1 Paige Ch. 585 | New York Court of Chancery | 1829
The Chancellor:—In the case of Miller v. The Receiver of the Franklin Bank, (ante, 444,) this court decided
An overdrawing is a debt due to the bank, and if the person who has overdrawn his account was, at the time the bank stopped payment, a bona fide holder of the bills in his own *right, the same rule of set-off must be applied. The evidence on which the receiver should act in allowing set-offs should be such as to satisfy him that the debtor could sustain such off-set in a court of justice, if a suit was brought against him. If the receiver thinks proper to rely upon the affidavit of the party, he should' at least require him to state when, where and from whom he received the bills, and under what circumstances.
Where the debtors and their sureties are insolvent, and only able to pay a part of their debts, it will be no injury to the creditors of the institution, if the receiver takes Middle District bills in payment; but in all such cases the receiver should estimate such bills at the probable amount of dividend which would be obtained thereon; that is, if the debtor is able to pay 75 per cent, of his debt, he should not be permitted to pay in bills at par, when they are in fact worth less than seventy-five per cent, in good money.
If bills of the bank were taken to exchange, and remained on hand at the time the bank stopped payment, they should be returned; but if the agent had parted with the bills, it would be manifestly unjust to allow him to receive Middle District bills afterwards to off-set.