Court Opinion

ID: 7932724
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:06:13.22781+00
Date Added: 2024-06-11T16:33:24.753493
License: Public Domain

Sherwood, J.
(dissenting.) I cannot agree in the conclusion reached in the opinion filed by my Brother Champlin in this case.
If the complainants are entitled to relief, it must be upon the facts stated in their bill.
Now, what are those facts? They are, substantially, that the complainants have a good and valid claim, arising upon contract, against the defendant Robinson, past due, of *528several thousand dollars; that the said defendant Robinson has a claim by way of judgment against the complainants of between $600 and $700, and said defendant is insolvent ;. and that unless the complainants are allowed to set off their claim to the extent of the defendant’s they will lose it entirely. They ask that the collection of the judgment against them may be enjoined until their claim can be put in judgment and the proper offset made.
These facts certainly present an equitable claim on the part of the complainants against the defendants, and a failure of proceedings at law to furnish the adequate remedy. Then why should not equity afford them the relief they pray t As the decree now stands, and as my brethren propose to affirm it, the complainants will be compelled to pay to the insolvent defendant $700, while he owes them more than twice that amount. I fail to see any reason why the offset should not be made. Mr. Tabor, as assignee of defendant’s claim, acquired no interest which could change the equities existing between complainants and defendant Robinson. This i understand to be conceded by my brothers, but they place their affirmation mainly upon the ground that the facts have once before been litigated, “ and the want of mutuality between the demand due to Robinson and the unliquidated demand claimed to be due from Robinson to the firm of O. Robinson & Oo.”
I confess I am unable to comprehend the argument that the question presented has been litigated. There is no question but that the defendant Robinson owed the complainants a debt for goods sold, nor is there any question but that he had a claim against the complainants.
The complainants brought suit against the defendant Robinson, and the latter obtained, by way of offset in said suit, the judgment which the complainants now ask to have off_ set against the claim the defendant Robinson owes them ° t y amounting to $2,000. Certainly the claim for which the decree was rendered against the defendant Robinson was nor litigated in the. suit at law. It qould not be, because it involved the investigation of partnership claims. The question *529involved is simply one of equitable set-off after the rights off the parties have been fully ascertained. The defendants’ claim was ascertained by the judgment, and the complainants’ by the decree. There is no chance for the litigation of either upon the merits in this suit.
It is said, however, that an appeal has been taken from the decree, and that the same is now pending. If this is true, I am unable to see how it can affect the equities of the present case. The equities appearing in the bill remain until it is finally determined whether or not the defendant Robinson owes the complainants, and to what extent; and until that time the proceedings to collect Robinson’s judgment should be stayed. The record shows the claim of the complainants as well before as after decree ; and the right to set off claims’ has always been regarded as one of equitable cognizance; and in what cases and under what circumstances it should be allowed or enforced is peculiarly, in my judgment, within the province and jurisdiction of a court of equity; and set-off should always be allowed and enforced whenever the just and equitable rights of the parties will be promoted thereby.
The rules limiting the cases and circumstances under which set-offs may be allowed in actions at law should not control the action of a court of equity upon the subject, but the equitable rights of the parties under the circumstances of each particular case should govern. This view may not be in accord with some of the cases, but I am sure it is with justice, and courts of equity should be governed by nothing else.
It is also claimed that there is want of mutuality between the demands of complainants and Robinson. I am aware1 there is much talk and refining upon the subject in some of the cases, but harmony in the decisions is not desirable where it can only be obtained at the sacrifice of the equitable rights of parties in a court of chancery. There is a natural equity in the doctrine that cross-demands may be set off against each other, and that only the balance should be required to . be paid by the delinquent party; and I fail to discover why the equity to have the set-off made is any stronger in the case *530of mutual claims, than where they are not mutual, provided the indebtedness held by each is honest and bona fide.
Lord Mansfield announced the true doctrine upon the sub. ject in the following language:
“ Natural equity says that cross-demands should compensate each other by deducting the less sum from the greater; and that the difference is the only sum which can be justly due.” Greene v. Farmer, 4 Burr. 2220, 2221: Story, Eq. Jur. § 1433.
“ It is true, where the court does not find a natural equity, going beyond the statute, the construction is the same in equity as at law;” so, as to mutual debts and credits, equity follows the law. But the application of the doctrine of natural equity in cases of set-off is not affected by the statutes upon the subject. It is to cases where the demands are not mutual that this doctrine applies, and, in my judgment, it should have been applied by the circuit judge in this case. By so. doing the rights of all the parties are regarded and protected ; while an affirmance will be equivalent to compelling the complainants to pay their indebtedness a second time. I can never assent toa judgment fraught with such injustice, as I understand it.
Before the statutes of offset were enacted, equity would interfere under a proper showing of the facts, and prevent the enforcement of a claim; and I have yet to learn that those statutes have limited in any respect the jurisdiction or power of a court of equity to relieve in such cases. I think the decree at the circuit should be reversed, and a new decree entered in this Court, as prayed in the bill, with costs of both courts.