Wells v. Stewart — 3 Barb. 40

Majority

p. 40

Same Term.

Before the same Justices.

Wells vs. Stewart.

Headnote

Where a suit is brought upon an account, by the assignees thereof, in the name of-the assignor, a promissory note of the assignor, held by the defendant at the time, of the assignment of the account, but not then due, cannot be set off against such account.

Error to the Fulton common pleas. Stuart sued Wells before a justice of the peace and recovered a judgment, and Wells appealed to the court of common pleas, where Stuart again recovered, and Wells brought a writ of error to this court to reverse that judgment. It appeared on the trial, that on the 14th day of April, 1845, Stewart gave one Pete)- Coyne a nego,-.

p. 41

tiable note for $59, payable in ninety days, which by subsequent endorsements became the property of Wells on the 26th day of May, 1845. That on the 28th day of May, 1845, Wells owed Stewart, on account, $75,70, which account on that day was assigned by Stewart for the benefit of his creditors. The accounts between them, in all, on both sides, amounted to about $800, and the balance was not ascertained until the 13th day of March, 1846. The common pleas refused to allow the note, as a set-off to the account, and the plaintiff recovered for the whole balance; to which decision the counsel of Wells duly excepted. There was a question of fraud in the assignment, put to the jury, which it is not important to notice here. The. cause was submitted on written arguments, by

George Yost, for the plaintiff in error.

A. McFarlin, for the defendant in error.

By the Court,

This case involves the construction of a portion of our statute of set-off.- On the 26 th of May, 1845, Wells owed Stewart, on account, over $75, and on that day he purchased a valid negotiable note against Stewart for $59, but which did not become due until in July thereafter. Two days after Wells became owner of the note, Stewart assigned his property to trustees for the benefit of his creditors, which assignment included his account against Wells. The question of notice does not arise. Wells owned the note before the assignment, and if it is a proper set-off, the assignees took the account subject thereto. So, on the other hand, if it cannot be set.off, Wells lost nothing by his ignorance of the assignment until March, 1846., if such was the fact. The whole matter turns upon the eighteenth section of the statute. (2 R. S. 354.) Not upon the third and fourth subdivisions of that section, as has been suggested, but upon the eighth. That reads as follows : “ If the action be founded upon a contract other than a negotiable promissory note, or bill of exchange, which has been assigned by the plaintiff, a demand existing against such plain

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tiff, or any assignee of such contract, at the time of the assignment thereof, and belonging to the defendant in good faith before notice of such assignment, may be set ofij to the amount of the plaintiff’s debt, if the demand be such as might have been set off against such plaintiff or such assignee while the contract belonged to him.” In our opinion the last part of this clause is fatal to the plaintiff in error. At no time while this account belonged to Stewart■ could this note have been set off against the account. Had Stewart sued Wells, on the account, on the day he made his assignment, or had the assignees sued him within some weeks afterwards, the note would not have applied. The words if the demand be such,” do not apply to the nature only, but also to the condition or state thereof. This case bears no analogy to those of bankrupts and insolvents. In those cases, justice requires that all the creditors should share in the estate of a debtor, who may be absolutely discharged of all his debts.

It is suggested that the defendant is at least entitled to a dividend on his note. The case, I think, does not properly present this point for our consideration. The proceedings under the assignment had not been closed. To settle that trust here, would be trying an issue wholly collateral.

The judgments must be affirmed.