Mead v. Gillett — 19 Wend. 396

Majority

p. 397

Mead vs. Gillett.

NEW-YORK,

May, 1838.

Headnote

Where an action is brought upon a contract (other than a negotiable promis-' sory note or bill of exchange) which has been assigned, in the name of the assignor for the benefit of the assignee, the defendant can set off only such demands as existed against the assignor and in good faith belonged to the defendant at the time of the assignment; demands subsequently acquired cannot be set off, although the defendant become the holder of them without notice of the assignment.

Error from the Chenango common pleas. A suit was commenced in a justice’s court in the . name of Henry Mead against Edwin D. Gillett, The plaintiff declared on a promissory note, not negotiable, dated Ilth February, 1834, made by the defendant, whereby he promised to pay Henry Mead $25,50, by the 1st day of June next after the date of the note. The defendant pleaded the general issue and gave notice of set-off. On the trial of the cause, the defendant admitted the making of the note declared upon, that J. B. Clark was the owner thereof, he having purchased the same of the payee on the 12th February, 1834, and that the suit was brought for his benefit in the name of the payee. The plaintiff on his part admitted that on the sixth day of March, 1834, the defendant obtained a judgment in a justice’s court against Henry Mead for $21,37^, in an action on the case ; and further admitted, that at the date of the note Henry Mead was indebted to the defendant $2,62£, which by mistake was omitted to be credited to the defendant at the time. On this evidence the justice, on the 18th July, 1835, rendered judgment against the plaintiff for the costs of suit. The common pleas of Chenango on certiorari affirmed the judgment, and the plaintiff thereupon sued out a writ of error.

p. 398

J. C. Clark, for plaintiff in error. r

W. S. Sayre, for defendant.

By the Court,

We do not see how, under the provisions of the statute, 2 R. S. 234, § 50, sub. 8, the set-off in this case can be allowed, as the defendant had not a demand existing against the nominal plaintiff at the time of the assignment of the note to Clark. The judgment in his favor had not then been obtained; besides, it was a judgment for a tort, and until its rendition he cannot be considered as having a demand within the meaning of the statute of set-off.

The section above referred to authorizes a defendant in an action founded upon a contract (other than negotiable paper) which has been assigned to a third person, to set off a demand belonging to him in good faith before notice of the assignment ; but it must be a demand which was in existence against the plaintiff at the time he made the assignment. A debt accrued subsequently is impliedly excluded; the legislature undoubtedly believing in such case that the equity of the assignee was the strongest, even in the absence of notice to the defendant. . The distinction is new and the reason for it not obvious, where the defendant has purchased the demand with a view to apply it in satisfaction of a demand held against him ; the time when it accrued does not seem at all important in balancing the equities of the parties. The fault lies rather with the assignee in not giving previous notice of the assignment, thereby leaving the defendant to believe the plaintiff to be still the owner of the demand. The language of the statute, however, is explicit and the rule imperative upon the courts. In this particular case the defendant can set up no such equity as we have alluded to, because the demand is one that has subsequently accrued to himself, his ownership not being occasioned by the supposition that the plaintiff still held the note in question.

Judgment reversed?