Sprigg v. Granneman

Green, J. It was admitted on the hearing that defendant Campbell had the execution against Louis Granneman, and was seeking to levy the same at the time the injunction was sued out, and that both- the Mulhollands are, and when the suit was commenced were, insolvent. It was further admitted that Margaret Mulholland, under a distress warrant, seized property in the hands of Louis Granneman, who, at the December term, 1885, brought replevin suit for the property, was defeated, and judgment against him and for the return of the property was rendered May 11, 1887. On August 25, 1887, Margaret Mulholland brought suit against Granneman to recover the value of the grain by him replevied, which he had not returned as ordered by the j udgment of the court in the replevin suit. While the replevin suit was yet pending, and some time in 1886, Granneman called on one A. H. Burlingame and asked him if he had a note on the Mulhollands, and learning he had such a note, proposed to take it, and if be beat this Mulholland he would give Burlingame fifty cents on the dollar for it, and if he couldn’t do anything with the note and gain the case, he was to return the note to Burlingame. In this interview Granneman disclosed to Burlingame the fact that he had some difficulty with Mrs. Mulholland concerning some grain, and she had sued him or was about to sue him for the grain, and he was going to make an offset of the note. Burlingame thereupon assigned the note to Granneman without recourse, upon the terms and conditions proposed, and received no consideration therefor. The note was for $125.27, dated June 16, 1882, and was payable in four months, with eight per cent interest. Granneman, having thus procured this note, at once brought suit on it, and at the March term, 1886, of said Circuit Court, recovered the judgment against the makers sought to be allowed as a'set-off in this case. Afterward, in the said suit of Margaret against him, Granneman, among other defenses, pleaded this judgment as a set-off, and by another plea set up the. note assigned to him as a set-off. To these pleas demurrers were sustained, and on the trial plaintiff recovered her said judgment. From the facts proven we are satisfied that when Granneman procured the assignment of the note to him, it was solely for the purpose of using it as a set-off against any claim of Margaret Mulholland for the grain unlawfully taken by him, and in anticipation .of his probable defeat in the pending replevin suit and the litigation likely to result therefrom. This purpose was understood by Burlingame at the time he assigned the note. Ho sale of the note was in fact made, nor was it understood or intended by the parties to be a bona fide sale of the note to Granneman. The device of assigning the note to give the transaction an appearance of a sale and transfer did not change its real character. The form of the pretended purchase unexplained might evidence a real sale and transfer, but the bonafides with which a set-off is created is always a legitimate subject of inquiry. Fair v. McIver, 16 East, 131. Hor did the merging of the note in the judgment against the Mulhollands, remove the taint which attached to the original transaction. It was but another step taken to accomplish the real purpose of the parties, which was to use the debt due Burlingame, as a set-off against the legal claim of a person for her property unlawfully taken by Granneman. The law applicable to the facts in this case, as we understand it, forbids the allowance of the set-off claimed by the appellee and decreed by the court below. “ As a set-off in general is only allowed for such claims as in good faith and absolutely belonged to the party at the commencement of the action, it follows that it does not extend to claims purchased conditionally for the purpose of using them as a set-off and with an agreement to return them to the seller if they were not so used. It would be a fraud upon the statute to' allow the defendant in anticipation of a law suit to get the use merely of the claims of others, with which to defeat his adversary.” “An indorsement of a note by the payee to one with the understanding if he can use it as a set-off to a demand held against him by another, he is to pay the amount, otherwise it is to be returned to the payee, does not confer on the assignee such a property in the note as will enable him to use it as a set-off against such demand.” "Waterman on Set-off, Sec. 45, citing Straus v. Eagle Ins. Co., 5 Ohio (A. S.), 59 ; Adams v. McGrew, 2 Ala. (A. S.) 675; McDade v. Mead, 18 Ibid. 214. We perceive no equitable grounds precluding the application of the foregoing rules to the case at bar, or requiring us to permit Granneman’s judgment against the Mulhollands to be used as a set-off against the judgment which is shown by the records to have been duly assigned, “ for value reed ” to Ralph E. Sprigg, and thus deprive the latter of the benefit of his purchase. We are also of the opinion that Burlingame was a competent witness and his testimony proper to be considered. He was not a party to the suit and his interest in the event of the suit, if he had any, was against the defendants, and not adverse to the complainant. Other points are raised in the briefs and arguments not necessary to discuss or decide, inasmuch as we think enough has been said, if our view is correct, to dispose of the case. The order and decree of the Circuit Court is reversed and the cause remanded with directions to dissolve the injunction and dismiss the bill as amended. Reversed and remanded with directions.