Zugg v. Turner

Woodward, J. The question in the case is, whether the defendant was entitled to his set-off of fifty dollars. It would seem that Folger had paid the rent up to the 26th of October, 1857, and that Turner permitted that of the remaining five months to stand unpaid, as if, with it, to pay the cost of the new building. A.t the time of the assignment from Folger to Zugg, Folger was owing Turner nothing, and Turner had notice of the assignment, but yet seeks to set-off against Zugg the rent which accrued after the assignment, all of which fell due before the bringing of the action. The defendant places his claim to a set-off upon section 952 of the Code; and to avoid this, the plaintiff’s argument is of the following tenor, and is so ingeniously put that it should not be passed in silence. He says : “Now, what is an ‘open account.’ In 2 Story’s Equity, it is said, that by mutual credit we are to understand a knowledge, on both sides, of an existing debt due to one party, founded on and trusting such debt, as a means of discharging it. The mere existence of distinct debts, without mutual credit [226] will not give a right of set-off in equity.” Did Turner, he asks, depend upon Folger’s building the kitchen as a consideration and security for the payment of the rent ? And he argues that the credits were not given in dependency upon each other; and urges that as Folger was not indebted at the time of the assignment, and as there was no open account between Folger and Turner, therefore the set-off should not be allowed. lie cites, further, Davis v. Milbourn, 3 Iowa, 163. The party here seeks to place this upon the ground of equitable set-off. But the principles upon which these are based, and the rules by which they are governed, are entirely different from those which govern in law. In this, a mutual dependency — a mutual credit, in the equity sense, is not required. It is sufficient that there be a debt-on each side, as is seen often in the fact of setting off a debt purchased from a third party, as a note, bill, &c. Our statute speaks of an open account. This party asks, what is an “ open account,” and proceeds' to answer the question by showing what are mutual credits in the equity sense. His error lies in confounding the legal notion of a set-off with the equitable notion of mutual credits. The case of Mead v. Gillett, cited from 19 Wend., 397, proceeds upon the common law rule, which was the law here before our present statute, but which is not now applicable. And perhaps the same remark is true of Watt v. The Mayor, &c., 1 Sandf., 23, or at least that case goes upon a rule pertinent to liquidated demands only; and to render it available, the party singularly attempts to make it appear that this account for erecting the kitchen, is a liquidated demand, upon the ground that that is certain which can be made certain; and this, he says, is effected by the proof and judgment. Enough has been said to show the argument upon which the plaintiff stands. But the case falls plainly under section 952 of the Code, as affected by section 951, and the provision is thus : “ An open account of sums of money due on [227] contract, may be assigned, and tbe assignee will have tbe right of action in his own name, but tbe maker (debtor), may avail himself of any defense or set-off, legal or equitable, against tbe assignee, which be may have against any assign- or thereof before suit is commenced.” Tbe fact that tbe agreement to pay for the building is in writing, does not constitute it such an “ instrument ” as is intended in sections 949 to 952, but tbe claim is nevertheless only an open account. Tbe whole contract was not assigned. Zugg was not to do tbe work, but Eolger did it, and then assigned, so that the only thing which was assigned was the claim for the money — the “ open account.” The set-off should have been allowed; wherefore the judgment is reversed, and the cause remanded for a new trial. Reversed.