Adams v. Leavens

| Conn. | Jul 15, 1849

Waite, J.

Willes and Avery mortgaged certain property to the plaintiffs, and afterwards mortgaged the same property to Henry C. Tyler, who entered into possession, and leased it to the defendants, for the term of one year, at a stipulated rent of twelve hundred dollars, payable quarterly. By a subsequent arrangement, made by the plaintiffs, the defendants and Tyler, it was agreed, by an instrument in writing, that the rent should be paid to the plaintiffs, and the amount applied toward the extinguishment of the debts due to the plaintiffs from Wittes and Avery.

By the terms of this contract, the defendants, upon enjoying the use of the property, according to the provisions of the lease, became the debtors of the plaintiffs, and liable to pay them the stipulated rent. And what would be the situation of the parties, provided the plaintiffs had made no assignment?

Before the suit was commenced, which was not until after the whole rent became due, the plaintiffs had failed and become insolvent; and the defendants had paid, and taken up from the bank, the two bills of exchange which the plaintiffs had accepted. By the provisions of the statute, they would clearly have a right to set off the amount of these two bills, against the plaintiffs' demand for rent, and recover the balance.

The circumstance that the demand for the rent grew out of a lease of the property mortgaged by Willes and Avery, and that the amount of that rent was to be applied toward the extinguishment of the debts for which the property was mortgaged, can make no difference, as to the defendants’ right of set-off. The rent was payable to the plaintiffs for their own benefit, and not to Willes and Avery; and with the latter it is immaterial in what manner that rent is paid, whether by the acceptances of the plaintiffs, or in the legal coin of the United States. In either case, the payment will enure to their benefit. The defendants, in such case, would owe the plaintiffs the amount of the rent; and the plaintiffs would owe the defendants the amount of the two bills of exchange. The debts would be mutual debts; and as the plaintiffs are insolvent, the statute authorises the set-off.

Such would be the effect had no assignment been made by the plaintiffs. But they have made an assignment to Douglass, both of their mortgages and their demand for rent. What effect has this proceeding upon the rights of the defendants? Douglass took the claims subject to all the equities existing at the time the assignment was made and perfected. Whatever payments had been made upon the mortgages, while they remained the property of the plaintiffs, would operate as such, after the transfer to Douglass; and whatever right of set-off existed, at that time, would continue, notwithstanding the assignment.

Had the defendants retained possession of these bills against the plaintiffs, and not indorsed them to the bank, their right of set-off as to both claims, would have continued; and Douglass could recover nothing upon the contract for rent.

But before the assignment was made to Douglass, the defendants had indorsed their bills to the Quinebaug Bank, and parted with their interest in them. The plaintiff's, in consequence, ceased to be the debtors of the defendants, and became indebted to the bank. And had Douglass, immediately upon the assignment, given notice to the defendants of the transfer to him, the defendants would have had no debt to set off against the claims for rent.

But Douglass, for a period of more than two months after the assignment, omitted to give that notice; and, in the mean time, the defendants had paid and taken up from the bank, one of the bills, and of course, at the time they received notice, they were the lawful holders of the bill, and, as against the plaintiffs, were entitled to a set-off.

In order to make the assignment to Douglass effectual, and prevent any intervening equities, it was necessary for him to give the defendants notice of that assignment, within a reasonable time. Van Buskirk v. Hartford Fire Insurance Go. 14 Conn. R. 144. Bishop v. Holcomb, 10 Conn. R. 446.

Until that was done, the defendants had a right to treat the claim for rent as a debt still due to the plaintiffs. They might well take up the bill for five hundred dollars, which they had indorsed to the bank, and hold it, to apply on the demand against them for the rent, without taking any measures to enforce the collection against the plaintiffs.

But the other bill stands upon different ground. When the assignment to Douglass was perfected by the notice, that remained the property of the bank, and the defendants had no interest in it, which they could setoff, even if they had, at that time, been sued by the plaintiffs. The bank stood in the same situation, with respect to the larger bill, which the defendants did, in respect to the smaller one. Both held by indorsement from the drawers. The right of set-off was in the holder, and not in the indorser.

With respect to the presumption arising from the joint sale of property, made by the plaintiffs and Douglass, the law, in such case, in the absence of all other evidence, presumes that it was so made, because the vendors were joint owners and equally interested. It is however a mere presumption, liable to be rebutted, by other evidence, showing a different interest.

We do not, therefore, discover any reason why a new trial should be granted to either party.

In this opinion the other Judges concurred.

New trial not to be granted.