30 S.C. 126 | S.C. | 1889
The opinion of the court was delivered by
The plaintiff, respondent, instituted the proceedings below to enforce a mechanic’s lien for the sum of $205, on certain premises of the defendants, Quesse and Greber, claiming priority over a mortgage of defendant, Young. The defendants answered, denying plaintiff’s claim.
The case was referred to the master. At the reference, on February 10, 1888, when the plaintiff closed his testimony, the defendants, Quesse and Greber, having entered upon the defence, but not closing, the reference was adjourned, and on February 27, 1888, these defendants gave notice that they would move to amend their answer in two particulars, the second of which was to set up, in a supplemental answer by way of equitable defence,
Upon exceptions, his honor, Judge Pressley, concurred in the ruling of the master, holding, with him, that a counter-claim to be available must be one “existing in favor of defendant * * * at the commencement of the action,” and saying : “In the matter of the equitable set-off craved by the defendants, my judgment is that said doctrine should not be so extended as to permit defendants to get advantage of other creditors, or to cast plaintiff in costs, or to defeat his right of homestead, if any exist, and some or all of these results might follow if defendants could set off against the plaintiff a claim purchased by defendants after plaintiff’s suit began.” At the same time, the defendants moved, if there was doubt about the insolvency of the plaintiff, that the case be remanded to the master for additional testimony on that subject. This motion was also overruled.
The main questions raised, in the appeal are: 1st. Were the defendants, Quesse and Greber, entitled to set up this amount of $577.74 as a legal counter-claim to the demand of plaintiff against them of $205? 2nd. If not, could they set it up as an equitable set-off or counter-claim? It is contended by appellants, first, that under the provisions of the code they should have been allowed to set up their claim as an ordinary counter-claim, it being a matter arising on contract, and the action against them also arising on contract, although the claim of -defendants was bought by them after the commencement of plaintiff’s action, and even after -answer had been put in, defending the suit upon other grounds.
It is conceded, that under the old practice and before the adoption of the Code, no claim of set-off arising under such circumstances would have been entertained or considered for a moment, it having been long since well settled that to entitle a debtor when
The appellants’ attorney, however, urges earnestly, that if this claim cannot be set up as a counter-claim under the provisions of the code, that still the defendants should be allowed to do so as an equitable set-off, founding the claim for equitable interference upon the insolvency of the plaintiff. Now, let it be admitted, that plaintiff was, and is, still insolvent, can this position of appellant be sustained ? Can this claim be set up as an equitable claim, contradistinguished from a legal counter-claim? It is true, that in England, and before the adoption of the statutes of set-off, the Court of Chancery had assumed jurisdiction of the matter of set-off, and had made it a subject of equity jurisdiction in certain cases. For instance, in cases of mutual debts and credits con
But in this latter class,of cases, there had to be something more than merely separate and opposing debts.- There had to be some mutuality, this term being used in the sense of some relation or connection or dependence with and upon each other, as, for instance, a knowledge on both sides of an “existing debt due to one party and a credit by the other party, founded on and trusting to such debt as a means of discharging it.” Ex parte Prescott, 1 Atk., 231. This mutuality is explained by Judge Story as follows: If A should be indebted to B in the sum of ¿£10,000 on bond, and B should borrow of A ¿£2,000 on his own bond, the bonds being payable at different times, the nature of the transaction Avould lead to the presumption that there was a mutual credit between the parties as to the ¿£2,000 as an ultimate set-ofT pro tanto from the debt of the ¿£10,000 ; and if the bonds were both payable at the same time, the presumption of such a mutual credit Avould be converted into an absolute certainty. In such a case, the Court of Chancery would have decreed a set-off, even before the adoption of the statutes of set-off, providing for unconnected debts being set off against each other.
And sometimes, too, a joint debt could have been set off in chancery against a separate debt, and conversely a separate debt against a joint one, but in all such cases antecedent to the statute allowing separate and unconnected debts to be set off, the one against the other, the Court of Chancery, before ■ it interfered, required the presence of some peculiar and special equity, demanding such interference, such as a mutual credit in the sense explained above. “Whenever there is a mutual credit between
Now, what special equity do the defendants invoke here ? They rely upon the insolvency of the plaintiff. This, we think, under the authorities, some of which have been cited by appellant, would have been sufficient, under the chancery rule above, to authorize the Chancery Court to decree a set-off, providing that the claim attempted to be set up had been in existence in favor of defendant when the plaintiff commenced action. In Lindsay et al. v. Jackson and McJimpsey (2 Paige, 581), cited by appellants, it was held that insolvency of one of the parties was a sufficient ground for the court to exercise its equitable jurisdiction in allowing an equitable set-off. But the set-off claimed and allowed was in existence in favor of the claimant at the same time with the other debt when the action began. And this, we think, will be found to be the fact in all of the cases, where such set-off has been allowed, on the ground of insolvency, by the Chancery Court as a matter of equity jurisdiction. We have found no case, nor have we been referred to any, where the defendant was allowed to interpose an insolvent claim against his suing creditor, bought up after action brought, and sought to be interposed on the ground of the insolvency of his creditor. The nearest approach to such a case is the case of Aldrich v. Campbell, cited by appellant, and found in 4 Gray, 284, where a negotiable promissory note was purchased, without notice that an action had been commenced on a debt from the purchaser to the maker, and before the notice of insolvency; the note under these circumstances was set up.
How different the equity there from the case before us. Here the claim in question was bought not only after' action begun, but after answer put in and issue joined, and we must suppose, from the affidavit submitted on the motion to amend the answer, with
It is the judgment of this court, that the judgment of the Circuit Court be affirmed.