Kinsey v. Ring

Lyon, C. J. Had the notes, or either of them, upon which Archer was an accommodation indorser for Colburn been due, and had the proper proceedings been taken to fix his liability thereon as an indorser before Colburn assigned the demand in suit to plaintiffs,— Colburn being then insolvent,— it will be assumed for the purposes of this appeal that an equitable setoff because of such liability might be enforced against the claim and demand of plaintiffs. In such case the judgment would probably go for the plaintiffs for the amount of their claim, but defendant would be allowed to pay it by paying an equal amount on the note or notes for the payment of which Archer was thus liable. The difficulty in the way of enforcing such equitable setoff in this action is that, when the plaintiffs took the assignment from Colburn of the account against Archer, neither of the notes of Colburn thus indorsed by Archer was due, and the liability of Archer thereon was contingent upon his being charged as indorser at the maturity of the notes. The plaintiffs paid a valuable consideration for the demand in suit, and, although such payment was made by allowing the amount of the demand on a pre-existing indebtedness of Colburn to them, the rights and liabilities of all parties in interest were fixed by the assignment. The circumstances that this action was not commenced until one note had become due, and Archer had been charged thereon as indorser, are quite immaterial. "We understand the plaintiffs to be in the position Colburn would have been in had he, instead of assigning the demand to plaintiffs, brought an action upon it at the time he so assigned it. The law seems to be well settled [539] that in such case no equitable setoff could have been enforced by Archer against the claim, notwithstanding the insolvency of Colburn. While cases have been cited to the effect that an equitable setoff may be enforced of a debt owing' ly the insolvent and due, against a debt owing to him but not due, we are referred to no case which allows the holder of the debt not due to enforce such setoff against one that is due. The authorities are all to the contrary. Thus in Spaulding v. Backus, 122 Mass. 553, which is a leading ease on the subject under consideration, it is held that “ a note given by A. to B., and not yet due, cannot in equity be set off against a note given by B. to A., upon which A. has brought an action for the benefit of C., to whom he assigned it, although C. knew ,at the time of the assignment that A. was insolvent, and A. was subsequently declared a bankrupt.” The same rule was applied in Bradley v. Angel, 3 N. Y. 475, which is another leading case on the same subject. We conclude that the learned circuit judge decided the case correctly, and must therefore affirm the judgment. By the Court.— Judgment affirmed.