Court Opinion

ID: 6620933
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:29:46.826405+00
Date Added: 2024-06-11T15:58:42.610486
License: Public Domain

SUPPLETORY OPINION, ON REHEARING.
SMITH, P. J.
— The plaintiff’s judgment antedated that of the defendant, and the moment the latter was recovered, the defendant being insolvent, the plaintiff’s equitable right of set-off attached to it and became a right which a court of equity, when its interference is appropriately invoked, will enforce.
The mere fact that the plaintiff and defendant Bow-ring each had a judgment against the other was not suf*166ficient to justify a set-off in equity. A set-off is ordinarily allowed in equity only where the party seeking the benefit of it can show some equitable ground for being protected against his adversary’s demand. 2 Story’s Eq. Juris., see. 1436. Where a party has a plain redress at law, chancery will generally refuse to assume jurisdiction. Where the demand sought to be set-off is certain and definite and the insolvency of the adverse party is admitted, the chancellor has jurisdiction to retain the matter and give full redress' by decreeing a set-off. The rule is founded in reason and justice and will be enforced when a proper case is made out. Field v. Oliver, 43 Mo. 200; Barnes v. McMullin, 78 Mo. 260; Foote v. Clark, 102 Mo. 394; Fulkerson v. Davenport, 70 Mo. 541. And so it has been ruled that if a party seeking the benefit of a set-off show that the adverse party is insolvent, this will be sufficient to justify the intervention of a court of equity to protect him against his adversary’s judgment. And such a case being distinctively one of equitable cognizance it is governed by the principles and rules of procedure applicable to proceedings in equity. Gemmell v. Hueben, 71 Mo. App. 291; Wendover v. Baker, 121 Mo. 273.
There is a great variety of cases asserting the rule and illustrating its application but the underlying and persuading principle which moved equity in all of them was the injustice of compelling the defendant to pay the demand against him and make the uncertain claims of insolvency of the plaintiff when called upon with an execution. Barnes v. McMullins, 78 Mo. 260, and cases there cited; Foote v. Clark, 102 Mo. 398; Gemmell v. Hueben, 71 Mo. App. 291. In all these cases there had to be some fact, such as insolvency or non-residence, disclosing the imminent danger of the defendant being compelled to pay without receiving credit for his cross-demand.
“The right of set-off is not an equity which the original debtor may, at all events, assert against the assignor *167or assignee of the debt, whether he has or has not, notice of its existence. There is no siich equity to have debts set off against each other, which attaches to the debts themselves and travels with them into whatsoever hands they may come; though it is doubtless true that where there are mutual subsisting debts, and either an express or implied agreement of stoppage pro tanto or mutual credit, a court of equity will enforce it against his assignee with notice.” Wolcott v. Sullivan, 1 Edw. Ch. R. 399. The right of set-off does not attach to the" debt itself nor depend upon the mutuality of the debts in their origin as an inherent quality belonging to such debts, but upon the situation and rights of the parties between whom it is sought to be enforced. It is a privilege attaching to the remedy only. Greene v. Darling, 5 Mason 201; Waterman on Set-Off, sec. 17.
It has been held by us that in actions at law where the right of exemption exists, the right of set-off will not overthrow it. Wagner v. Fur. Co., 63 Mo. App. 206; Lewis v. Gill, 76 Mo. App. 504. And so it has been held in a Pennsylvania case (Wilson v. McElroy, 32 Penn. 82), that in an action against an officer for seizure under an execution of property of a defendant exempt by statute, that the execution debt could not be “defalked against the damages” recovered for the wrongful seizure. And we take it that while the chancellor'in enforcing the equitable right of set-off will most generally fol-. low the exemption statutes, yet he will not always do so, for there may be facts and circumstances disclosed which equity and good conscience would require the enforcement of the right notwithstanding the statute. This principle finds illustration in Duffy v. Duffy, 155 Mo. 144, where an insolvent son, the head of a family who owed a debt of record — a judgment to his deceased fa-, ther’s estate — was denied his statutory exemptions until that debt was paid. And in Lietman’s case, 149 Mo. 1.12, it was held that the statute of exemptions could not be invoked by an heir to exempt his interest in the real *168estate of his deceased father as against a debt he owed the estate. The statute of exemptions, though invoked, was by our Supreme Court held inapplicable in each of these cases. And this ruling, it was declared, rested upon the wholesome principles of right and justice.
It seems that Bowring brought an action against the plaintiff carrier for a breach of a contract of affreightment and failed to make out his case, and judgment was given against him for costs. And in another action on the same contract he succeeded in obtaining judgment. It is now insisted that Bowring is entitled to have his judgment satisfied by plaintiff without satisfying that of plaintiff herein against him. The only ground upon which this insistence rests is that Bowring is the head of a family and therefore his judgment against plaintiff is exempt under the statute.
Bowring may well felicitate himself on the forbearance of the court to require of him, in the action in which he recovered the judgment, .to pay the cost that had been adjudged against him in the other suit in which he was unsuccessful as a condition upon which he would be allowed to further prosecute that action. Surely, it can not be that after being allowed to prosecute his several actions without payment of any cost and that after he succeeds in the last one to obtain a small judgment, much less than that previously rendered against him for cost that a court of equity in a proceeding of this kind will refuse to decree that his judgment be set-off by that of the plaintiff herein. It seems that the amount of the cost which Bowring was adjudged to pay plaintiff was due to officers of the court and witnesses and for which the plaintiff was primarily liable under the statute, and that these costs it has paid. The plaintiff has thus paid for Bowring a greater sum than that of his judgment against it, and now to require it to satisfy the judgment against it under such circumstances would be most inequitable and unconscionable.
We can not think that in a case like this the equit*169able right of set-off ought to be denied because the statute of exemption is invoked. A decree that would in effect require the 'plaintiff to pay the insolvent Bowring the amount of his judgment against it before he pays that of plaintiff against him, under the circumstances, if not contra bonos mores, would, in our opinion, be so inequitable and unjust that a chancellor would hesitate long before ordering it to be entered. As between plaintiff and Bowring we see no reason why the equitable doctrine may not be appropriately invoked and applied.
The contention of defendants Hollis and Houts that Bowring had a statutory right to claim and hold his judgment against plaintiff as exempt property, was discussed and disposed of adversely to them in the opinion to which this is suppletory, and as no reason is now seen for a different disposition of it, it must stand undisturbed.
But Hollis and Houts claim that the latter made an agreement with Bowring before any of the several actions were brought against the plaintiff that they were to have one-half of whatever the amount of the recovery should be as a fee for their services therein, and that the assignment was made to secure them as to that. It sufficiently appears from the record that Hollis was entirely familiar not only with the litigation that was carried on between Bowring and plaintiff through all of its various stages, but that he was fully apprised of Bow-ring’s insolvent condition, and he must be held to have had full knowledge of the existence of plaintiff’s judgment at the time of the assignment of Bowring’s judgment against plaintiff. In this State such an assignment gives an attorney no lien on the judgment for his fee (Skinker v. Smith, 48 Mo. App. 91) and even in those jurisdictions where such a lien is given, an assignment of the judgment prior to the motion to have the set-off made will not defeat the right of set-off. Yorton v. Railroad, 62 Wis. 367; Marshall v. Cooper, 43 Md. *17046; Levy v. Steinbach, 43 Md. 212; Waterman on Set-Off, sec. 361. And the reason of the rule is said to be that the assignee attorney stands in no better position than the judgment creditor and is subject to the same equitable rights which existed in favor of the adverse party. Gano v. Railroad Co., 60 Wis. 12; Yorton v. Railroad Co., ante; Graves v. Woodbury, 4 Hill 559; Hovey v. Morrill, 61 N. H. 9; Rowe v. Langley, 49 N. H. 395. And so it has been held in New York that the lien of an attorney given by the law of that State has always been regarded as subject to the equitable right of set-off between the parties. Sanders v. Gillett, 8 Daly 183; Ward v. Wordsworth, 1 E. D. Smith 598; Spencer v. White, 1 Johns. Cases 102; Pinder v. Morris, 3 Caines Rep. 165; People v. Manning, 13 Wend. 647; Brooks v. Hanford, 15 Abb. Pr. 342. And so, too, it has been ex pressly held in Maine and California, and perhaps elsewhere that if the right of set-off had attached at the time of the assignment, as in this case, the assignee must take the demand cum onere with the right of set-off still clinging to it, or, which is the same thing, neither of the parties assigning his judgment to a third party could have defeated the right of the other'to have his judgment set off. McBride v. Fallon, 65 Cal. 301; Pierce v. Bent, 69 Maine 381; Chase v. Woodward, 61 N. H. 79; Langston v. Roby, 68 Ga. 406; Wells, Fargo & Co. v. Clarkson, 5 Mont. 336; Irvine v. Myers, 6 Minn. 562, Crecelius v. Bierman, 72 Mo. App. 355, was a case where there was a motion to set off cross-judgments. It appears' from the report of the case that on a certain date Crecelius had recovered judgment in an action of slander against Bierman for $500, and that afterwards the latter recovered judgment against the former for a much' larger amount. It was sought by Bierman to set-off his judgment against the prior judgment of Crecelius. It was shown that Crecelius had, prior to the bringing of the slander suit, entered into an agreement with his attorney to give him *171for his services in the case fifty per cent of the amount of the recovery, and it was held that this operated as an equitable assignment of one-half of the judgment, citing Schubert v. Hirschberg, 65 Mo. App. 579. But it was further held that as to the judgment defendant, being only an -assignee for a part of the judgment without the consent of the judgment defendant, that the latter was not bound thereby, and that his right to-set off the whole judgment by his cross-judgment was not affected by the equitable assignment of his attorney, citing Bank v. Noonan, 88 Mo. 372; Loomis v. Robinson, 76 Mo. 488; Burnett v. Crandall, 63 Mo. 410; Love v. Fairfield, 13 Mo. 301.
In Black on Judgments, section 954, it is said: “Most of the cases [citing them in note 81] seem to agree in the rule that where a judgment recovered by the plaintiff has been assigned to his attorney in good faith, in payment for his services in the action, the court should refuse to set off against it that recovered by defendant against plaintiff prior to the assignment,” provided the attorney taking the assignment had no notice of such prior judgment. As Hollis had, as has been stated, notice of the prior judgment at the time of the assignment of the latter to him, this rule is inapplicable here. There is much diversity of opinion among the courts as to when or to what extent or under what circumstances one judgment may be set off against another after the assignment to a third party; as may be seen by reference to the cases cited in note 76 to section 954 of Black on Judgments. We have not gone to the great length that many of them have in applying the right. We have gone no further than to declare, if the assignee has notice of the other judgment at the time of taking the assignment, that he will take subject to the equitable right to set it off. Skinker v. Smith, 48 Mo. App. supra.
The plaintiff did not assent to the equitable assignment of Bowring to Hollis of fifty per cent of the amount of the judgment and so it was ruled in Crecelius v. Bier-*172man that such assignment was inoperative as to the plaintiff. So that the claim of Hollis and Houts is entitled to no consideration on account of the prior agreement between Bowring and Hollis, as respecting the fee for his legal services. And since Hollis and Houts at the time of the assignment occupied no situation superior to that of any other creditor, and since they took the assignment as a security for the amount of the fee which Bowring owed to them with full knowledge of the existence of the plaintiff’s prior judgment to which the right of set off attached, it seems clear to us that the plaintiff’s right to set off should have been upheld by the trial court; and accordingly its decree is reversed and cause remanded;
All concur.