Jump v. Leon, 192 Mass. 511

Jump v. Leon

192 Mass. 511 | Mass. | 1906

Braley, J.

Under R. L. c. 174, § 1, if an action on the promissory notes set out in the declaration had been brought by Bates in his own name, and after his death prosecuted by his executrix, the defendant by reason of the statute could not at law have had by way of set-off the benefit of the counterclaim now pleaded as an equitable defence, although the notes held by him were purchased in the lifetime of the testator, because he did not acquire title until after the commencement of the action. Cook v. Mills, 5 Allen, 36. Backus v. Spaulding, 129 Mass. 234, 236.

By repeated decisions beginning with Little v. Obrien, 9 Mass. 423, it has been settled that the holder of negotiable paper *514indorsed in blank to which he has no legal title, or in which he has no beneficial interest may maintain after maturity a suit thereon against the maker, with the assent of the real owner to whom when recovered he is accountable for the proceeds. Whitten v. Hayden, 9 Allen, 408. Wheeler v. Johnson, 97 Mass. 39. National Pemberton Bank v. Porter, 125 Mass. 333, 335. Spofford v. Norton, 126 Mass. 533. Parks v. Smith, 155 Mass. 26, 31. Prescott National Bank v. Butler, 157 Mass. 548. Regina Flour Mill Co. v. Holmes, 156 Mass. 11. Haskell v. Avery, 181 Mass. 106. New England Trust Co. v. New York Belting & Packing Co. 166 Mass. 42, 45. Fay v. Hunt, 190 Mass. 378. See Towne v. Wason, 128 Mass. 517.

It is unnecessary, however, to decide whether the placing of the notes by Bates in the hands of an attorney at law with directions to collect them but with no further instructions, there being no disclosure of any facts on the evidence which rendered such a course on his part necessary or advisable, constituted a sufficient authorization for him to transfer them to the plaintiff for the purpose of having the action brought in his name; for the exceptions to the refusals to rule that for this reason, as neither the beneficial interest nor legal title passed, the action could not be maintained have not been argued, and must be considered as waived.

This leaves as the only question whether the defendant has a right to an equitable set-off of the unmatured notes. Beyond the mere form in which the present action is cast is the substance of the contractual relations of the parties in interest even if the demands are unconnected, and in equity, or at law, the nominal difference of parties plaintiff, where the litigation in reality is for the sole use and benefit of a party not named in the writ, but whose title is shown to be absolute, is not a bar which prevents the other party from maintaining his claim in set-off. R. L. c. 174, § 5. Commonwealth v. Phoenix Bank, 11 Met. 129, 136. Tyler v. Boyce, 135 Mass. 558, 560. Boyden v. Massachusetts Ins. Co. 153 Mass. 544, 548. Stewart v. Coulter, 12 S. & R. 252.

The notes held by the defendant, apparently as a purchaser for value and in good faith, matured on December 10, 1904, and the maker died on December 12,1904, and a year not having *515elapsed since the appointment of the executrix an action against her cannot be maintained until its expiration. Smith v. Hill, 8 Gray, 572, 574. R. L. c. 141, § 1. No unreasonable delay in bringing an action, therefore, can be imputed, and from the evidence of the executrix it may be inferred that the estate is not solvent, and if before verdict it had been represented insolvent, the set-off claimed could have been enforced although the notes were not due at the date of the plaintiff’s writ. R. L. c. 174, § 5. Bigelow v. Folger, 2 Met. 255. Phelps v. Rice, 10 Met. 128, 131. Aldrich v. Campbell, 4 Gray, 284, 286. The position then in which the defendant is placed is this: he holds valid outstanding promissory notes against an estate the solvency of which is admitted by the executrix to be doubtful, and is unable to enforce them independently, by reason of the special statute of limitations. The equity arising from such a situation is urged by him as a reason why he should be given the opportunity to try the question of the insolvency in fact of the estate, and upon this issue being found in his favor then to set off one debt against the other. In other jurisdictions this equitable right has been held to be created by the fact of insolvency of one of the parties where there are mutual debts similar as to their maturity to those shown in this case, and the relief given is not made dependent on a formal adjudication of the debtor as an insolvent, or a bankrupt. See Ford v. Thornton, 3 Leigh, 695, 698 ; Lindsay v. Jackson, 2 Paige, 581; American Bank v. Wall, 56 Maine, 167; Gay v. Gay, 10 Paige, 369, 376 ; Levy v. Steinbach, 43 Md. 212; Twigg v. Hopkins, 85 Md. 301; Goodwin v. Keney, 49 Conn. 563, 569; Stewart v. Coulter, 12 S. & R. 252; Smith v. Felton, 43 N. Y. 419, 423; Nashville Trust Co. v. Fourth National Bank, 91 Tenn. 336; Ex parte Stephens, 11 Ves. 24; Williams v. Davies, 2 Sim. 461; Agra Bank v. Hoffman, 34 L. J. (N. S.) Ch. 285; Schuler v. Israel, 120 U. S. 506 ; Carr v. Hamilton, 129 U. S. 252, 255; Scott v. Armstrong, 146 U. S. 499; North Chicago Rolling Mill Co. v. St. Louis Ore & Steel Co. 152 U. S. 596 ; Camden National Bank v. Green, 18 Stew. 546, and note; In re Hatch, 155 N. Y. 401.

But in Spaulding v. Backus, 122 Mass. 553, 556, where the doctrine of equitable set-off was fully considered, with a review of some of the earlier authorities, it was said “ that a party, *516whose debt is not due, has no equitable claim to have it set off against a debt of his own, already due, in the hands of a party who is insolvent,” and hence in those of his executor or administrator, where neither the debtor nor the estate has been adjudicated insolvent, and this doctrine was approved and followed in Wiley v. Bunker Hill National Bank, 183 Mass. 495, 497, 498. The rule established by these cases so far as they relate to this question is that if a decree had been passed by the Probate Court declaring the estate of Bates insolvent this defence would have been immediately available, but as the executrix has not chosen to take such action the fact of actual insolvency cannot be shown under R. L. c. 173, § 28, permitting an equitable defence which entitles a defendant to be unconditionally relieved against either the claim, or the judgment, by any form of appropriate relief recognized by a court of equity. Barton v. Radclyffe, 149 Mass. 275, 280. New York, New Haven, & Hartford Railroad v. Martin, 158 Mass. 313. Nash v. D’Arcy, 183 Mass. 30.

But it would be unfortunate if the defendant was finally left without any remedy which a court in the exercise of a sound discretion might grant. If the plaintiff obtained judgment, and then instead of taking out execution brought suit, the exemption of the executrix having expired, and the defendant’ notes having matured, they could be set off under R. L. c. 174, § 5. It is suggested that as this section applies only to debts which may be put in suit, if the defendant recovered judgment against the estate, by reason of the diversity of parties^uch judgments would not be a subject of set-off. The court' will look at substance instead of form for the purpose of administering justice, and in Barrett v. Barrett, 8 Pick. 342, it was decided that judgment in favor of the judge of probate in a suit on a probate bond could be set off against a judgment recovered by the executor in his individual capacity against the legatee for whose benefit the first suit had been instituted. Nor is it requisite that the name of the real party in interest should appear in the record, as this may be shown by oral evidence, and when established a set-off follows with the same effect as if the adverse party had been disclosed by the recitals in the judgment. Sheldon v. Kendall, 7 Cush. 217, 219. See Fiske v. Steele, 152 Mass. 260; Tilton v. Goodwin, 183 Mass. 236. To afford this relief courts, pro*517ceeding according to the common law with jurisdiction of the subject matter and of the parties, have continued cases after verdict until a defendant could obtain judgment on his claim which for any sufficient reason could not have been pleaded in the action, so that ultimately such set-off could be made. Dennie v. Elliott, 2 H. Bl. 587. Barker v. Braham, 2 Wm. Bl. 869. Brown v. Hendrickson, 10 Vroom, 239. Wolcott v. Jones, 4 Allen, 367, 368. Ames v. Bates, 119 Mass. 397. Chipman v. Fowle, 130 Mass. 352, 354. See McLauthlin v. Smith, 176 Mass. 46, 47.

It will be open to the defendant by a motion in the Superior Court for a continuance for judgment to obtain suitable relief, but if such action is not taken, or relief is not granted, then according to the terms of the report, as no error of law is found at the trial, the order must be

Judgment for the plaintiff on the verdict.