Court Opinion

ID: 5461303
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:37:14.835197+00
Date Added: 2024-06-11T08:32:53.832629
License: Public Domain

By the Court, Clerke, J.
I. As to the question of fact, whether the promissory notes were pledged merely to secure the borrowed money, ($5000,) or whether they were pledged to secure the whole indebtedness due from the assignors of the plaintiff's to the defendants, is a question of fact submitted to the jury on conflicting evidence, with which it is not proper that we should interfere.
II. The offer of the defendants to prove that it was the' practice of their firm, on extending time, to demand col-laterals, was not admissible. The question as to the extent' of the pledge depended entirely on the agreement; and this was ascertainable from what was said or done by the parties, at the time, in relation to this particular transaction. Ho practice of the firm, in relation to their general transactions, could have affected the testimony relative to this particular transaction, one way or the other.
III. Had the defendant's a right to set off their general demand against the assignors of the plaintiffs, against this demand of the plaintiffs ? Undoubtedly, where there are. mutual demands between parties, which can not be set off under the statute, but which a court of equity may compensate or apply in satisfaction of each other, the fact that one of the parties is insolvent, has, frequently, been held a sufficient ground for the exercise of the equitable jurisdiction of courts of equity. But this has been done only when it did not interfere with the equitable rights of other creditors, or with other cherished principles of those courts. Equality is one of these principles; and in cases of insolvency, equity, when not prevented by other rules of law or equity, which are too stringent to be evaded, will countenance and aid an equal distribution of the assets : and will not, therefore, countenance a set-off, which will give one creditor of an insolvent, or a bankrupt, an advantage over others equally vigilant. *403The case in AtTeyns, cited by the defendants’ counsel, (Exparte Deeze, 1 Atk. R. 223,) has apparently, from the text of the report, some analogy to this case. It was there decided by the lord chancellor, (Hardwicke,) that a packer may not only retain goods until he is paid the price of packing; but if he has another debt due to him from the same person, the goods shall not be taken from him until he has been paid the whole, notwithstanding the debtor has become a bankrupt. ■But my edition of Atkyns, (London edition, 1794,) contains a note of the reporter, appended to the case, which the Dublin edition does not contain, and which, I am informed, was the edition consulted by the counsel of the defendants in this case. According to the note, the case was determined upon evidence that it was usual for packers to lend money to clothiers, and the cloths to be a pledge, not only for the work done, in packing, but for the loan of money," likewise ; according to which usage the packer was in the nature of a factor, and as such, entitled to a lien upon the goods, not only for incidental charges, but as an item of mutual account for the general balance due to him. This is clearly shown by the lord chancellor himself, in the same volume, a few pages further, in Exparte Ockenden, (1 Atk. Bep. 234.) There he decided that where goods are delivered to a tradesman or manufacturer, for a particular purpose, as corn to a miller, to be ground, or cloth to be dyed by a dyer, no right of set-off exists. Beferring to Exparte Deeze, he says: “ There was evidence before me that it is usual for packers to lend money to clothiers, and the cloths to be a pledge, not only for the work done in packing, but for the loan of money, likewise.” He adds: “I do not know that a court of equity have gone further than courts of law, in cases of set off.”
In Murray v. Riggs, (15 John. 591,) Thompson, Oh. J. in delivering the opinion of the court, cited Exparte Deeze, as authority for the unqualified right of equitable set off, in the same manner as the counsel of the defendants in this action, without referring to the note of the reporter, or to the *404subsequent decision of the lord chancellor, in Exparte Oclcenden. Kent, chancellor, also, in Duncan v. Lyon, (3 John. Ch. 359,) referred to Exparte Deeze, without seeming to be aware of the explanation in the reporter’s note, or of the subsequent decision in Exparte Oclcenden; although he admits that a court of equity follows the same general rules as a court of law, in respect to set off.
[New York General Term,
January 2, 1866.
Myers v. Davis, (22 N. Y. Rep. 489,) is very pertinent to the case before us, and, without regarding any other principle than the one there referred to, is conclusive. It was there held that until a demand becomes mature, a set-off may be defeated by the assignment of the claim of the opposite party, though the latter may be insolvent, and his demand may not have become. payable when assigned. In this case, the indebtedness of the assignors of the plaintiffs to the defendants did not mature, when the assignment to the plaintiffs was made.
There are other reasons why no set off could be allowed in this case. But these certainly are quite sufficient.
The judgment should be affirmed with costs.
Geo. G. Bernard, Clerke and Ingraham, Justices.]