Court Opinion

ID: 9750119
Source: CourtListenerOpinion
Date Created: 2023-08-28 14:20:38.910345+00
Date Added: 2024-06-11T07:26:02.928177
License: Public Domain

Weintraub, C. J.
(concurring). I join in the opinion' of Mr. Justice Proctor hut add some further views, in part in response to the dissenting opinion.
The dissent speaks in terms of the right of “setoff” ins the event of insolvency. I think the concept is irrelevant.
Setoff deals with claims arising out of separate, distinct transactions. The common law did not recognize the right of a debtor to offset an independent claim he had against his creditor arising out of another transaction. That rule being manifestly unfair, equity intervened to permit the offset, 47 Am. Jur., Setoff and Counterclaim, § 10, pp. 714-716, and the insolvency of the plaintiff was an occasion for such equitable intervention, 47 Am. Jur., Setoff and Counterclaim, § 17, pp. 720-721. Equity required “mutuality” with respect to the claims to satisfy the concept of the justice underlying an equitable right to offset. In that regard, it is usually held that a fiduciary may not offset a demand he has as a nonfidueiary against the beneficiary. The reason for that limitation is readily understandable; a fiduciary should abide by his special trust, and if the beneficiary becomes insolvent, it would be inequitable to permit the fiduciary to gain an advantage over another creditor through the vehicle of a trust obligation, he had assumed.
But the issue here is not one of setoff. We are not dealing with claims arising out of distinct transactions. Rather we are dealing with cross-claims under a single contract. Technically, the applicable concept is called “recoupment.” A recoupment defends against the very claim asserted by a plaintiff, disputing the plaintiff’s right to recover some or all of what he demands. It is thus defensive, and, unlike the setoff, recoupment was recognized by the common law. 47 Am. Jur., Setoff and Counterclaim, § 9, pp. 713-714. To illustrate, if a building contractor seeks to recover *84the contract price, the owner who claims the contractor failed to perform or performed improperly may assert a recoupment seeking to defeat or reduce the claim because of nonperformance or poor performance. The owner pursued by or on behalf of the contractor does not resort to the equitable doctrine of “setoff” when he contests the contractor’s claim. And of course it would be absurd to say that a creditor of the contractor, or a receiver in the event of the contractor’s insolvency, could claim a position better than that of the contractor with respect to the contractor’s alleged claim against the owner.
Thus the doctrine of setoff has nothing to do with the case at hand. We have mutual promises in a single contract. The wife agreed to transfer title to the tax refund checks to the husband, and the husband agreed to pay moneys to her for herself and the children. The question is whether equity should order her to transfer title to the checks notwithstanding that her husband was in default in his promises. It would be odd indeed to say she had to turn moneys over to him when moneys were due from him under the same contract. I see nothing to drive a court to that anomalous result. See Woodhouse v. Woodhouse, 15 N. J. 550 (1954).
The husband bargained for the opportunity to file a joint tax return. As a necessary incident, he gave her a grip upon any refund which might be payable. He did not bargain for a promise that she would transmit the refund even if he should be in default in his dollar obligations to her and the children. It would have been strange to ask her for that covenant and it would be remarkable if she gave it. The natural agreement would be that any asset of his which thus came into her hands would be applied to his broken promise. Yet we are asked to interpolate a covenant that her promise was “independent” of his, to be performed despite his default under the contract. Nothing could be further from her probable intent, or from his. I would not visit upon the wife and children an obligation *85so contrary to the demands of fair dealing, an obligation which, as I have said, the husband did not obtain and sensibly could not have sought.
If the husband himself had asked the help of a court of equity to compel her to endorse the check notwithstanding his own default, short shrift would have been made of that application. Sensitive to the justice of the situation, equity would have seen to it that the moneys, thus available, were applied to his performance under the contract. To that end equity would easily conclude she was entitled to claim her share of the legal title to the checks as security for the payment of what was due her.
And if equity would so hold as between the parties to the contract, I am at a loss to understand how a creditor of the husband can claim a different result. It would bo novel indeed to alter the terms of a contract at the behest of a creditor. I think it elementary that a creditor, or a representative of creditors in the case of insolvency, stands in the shoes of the party to the contract. If there is no net sum due their debtor, there is nothing for them to take.
I think there is still another ground upon which the wife would be entitled to prevail at least in part. N. J. S. A. 3A:24-2 provides for the order in which expenses and debts of a decedent shall be paid and the stated order controls if the estate is insolvent, N. J. S. A. 3A:24— 37. The fifth category is:
“Judgments entered against the deceased according to the priority of their entries respectively.”
The claims which here compete with the wife’s are judgments held by other creditors. If the wife holds a “judgment” against the decedent, her judgment is first in time.
I see no reason to say her judgment is not a judgment within the meaning of the statute. A judgment nisi was in fact entered. The agreement negotiated by the parties was incorporated in the judgment and was “hereby approved, subject, however, to the continuing jurisdiction of *86this Court to make subsequent award of alimony as the circumstances warrant.’ The agreement called for the husband to support the wife and their three children at a stated rate. Among other things, the husband agreed to maintain insurance on his life for the benefit of the children to the extent of $25,000 for each of them.
That a support judgment remains subject to modification upon change in circumstances, N. J. S. A. 2A:3A-23, does not militate against the fact that the judgment is a judgment. The record shows a motion was filed on March 10, 1967 to have the husband held in contempt for failing to pay arrears and to compel him to perform the provision with respect to life insurance. The matter was continued because of the husband’s illness and on August 30, 1968 the court ordered “that so much of Plaintiff’s Motion as seeks to fix the amount of arrears and to adjudge the Defendant in contempt be and the same are hereby denied” but ordered further that the wife is granted leave to serve written interrogatories “upon the Defendant directed to his earnings, income and financial affairs and that the aforesaid matter be and the same is hereby continued without date and until said interrogatories are served and answered.” We note that although the court declined to fix the amount of the arrears on that contempt application, the court did not wipe out the arrears or reduce the amount of the support obligation. The husband never sought a modification of the judgment. And of course the judgment was not vacated.
The question arises whether the wife’s claim is other than one upon a “judgment” because the amount of the arrears was not fixed. It is important to note what is not involved. The question is not whether arrears must be fixed for other purposes, such as to obtain a writ of execution, or to obtain a lien on real property,1 or to command *87full faith and credit in another jurisdiction. We are concerned with priorities under a statute controlling the distribution of an insolvent estate, and the question is whether what is undeniably a judgment should be said to be something other than a judgment within the intendment of that statute because the amount of the arrears was not fixed by another order. I see no reason why it should matter whether the arrears were thus fixed.
Nor would I assume the Legislature meant to denigrate a judgment stemming from an obligation to support one’s family. The obligation to support one’s family should be able to hold its own in this milieu. It perhaps should be mentioned that a bankrupt will not be discharged of his liability “for alimony due or to become due, or for the maintenance or support of wife or child.” 11 U. S. C. A. § 35(a) (7). See Weimore v. Markoe, 196 U. S. 68, 25 S. Ct. 172, 49 L. Ed. 390 (1904). This exclusion rests upon a concern for the dependents rather than upon the premise that such dependents ought not to share in the bankrupt’s estate. The objective is to leave the bankrupt fully obligated to pay. But when, as in the case at hand, the insolvent estate is that of a decedent, the dependents of course would not be aided by exclusion in the distribution of what remains. Concern for them is expressed by permitting them *88to claim what remains along with other creditors on a basis equal to theirs. To that end a judgment for support should be treated as what it is — a “judgment.”

When an abstract of a decree nisi was filed with the clerk of the former Supreme Court under section 44 of the Chancery Act of 1902 *87(now N. J. S. A. 2A:16-18, 19), the installments of alimony became liens on real property as the installments matured. Stoy v. Stoy, 41 N. J. Eq. 370 (E. & A. 1886) ; Warren v. Warren, 92 N. J. Eq. 334 (Ch. 1921) ; see annotation, 59 A. L. R. 2d 656, 674-675 (1958). Those cases have never been overruled. In Rooney v. Rooney, 102 N. J. L. 551 (Sup. Ct. 1926), it was held that a lien could not be claimed under a docketed final decree for divorce because it did not contain the order for alimony, that order being in the decree nisi which had not been docketed. Rooney distinguished Stoy and Warren, and I assume on that ground, thus accepting their holding that a lien would arise as the installments matured under a docketed decree nisi. In Joseph Harris & Sons, Inc. v. Van Loan, 23 N. J. 466, 470 (1957), we said that although alimony and maintenance judgments do not “resemble judgments at law in the pecuniary obligations they impose at the time of their pronouncement, * * * they can take on that form as the alimony from time to time accrues,” citing Warren.