Court Opinion

ID: 6408518
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:49.595251+00
Date Added: 2024-06-11T15:51:17.609315
License: Public Domain

Wilde, J.
Upon the case stated, several questions are raised, the principal one being as to the defendant’s right of set-off. The action is founded on the covenant of warranty-contained in a deed of conveyance of real estate from the defendant to Elihu Pond. The defendant therein covenanted with said Pond, that he (the defendant) was lawfully seized in fee of the granted premises, that they were free from all incumbrances, except a mortgage to Increase S. Smith, which the defendant agreed to discharge, and to warrant and defend the premises to said Pond, his heirs and assigns forever, against the lawful claims and demands of all persons. After this conveyance, Pond became insolvent, and the premises were duly conveyed to the plaintiff, who has been compelled to pay the mortgage debt due to said Increase S. Smith.
The first question is, whether upon these facts there is a breach of the covenant of warranty ; and we think that there clearly is. The defendant’s counsel contends that this covenant is qualified by the covenant to pay the mortgage to Increase S. Smith, and that the latter covenant does not run with the land. • But there is no rule of construction, nor any reasonable principle, upon which this ground of defence can be maintained. The covenant to pay the mortgage qualified the covenant against incumbrances, and nothing more. Such are the express language and true meaning of the exception and covenant. The facts admitted show a breach of both covenants, viz. that of warranty, and the covenant to remove the incumbrance. And it certainly cannot be maintained that the breach of one covenant, without satisfaction, can be any bar to a recovery for the breach of the other covenant.
The other ground of defence, however, on which the defendant mainly relies, we think is well maintained. On the facts agreed, we can have no doubt that the defendant would have a good right of set-off in an action by Pond; and the plaintiff has no better right than Pond would have had, if he had been compelled to discharge the incumbrance, The insolvent law (Si. 1838, c. 163, §5,) provides that the assignees *199of an insolvent debtor “ shall have the like remedy to recover all the estate, debts and effects, in their own names, as the debtor might have had, if no assignment had been made.” The plaintiff, having express notice of the incumbrance at the time of his purchase, has no greater right than the assignee had.
It has been argued, that the defendant, by proving his debt in part before the master, is precluded from his claim of set-off, as to the part so proved. But we think otherwise. He acted unadvisedly in proving his claim before the master; but he has withdrawn that claim, so far as he was allowed so to do ; and there seems to be no good reason why his legal and equitable rights should be barred by a mere mistake. In the case of Sargent v. Southgate, 5 Pick. 312, the defendant was allowed to file in set-off a note of hand upon which he had before commenced a suit. So in the present case, although the defendant proved his debt in part, before the master, he has not received any dividend ; and after the allowance of his claim of set-off, he cannot be entitled to a dividend, and no injustice can be done to the creditors of Pond. We are therefore of opinion that the defendant’s claim of set-off ought to be allowed. This, we think, would be a case of mutual demands, within the meaning of the third section of the insolvent law, if the action had been brought in the name of the assignee. That section provides, that “ when it shall appear that there has been mutual credit given by the debtor and any other person, or mutual debts between them, the account between them shall be stated, and one debt shall be set off against the other,” &c. This point of set-off is supported by the decision in the case of Tuckers v. Oxley, 5 Cranch, 39, and Ex parte Prescot, 1 Atk. 230, cited by the defendant’s counsel, and by other authorities. See Babington on Set-off, c. 5. In Tuckers v. Oxley, it was decided that the term “ debt,” as used in a section of the first bankrupt law of the United States similar to the provision in the third section of the insolvent law, was fairly to be construed to mean any debt for which the act provides *200“ A debt,” Chief Justice Marshall says, “ which may be proved before the commissioners, and to the. owner of which a dividend must be paid, is a debt in the sense of the term as used in this section.” And in Ex parte Prescot, it was decided that a debt, although payable at a future day, and although not strictly a mutual debt, might be set off under a like provision in the English bankrupt law.
Upon these authorities, and upon principle, considering the plaintiff as entitled to no greater rights than the assignee had, from whom he derived his title, with express notice of the defendant’s claim, we are of opinion that the same must be allowed; and, as it exceeds the plaintiff’s demand, this action cannot be maintained.

Plaintiff nonsuit.