Lowell v. Lane

By the Court, Balcom, J. The judgment the defendant recovered against Smith was not a set-off, counter-claim or defense to this action, for it was not rendered until eleven days after the plaintiff purchased the note of Smith upon which this action was brought. The note the defendant held against Smith when the plaintiff purchased the one upon which this action was brought could not be used as a set-off, counter-claim or defense to this action, because it did not exist, or was not a subsisting demand, at the time the action was commenced. It was merged in the judgment which the defendant obtained against Smith on the 29th day of October, 1858; and the right to use it in this action for any purpose was gone. (See Ives v. Goddard, 1 Hilton, 434; Mizzell v. Moore, 7 Iredell’s Law Rep. 255.) The defendant’s counsel has made the point that the evidence does not show the defendant had notice of the transfer of his note, by Smith to the plaintiff, before he recovered his judgment against Smith; and that the defendant could set off his judgment against Smith in this action; for the reason that he recovered it before he had any notice that the plaintiff had purchased his note of Smith-; and because his note was purchased by the plaintiff after it became due. It is claimed that this position is sustained by section 112 of the code, which reads as follows: “In the case of an assignment of a thing in action, the action by the assignee shall be without prejudice to any set-off or other defense existing at the time of, or before notice of the assignment ; but this section shall not apply to a negotiable promissory note or bill of exchange, transferred in good faith, and upon good consideration, before due.” It cannot be denied but that the letter of this section would sustain the [303] point made by the defendant’s counsel; but its spirit and meaning do not, according to the construction put upon it by the court of appeals, in Beckwith v. The Union Bank, (5 Seld. 211.) According to that construction it was not necessary for the plaintiff to prove the defendant had notice of the transfer of his note by Smith to the plaintiff before the defendant recovered his judgment against Smith, to prevent such judgment being used as a set-off, counter-claim or defense in this action. [Broome General Term, January 22, 1861. Balcom, Campbell and Parker, Justices.] It follows that the county court properly affirmed the judgment of the justice, and that this court should affirm the judgment of the county court, with costs. Decision accordingly.