Spear, J.

It seems to be conceded that the position of plaintiffs in error is in no wise strengthened by tbe assignment of bis judgment by Serbant to Pearce, and,it is, therefore, not necessary to further comment upon that feature of tbe case. Tbe claim of error in tbe judgment of tbe circuit court is based upon tbe proposition that Serbant’s right to exemption, as Set forth in bis amended answer, is given by section 5441, Revised Statutes, and that tbe exemption may be claimed at any time before tbe property is disposed of by legal process or decree. That section provides that “husband and wife living together * * * resident of Ohio, not tbe owner of a homestead, may in lieu thereof bold exempt from levy and sale, real or personal property to be selected by such person * * * at any time before sale, not exceeding $500 in value, ’ ’ etc. It is claimed, also, that Serbant’s judgment against Haber was “property” within the meaning of tbe above recited section, and that bad it been sought to be reached by attachment on tbe part of another creditor, Serbant would have been entitled, on tbe authority of Chilcote v. Conley, 36 Ohio St., 545, to have held the amount exempt.

This claim may be admitted, but it falls far short of determining this case. We are in tbe field of set-off rather than that of exemption. Tbe subject is treated specially and fully by sections 5066 to 5077, Eevised Statutes, where set-off is defined as a cause of action existing in favor of a defendant and against the plaintiff, between whom a several judgment might be had in the action, etc.; providing further for the making of a new party where necessary to a full decision on the set-off if, owing to the insolvency or non-residence of the plaintiff, or other cause, the defendant will be in dang’er of losing his claim unless permitted to use it as a set-off, and finally providing (5073) that “when cross-demands have existed between persons under such circumstances that if one had brought an action against the other a counter-claim or set-off could have been set up, neither can be deprived of the benefit thereof by assignment by the other, or by his death, but the two demands must be deemed compensated, so far as they equal each other.”

The language of this section is specific and affords a rule, as we think, which clearly governs all cases where cross-demands have existed between persons under such circumstances that if one had brought an action against the other a set-off could have been set up. That condition exists here without question. The imperative language which follows is that the two demands must be deemed compensated so far as they equal each other. This is the rule of the civil law which admitted a set-off in the name of compensation, the reciprocal acquittal of debts between two persons who are indebted the one to the other, or the extinction of debts of which two persons are reciprocally debtors to one another by the credits of which they are reciprocally creditors to one another. In such situation compensation takes place, and the respective debts are immediately extinguished by operation of law to the extent of their concurrence. Waterman on Set-offs, secs. 12, 13. The philosophy of the rule is that the balance left after deducting the smaller from the greater is the real debt owing. The rule is logical and does not seem to be inequitable. At all events, it is the dictum of the statute, and we think it is not the duty of the courts to overthrow it by finespun distinctions, or by an effort to apply deductions from other sections of the statutes which in terms have no relation to it. It isn’t pretended that the language of any section relating to exemptions gives such right to exemption in a case like the present. Indeed the assumption that such a claim may be set off in the answer in a case pending finds no support in the sections relating to exemptions, the language being that the claimant may hold exempt from levy and sale to be selected any time before sale. This provision would seem to imply that the question of exemption is not to be determined in advance of judgment; that is, the demand is to follow judgment, not precede it.

Counsel for plaintiffs in error cite decisions in other jurisdictions which support his contention. But they are in states where the question was determined upon what is termed equitable principles, resting entirely upon the practice known in courts of equity from time immemorial and in the absence of statute, or upon statutes respecting set-offs unlike ours and construed by the practice in equity, and where the rule of the civil law is not recognized. Such decisions are, of course, not authority, nor does the reasoning of the judges, however high their standing, because of the distinctions above stated, afford light to us. It is to be noted that no special equity is set up. It is not even claimed that Haker was not the owner of the cause of action on which his judgment was based at the bringing of the suit by Serhant. A remark here and there in opinions by judges of this court notably in Diehl v. Friester, 37 Ohio St., 473, lends some color to the claim of counsel, but the question we have here was not the question before the court in any of the cases referred to.

No case to be found among the' reports of this court presents precisely the facts of this case. But we are unable to see any distinction in principle between the case at bar and Pierce v. Kepner, 52 Ohio St., 615, affirming the judgment of the circuit court of Darke county and reported in. 5 O. C. 0., 488. In that case Pierce brought suit against Kepner to recover a balance of $162.90 for work in repairing a house. The plaintiff alleged in his petition that he was entitled to an allowance in lieu of homestead and claimed the amount of his credit for work as exempt. The defendant pleaded as sét-off a promissory note for $73.27 made by plaintiff and purchased by defendant before the contract for house-repair was made. Plaintiff replied that defendant was not entitled to have the note set off because plaintiff was entitled to the full amount sued for as an allowance, to him as head of a family in lieu of a homestead. The common pleas refused the set-off and gave plaintiff judgment for the full amount of his claim. This judgment was reversed by the circuit court, that court' holding that though a plaintiff in an action for money may be entitled to hold exempt from levy and sale a sum equal to that for which he sues, yet that fact will not defeat the defendant’s right of set-off, and, as before stated, this judgment was affirmed by this court. On the authority of this case, as well as upon principle, we hold there was no error in the judgments below, and the same are

Affirmed.

Davis, C. J., Shauck, Price, Crew and Summers, JJ., concur.