223 F. 1010 | 4th Cir. | 1915
W. G. Morris and the firm of R. H. Richardson & Sons, were each general contractors engaged in government work in this community. On the 8th of July, 1910, Morris entered into a contract with the United States for the construction of a building at Portsmouth, Va., known as the “Naval Hospital Building,” and on the 30th of May, 1911, Richardson & Sons contracted with the government for the construction of a building at Fortress Monroe, Va., known as the “Marine Officers’ Quarters.” The two contractors each gave bond to the government for the faithful execution of their contracts; the appellee the American Surety Company becoming surely on each bond. Morris did work and furnished materials as subcontractor under R. H. Richardson & Sons for the Marine Officers’ Quarters at Fortress MDnroe, and Richardson & Sons furnished labor and materials as subcontractors under Morris for the Naval Hospital Building at Portsmouth. Upon the completion of these contracts, which occupied some months, Morris owed Richardson & Sons $1,598.59 for work and supplies furnished the Naval Hospital building, and Richardson & Sons owed Morris $1,-611.60 for work and supplies in connection with the Marine Officers’ Quarters. At this stage, Richardson & Sous were duly adjudged involuntary bankrupts, and in their schedules in bankruptcy made no reference to the indebtedness between themselves and Morris, though as a matter of fact there was a balance of $13.01 due Morris.
The appellees Eackey, Wolcott & Eiphart were duly elected trustees in bankruptcy of .Richardson & Sons, and subsequent to their appointment and qualification this suit was instituted by dhe United States of America, suing for the use of W. J. Morris, against Richardson & Sons, their trustees in bankruptcy, and the American Surety Company, setting up a claim of $3,224. The American Surety Company appeared and filed its pleas of payment, condition performed, and two special pleas of set-off. Plaintiff thereupon joined issue on the first plea, admitted payment on account of said debt, whereby its claim -was reduced to $1,611.60, with interest, and moved to reject the two special pleas of set-off. A jury was waived, and the case submitted to the judge, upon motion to reject said pleas and upon the merits, resulting in the judgment complained of; that is to say, the court-denied the motion to reject" said pleas, and gave the plaintiff judgment for $13.01, the difference between the balance due on the claim sued on and the amount due by Richardson & Sons and set up in the
“Payment or set-off may be allowed, if described in plea or account; when allowed, though, claim against several, and debt only to part of them. In a suit for any debt, the defendant may at the trial prove, and have allowed against such debt, any payment or set-off which is so described in his plea, or in an account filed therewith, as to give the plaintiff notice of its nature, but not otherwise. Although the claim of the plaintiff be jointly against several persons, and the set-off is of a debt not to all but only to a part of them, this section shall extend to such set-off, if it appear that the persons, against whom such claim is, stand in the relation of principal and surety, and the person entitled to the set-off is the principal.”
This statute provides in terms that, where the relation of principal and surety exists, the surety may assert any claim which its principal would have had against the person seeking to recover against such surety, which is this case precisely. The defendant in error was surety for both Morris and Richardson & Sons. Morris sought to make it liable for what Richardson owed him. The surety replied that, while it was true Richardson owed the plaintiff, still the plaintiff also owed Richardson approximately the amount sued for, and that therefore it should not be required to pay money to Morris for Richardson until the former paid to the latter the amount he owed. This is clearly what should be done in the absence of some apparent and overwhelming reason to the contrary. It is what the statute of offset is intended for; and because of its reasonable and equitable character is entitled to be liberally considered. Allen v. Hart, 18 Grat. (Va.) 722; Tidewater Quarry Co. v. Scott, 105 Va. 160, 52 S. E. 835, 115 Am. St. Rep. 864, 8 Ann. Cas. 736.
The position of the plaintiff in error that this plea of set-off should not be entertained, because the same arises out of a transaction extrinsic of the plaintiff’s demand, and for which an action on contract might be maintained by the defendant against the plaintiff, is not well taken. On the contrary, it is just what could be done, and this is especially true under the Virginia statute, where it is sought to make a surety pay money for its principal, which in point of fact is not due, upon an adjustment of transactions between -the parties themselves. 34 Cyc. 625; Burks on Plead. & Prac. 435.
The right of a surety, when sued, to set off any debt due his principal from the plaintiff, is well settled under the Virginia authorities; the cases having gone so far as to allow this to be done, even though
The decision of the lower court is plainly right, and should be affirmed.
Affirmed.