Case ID: mass_24/html/0171-01.html
Source: Caselaw Access Project
Author: {"author": "Parker C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Boston Type and Stereotype Foundery Company versus Samuel W. Mortimer, Principal, and Jacob Chapin, Trustee.
    
      Oct 25th.
    Where a person summoned as trustee, who was indebted to the principal defendant ’ at the time of the service of the writ, had before that time indorsed a note of the defendant, to a larger amount, which became payable before the trustee made his answer, arid which he was compelled to pay as indorser before making his answer, in consequence of the maker’s failing to pay it, it was held, that the supposed trustee might set off the amount thus paid by him against the debt due from him, and that therefore he could not be chargeable.
    The following facts appeared from the answers of Chapin, the supposed trustee. At the time that the plaintiff’s writ was served on Chapin, he owed Mortimer a balance of about twenty or thirty dollars on account, which was payable subsequently to the time of the service of the plaintiff’s writ. At the time of the service of this writ on the supposed trustee, he was indorser for Mortimer on notes amounting to between three and four hundred dollars, which were payable after the service of the writ. The notes not being paid at maturity by Mortimer, Chapin paid them as indorser ; and in consequence, at the time of making his answer, Mortimer was indebted to him in a much larger sum than the balance of account in favor of Mortimer at the time of the service of the writ. The question was, whether Chapin, under these circumstances, was chargeable as trustee.
    Russell, for the plaintiffs,
    contended that Chapin being liable as indorser for the defendant, was in a similar situation to a creditor having goods of his debtor in his hands on which he has no lien, and which there is no agreement that he shall set off against his demand. Jarvis v. Rogers, 15 Mass. R. 414 , Allen v. Megguire, 15 Mass. R. 490. There is no agreement by which the trustee can set off his liability as indorser, against the debts which he owes the defendant.
    
      Chapin, pro se.
    
    It is settled that the liability of an indorser is a good consideration for a new note given him by the maker of the original note, and he may make an attachment on the new note before he has sustained any injury from his liability as indorser. Cushing v. Gore, 15 Mass. R. 69. So here, if the debtor had given the trustee a note on account of his liability, it is clear that the trustee could not be held. But the trustee ought to be in as good condition without, as with, such a note. The intent of the statute is, that the trustee should not be injured by its operation. The case of Hathaway v. Russell, 16 Mass. K. 473, shows that the trustee may avail himself of any claim which he may have against the principal defendant of which he could avail himself in any form of action or any mode of proceeding against the principal; whether by way of set-off on the trial, or by setting off judgments under an order of court; or by setting off executions in the hands of the sheriff. In the present case, if the debtor had himself sued the trustee, the latter might have availed himself of a set-off in any one of these three modes. If the trustee is charged in this case, he will be obliged to pay to a stranger what the debtor himself could not have compelled him to pay.
   The opinion of the Court was afterwards drawn up by

Parker C. J.

It appears by the answer, that at the time of the service of the. writ there was a small balance of accounts due from the respondent to the debtor, and that at the same time the respondent was liable to the Taunton bank for the debtor to a much larger amount, on a negotiable note indorsed by him at the request and for the benefit of the debtor. It further appears, that before the answer, the debtor had failed, and that the respondent had been called upon, and being legally obliged to pay, had paid the amount of the note, and had no indemnity or security therefor.

Under these circumstances we think he cannot be held as. trustee ; for it would be against justice, that he should be held to pay a creditor of his debtor the only money by which he can partially indemnify himself. This question has not before arisen, but we think it quite consistent with the object and views of the legislature, and with the general tenor of the statute, that if before final answer the debtor becomes indebted to the respondent on any contract entered into before the service of the writ, the latter shall have a right of set-off, and be chargeable only with the final balance, if one should be due.

The principles sanctioned by the Court in the case of Hathaway v. Russell, 16 Mass. R. 479, warrant the above conclusion.

This decision will not reach the case of a liability incurred after the service of a writ, or where the effect of such liability may be avoided by reasonable diligence on the part of the person liable, to procure the payment of the debt by the principal; nor where it is contingent, whether the liability will ever be enforced or not; but we confine it to such a case as we have before us, in which there was an actual liability before the service of the writ, and an actual payment by necessity before the answer.

The respondent in a trustee process ought not to be placed in a worse situation than he would be in if the principal had sued him for the debt; and if the principal had sued him, although he could not file a claim in set-off after entry of the action against him, yet if at any time before judgment the plaintiff in the suit had become indebted to him for money paid, on a liability incurred before the suit, upon showing this matter to the court and that the plaintiff had failed, and was unable to pay, he would obtain a continuance that he might bring a cross action, so as to have a set-off of judgments or executions, unless there should be special causes for refusing this relief. Hathaway v. Russell, 16 Mass. R. 473. 
      
       See Lamb v. Stone, 11 Pick. 533