Smith & Co. v. Ewer

The opinion of the Court was delivered by Woodward, J. This is the last of this batch of cases, and as the assignment to Cooper was fully proved in this case, the questions that arise upon it must be considered. The claim in suit was assigned to Cooper on the 29th October, 1851, and the action was instituted on the 25th March, 1852. The note which the defendants offered in evidence was drawn by James R. Smith & Co., on the 14th April, 1851, for $931, at 8 months, payable to the order of Stewart & Bro., and by them endorsed without date to the defendants. The defendants could not be affected by the assignment of their creditors’ claim to Cooper until' they received notice of it. Until such notice they were at liberty to arm themselves with liabilities of Smith & Co., and use them in defence of any action that might be brought on their own indebtedness. This doctrine, hinted in a variety of cases, was fully discussed by Mr. Justice Lewis, and settled by this Court in the case of Rider v. Johnson, decided at the last term in this district, but not yet reported. Cooper gave the defendants no notice of the assignment till suit was brought. But that was notice, for the writ told them he was on the record as the beneficial plaintiff. Bid the defendants hold the note of Smith & Co., at that time ? If they did, they had the right to set it off. If they did not, but obtained it subsequently, they had no right to set it off, whether the assignment was for a valuable consideration or not, for there is no rule better settled than that a debt or demand to be set off must exist at the commencement of the suit, and must at that time have belonged to the defendant: Huling v. Hugg, 1 W. & Ser. 418; Pennell v. Grub, 1 Harris 554. Now here was a question of fact, of which the defendants held the affirmative, and by the general rule, as well as according to Pennel v. Grub, the onus was on them. What evidence is there that on the 25th of March, 1852, they held the note ? None, unless it can be inferred presumptively from the negotiability of the note. But negotiable notes are frequently transferred after maturity. We have various instances of this in the books. This [118] note fell due in December, 1851; and if in the defendant’s hands then, they would doubtless have protested it for the purpose of fixing the endorser, and could easily have shown the fact. But if not in their hands, then what ground is there for presuming they obtained it before the 25th of March, 1852 ? The suit was not commenced till March, 1853, and it is quite as probable they would have looked up overdue paper in that year of preparation, as that they would have taken it in the three months that elapsed between its maturity and the institution of the suit. It is impossible to raise any presumption from the facts before us to supply the affirmative proof, which it is incumbent on the defendants to produce. On this ground the instruction should have been adverse to the defence, and the judgment must be reversed and a venire de novo awarded.