21 Ind. App. 129 | Ind. Ct. App. | 1898
Appellants brought this action on three promissory notes, executed by Abram D. Clark and Emma Clark, his wife, May 4, 1894, for $500 each, payable to Samuel L. Sulzer in thirty, sixty, and ninety days, respectively, and assigned by Samuel L. Sulzer to appellants November 30, 1894. To the complaint of appellants, which is in ordinary form, the defendants filed separate answers, — Abram D. Clark, in four paragraphs; his codefendant, Emma Clark, in two paragraphs. The first paragraph of the separate answer of Abram D. Clark is the general denial; the second, third, and fourth are in the nature of set-off. The first paragraph of the separate answer of Emma Clark is the general issue; the second, coverture. To
The liability of Emma Clark is not discussed, and the only question, therefore, that we- are called upon to determine, is whether Abram D. Clark is entitled to his set-off, as pleaded, according to the evidence.
Substantially the facts as disclosed by the evidence are as follows: In May, 1894, Samuel L. Sulzer was engaged in the mercantile business in the city of Cannelton, and had been for many years prior thereto. In connection with his store, he "also operated what was known as the “Commercial Bank,” a private concern. At the date above mentioned Abram D. Clark was engaged in the pottery business. Clark had from time to time drawn out of the Commercial Bank various amounts of money, to be used in his business. It was found on the 4th day of May, 1894, that Clark had overdrawn his account in the bank to the extent of $1,500, for which he and his wife executed the three notes now in controversy. After the execution of the three notes, and before the assignment to appellants, one James P. Jackson had deposited with Sulzer, on banking terms $2,500, and on the 12th of November, 1894, Jackson required him to execute his note to him therefor, due in thirty days, and on this note Abram D. Clark and M. P. Casper became sureties; The date
Counsel for appellees insist, however, that independently of the statute appellees are entitled to an equitable set-off. Courts have long recognized “set-off as a natural equity.” Before the statute of set-off, courts of chancery acted upon the doctrine of set-off as grounded upon the principles of natural equity. Barbour in the Law of Set-Off, page 190, says: “If a court finds a case of natural equity, not within the statute, it will permit an equitable set-off, if, from the nature of the claim, or from the situation of the parties, it is impossible to obtain justice by a cross-action,” citing Lindsay v. Jackson, 2 Paige, 581; Piggott v. Williams, Mad. & Gel. 95. In Derby on Counter
The decision of the court in Williams, Adm., v. Helme, 1 Dev. Eq. (N. Car.) 151, is thus stated in the syllabus: “A surety has, in respect of his liability, the rights of a creditor, and upon the insolvency of the principal debtor may retain any funds belonging to him in his hands. Therefore where the. surety owed the principal debtor, who became insolvent, and assigned for value the debt due by the surety, it was held that the latter might retain the amount of his subsequent pay
“But these decisions rest, expressly, upon the ground of the assignor’s insolvency; and consequently
We think it fairly deducible from these decisions that insolvency is a distinct equitable ground of set-off, outside of the statute. It is in evidence that when appellants signed the note in favor of Jackson, as surety for Sulzer, the husband had in mind his indebtedness to Sulzer. He testified: That Sulzer promised him protection. “He would not see us suffer, but would protect us. That I was under obligations to him. That I owed him. I did owe him the note in suit, and $1,800 besides. I would not have signed the Jackson note had I not owed him.” It is apparent, too, that Sulzer requested Clark to become surety on his note for the reason that he was his debtor. Sulzer is insolvent. Clark has already paid the debt owing by Sulzer to Jackson. He is without remedy, unless he is allowed the set-off claimed. The circumstances of the case, we think, entitle him to the benefit of the doctrine cited. The assignment in this case is for the benefit of only three of Sulzers creditors. The assignment gave to the appellants only the rights that Sulzer had in the n'otes in suit. They were past due at the date of the assignment. They were charged with all outstanding equities against them. The evidence shows that at the time of the trial there was due appellants a balance of $11,000, and that they had in their hands property worth $18,950, with which to pay the same. From this it would appear that no harm could come to appellants by permitting appellees’ set-off. It would be inequitable, under the circumstances, to permit them to collect money from Clark for Sulzer and not credit Clark what he paid out for Sulzer. In other words, it would be, in the language of Thurman, C. J., in Fol
Counsel for appellees further contend that as the Jackson note was commercial paper, Sulzer being in solvent at the time it was signed by Clark and Casper, it at once became the debt of the solvent sureties; that, the note being payable in a bank in this State, it was actual payment; so that Sulzer owed Clark one-half of the Jackson note ($1,250) the moment it was delivered to Jackson, November 12, 1894, upon the assignment to appellants, and at the same time Clark owed Sulzer the balance of the notes in suit. Counsel for appellees also claim that the judgment must be affirmed because the evidence is not in the record. The conclusion we have reached renders it unnecessary to consider either one of these claims. We find no error in the record. Judgment affirmed.