Court Opinion

ID: 6124910
Source: CourtListenerOpinion
Date Created: 2022-02-04 20:21:48.613146+00
Date Added: 2024-06-11T08:26:20.692848
License: Public Domain

Bockes, J.
(dissenting):
The defendant’s note was dated November 21, 1879, and was payable sixty days after date. It fell due, therefore, January twentieth — twenty-third next following its date. The assignment to the plaintiffs, which carried title to the note to them, was made June 2, 1880. On the second day of April last preceding, the defendant deposited with the plaintiffs’ assignor, who was doing business as a private banker under the name and style of O. J. Pratt, banker,- $600, and took therefor a certificate of deposit, as follows:
“Banking-house oe O. J. Pratt, )
“ $600. Whitney’s Point, N. Y., April 2, 1880. i
“ Nelson Dunham has deposited in said banking-house six hundred dollars, payable in bankable currency to himself or order on return of this certificate properly indorsed, with interest at the rate of 5 per cent per annum, if left four months.
“O, J. PRATT,
“ No. 2,138. Banker, D.
“You cannot draw any money on this certificate unless you bring it with you.”
The certificate of deposit was not presented for payment until August 5, 1880, when the defendant made presentation of it, demanded payment, and claimed to have it apply as a set-off against his aforesaid note. Payment was refused and the right of set-off was denied.
The claim or demand evidenced by the certificate of deposit was not due until the latter was presented for payment August 5, 1880. An action could not have been maintained upon it, nor would the statute of limitations commence to run against it until presentation and demand. The cases that hold this rule of law are numerous. (National Bank of Fort Ed. v. W. Co. N. B., 5 Hun, 605; Fort v. McCully, 59 Barb., 87; Payne v. Gardiner, 29 N. Y., 146; Howell v. Adams, 68 id., 314, 321; Sullivan v. *97Fosdick, 10 Hun, 173, 182; Pardee v. Fish, 60 N. Y., 265.) As regards the right of set-off here, the case of the Kingston Bank v. Gay (19 Barb., 459, 460) is directly in point. The doctrine of this case has never been questioned. There are also many cases holding the doctrine that in an action by an assignee, the defendant cannot set-off a demand against the assignor not due at the time of the assignment of the subject of the action. (Martin v. Kunzmuller, 37 N. Y., 396, and eases there cited; Murray v. Deyo, 10 Hun, 3-6; Beckwith v. Union B. of N. Y., 9 N. Y., 211.) In all the cases the rule is declared to be that an allowance to a pai’ty by way of set-off is always founded on an existing demand in presentí, and not one that may be claimed in futivro. It does not appear that any change in the law of set-off has been effected by the new Code of Procedure in a case like the present. It is suggested that the right of set-off in this case should be exercised as an equitable right, notwithstanding the law applicable to a case of mere legal right. But as was said by Judge Folger, in Jordan v. N. S. and L. Bank (74 N. Y., 473), “equity follows the statute and the law, unless there are peculiar circumstances presented.” And Judge Andrews said in Bathgate v. Haskin (59 N. Y., 533) that “ while, as a general principle, courts of equity follow the rules of law in enforcing set-offs, they exercise an original jurisdiction over the subject, and in cases of peculiar equity and under special circumstances will enforce a set-off in cases not within the letter of the law.” So in Lindsay v. Jackson (2 Paige, 581) it was held that equity would permit a set-off in a case not within the statute of set-off.
The case here before the court, however, comes within the letter of the law which declares in what cases set-offs may be allowed. (Code of Civil Pro., § 502, sub.,2.) It is there provided that “if the action is upon a negotiable promissory note or bill of exchange which has been assigned to the plaintiff after it became due, a demand existing against a person who assigned or transferred it after it became due, must be allowed as a counter-claim, to the amount of the plaintiff’s demand, if it might ha/oe been so allowed against the assignor, while the note or bill belonged to him.” It is urged that the mere insolvency of the assignor of the note raises a sufficient equity on which to ground the defendants’ claim of set-off *98in this case. That this has not been so regarded is evident from the cases cited. In Martin v. Kunzmuller (supra) the action was brought' by the assignees, who got their title to the claim on which they bi’ought the suit under an assignment for the benefit of creditors. The following cases were of the same character: Beckwith v. U. B. of N. Y. (9 N. Y., 211); Myers v. Davis (22 id., 489); Wells v. Stewart (3 Barb., 40); Hicks v. McGrorty (2 Duer, 295). In these cases the claim to set-off was made against the' assignees (the same as in the case in hand), and it was disallowed notwithstanding the insolvency of the assignor. . Those cases have not been overruled, nor has the doctrine there declared ever been questioned. The true rule is laid down by Judge Denio, in Myers v. Davis (22 N. Y., 493), as follows: “ Where the one claiming a set-off has a demand against the other, presently payable, and the other party is insolvent, the former may claim to have the set-off made, though the demand of his adversary against him has not become payable; but if before the demand of the party claiming the set-off becomes mature, the opposite claim has been assigned, * * * the right of set-off no longer exists.” This is the doctrine of Bradley v. Angel (3 N. Y., 475), and of Lindsay v. Jackson (2 Paige, 581). The case of Smith v. Felton (43 N. Y., 419) is not in conflict with those above cited. On page 422, Judge Allen says: “ Had then, the present defendants, after the failure of Rich, and- before the assignment by him, brought an action, for the equitable relief which they now claim, they would have been entitled to it within the principle of the case cited.” (Lindsay v. Jackson, supra.) In Smith v. Felton the right to set-off had become settled by the action of the defendants before the assignment. Prior to that event the defendants had demanded to have the set-off allowed. So here, if the defendant, prior to the assignment to the plaintiffs, had presented his certificate of depost for payment to their assignor, his right of set-off would have been undoubted, for in that case the counter-demand would have been due before the right of the plaintiffs’ attached. In that case the right of the defendant to a set-off would' have been, perfect under the statute. The cases in which the court will interfere to declare a set-off in equity are stated in Hatch v. The Mayor (11 W. D., 135), to be: Those, where one debt is contracted on the faith of another, or where there is an agreement between the *99parties that one debt shall be discounted from another, or where there is a rule of law on which to base its action, or where there is some intervening equity that renders the interposition of the court necessary for the protection of the demand.
I find no authority either in law or equity giving support to the defendant’s claim of set-off in this case. The plaintiffs are entitled to judgment on the case presented for decision.
Present — Learned, P. J., Bocees and Boardman, JJ.
' Judgment for defendant on submission that certificate of deposit is set-off against note, with costs.