Court Opinion

ID: 5470842
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:37:41.250353+00
Date Added: 2024-06-11T08:33:18.311644
License: Public Domain

Barrett, J.
A statutory set-off, on bill filed, is a matter of strict right. Where the demands on both sides are liquidated by judgment, the case is brought within the provisions of the statute, and no other equity is needed.
That is not this case; for when the present action was commenced, the plaintiffs’ demand, although mature, was not liquidated by judgment.
There is a class of cases, however, not specially provided for in the statute, in which equity affords relief. Even before the statute, courts of chancery were accustomed to allow set-offs where there were mutual credits or where the demands were connected (Story Eq. Jur., secs. 1434, 1435). This was upon the ground either of the presumed intention of the *485parties, or of what is called a natural equity (Id.). In this state, it is settled, by a long line of decisions, that where the defendant is insolvent cross-demands, although independent, will be enforced. Where that element, insolvency, comes in, it is not necessary that the plaintiff’s demand should be liquidated by judgment (Gay agt. Gay, 10 Paige, 369; Barber agt. Spencer, 11 id., 517; Knapp agt. Burnham, 11 id., 333; Pignolet agt. Geer, 19 Abb. P. R., 264), nor that the defendant’s demand should even have matured. It is sufficient if the plaintiff’s demand be due (Lindsay agt. Jackson, 2 Paige, 581; Bradley agt. Angel, 3 Comst., 475; Smith agt. Felton, 43 N. Y., 419; Smith agt. Fox, 48 id., 674).
The contention that if the demand be not reduced to judgment, it must, at least, be undisputed or liquidated by a note or similar obligation is inadmissible. In Knapp agt. Burn-ham (ubi sup.), there was an open account as well as promissory notes, yet the chancellor observed, “ that the defendants were not without remedy, if they could establish the fact that the complainant was insolvent, so that they could not recover these demands against him by an ordinary suit at law.”
In Smith agt. Felton and Smith agt. Fox, the demands sought to be offsets were money on deposit with bankers.
Again, to require an undisputed claim would practically put an end to the right of equitable set-off. Why should a defendant admit, when mere questioning would throw the plaintiff out of court % The line is really drawn at uncertain damages, such as rest in the sound discretion of a jury (Duncan agt. Lyon, 3 Johns. Ch., 358; Livingston agt. Livingston, 4 id., 292; Hepburn agt. Hoag, 6 Cow., 613).
The set-off (against a judgment) of a demand, which has not been thus liquidated, will only be allowed on bill filed. It will not be allowed on motion in a court, either of law or equity. The reasons are obvious; and if this distinction is kept in mind, the cases will be found to be entirely harmonious.
It is quite clear, both upon principle and authority, that *486when the Messrs. Coudert took the assignment of the. verdict, the plaintiffs’ right of equitable set-off had already attached.
The cross-demands grew out of the same contract, and Alfaro was insolvent. The Messrs. Coudert knew these facts and they took, therefore, subject to the equity in question. Indeed, without such knowledge, the result must have been the same — on general principles applicable to the assignment of a non-negotiable chose in action.
The assignment was not in consummation of an original agreement between attorney and client, by which the former were to have the verdict in payment for their services. Unfortunately no such agreement was made.
The case, therefore, is not brought within the principle of Zogbaum agt. Parker (55 N. Y., 120) and like cases.
But quite independent of the assignment, there is the attorney’s lien for the costs. That, at least, can be protected. In Nicoll agt. Nicoll (16 Wend., 446) the bill was filed to enforce a statutory set-off, and it was held that the lien could not be let in to obstruct the legal rights. “ On motion,” said Coweit, J., “ the courts proceed without the statute; on bill filed or trial at law, they are within it and must obey it.” That docti’ine has since been -repeatedly followed. But we have seen that the present case is not within the statute of set-offs, and that the plaintiffs’ rights flow from the inherent powers of a court of equity “ to put a stop to proceedings injurious or unconscientious ” (Stimson agt. Hart, 14 J. R., 74), and to do what “ equity and justice demand” (Smith agt. Felton, ubi sup.). It was only where courts of equity were called upon to apply the statute of set-off that the power to protect the attorney’s lien was denied. Where the appeal is to inherent equity, Dunkin agt. Vanderburgh (1 Paige, 622) and Gridley agt. Garrison (4 id., 653) asserting such power, are still applicable.
As assignee of the verdict, the attorneys’ equity is inferior to that of the 'plaintiffs; but their equitable lien for the costs is superior and paramount.
*487The payment of the judgment is no bar to relief. Such payment was involuntary. It was compelled after suit brought. It is a familiar principle that when a court of equity has acquired jurisdiction for one purpose, it may retain it generally; also, that when the whole merits are before the court, it will proceed and do complete justice between the parties by disposing of all questions between them.
“The jurisdiction having once rightfully attached,” says Stobt, “ shall be made effectual for the purposes of complete relief.”
It may be added that the injunction to restrain the enforcement of the judgment pendente lite was properly granted, and its dissolution ex parte must have been inadvertent or without careful consideration.
There must be judgment for the plaintiffs declaring them entitled t.o an equitable set-off, to the extent of the verdict and interest, and decreeing payment to that amount, but, under all the circumstances of the case, and as the plaintiffs only succeed in part, without costs.