Court Opinion

ID: 6408439
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:46.310343+00
Date Added: 2024-06-11T15:51:17.444747
License: Public Domain

Hubbard, J.
The only question in the present case is, whether the set-off can be allowed. This set-off is a judgment recovered, by the defendant, on a note given by the payee of the note now in suit. The note sued is payable on demand, and is within the purview of St. 1839, c. 121, § 1, on which the defendant relies. This statute is founded upon the principle of the law merchant, that he who takes a bill or note, after it is due, takes it subject to all the objections and equities to which it was liable in the hands of the person from whom he takes it; and the question is, whether this provision of the statute is to be restricted to a defence which is either payment or a technical bar to a recovery, or whether it is to receive a liberal construction, so that the defendant may avail himself of a defence in the nature of a set-off, which he could do if the original payee of the note was the plaintiff. It is enacted in the statute respecting set-off, (Rev. Sts. c. 96, §§ 1, 2, 4,) that “ when there are mutual debts or demands between the plaintiff and defendant in anv action, one demand may be *370set off against the other,” if such demands are “ founded upon a judgment, or upon a contract; ” it being a demand which “ existed at the time of the commencement of the suit, and then belonged to the defendant.”
It is obvious, therefore, that if Clark were the plaintiff in the present suit, the judgment recovered by the defendant against him, might be filed in set-off, as a defence to the action; and such set-off, -though not literally a payment of the plaintiff’s demand, nor a technical bar to it, would be received as equivalent thereto, and would prevent a recovery of judgment for damages by the plaintiff; admitting the amount of the judgment set off to be equal to the plaintiff’s demand.
The statute of 1839, c. 121, like the Rev. Sts. c. 96, is remedial, and is to receive a liberal construction. And we think that any matter which would constitute a defence, by way of set-off, where the payee is plaintiff, may also be given in evidence by the promisor of a note payable on demand, when an indorsee is plaintiff; and this, whether such defence be made by showing payment, or by way of set-off; and that the words “ legal defence ” are not to be restricted to the case of payment or of a technical bar. That this construction should be given to the statute, we think may well be argued from the case of Sargent v. Southgate, 5 Pick. 312, in which it was held that a defendant might file in set-off a negotiable note made to him by the payee of the note in suit, before he had notice' of its assignment; a defence which the court deemed both legal and equitable. The statute of 1839, c. 121, is, in effect, a legislative sanction of the doctrine maintained in that case. Applying, then, its principles to the present case, we are of opinion that the exceptions must be sustained, and a new trial granted, to let in the evidence. But we would intimate to the parties, that the facts stated in the deposition of Clark go far to prove a payment to Brooks of the note on which he has recovered judgment; and that, if the same has been paid to him, he cannot maintain this defence. In point of fact he appears to be acting for the benefit of a third person

New trial granted.