McLane v. Johnson

The opinion of the court was delivered by Powers, J. The bill seeks to compel an offset of the claims held by the defendant against the estate of Jesse Johnson, to the amount of the .dividends to become due thereon, to the orator’s advances of money provisionally made to the defendant, and for the defendant’s benefit, to satisfy the original holders of such claims ; and for the payment to the orator of any balance that may be due him, above the amount of such dividends. The defendant, amongst other things, incorporates in his answer a demurrer to the bill for Avant of equity. But such a demurrer is waived unless it is brought on to hearing before the bill is answered and heard on the merits. Wade v. Pulsifer, 54 Vt. 45. But if seasonably interposed, the demurrer Avould be unavailing. The subject-matter of set-off is one of the original and — 243 — well-established beads of equity jurisdiction. Our statutes allowing it have not taken away tbe jurisdiction of chancery, but have merely provided a remedy at law for the offset of mutual claims between parties which might always have been done in equity. At law, however, set-off cannot be effected unless the demands are, in legal significance, mutual. Here the orator sues in his representative capacity as administrator upon a demand arising since the death of his intestate, and asks to have an offset made of claims allowed against the estate ho represents in favor of third persons, but now held by the defendant as assignee, or equitable owner thereof. At law the claims held by the defendant could be enforced only in the names of the original holders. They were not allowances made to the defendant. They were never at law debts owing by the intestate to the defendant. Even if the debts had originally been payable to the defendant, they could not- at law be offset to a demaird accruing to the orator in his representative capacity after the death of his intestate, for this would alter the course of the distribution of the assets, and give one creditor an advantage over the .others. Aiken v. Bridgman, 37 Vt. 249; Rees v. Watts, 11 Exch. 410; Chit. Cont. 956. But in equity the form of the indebtedness is disregarded, and an offset may be decreed of liquidated demands held by an assignee or equitable owner, — especially if he is insolvent. The defendant, in respect to the claims in question, stands in this relation; and his claims have been liquidated by the allowance of the commissioners, and the judgment of the Probate Court thereon. He is compellable, therefore, to make the offset, if the orator’s case is in other respects made out. Ferris v. Burton, 1 Vt. 439; Downer v. Dana, 17 Vt. 518; Blake v. Langdon, 19 Vt. 485. It is urged that the receipts of April 13th and April 17th, 1869, described in the master’s report, are written contracts between the parties, and so within the rule. prohibiting the admission of .parol proof to enlarge or vary the scope of the — 244 — terms made use of. But looking at these papers in the light of the circumstances surrounding their execution, and as applied to the subject-matter to which they relate, which is always allowable and generally necessary in the construction of written instruments, we think they are, what their terms fairly import, mere accountable receipts for money, and not contracts within' the rule contended for. They purport to acknowledge the receipt of money to be accounted for in the settlement of certain claims allowed by commissioners; but upon what basis of accountability, or what is included in the-unnamed and unspecified “ certain claims,” and when or Avith whom the accounting is to be had, is left wholly to conjecture so far as the terms of the instrument inform us. It is clear, then, that by giving to these instruments the character of contracts, they are so far ambiguous as to require explanation, even upon the defendant’s theory of the manner in which he holds the money specified. They are like the receipt described in Hitt v. Slocum, 37 Vt. 524, which was “ a receipt for the Osborn note to apply on account;” and that in Earle v. Wallingford, 44 Vt. 367, which in form shoAved a completed contract; and that in Randall v. Kelsey, 46 Vt. 158, which purported to be in full; and those in many other cases, Avherein it has been held that a' receipt purporting to be in full, thus indicating the consummation of a previous transaction, or one for money or property to be thereafterAvards accounted for, is an instrument that is open to explanation, so that.' its true office, as between the parties, may be-fulfilled. The objection made to the evidence offered to shorv the true character of the other exhibits of .the orator rests substantially upon the ground above referred to, and need not be further considered. The defendant claims that the effect of his ansAver as evidence was ignored or disregarded by the master ; but there is nothing-in the report that warrants (his criticism. The answer as evidence is to bo Aveighed like other evidence. It gains no factitious Aveight because it happens also to be one of the plead — 245 — ings. As evidence it is subject to the infirmities of evidence. Veile v. Blodgett, 49 Vt. 270. The master having based his findings upon proper evidence, they established this state of facts : The orator advanced to the defendant at his request, from time to time, large sums of money belonging to the estate he represented, for the purpose of aiding the defendant in getting temporary relief from the pressure of certain creditors of said estate, whoso claims were legally collectible of the defendant as surety for the.intestate, and to enable him to buy up sundry claims of other creditors for his own personal advantage, under an agreement that as to said estate such claims should be held by. the defendant precisely as they otherwise would have been held by the original holders ; that is, subject to such dividends as might ultimately be declared upon them ; and after deducting or offsetting such dividends, the defendant should account to the orator for any balance that might be due him, with interest from the date of such advances.' These facts are applicable to all the exhibits of the orator, from No. 2 to No. 9 inclusive. They all represent a common understanding respecting the accountability of the defendant. The Statute of Limitations is interposed as a bar to the relief the orator seeks ; but this defence is not available; as by the terms of the agreement the time has not arrived for the application of the dividends to the advances made nor the payment of any balance that may appear by such application. The suit is not premature ; for the defendant has repudiated the understanding upon which he received the money and his agreement to make the application of it upon the claims which he now holds. Under these circumstances a right accrued to to the orator to have the status of these claims fixed by a decree in chancery in advance of any order of the Probate Court for the payment of the claims' allowed by commissioners and the distribution of assets ; as the Probate Court is powerless to make un offset of the dividends upon these claims to the orator’s advances,-and the orator could in that court get no protection — 246 — for these advances in the settlement of' his administration account, and by the insolvency- of the defendant would be wholly without remedy. There is little reason, therefore, in asking the orator in advance to hazard the fruitless experiment and incur the needless expense of seeking at the hands of the Probate Court a decree to the effect that it can give him no relief in the premises. The remedy at law is wholly inadequate to restore to the -orator the assets of this estate, which he has in kindness but not in wisdom entrusted to the defendant. The defendant controls all the claims in question as well those upon which Chamberlin was surety as the others. The master says respecting the money advanced to pay the Holton and Andross notes which were signed by the defendant and Chamberlin: “It was agreed between the orator and defendant, that the orator Would let the defendant have the money required to pay the Holton note and the Andross note, and the defendant was to hold said notes against the orator administrator the same as the original party would have done, and on the settlement of the estate the dividend on these notes was to offset against the money thus advanced by the orator administrator as aforesaid.” As to these notes then, although Chamberlin was a joint surety with the defendant, still the advance of the money was made to the defendant alone, and accountability therefor was alone assumed by the defendant. Chamberlin, then, is no proper party to an accounting upon the score of those notes. As to exhibit No. 4, covering the Rice note, the master says: “The defendant and M. R. Chamberlin requested the orator to pay said note, and the orator did so ; and they were to account to the orator as though they held the note to account to the orator for any deficiency that might arise by reason of the estate being short of paying in full.” This would indicate a joint accountability of the defendant and Chamberlin for the advance upon this note. But the master, later on, says that — 247 — during the time the orator was letting the defendant Johnson and Johnson and Chamberlin have the money named in the oiator’s exhibits, it was agreed by the parties that defendant Johnson should account for the money so advanced in the settlement of the claims that he might hold against the estate, and that any balance that might be either way the orator and the defendant were to adjust. And, again, near the close of the report, he says: “The claims purchased in by the defendant and M. R. Chamberlin, and those named above purchased in by the defendant, are now held by him (defendant) with the same fights to a dividend in the estate of Jesse Johnson as the original holder.” Upon the whole finding it is manifest that the defendant by the arrangement was the sole party to the accounting provided for by the agreement of all parties in interest. The defendant alone holds all the claims in question, and he is bound to carry out the agreement established on the evidence. The decree of the Court of Chancery is affirmed, and the cause remanded, with mandate.