McDuffie v. Dame

Upham, J. The note in suit remained in the promisee’s hands until long after it had become discredited ; and it is contended by the defendant that for this cause it is liable to set-off. But the plaintiff relies on the case of Chandler vs. Drew, 6 N. H. Rep. 469, to sustain the position that a set-off is inadmissible, even under such circumstances. The case of Chandler vs. Drew is opposed to the prevailing doctrine as to set-off in other states; 'but this arises from the fact that the rule there adopted is based upon the particular provisions of our statute. We are not disposed to doubt the propriety of that decision ; at the same time, it should not be extended beyond the precise limitations of the case. In that case the note had been indorsed, bona fide and on a good consideration, and we regard this as an essential point in the decision. An indorsed, discredited note should be liable to set-off, unless there has been an actual transfer of the interest in the note. A transfer which is merely nominal, should be regarded in the light of a fraud on the payee, where there is a set-off and a transfer of the note is made to avoid it. We hold, therefore, that in an action by the indorsee against the maker, if the defendant files a set-off against the note, and introduces evidence that the note was not indorsed until discredited, he will be admitted to sustain his set-off, un [246] less the plaintiff shows that he took the note bona fide for a valuable consideration. This was not done in this case. The set-off was, therefore, improperly rejected, and the verdict must be set aside and a New trial granted.