159 So. 231 | Ala. | 1935
The main question involved in this appeal is the sufficiency of the defendant's special plea 6.
The plea, when reduced to its final analysis, is nothing but an attempted set-off against the note sued upon, for the reason that the plaintiff, when acquiring the said note, had notice of the insolvency of its assignor, the Ensley Bank. Section 10178 of the Code of 1923 provides: "Paper governed by the commercial law, negotiated before maturity, is not subject to set-off or recoupment." Whatever may be the decisions elsewhere, this court has decided that said section precludes a set-off when the instrument sued on is commercial paper and was negotiated for value before maturity. Manning v. Maroney,
True, we now have the trust fund doctrine in this state, as section 7062 of the Code of 1923 says: "The assets of insolvent corporations constitute a trust fund for the payment of the creditors of such corporations, which may be marshalled and administered in courts having equity jurisdiction in this state." But this is solely a question of equitable cognizance and not available to this defendant in a court of law. Moreover, if the instrument in question be regarded as a part of the trust fund of the insolvent corporation, the defendant would not be entitled to set off its deposit in the bank against the note, for, if the assets be insufficient to pay the creditors, this would, in effect, give it a preference, as the other creditors would only get their pro rata. New Farmer's Bank's Trustee v. Young,
As the defendant's plea 6 was bad and subject to the plaintiff's demurrer, it is unnecessary for us to pass upon the replications to said plea.
The judgment of the circuit court is reversed, and the cause is remanded.
Reversed and remanded.
THOMAS, BROWN, and KNIGHT, JJ., concur. *698