Ainslie v. Boynton

By the Court, McCoun, J. Whether Ainslie is entitled to have a set-off of the judgments, so that the one recovered against him shall be extinguished by compensating so much of the judgment in his favor against Ray Boynton, depends Upon the validity or invalidity of the assignment of the Boynton [262] judgment. If that assignment is shown to be invalid for any cause, then the right of set-off of the judgments as judgments is perfect, and was so from the moment Ainslie recovered" his against Ray Boynton, without regard to extraneous circumstances, such as insolvency or the like. But if the assignment from Ray to Edward is a valid assignment, or if from the facts stated in relation to it, the court is not at liberty to pronounce it fraudulent and void, then it is equally clear and certain that the judgments as judgments cannot be set off, and the one be made to compensate, pro tanto, the other. If, however, the assignment is valid and free from fraud, still a question arises whether Edward did not it take subject to an equitable set-off td some extent, which existed in favor of Ainslie at the time the assignment was made. Both questions are to be considered. First, as to the alleged fraudulent character of the assignment. The decree appealed from has declared it such, and pronounced it void. But the difficulty with this part of the decree is the want of legal proof of fraud. The hill has called for a discovery under oath, upon charges which it makes of fraud in its worst aspects, in contriving and getting up the assignment for the purpose of defeating Ainslie’s right of set-off. The answer of both defendants meets these charges; and positively denies them. It avers the consideration was actually paid in cash, and denies the motives and intentions imputed by the bill. Now whatever conjectures we may indulge in to the contrary, and however suspicious the transaction may seem, yet we are not at liberty to disregard their statement and to say it is utterly unworthy of belief. The plaintiff has shown that he was willing to trust to their oath, and to have the court abide by their answer until disproved; or he would not have put them upon oath in answering those charges. Hé has furnished no testimony nor other evidence, contradictory of their asseverations responsive to his bill, and is not entitled to a decree setting aside the assignment for fraud. Then as to the next question, what equity waá the assignment subject to, when it was taken by Edward ? [263] The claim assigned had two days before been ascertained and liquidated, by the report of the referees, at $16,32, On the 1st of November, one month before the assignment, $400 had become due from the assignor to Ainslie, for two quarters’ rent. Although the condition of the then pending suit was such that Ainslie could not interfere and claim a set-off at law of any part of such rent without suit, yet a right of set-off existed in equity from the time the rent became due and remained unpaid. Even if there was a difficulty about its attaching, owing to the uncertainty and unliquidated nature of the demand, which was in suit against Ainslie, yet when that demand was reduced to a certainty, by the report, on the 29 th of November, the equitable right of set-off then attached, and it remained in full force on the 1st of December, when the assignment was made. This set-off, a court of equity will enforce upon a bill filed for that purpose, when circumstances are shown to exist requiring its interference, such as insolvency, or the impossibility of obtaining the benefit of it in an ordinary suit at law. It is a right which exists prior to, and independent of, the recovery of judgments. The doctrine is explained by the chancellor, in Gay v. Gay, (10 Paige, 369.) This equitable set-off does not extend, however, in this case, to the costs of the suit against Ainslie, Those costs equitably belonged to the attorney, and the assignee assumed the payment of the costs, by assuming the control and prosecution of the suit, and he is entitled to reimbursement. Besides, the costs accrued by the judgment long after the assignment, and until judgment, were unliquidated, and not a subject of set-off, (13 Wend. 340,) or against which any right of set-off could attach before judgment. And the judgment, when rendered, belonged to the assignee, subject only to the equitable set-off in respect to the amount reported by the referee. The decree of the assistant vice chancellor must be reversed, so far as it declares the assignment to be fraudulent and void; and it must be modified in respect to the set-off, by allowing only the damages, exclusive of the taxed costs in the judgment of Boynton v. Ainslie, to be credited and allowed as a pay [264] ment on the judgment of Ainslie v. Boynton. And each party must be left to bear his own costs of the suit in chancery and on this appeal.