Court Opinion

ID: 8629417
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:35:17.304288+00
Date Added: 2024-06-11T16:55:42.983338
License: Public Domain

LOWELL, District Judge.
Our bankrupt, law has adopted the language which had been used in former statutes for a long time, in reference to cross-demands between the assignee of a bankrupt and a creditor of the estate, that “in all cases of mutual debts or mutual credits between the parties, the account between them shall be stated, and one debt set off against the other, and the balance only shall be allowed or paid.” After some diversify of opinion, the leading case of Rose v. Hart. 8 Taunt. 499, appears to have been accepted as settling the law of England, that where a creditor has goods or choses in action of the bankrupt put into his hands before bankruptcy by a valid contract, by the terms of which the deposit will result in a debt, as if they are deposited for sale or collection, the case of mutual credit has arisen within the meaning of the bankrupt act; but where there is a deposit for some other purpose, as in the leading case itself, where goods were left with a fuller to be dressed, he can claim nothing beyond such lien as the common law gives him.’ See Rose v. Hart, 2 Smith, Lead. Cas. 172, and the American notes which cite cases in this country quite as liberal in favor of an equitable set-off, even when the statute is silent.
Under this rule the petitioners would have a right to set off the price of these goods against the demand of the assignee for the value of the goods, by virtue of the consignment of December, 18G9, independently of any question of the revival of their lien as vendors, or of the intermediate pledge by the brokers. But this inquiry I do not pursue beyond the mere statement of a rule which seems to be indisputable, because the facts establish a right to hold the goods by the very terms of the contract. Whether the petitioners had a lien or not. it is plain that both parties thought they had one, and that the last agreement between them was made on that basis, the petitioners undertaking for a valuable consideration, to “carry” the madder for six months, and at the end of that time to be at liberty to sell it for the best price they could obtain, and reimburse themselves. This was accepted as a concession on their part, and to save a sacrifice; and throughout the correspondence, the talk is of “margins,” and of “carrying” the goods for the benefit of Mr. Hol-brook, all of which imports a right in the merchants to insist on a sale, and a holding of the goods as security for the purchase-money. I find, therefore, that the evidence clearly shows a lien by contract, whatever may have been its supposed origin, and a lien on which the parties have so acted and dealt with each other that the bankrupt and his assignee cannot now deny it It was founded on the valuable consideration of a forbearance to sue.
Order that the petitioners have leave to apply the proceeds of sale of the madder towards the payment of their debt, and to ■prove for the deficiency.