Lockwood v. Beckwith

6 Mich. 168 | Mich. | 1858

Martin Ch. J.:

Two questions are raised by the parties interpleading, for our determination: 1st, Whether Thomas is entitled to set off the one-half of the judgment obtained on what is called the Enos contract, being about two thousand dollars, against the note for two thousand dollars, in Beckwith’s hands; and, 2d, Whether he is entitled to set off the one thousand dollar acceptance of the Hunters against such note,

The claim to set off the one-half of the judgment obtained on the Enos contract, is based upon the proposition that the firm of W. C. & A. A. Hunter was interested in, the contract, and was of course bound by the judgment, and liable to contribute towards its satisfaction. An ex-, amination of the testimony satisfies us that no such liability exists. W. C. Hunter never had any interest in that contract, was never a party to it, and is of course not bound by the judgment. A. A. Hunter was individually interested in the contract, and it was his private adventure; there is no evidence that W. C. Hunter ever had any knowledge. 'of, or participation in, it, or that he was regarded by any "one as connected with it, until this claim of set-off was made. While it is true that a partnership may be bound ■b.y a transaction in the name of one partner, as well as by the joint name, if it be within the scope of the partnership 'business, yet this is only true when the transaction is one in behalf of the .partnership, and not of a member. If a member enter into a transaction in his own behalf, which is within the scope of the partnership business, his co-partner may insist that it is a fraud upon him, -and claim the benefit resulting from it-; yet this is a right which the partner can alone assert, and is not available to third parties for the purpose of fixing a liability upon the partnership, when ■'such claim has not been asserted. Nor, under such circumstances, will the acts and declarations of the partner actually engaged in the transaction in his own name, bind the partnership so as to affix a liability upon it. As the transaction is ostensibly and .primarily his own, and in fraud of his co-partner, -if he chooses so to regard it, A. A. Hunter can not add to this fraud the further one of making the partnership liable upon his individual adventures, by his voluntary acts and declarations.

It is further insisted that Thomas is entitled to have the 'Amount of the one thousand dollar acceptance set off -against this note.

There is no evidexxce in the case tending to show for what purpose, or uxxder what circumstances, the acceptance was .givexx. All we kxrow is the simple fact that Thomas, on the 25th of July, 1850, drew upon the Hunters for oxxe thousand dollars, at sixty days, and that the draft was accepted by them. We are not even informed in whose favor the draft was drawn — in fact, the presumption is that it was in his own favor, as he alleges that he held the acceptance at the time of the assignment by the Hunters to Beckwith, and it had then some thirty days to run. It may have been ’made -as accommodation paper, and, this failing, the accept-mice remained in Thomas’s hands. Whatever may have been the fact, the Court will infer nothing in favor of this claim; for the relief being purely equitable, and beyond that given by the statutes of set-off, the party asking it must affirmatively show the existence of those facts necessary to raise the equity. Although at law the acceptance is prima facie evidence of funds in the hands of the acceptor, yet equity requires something’ more than a prima facie case upon which to act, in cases requiring a departure from the statute in affording the remedy. Thomas, it must be remembered, is, as to this claim of set-off, in the position of one seeking relief; for there is no pretence that he has actually paid the two thousand dollar note, or any part of it. ITe asks the Court to appropriate the amount of that acceptance upon the note; and the onus is cast upon him to establish his equitable, title to such relief.

Now, at law, he had, at the time of the assignment by the Hunters to Beckwith, no right to set off the amount of this acceptance against the note, as it was not due; and it is upon their rights, as they then existed, that we are. asked to adjudicate. Has he any such equitable right? As the case is presented to us, we have only evidence, at the most, of the existence of cross demands between them, one. only of which was due. It appears that in May, 1849, the. note for two thousand dollars was given by Thomas to the Hunters, and that, in July of that year, he assigned to them the securities out of which this controversy arises. This note is certainly not evidence of any prior dealings, nor of the existence of any mutual credits between the parties. Hpon this point of their dealings, there is again no testimony. Thomas alleges that the note was given- for the security of a balance of his account with the Hunters; but we have no evidence that any such account ever existed, and in his assignment of the securities,, he alleges that it was given for borrowed money; and so Beck-with insists the fact to. be. Nor- is there testimony of' any subsequent dealings or credits between Thomas and the Hunters. The evidence is altogether silent upon this point also. The only thing which clearly appears, is the fact that Thomas assigned certain demands to secure this two thousand dollar note; but what is their amount and value, is not shown nor stated. Whether they amounted to two thousand dollars, or exceeded that sum, we can not ascertain — all we know, is, that only eight hundred dollars has yet been collected out of them. From this fact, certainly, no presumption of equity can arise in favor of this claim of set-off. The existence of mere cross demands is no ground for this relief.

Nor does the fact of the Hunters’ insolvency and assignment before the acceptance fell due, of itself, raise an equity of set-off, although it is a circumstance which, in connection with the fact of the existence of a mutual credit, will justify such set-off. Although there is much doubt thrown over this branch of the law, and conflict of authorities, yet we think the true rule to be, that the debt must have existed as a mutual credit, at the time of the assignment to Beckwith, to authorize the set-off. The equity must attach to the demand, and not to the person of the debtor. Judge Story, in 2 JSq. Juris. §1435, says, that “independently of the statutes of set-off, courts of equity, in virtue of their general jurisdiction, are accustomed to grant relief in all cases, where, although there are mutual and independent debts, yet there is a mutual credit between the parties, founded, at the time, upon the existence of some debt due by the crediting party to the other. By mutual credit, in the sense in which the terms are here used, we are to understand 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.” It has been repeatedly said that, in the matter of set-off, courts of equity follow the law, and will not allow set-off in cases where the law will not, unless there be special equities growing out of tbe transaction itself, requiring it; and in this case we discover none.

The decree of the court below must be reversed, and a decree entered for Beckwith, in accordance herewith, with costs.

Manning and Christiancy JJ. concurred. Campbell J. did not sit in this case, having been counsel for one of the parties.