Mason v. Knowlson — 1 Hill & Den. 218

Majority

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Mason vs. W. Knowlson. W. Knowlson vs. Mason.

Headnote

A party, to have the right of setting off one judgment against another, on motion, must be the absolute owner of the former in his own right; especially as against persons to whom the defendant therein has assigned the other judgment.

M., being indebted to K., procured from T. a negotiable note against K.; afterward K. assigned the demand against M., who, on being informed of the assignment, proposed to the assignees to set off the one demand against the other, which the latter refused. Then M. sued the note, and before he obtained a verdict, the assignees sued. him in IC.’s name, on their demand. The latter suit . was tried before M. perfected his judgment; but M., though he continually urged, the assignees to a voluntary allowance of his set-off, did not attempt to enforce it in their suit; and judgments were finally rendered on both demands. Some facts appeared, tending (though obscurely,) to show, that M. was a nominal' holder of the note for Ti’s benefit; and the affidavits of M. and T. did not deny this, except by stating, in general terms, that the note was transferred bom fide and absolutely, for a good and mluable consideration, &c. Held, that un'der these circumstances, the inference of M. not being the holder of the judgment ' upon the note in his own right, was too strong, to warrant the court either in ordering a set off of the judgments, or a feigned issue to try the question of fact.

Had M. endeavored to get the note allowed as a set off, in the suit against him, and been defeated, it seems a feigned issue might have been awarded.

A set off of a judgment, upon motion, will not be refused, merely because the party has neglected an opportunity to set off the- subject of the judgment, or the judgment itself, on a trial. Semble.

A set off of a debt due from an assignor, will not be allowed, as against his assignee, unless the defendant acquired it bom fide, before notice of the assignment.

Motion on the part of Mason, to set off judgments. The affidavits on the side of Mason, made out the follow

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ing case. Mason, on the 15th June, 1838, purchased a promissory note against W. Knowlson, payable to A. Thomas or hearer, and commenced his suit upon it Nov. 1st, of the same year. The cause was tried in April, 1839, on a plea of the general issue, and notice of a set off against Thomas; and a verdict was rendered for Mason, the plaintiff, of $956,97. Judgment thereon was entered May 6th, 1839, for damages and costs, $1017,46.

On the 1st of March, 1839, W. Knowlson commenced a suit against Mason, for a cross demand, which he might have set off in the first action. Previous to this, Mason had offered W. Knowlson to set off their mutual claims, and pay the balance due, which the latter refused to do, declaring he had assigned his demand to Samuel Lightbody and Richard Knowlson. Mason then repeated the offer to S. Lightbody and R. Knowlson, and their attorneys, which was again refused. It was again repeated to the attorneys, after they had commenced the cross-suit, and again declined. Mason then interposed a plea of the general issue, and.tender of the balance, offering again to pay, which was declined. The cause Was noticed for trial at the April circuit, 1840, when it was referred. The parties agreed on a balance for the referees to report, and Mason again repeated his offer, which was again declined; and judgment was perfected against him in the name of W. Knowlson, as plaintiff, for $1398, Jan. 28th, 1841. It was not denied hy Mason, that he had full notice of the claim by Lightbody and R. Knowlson, to be assignees, in season to have interposed his claim, and litigated his right of set off in the suit brought by them, in the name of W. Knowlson.

By affidavits on the part of W. Knowlson, (this motion being resisted in behalf of his assignees, Lightbody and Richard Knowlson,) it appeared that the claim in favor of W. Knowlson had been absolutely assigned to them, July 3d, 1838, for a valuable consideration; after which Mason had offered to set off the note he had before obtained of Thomas. The affidavits also tended to show, though

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not very clearly, that Mason had obtained the note of Thomas on condition that he might look to Thomas for reimbursement of what he had paid for it, if he did not succeed in setting off the note against Knowlson. The terms of the affidavits on Mason’s side, respecting the manner in which he obtained the note, sufficiently appear in. the opinion of the court.

E. A. Graham & S. Beardsley, for the motion.

C. A. Mann, contra.

Clearly, the regular course for Mason was to have set off the note he obtained of Thomas against the cross-suit of Knowlson. This he might have done, notwithstanding his own action; and then his right to set off would have been tried in the proper place} by a jury, or by the referees. The verdict he obtained operated but as a liquidation oi7 the amount; and w-ould have been evidence under a plea or notice proposing to set off the note. (Baskerville v. Brown, 2 Burr. 1229.) The whole case might then have been heard through witnesses on the stand. If the assignees of Knowlson had discontinued or refused to proceed to a trial or hearing, still the right to set off in some form, if there existed any originally, might have been kept unimpaired. It was impossible for the assignees to avoid being met with it on bringing their claim to a trial, had Mason insisted upon it. Instead pf doing so, knowing that W. Knowlson disclaimed all interest in it, that the shit was by the assignees, as the real parties, that they repudiated the proposition to set off, and insisted on direct payment of the whole, (thus intimating a desire to try whether the note was really his, or interposed merely for the benefit of Thomas,) he perfected his own1 judgment, leaving the assignees to do the same thing with theirs. I will 'not say this is an estoppel; but it certainly shows very little hope of being able to make out a set off by such evidence as would have been competent upon a trial. I find

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it entirely settled, that if this demand of Thomas was holden by Mason, to be set off for the benefit of Thomas, by arrangement between them, the latter must be regarded as the real owner; and the demand could not have been, nor can it now be set off; at least, not as against Wm. Knowlson’s assignees. (Fair v. M’Iver, 16 East, 130. Satterlee v. Ten Eyck, 7 Cowen, 480. 2 R. S. 278, 2d ed., § 32, sub. 7, 8)^[1] There seems to have been a constant struggle, from the time when Mason obtained the note, to induce a voluntary set off by W. Knowlson and his assignees. Mason looked upon a set off as his only mode of obtaining payment; yet he submits to a report against him, knowing that W. Knowlson’s assignees were the real parties to the suit, claiming in defiance of the set off. Such a circumstance leads the mind Very strongly to infer a collusive arrangement; and would seem to call for, at least, a very clear case, to overcome the inference. But without showing any satisfactory reason why he omitted to try his- right, at the proper time, Mason comes, on his own affidavit, stating generally, that he was the owner of the note, from the 15th of June, 1838, Thomas swearing that he then bona fide and absolutely transferred it, for a good and valuable consideration. Neither of them specifically deny, that it was taken to be set off for Thomas; neither state what the consideration was, in kind or amount; nor whether any was paid; nor if any, whether, oil failure to set off, Thomas was to refund. On the contrary, there is evidence of Mason’s declarations, tending to show that he had become a nominal holder, for the benefit of Thomas. As the case stands, neither, would have been competent witnesses; but I doubt whether the claim would have availed against a cross-examination of Thomas before a jury, even on his being released, and made technically admissible; though I am inclined to think I should have awarded an issue, had not the plaintiff passed by' the forum where alone any thing like a satisfactory examination of Thomas or other wit

(a) (a) fa) See Barbour's Law of Set Off, 37, 8.

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nesses could be had. As the case stands, on the evidence, I think it too strong against Mason to warrant my interposing at all.

I put the case on the evidence. I do not mean to say, that we will not set off a judgment on motion, merely because the subject of the judgment, or the judgment itself, might have been set off on a trial, though there are dicta in Philipson v. Caldwell, (6 Taunt. 176,) which look that way. It is always right that compensation should be made by a set off; and where there is no previous dispute that the claims are in right of the parties, or no notice of any such dispute, the set off mayas well be made on motion, as in any other way; and the books on set off say it may. (Montagu on Set Off, 10. Babingt. on Set Off, 104.) But the 2 R. S. 278, 2d ed., § 32, sub. 7, 8, as well as decisions in this court before the statute, recognize an assignment, and take away all right to set off a debt of the assignor against the assignee, unless the defendant acquired it bona fide, before notice of the assignment. If he did, he may then set off by notice or plea. The assignee becomes a real party, known as such to the law ; and Mason, in the present instance, having notice of the assignment, and that his right of set off was denied, wilfully refusing to try the question in the proper place, but going on himself to judgment, and then coming here on affidavits unsatisfactory in themselves, and made still weaker by opposing proofs, presents a case, on which I think it safe to say, he is not entitled to relief, or any farther opportunity to try his right.

Motion denied.