Union National Bank v. Cannonsburgh Iron Co.

Opinion by Mr. Chief Justice Mercur: This judgment was entered on a case stated. In an opinion just filed on a writ of error taken by the defendant, we held it had no cause to complain of the judgment. The complaint now to be considered is whether the judgment was not entered in favor of the plaintiff, for a less sum than it is entitled to under the admitted facts. Conceding that the check given to plaintiff in error, on the Penn Bank, did not operate as a payment of the note held by the plaintiff against the defendant, yet the latter contends that it is entitled to a set-off for the sum of $969.85, which, on the 28th day of May, 1884, stood to the credit of the Penn Bank on the books of the plaintiff. It was a part of the proceeds of sundry notes discounted by the plaintiff on the 23d of May, for the accommodation of the Penn Bank. The latter bank in fact was then insolvent, but its insolvency was not then known to the plaintiff. On the 28th of May, the Penn Bank assigned all its property to Warner in trust for its creditors. The trustee has brought suit against the plaintiff to recover the $965.85; and that suit is still pending. The court below thought the plaintiff was bound to set off or apply this sum on the note it held against the defendant, and entered judgment for the residue of the note only. This is assigned for error. It is difficult to see on what principle the application of this sum can thus be enforced. The general rule is that a set-off is not allowable unless the debts be due between the same parties and in the same right. Potter v. Burd, 4 Watts, 15; Milliken v. Gardner, 37 Pa. 456; Scott v. Fritz, 51 Pa. 418. The money on deposit with the plaintiff was not due to the defendant. A set-off is in substance a cross action; and a cross demand must be complete when the action was instituted. Gunnis v. Cluff, 111 Pa. 512, 2 Cent. Rep. 356, 4 Atl. 920. The defendant was in no condition to bring suit against the plaintiff for this money. It had no such right of action. It [62] had no legal or equitable claim which it could thus enforce. That money was wholly res . inter alios acta. The defendant was not a party to the transaction which produced the fund. It could not check it out. Prior to the assignment it had no right to be heard as to what disposition should be made of it. What right it has, if any, to share therein under the assignment is a question not now before us. Whether, under the authority of Dougherty v. Central Nat. Bank, 93 Pa. 227, 39 Am. Rep. 750, the plaintiff can show such equities as to retain the money on the notes it discounted for an insolvent may arise in the suit brought by the assignee. Whatever the equities may be between the plaintiff and the Penn Bank, arising out of that transaction, it is clear the defendant cannot control the application of that fund. The plaintiff did not hold that money as security for the payment of a check drawn on another bank. When the check was dishonored he offered to return it to the defendant from whom he received it. We think the learned judge erred in holding that the defendant was entitled to set off the amount which stood in the bank of the plaintiff to the credit of the Penn Bank. Judgment reversed; and now, October 4, 1886, judgment in favor of the plaintiff, for $2,237.67, with interest from May 24, 1884, and $1.50 costs of protest and costs of suit, according to agreement in case stated.