218 F. 898 | D.N.J. | 1914
(after staling the facts as above). The first question presented by the motion is whether the defendant, who al
In Davis v. Industrial Manufacturing Co., 114 N. C. 321, 19 S. E. 371, 23 L. R. A. 322, this general rule was recognized, and in Knaffle v. Knoxville Banking & Trust Co., 128 Tenn. 181, 159 S. W. 838, 50 L. R. A. (N. S.) 167, the Supreme Court of Tennessee said that, if the relief there prayed for by the petitioning surety were granted, an inequitable result .would be worked against the rule which ordinarily denied set-off where a depositor was in fact a mere surety on the note and it appeared that the principal obligor was solvent. Edmondson v. Thomasson, 112 Va. 326, 71 S. E. 536, Ann. Cas. 1913A, 1301, was decided in accordance -with a like rule. So, also, were the cases of New Farmers’ Bank’s Trustee v. Young, 100 Ky. 683, 39 S. W. 46, and Stephens v. Schuchmann, 32 Mo. App. 333. The Missouri case just referred to was an action by a receiver of an insolvent national bank against an indorser on promissory notes, wherein the indorser sought to set off his deposit in the bank. Section 5242 of the Revised Statutes of the United States (Comp. St. 1913, § 9834) received careful examination by the court, which in interpreting the intent of the statute held that it did not give the indorser of the note credit for the entire amount of his deposit while other creditors had to be satisfied with just what the assets of the bank might be..
In Re Middle District Bank, 1 Paige (N. Y.) 585, Chancellor Wal-worth said:
“If the real debtor is unable to pay, and tbe receiver is compelled to resort to tbe indorser, wbo is eventually to be tbe loser, be bas tbe same equitable .claim to offset bills wbicb be bad at tbe time tbe bank stopped payment. But no sucb offset should be allowed to an indorser where be is indemnified by tbe real debtor, or where tbe latter can be compelled to pay.”
A recent decision in New York, cited by the plaintiff, Borough Bank of Brooklyn v. Mulqueen et al., 70 Misc. Rep. 137, 125 N. Y. Supp. 1034, is to a like effect.
Counsel for the plaintiff refers to the decision of Yardley v. Clothier, admitting that it is in point, in that the indorser of a note was there allowed the offset of his deposit, but would have the court distinguish it from the present case, for the reason that the point that, if the maker is solvent, the indorser cannot set off his deposit was not presented. Possibly the Court of Appeals would recognize the distinction urged, but I gather that the court considered the point that the defendant’s obligation in the case before it was that of an indorser simply, for. such a position had been referred to by the Circuit Court and, moreover, the action was one by a receiver against a defendant as an in-dorser. The Court of Appeals applied the rule that mutual accounts are to be adjusted in such manner that the balance constitutes the debt to be recovered, Furthermore, it is significant that the rule of set-off as declared in Yardley v. Clothier by the Circuit Court was expressly approved by the Supreme Court of the United States in Scott v. Armstrong, 146 U. S. 499, 13 Sup. Ct. 148, 36 L. Ed. 1059.
The present motion to strike out the whole answer is denied, without prejudice, however, to the interposition of another motion by the plaintiff, based upon the view expressed upon the second point discussed in this memorandum opinion.