Somerset Colliery Co. v. John , 219 Pa. 380 ( 1908 )

Opinion by

Mr. Justice Stewart,

This was a proceeding by scire facias on a mortgage. On the trial defendant offered to set off against plaintiff’s demand two distinct claims held in his own right against the mortgagee. Part of the offer was to show that at the time the mortgage was given, these claims being then in existence, it was agreed between the parties that they should be adjusted when the mortgage fell due and in connection with its payment. The offer was rejected on the ground that it tended to contradict or change by parol the written instrument on which the plaintiff relied. This was a misapplication of the rule. In no sense would the evidence under the offer contradict or vary the terms of the mortgage. If the claims embraced in the offer were such as could be properly used by way of set-off under our defalcation act, the agreement between the parties that they might be so used, was of no consequence whatever. The question was, were they such claims ? If they were, the evidence supporting them should have been admitted, leaving it to the jury to decide as to its sufficiency, under proper instructions. Mortgages are not excepted out of the general defalcation act, and they may be reduced by way of set-off just as other evidences of indebtedness. Defendant’s offer was to prove two distinct claims by way of set-off, first, a liquidated indebtedness of $8,000 arising on written articles of agreement by which the appellee became bound to pay to the appellant this specific sum upon a certain default, which appellant proposed to prove had occurred ; and second, a claim for unliquidated damages for failure on part of appellant to operate certain leased coal mines according to the terms of its agreement. With respect to the first, defendant’s right to set it off, providing his proof be adequate and the claim a liquidated one, is not open to doubt. This right he would have under the statute. The second being a claim for unliquidated damages, and therefore not of equal dignity with the mortgage, his right of set-off with respect to it, if any such right exists, must be derived from the agreement he alleges with respect to it. The law denies the right of set-off where the claim is for damages arising ex contractu, and the damages are not capable of liquidation by any known legal standard. “ A debt or the damages which can be set off as an independent counterclaim must be such as a jury can find and liquidate in the ordinary way just as if the defendant were a plaintiff suing in debt, assumpsit or covenant:” Russell v. Miller, 54 Pa. 154.

Our cases are quite consistent, however, in holding that even such claims may be applied as a credit or set-off where the parties have so agreed. It is only necessary to refer to Hopkins v. Stockdale, 117 Pa. 365. The only assignment of error relates to the rejection of defendant’s offer, and it is sustained.

Judgment reversed, and venire facias de novo awarded.