Gay v. Gay

10 Paige Ch. 369 | New York Court of Chancery | 1843

The Chancellor.

The excuse for not attending the special term is unquestionably sufficient, as the court for the correction of errors was in session until the first Tuesday in July. The counsel employed to argue the appeals and to resist the defendant’s motion, had therefore very strong reasons for believing that the chancellor would not be able to return in time to hold his special term, at Saratoga Springs, on that day, and that cases noticed for that term must stand over until the third Tuesday in July, under the general rule of the court. It would therefore be a matter of course to let these appellants in to resist the defendant’s motion to dismiss the appeal, and to open the decree made upon the cross appeal ex parte, upon the usual terms, if the substantial equity and justice of the case was with them. But where the proceedings of the other party have been technically regular, and he has obtained a decree or order which is in conformity with the real equity of the case, this court will not open a default, as a matter of favor, to enable these applicants to insist upon mere technical objections; and thus to give them an opportunity to entangle justice in the net of form. I therefore permitted the parties, on the argument of this motion, to go into the merits of the case, not only as to the regularity of the appeals, but also as to the equity of the defendant’s claim to offset the judgments due to him from James P. Gay, against the balance of the copartnership account which was assigned by the latter to the appellants E. A. Jee, A. W. Jee, and P. E. Morrison, pending the suit brought for the settlement of the copartnership transactions.

In relation to the regularity of the first appeal, although the appellant’s solicitor acted under a misapprehension as to the practice, I think the defendant’s counsel is right in supposing that it was not made within the time limited by the statute for appealing from an interlocutory order. The appeal from such an order must be entered, and notice thereof served on the adverse party or his solicitor, within fifteen days from the time that the appellant has notice of such order. And this court, in the case of The New-York Coal Company v. Dyett, (4 Paige's Rep. 274.) decided that where the appellant draws up and enters the order appealed from, he has notice in fact of the order at the time he enters the same. And an order is considered as entered from the time it is drawn up, or settled, and left with the register or clerk to be copied into the records of the court. In this case, the solicitor for the complainants actually drew up the order, as well as the decree, and left them with the clerk; or rather, he laid them before him on his table, to be entered, after showing his draft to the solicitor of the defendant; and without any direction to the clerk to consult such solicitor before entering the same in the records of the court. The order and decree must therefore be deemed to have been entered by the complainant’s solicitor, and at that time ; and the first appeal which was entered on the 27th of May, nineteen days afterwards, was too late. The time for appealing in this case, being fixed by statute, and not by a mere rule of the court, the appeal must therefore have been dismissed, even if the counsel had appeared to oppose the application on the first Tuesday of July ; as the court has no power to extend the time for appealing, in such cases. (1 Barbour's Chan. Prac. 400.)

When the party appealing does not himself enter the order or decree appealed from, he has fifteen days to appeal, after he has notice of the entry of such order or decree, either by the service of a formal written notice on him or his solicitor, or by the service of a copy of the order or decree itself. A mere constructive notice, or even a parol notice of the order, is not sufficient to limit the right of appeal in such a case. (Idem, 399. Wilde v. Jenkins, 14 Wend. 539.) The application to dismiss the defendant’s appeal must therefore be denied, even if the decree entered upon the ex parte argument should be opened.

Again ; I think the whole equity of the caséis with the defendant, in relation to the subject matter of both appeals; although there are some technical difficulties existing as to the manner in which the defendant has proceeded to enforce his equitable right of set off. The right to set-off one judgment or decree against another, by a motion to this court, or by a summary application to the equitable powers of a court of law, only exists in those cases where the debts on both sides had been finally liquidated, by judgment or decree, before the assignment of either to a third party. (Graves v. Woodbury, 4 Hill’s Rep. 559.) Where one debt, therefore, as in this case, is absolutely assigned to a stranger, pending the litigation, and before it is liquidated by a final judgment or decree, the same cannot be set off against the other, on motion, even in this court; where the two debts have no connection with each other. Upon a bill filed in this court for a set-off, the right of set-off does not always depend upon the statute, nor upon the question whether both demands are liquidated by judgment or decree. But if an equitable right of set-off exists, while the parties have mutual demands against each other, because the debt due to the party claiming the set-off is so situated that it is impossible for him to obtain satisfaction of such debt by an ordinary suit at law, or in equity, to recover the same, this court, upon a bill filed, will compel an equitable set-off of one debt against the other. And the insolvency of the party against whom the set-off is claimed is a sufficient ground for the exercise of the jurisdiction of the court of chancery, in allowing a set-off in cases not provided for by the statute, although the demands on both sides are not liquidated by judgment, or decree, so as to authorize’a set-off upon a summary application, by motion. (See Lindsay v. Jackson, 2 Paige's Rep. 581, and cases there referred to.) And where there are cross demands, between two parties, of such a nature that if both were recoverable at law they would be the subjects of legal offset, then if either of the demands is matter of equitable jurisdiction only, the set-off may be enforced in equity. (Clark v. Coit, 1 Craig & Phil. Rep. 154.)

In this case, it appears by the defendant’s affidavit, on which the motion for set-off was founded, and which by the admission of the complainant’s solicitor was served on him on the 1st of February, 1839, that J. P. Gay, the complainant, was then insolvent; that executions against him to a large amount had been returned unsatisfied $ and that the payment of the two assigned judgménts could not then have been enforced by executions thereon. This was two months previous to the assignment of his claim against the defendant in this suit j which assignment was not made until the 1st of April, 1839. Previous to that assignment, therefore, an equitable right existed in favor of this defendant, to have his two judgments set-off and applied^in satisfaction of the balance which should be decreed to be due from him, to the complainant J. P. Gay, on account of the copartnership transactious. And if John S. Gay-had adopted the proper technical proceedings to obtain such set-off, by filing a cross bill, instead of resorting to the informal mode of giving notice of a summary application for a set-off upon the final hearing of the cause upon the master’s report, it would have been a matter of course, upon these facts, to have made it a part of the decree that the amount due upon the two assigned judgments should be offset, against the balance found due from him by the report of the master. The assignees of the subject matter of this suit, therefore, took it subject to this prior equitable right of set-off which existed against it in favor of the defendant in this suit. For the assignee of a chose in action, the assignment of which is available only in equity, takes subject to all the equities which then exist against the assignor. (Ord v. White, 3 Beavan's Rep. 357.)

When the assignees of the original complainant, therefore, were obliged to file their bill in the nature of a bill of revivor and supplement, to revive and have the benefit of the former proceedings, it was competent and proper for the defendant, as he has done, to set up this equitable right of set-off, in his answer, and to claim the benefit thereof at the hearing. Here again, however, the defendant’s solicitor, by a technical slip, relied upon a summary application at the hearing, to obtain his set-off, by a separate order, founded upon aEdavits and documentary evidence of the facts, instead of proving those facts in the usual way, and having the set-off made a part of the decree in the cause. But as there is no doubt as to the facts in the case, and as the defendant has obtained such an allowance of the set-off as he was equitably entitled to, by a slip of the adverse party, it would be inequitable to open the decree upon the appeal, and to grant a rehearing, for the mere purpose of enabling the assignees to insist upon these technical objections to his right of set-off; even if the first appeal had been entered within the time prescribed by the statute. And as no costs were awarded to either party as against the other, in the suit to settle the copartnership account, no equity existed in favor of the complainant’s solicitor to have the costs, due to him from his own clients only, paid out of the balance found due upon the copartnership account •, to the exclusion of a part of the defendant’s right of set-off.

The motion must be denied, with ten dollars costs.