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termediate collecting agent is not rendered admissible as a set-off by a mere usage between the banks to credit collections on account and settle such balances at regular intervals.431 So, if bills are remitted by A., to be discounted and applied to a particular purpose, the party receiving the proceeds cannot set off a debt of A., who be came bankrupt before they were received.432 If a note, however, is made and delivered to a broker "for sale or advance," a purchaser advancing the amount by a credit given to the broker may set off the amount due to the broker. 433

Set-Off against Trustee.

§ 1860. A note held by the defendant as trustee cannot be set off in an action brought against him individually.434 If an indorsee sues as trustee for the drawer, he will be subject to any set-off available against the drawer.435 So, it has been held that, where the claim sued upon belongs to a beneficial owner who is not a party, a set-off against him is a good defense.436 But, in an action on a note against A., he cannot set up a judgment recovered for his use in the name of B.,437 or a sealed bill made to B., as “agent of the ereditors of A." 438 Where A. sues on an account for the use of B., the defendant may set off a note of A., acquired by him before notice of the assignment to B., the burden being on the defendant to show when he obtained the note.439

431 Hackett v. Reynolds, 114 Pa. St. 328, 6 Atl. 689.

432 Buchanan v. Findlay, 9 Barn. & C. 738.

433 Carman v. Garrison, 13 Pa. St. 158.

434 McDonald v. Harrison, 12 Mo. 447. So, a fortiori, if he holds the note merely as collecting agent for the plaintiff, Lewis v. Sheaman, 28 Ind. 427; or if the note to be set off is then actually in the plaintiff's hands as pledgee, Reilly v. Rucker, 16 Ind. 303.

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435 Thornton v. Maynard, L. R. 10 C. P. 695.

436 Farwell v. Tyler, 5 Iowa, 535. So, the debt of a lunatic ward may be set off against a note made to his guardian as such. Nickerson v. Gilliam,

29 Mo. 456.

437 Harrel v. Petty, 11 Rich. Law (S. C.) 373.

438 Stryker v. Beekman, 8 N. J. Law, 209.

439 Smith v. Ewer, 22 Pa. St. 116.

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Set-Off against Administrator.

§ 1861. Where an action is brought by an executor in his own name, the defendant cannot set off a demand which existed against the testator at the time of his death.440 So, where one incurs a debt

to an administrator for property purchased at the administrator's sale, he cannot set off a note made by the intestate; **1 although such set-off has been allowed in some states.442 And if a legatee gives his note to an executor for money borrowed of the estate, it will be subject to a set-off of an amount due the maker from the estate, as against a purchaser after maturity.43 But although the adminis trator represents the maker's interest in the estate to be worth a given sum, and he purchases land and gives his note for an amount. less than such sum, expecting to use the claim as a set-off, it will not be admissible as such.444 So, where suit is brought by an administrator for the balance of the intestate's bank account, a note by the intestate cannot be set off; 445 especially if such note was purchased after the intestate died insolvent.**6 And, in a suit by an administrator for a debt due the intestate in his lifetime, the defendant cannot set up a payment made by him, as surety for the intestate, after his death.** So, a prior partnership account, which is already barred by statute, cannot be set up by the defendant against his note given to the executor of the deceased partner for a purchase of his interest.*

448

440 Merritt v. Seaman, 6 N. Y. 168.

441 Bales v. Hyman, 57 Miss. 330. Although the estate was solvent. Bizzell v. Stone, 12 Ark. 378. So, even a judgment against the deceased cannot be set off, since it would affect the priority of other judgments. McLean v. Leach, 68 N. C. 95. But a subsequent agreement to credit the account of the maker against the heirs of the deceased is not a set-off, but a new agreement, and discharges the note. Heckenkemper v. Dingwehrs, 32 Ill. 538.

442 Mills v. Lumpkin, 1 Kelly (Ga.) 511. Especially against an insolvent estate, and in the hands of an indorsee after maturity. Ransom v. McClees,

64 N. C. 17.

443 Whedbee v. Reddick, 79 N. C. 521.

444 Floyd v. Rust, 58 Tex. 503.

445 Bosler's Adm'rs v. Bank, 4 Pa. St. 32.

446 Irons v. Sayles, 5 R. I. 264.

447 Minor v. Minor's Adm'r, 8 Grat. (Va.) L.

448 Grew V. Burditt, 9 Pick. (Mass.) 265.

Set-Off by a Joint Debtor.

§ 1862. Where suit is brought against a debtor, he cannot set off a debt due to himself and another jointly.449 But if one debtor is sued alone, on a joint note made by himself and another, he may plead the nonjoinder of the other, and set off a debt due to both.450 And where a suit is brought against one surviving partner, a debt due to both may be set off.451 In a suit on a joint and several note, against one of the several makers, the debt due from the plaintiff to the other maker cannot be set off. 452 And where a note is made by one partner to another, for the purchase of his interest in the firm, and is signed by a creditor of the firm as surety, the surety cannot, after the payee's death, set off, against an indorsee, his own claim against the firm; but he will be liable to the indorsee as surety, and the maker and surviving partner as principal debtor.453

In like manner, if the action is brought against joint debtors, a debt due to one cannot be set off.454 So, in an action against two joint and several makers, a set-off in favor of one maker, who claims to be principal, is not admissible.455 And even in Illinois, where the statute makes joint obligations in general joint and several, a partnership note is a joint obligation, and not subject to a set-off in favor of one partner. 450 So, in Massachusetts, as to an indorsement by a

449 McKinley v. Winston, 19 Ala. 301; Miller v. Florer, 19 Ohio St. 356: Proctor v. Cole, 104 Ind. 373, 3 N. E. 106, and 4 N. E. 303. So, too, in equity. Reed v. Whitney, 7 Gray (Mass.) 533.

450 Stack wood v. Dunn, 3 Q. B. 822.

451 Byles, Bills, 369; Slipper v. Stidstone, 1 Esp. 47, 5 Term R. 493.

452 Jennings v. Shriver, 5 Blackf. (Ind.) 37.

453 Walker v. Eyth, 25 Pa. St. 216.

454 Robbins v. Brooks, 42 Mich. 62, 3 N. W. 256; Menaugh v. Chandler, 89 Ind. 94; First Nat. Bank of Newcastle v. Nugen, 99 Ind. 160; Bullard v. Dorsey, 7 Smedes & M. (Miss.) 9; Burgwin v. Babcock, 11 Ill. 28; Henderson v. Lewis, 9 Serg. & R. (Pa.) 379; Powell v. Hogue, 8 B. Mon. (Ky.) 443; Ritchie v. Moore, 5 Munf. (Va.) 388. Unless an express agreement to that effect is shown, Davis v. Notware, 13 Nev. 421; or unless the maker claiming the set-off is the principal and the other maker only a surety, Dodge v. Dunham,

41 Ind. 191.

455 Great Western Ins. Co. v. Pierce, 1 Wyo. 45; Lenoir v. Moore, 61 Miss. 400.

456 Coates v. Preston, 105 Ill. 470.

stranger, made by the statute a co-maker.457 In some states, however, one of two joint defendants may set off a demand due to him alone from the plaintiff." 458

Set-Off against a Joint Creditor.

§ 1863. Where a suit is brought by joint payees, the debt of one cannot be set off.459 So, against a partnership claim, the individual debt of one partner cannot be set off.460 So, in a foreclosure by the joint holders of a mortgage, the note of one cannot be used as a setoff.4 461 But where suit is brought by two, on a note held for one of them, his individual debt to the maker at the commencement of the suit may be set off. 462 So, where A. sues as the surviving partner, his individual debt may be set off.46

In like manner, where A. sues in his sole right, his liability jointly with another on their joint note, or joint indorsement,*

457 Brooks v. Stackpole, 168 Mass. 537, 47 N. E. 419.

465

458 Kent v. Rogers, 24 Mo. 306; Austin v. Feland, 8 Mo. 309; Robinson v. Furbush, 34 Me. 509.

459 Walker v. Hall, 66 Miss. 390, 6 South. 318. And see Wulschner v. Sells, 87 Ind. 71, where a note to the wife for a consideration moving from the husband was held to be their joint property, and not subject to a set-off against the husband alone.

460 Lovel v. Whitridge, 1 McCord (S. C.) 16; Ross v. Pearson, 21 Ala. 473; Johnson v. Kent, 9 Ind. 252; Scott v. Trent, 1 Wash. (Va.) 77; Henderson v. Gilliam, 12 Tex. 71. But an exception is made in Massachusetts as to dormant partners (Pub. St. p. 982, § 9).

461 Either in favor of the mortgagor or of his grantee, who had assumed the mortgage as part of the purchase-money, after deducting the amount of the note. Williamson v. Fox, 30 N. J. Eq. 488.

462 Forkner v. Dinwiddie, 3 Ind. 34.

463 Holbrook v. Lackey, 13 Metc. (Mass.) 132.

464 Burnatt v. Frazier (Ky.) 40 S. W. 697. But see, contra, where the comaker is deceased, and the note was a joint note, McCarthy v. Sleight (Mich.) 72 N. W. 165; or where the co-maker was the wife of the defendant, and his surety, Abshire v. Corey, 113 Ind. 484, 15 N. E. 685.

465 Plets v. Johnson, 3 Hill (N. Y.) 112; Blankenship v. Rogers, 10 Ind. 333; Duramus v. Harrison, 26 Ala. 326; Robertson v. Parks, 3 Md. Ch. 65; Hilliard v. Walker, 11 Ill. 644. But see, contra, Hoffman v. Zollinger, 39 Ind. 461; Pate v. Gray, Hempst. 155, Fed. Cas. No. 10,794a. So, where both joint debtors against whom the set-off is claimed are insolvent, and the plaintiff purchased the note in suit after maturity, Baker v. Kinsey, 41 Ohio St. 403.

cannot be used as a set-off. If a note made to A. is assigned to B., and the maker recovers judgment, before notice of the assignment, against A. and C., he may set off such judgment, in Mississippi, in a suit brought by B.466 And, although a claim against the plaintiff and another jointly is not matter of legal set-off against the plaintiff suing alone, it may be made so by agreement.467 And a joint and several note may be a set-off against a claim in favor of one of the makers. 468

Set-Off between Partners-Husband and Wife-Against State.

§ 1864. Where a partner gives his note to another partner for the use of the firm, a partnership account against the payee is not within the jurisdiction of the court, and cannot be set off.469 So, if the note of a firm is indorsed to one partner, and transferred by him, even after maturity, to a purchaser for value, who had no notice of the relationship of the parties, an account between the firm and the indorsing partner cannot be set up.470 But where a partnership note to one partner is transferred after maturity, and after the dissolution of the firm, an account of the firm against the payee may be set off, although he had transferred to the other partner all his interest in claims belonging to the firm.471

The debt of a married woman dum sola cannot be set off in an action brought by her husband alone, on a note given to her.472 So, in an action by husband and wife on a note made to her before marriage, the defendant cannot set off a claim for property sold to husband and wife, which constitutes a liability of the husband only.*73

466 Peyton v. Compress Co., 63 Miss. 410.

467 Perkins v. Hawkins, 9 Grat. (Va.) 649; Mitchell v. Sellman, 5 Md. 376. 468 Ferguson v. Millikin, 42 Mich. 441, 4 N. W. 185; Hurdle v. Hanner, 50 N. C. 360. Although already sued jointly against A. & B. Moore v. Andrews, 13 U. C. C. P. 405.

469 Anderson v. Robertson, 32 Miss. 241. So, as against a partnership note to a partner (since deceased). Willis v. Barron (Mo. Sup.) 45 S. W. 289.

470 Young v. Shriner, SO Pa. St. 463.

471 Davis v. Briggs, 39 Me. 304.

472 Byles, Bills, 369; Chit. Bills, 31.

Before marriage, Burrough v. Moss,

10 Barn. & C. 558; or after, McCarty v. Mewhinney, 8 Ind. 513.

473 Smith v. Johnson, 5 Har. (Del.) 40.

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