Hovey v. Morrill , 61 N.H. 9 ( 1881 )

Courts of law and of equity have the power to set off mutual judgments, one against the other, so far as either will apply. The power is an equitable one, to be exercised in the interests of justice, and is not derived from the statutes governing the right of set-off of one claim against another in suit, or of executions in which the plaintiff in one is the defendant in the other. Under the statutes, to enable one party to set off a claim against another in suit, the claims must be mutual to and from the same persons in the same right and capacity, and liquidated or determinate by computation. Independent of any statute, mutual judgments, although not founded on mutual debts, will, on equitable principles and to prevent injustice, be set off against each other. Brown v. Warren, 43 N.H. 430. When the party claiming the benefit of a set-off could not avail himself of the right in the trial of the action, if justice requires it the cause may be continued or execution stayed until the claimant obtains judgment, which may then be set off against the other. Hutchins v. Riddle, 12 N.H. 464; McQuesten v. Bowman, 17 N.H. 24; Smith v. Woodman, 28 N.H. 530. In exercising the power of setting off mutual judgments, the real and not the nominal parties are considered; and if one judgment has been, in good faith and for a valuable consideration, assigned to a third person before application for a set-off is made, such third person is the real party in interest, and no set-off can ordinarily be allowed. Perkins v. Thompson, 3 N.H. 144; Wright v. Cobleigh, 23 N.H. 32; Goodwin v. Richardson, 44 N.H. 125; Makepeace v. Coates, 8 Mass. 451; Ames v. Bates, 119 Mass. 397; Zogbaum v. Parker,55 N.Y. 120; Ramsey's Appeal, 2 Watts 228; Williams v. Evans, 2 McCord 203.

Cases often occur in which the set-off of one judgment against another is allowed, regardless of a prior assignment of one to third person. Such cases are, where the assignee has taken the judgment charged with notice of the right of set-off as an existing defence (Rowe v. Langley, 49 N.H. 395); where, through insolvency of the assignor at the time of the assignment, the party claiming the right of set-off had no other means of collecting his debt (Gay v. Gay, 10 Pai. Ch. 369, 375, 376); and where, in anticipation of an application to make the set-off, the assignment was made for the purpose of defeating the right. Duncan v. Bloomstock, 2 McCord 318. These cases may be regarded as exceptions to the rule, and so decided on the sufficient ground that injustice would be done in any other way; or they may be regarded as not within the rule, and that the assignments under the circumstances of those cases could not have been made in good faith. In all cases where the assignment is without consideration, not in good faith, or fraudulently made to defeat the application, the court will direct the set-off to be made. Cross v. Brown, 51 N.H. 486; Hurst v. Sheets,14 Iowa 322; Russell v. Conway, 11 Cal. 93; Morris v. Hollis, 2 Harr. (Del.) and; Duncan v. Bloomstock, supra, and note to the case in 13 Am. Dec. 728.

The power of set-off being equitable will be exercised in all cases to promote substantial justice, and rests in the discretion of the court. Rowe v. Langley, supra 397; Simson v. Hart, 14 Johns. 63; Brown v. Hendrickson,39 N. J. Law 239, Burns v. Thornburgh, 3 Watts 78; Baker v. Hoag, 6 How. Pr. 201. Whether the set-off was allowed at the trial term as a matter of right, or upon equitable grounds as a matter of justice, does not appear from the case. The question being one of justice resting in the judgment of the court upon all the facts at the trial, the case is discharged, to be disposed of at the trial term on the suggestions made.

Case discharged.

SMITH and CLARK, JJ., did not sit: the others concurred.