McPherson v. Ross

The opinion of the court was delivered by Eccleston, J. It appears from the record that this is an amicable proceeding. And the counsel having stated, that it was the wish of the parties to have the question decided, upon equitable principles, without regard to matters of form;'we will not stop to enquire, whether the case is properly before us, as to an equitable right of set off, but will proceed to express our opinion on the point in dispute. John McPherson had claims against Wm. S. McPherson, as trustee for the sale of the real estate of Sarah McPherson. In 1844 John conveyed all his property to the appellee, in trust for the benefit of his creditors ; and in the same year, a conveyance of like character was made by William, to J. D. Roman. Sometime afterwards, the trustee of William paid about $>6000, in discharge of John’s debts for which William had become surety. A part of this sum William now insists he has a right to set off against the claim of the appellee. Among other reasons for sustaining the judgment below, it is said the claim of the appellee is upon a trust fund, and was due to John, not exclusively in his own right, but in part, as assignee of others. There is no necessity, however, to say anything in regard to the nature of John’s claims be [185] lieving as we do, that the set oil cannot be allowed, because the payments on account of the debts of John were not made by William, but by his trustee, out of funds transferred for the benefit of creditors. If the plaintiff should recover the ¡money he claims in this case, it will be in his hands for the purpose of paying the creditors of John. And thus William’s trustee will have a claim upon the same, on account of the debts of John paid by him; for the payment of which debts, in part, this very fund was appropriated, by the general transfer of all John’s property to his trustee. But if William is permitted to have the set off, it will virtually rescind, in part, the transfer made by him for the use of his creditors. The case of the assignees of Smith vs. Muggleston, 3 Mee. & Wels., 30, was cited on the part of the appellant. That was a decision under the statute of 6 Geo., 4, ch. 16, sec. 50, and is no authority upon the question under consideration. Jones vs. Messop, 3 Hare, 568, in 25th Eng. Ch. Rep., was much relied upon in argument; but there is a very important difference between that and the present case. There the party claiming the set off had paid the money himself, as surety, after his principal had become insolvent. By means of an injunction, he obtained a set off for the amount thus paid. The suit against which this injunction was granted, was upon a bond, given by the said surety, to the father of the insolvent. After the decease of both father and son, the assignee of the insolvent, as the administrator d, b. n., of the father, instituted suit on the bond, the proceeds of which, if received, would have been held by him as the assignee of the son; according to the opinion of the vice-chancellor. Believing that neither at law nor in equity, the appellant can successfully urge his defence, we think there was no error in the judgment on the award. Judgment affirmed.