Partch v. Russell , 199 Iowa 1049 ( 1925 )

Appellant is the receiver of the First Trust Savings Bank of Sibley, Iowa, an insolvent banking corporation. The cause of action is for rent accruing on an oral lease entered into by appellee with the receiver on or about the 8th day of September, 1922, from month to month, at a monthly rental of $40. The amount claimed to be due is $200. The defense pleaded is that the insolvent bank was indebted to appellee at the time the lease was entered into, in the sum of $349.17, which appellee had on deposit therein at the time the bank became insolvent. He asks that the deposit be set off against the amount due as rent. The court below allowed the offset. Appellee relies upon Partch v.Boyle, 197 Iowa 1314; Brown v. Sheldon State Bank, 139 Iowa 83;Brown v. Cairns, Bolton Foster, 107 Iowa 727; and other similar cases in which the right of offset was sustained.

Appellant contends that the doctrine of the above cases is not applicable to the present controversy, for the reason that the indebtedness for rent did not exist at the time the bank became insolvent and its affairs were placed in the hands of a receiver. We think this contention is sound. The very point upon which the decisions in the cases cited rested, was that the indebtedness to the bank existed at the time it became insolvent. In the Partch case, which reaffirmed the doctrine of Brown v. Cairns, Bolton Foster, supra, emphasis was placed upon the fact that the lease there involved was in writing, for a fixed and definite period, and therefore there was an existing indebtedness. We are not disposed to extend the doctrine of the cited cases. The lease now under consideration was oral, and from month to month only, and was entered into after the receiver was appointed. It is our conclusion that the right of offset did not exist as to the subsequently accruing installments of rent.

It follows that the judgment and decree of the court below is — Reversed.