Russell v. Miller

The opinion of the court was delivered, by

Agnew, J.

A careful examination of the voluminous correspondence and testimony in this case proves that the debts contained in the judgment of Safford & Co. and of Thomas Earp against Andrew Russell were for the indebtedness of Thomas C. Williams, and can be traced into the liabilities aggregated at $53,150, acknowledged by Williams December 24th 1847, and contained in Russell’s detailed statement of December 30th 1847.

This aggregate was the sum of the liabilities of Williams secured by the assignment of his lease to Russell at the time when the latter, on the 27th December 1847, assigned over the lease to Charles Miller & Co. The $1000 note contained in Thomas Mitchell’s judgment I have been unable to trace through the mass of evidence into the statement of December 30th 1847. Possibly it can be, but it is immaterial, as the liabilities of Russell to Safford & Co. on account of Williams, will suffice to raise the material question in this case.

The Safford & Co. claims of $3500 being debts incurred by Russell for Williams before his assignment to Miller & Co. were protected by Williams’s assignment to him, and would follow the lease. But this effect is attributable to the force of Williams’s assignment to Russell, and not of Russell’s to Miller & Co., excepting so far as Miller & Co. took the lease from Russell cum mere. But it is the effect of the advances of Miller & Co. to Russell we are now considering, and this evidently depends upon the fact whether these advances were made upon the security of the colliery under Russell’s assignment to them. It is only by establishing this relation between the debts in suit and the profits of the colliery that these profits can per se go in extinguishment of these debts. The security of the assignment from Russell to Miller & Co. is the only link which couples them together. That assignment was made to secure Miller & Co. for $23,150 liability already incurred, and also for future loans and liabilities for Russell.

But they were not bound by its terms for any particular sum to be advanced or liability to be incurred, and could therefore cease to advance or to incur responsibility, upon the security of the colliery, when they deemed it prudent to stop. If they chose not to add to the burden on the colliery, and to require other security, or even to make it a debt of honor, to be met by Russell at maturity, they could do so. So long as Williams continued to be the owner of the colliery, and his assignment to Russell a security for his debts, it was their interest to suffer their advances to Russell on account of Williams’s liabilities to rest upon that security. But that interest ceased when they became the purchasers, on the 28th May 1849, for any new burden thus cast upon the colliery in their own hands only increased the extent of the liability for the profits to be accounted for to Russell on his assignment. While they might not shake off the liability for profits already accrued, they as owners of the resulting interest in the lease might not wish to diminish that interest by increasing the debt upon it. The case therefore hinges upon the fact whether the advances resulting in the notes in suit were made by Miller & Co. to Russell on the credit of the colliery. If they were then holding the colliery under the assignment as a security for these advances, the profits received from it would attach to these debts, and go in extinguishment, otherwise the debts would have no connection with the profits, and the latter would stand but as an independent claim of Russell, through their duty to account to him for the profits received under his assignment to them. On this point the judge in the court below charged in substance that the notes being outside of the pledge as a collateral security, the plaintiff was entitled to a verdict. In this he appears to have been right. The correspondence shows very clearly that the advances from which these notes arose were made to Russell on his private account, and not on account of the colliery. When the judgments were about to fall due, Russell was anxious to raise money to avoid a sheriff’s sale, and wrote to Miller & Co. to effect a loan for him to the amount of $11,000, proffering a reward of $500 for their trouble, and saying he must have $7500, cost what it would. He also mentioned that the Mitchell, Tyler and Earp judgments were joint liens, and when paid could be assigned to them, and he would give any further security he could. Miller & Co. declined, stating that the state of their own business admonished them to avoid increased debt, and that their investment in the Mount Laffee colliery was large, withdrawing that much active capital from their own business.

The result was that to befriend him they permitted him to draw upon them for his own use and accommodation, with a distinct request to provide funds to meet the drafts at maturity.

For this he expressed his gratitude, saying the kindness was one he could never forget.

The correspondence on this subject afterwards shows that the debt was his personal debt, and the notes were finally charged against him in his private account when he failed to pay them. The equitable defence, therefore, failed on the ground that the profits of the colliery were not pledged to their payment.

The next question is whether failing as an equitable defence, Russell’s executors were entitled to demand an account of the profits in this action as an independent set-off to the sum which should be found due from Miller & Co. As such a counter claim it was not competent to be set off. A debt or the damages which can be set off as an independent counter claim must be such as a jury can find and liquidate in the ordinary way just as if the defendant were a plaintiff suing in debt, assumpsit or covenant.

But where the right of the defendant is only to call the plaintiff to an account, and his demand is such as must be settled in an action of account render, or by a bill in equity for an account, it is not a proper set-off. A jury cannot pass on a question of this nature without great inconvenience. A set-off to a set-off will not be permitted, and it would be much worse to try before a jury at bar an unadjusted question of account and of profits arising out of a long and complicated business to be found only in numerous books of account.

These views cover all the assignments of error; for the exclusion of the whole defence puts out of the case all questions arising under it.

The judgment is affirmed.