Wells v. Stewart

By the Court,

HaNd, J,

This case involves the construction of a portion of our statute of set-off.- On the 26 th of May, 1845, Wells owed Stewart, on account, over $75, and on that day he purchased a valid negotiable note against Stewart for $59, but which did not become due until in July thereafter. Two days after Wells became owner of the note, Stewart assigned his property to trustees for the benefit of his creditors, which assignment included his account against Wells. The question of notice does not arise. Wells owned the note before the assignment, and if it is a proper set-off, the assignees took the account subject thereto. So, on the other hand, if it cannot be set.off, Wells lost nothing by his ignorance of the assignment until March, 1846., if such was the fact. The whole matter turns upon the eighteenth section of the statute. (2 R. S. 354.) Not upon the third and fourth subdivisions of that section, as has been suggested, but upon the eighth. That reads as follows : “ If the action be founded upon a contract other than a negotiable promissory note, or bill of exchange, which has been assigned by the plaintiff, a demand existing against such plaintiff, or any assignee of such contract, at the time of the assignment thereof, and belonging to the defendant in good faith before notice of such assignment, may be set ofij to the amount of the plaintiff’s debt, if the demand be such as might have been set off against such plaintiff or such assignee while the contract belonged to him.” In our opinion the last part of this clause is fatal to the plaintiff in error. At no time while this account belonged to Stewart■ could this note have been set off against the account. Had Stewart sued Wells, on the account, on the day he made his assignment, or had the assignees sued him within some weeks afterwards, the note would not have applied. The words if the demand be such,” do not apply to the nature only, but also to the condition or state thereof. This case bears no analogy to those of bankrupts and insolvents. In those cases, justice requires that all the creditors should share in the estate of a debtor, who may be absolutely discharged of all his debts.

It is suggested that the defendant is at least entitled to a dividend on his note. The case, I think, does not properly present this point for our consideration. The proceedings under the assignment had not been closed. To settle that trust here, would be trying an issue wholly collateral.

The judgments must be affirmed.