Schermerhorn v. Anderson

Edmonds, J.

There are two objections to the set-off claimed in this suit: 1. Because the demands are independent of, and in no wise connected with, each other, so as to render them the subject of an equitable set-off; and 2d. Because the attorney has a lien on the judgment recovered at law, superior in its claim to the equity of the defendant in that suit. As to the first point, it is undoubtedly true, that equity exercises a jurisdiction, as to set-offs, beyond that conferred by the statute. When there is no connection between the demands, then the rule in equity and at law is the same. (2 Story’s Eq. Jur. § 1434.) But if there is a connection between them, equity acts upon them, and allows a set-off under particular circumstances, when at law it would not be allowed. ( Whitaker v. Rush, Amb. Rep. 407. Rawson v. Samuel, 1 Craig & Ph. 161.) It is conceded, on all hands, that the demands mentioned in this suit could not be set off at law nor in equity, under the statute. To be set off in equity, under its extra-statutory jurisdiction, there must be a connection between the demands. What connection is necessary to render them the subjects of an equitable set-off, is the question. They both flow from the same contract, and they are owing by the parties who are bound by that contract. , That is the extent of their connexion. Is that enough ? The case of Rawson v. Samuel, (1 Craig & Ph. supra,) was in both these respects like this; and it was urged by the counsel that they were connected, within the rule. But the lord chancellor, in determining it, held that as one was for an account of transactions under the contract, and the other for damages for a breach of it, the object and subject matters were totally distinct; and that the fact that the agreement was the origin of both, did not form the necessary bond of union. The Connection necessary to found this jurisdiction upon is defined by Lord Mansfield to be where the nature of the transaction consists of a variety of receipts and payments, debts and credits, where the balance only was the real debt due. (Green v. Farmer, 1 Bl. Rep. 651.) By Lord Loughborough, Ch., it is defined to be, where there are mutual credits between the parties which cannot be set off at law. (James v. Kynnier, 5 Ves. 108;) and by Lord Ch. Cowper, in Lanesborough v. Jones, (1 P. Wms. 325,) to be cases of mutual credit.

This case, then, resolves itself into this: that these demands being distinct and independent, and not connected with each other, are not the subjects of an equitable set-off; and if as independent demands they may be set off against each other, under the statute, the remedy is at law. And in either event, this bill must be dismissed with costs.