Gutchess v. Daniels , 58 Barb. 401 ( 1870 )

By the Court, Johnson, J.

The referee held, as a conclusion of law, that the prior indebtedness from the plaintiff’s assignors to the defendants, was not a valid set-off) and could not be allowed against the claim assigned for one half the profits of the cargo of wheat. At the time the wheat was shipped by the plaintiff’s assignors to the defendants, to be sold on commission, the former were indebted to the latter in the sum of $4403.81, which was then due. It had been agreed between them that the plaintiff’s assignors should, through the summer of 1867, ship grain to the defendants, to be purchased with funds to be furnished by the defendants, and sold by them on commission, and that one half the net profits should be applied by the defendants upon the old indebtedness, and the other half paid over to the said assignors by the defendants, and not otherwise' applied. This agreement did not deprive the defendants of the right to set off enough of their claim to extinguish the demand in suit, in the hands of the plaintiff. Their demand against the plaintiff’s assignors was due at the time of the assignment. It was a proper demand to be set off! The action was upon a demand which would have been the subj ect of set-off. There is nothing in the agreement as found, which could have prevented the defendants from commencing an action to recover their demand against the plaintiff’s assignors at the time of the assignment, or when this action was commenced. The statute, therefore, gave to the defendants the right to set off their demand. (2 R. S. 354, § 18.)

[Fourth Department, General Term, at Syracuse, November 14, 1870.

It has been repeatedly held that an agreement like the one found in this case did not debar the defendant of his right of set-off (Downer v. Eggleston, 15 Wend. 51. Eland v. Karr, 1 East, 375. Cornforth v. Rivett, 2 Maule & Selw. 510. McGillivray, v. Simpson, 9 Bowl. & Ry. 35. S. C., 2 Car. & P. 320. Barb. Law of Set-Off, 93, 137. 2 Pars, on Cont. 249. 1 Wait’s Law and Prac. 966.)

The case of McGillivray v. Simpson, (supra,) is quite like the case at bar, and it was held that the agreement was not binding upon the defendant, so as to deprive him of the legal rights he possessed, of lien and of set-off. In . every case where there is a good cause of action, and also a valid claim, which is the subject of set-off, in the hands of the defendant, both being due, there is a mutual violation of the obligation to pay.

The statute of set-off proceeds upon the equitable principle of not allowing one party to recover from another, money due, while at the same time he withholds from such other that which is legally and equitably due from himself. The exception to the conclusion of law was, therefore, well taken, and the judgment must be reversed. .

Judgment reversed, and a new trial ordered; costs to abide the event.

Mullin, P. J., and Johnson and Talcott, Justices.]