Huse v. Ames

• Decision Date: 23 March 1891
• Citation: 104 Mo. 91,15 S.W. 965
• Parties: HUSE v. AMES.
• Court: Missouri Supreme Court

15 S.W. 965

104 Mo. 91

HUSE v. AMES.

Supreme Court of Missouri, Division No. 1.

March 23, 1891.

ASSIGNMENT FOR BENEFIT OF CREDITORS — DEEDS — ACKNOWLEDGMENT.

1. In a suit by an assignee for the benefit of creditors on a debt due the assignor, the defendant cannot set off payments made by him after the assignment as surety for the assignor, though the payments were made on debts which were part due when the assignment was made. Overruling Morrow v. Bright, 20 Mo. 298, and following White v. Henly, 54 Mo. 596.

2. The directors of an insolvent corporation authorized its vice-president "to use all means and do all acts and make all deeds by him deemed necessary or proper to serve the best interest of the association, and to use the corporate seal for such purpose:" provided, that the treasurer "be authorized to receive and disburse all moneys belonging to the association, and act as manager of the same, until its business is closed." Held, that the vice-president was authorized to execute an assignment for the benefit of creditors.

3. Act Mo. 1883, p. 20, provides that the "following forms" of acknowledgment may be used in the case of conveyances, and that any acknowledgment so taken and certified shall be sufficient. Held, that any acknowledgment good before the passage of that act will still be sufficient.

Appeal from St. Louis circuit court; GEORGE W. LUBKE, Judge.

I. T. Wise and H. J. Grover, for appellant. W. B. Douglas and W. H. Scudder, Jr., for respondent.

BLACK, J.

The Lindell Hotel Association, a corporation, made a voluntary assignment to James L. Huse, as assignee for the benefit of creditors, on the 24th June, 1884. On the 27th of the same month the assignee commenced this suit against Henry Ames to recover a balance of $3,393.10 due on account for board, etc. Ames was a director and stockholder of the insolvent corporation. In October, 1885, the defendant filed a second amended and supplemental answer, in which he denied the alleged indebtedness, put in issue the validity of the assignment, and set up an equitable set-off. On motion of the plaintiff, the court struck out the set-off, to which ruling the defendant saved no exceptions. In October, 1886, he moved for leave to file a third amended and supplemental answer, which motion was overruled, and he then for the first time excepted to the ruling of the court. The plaintiff insists that defendant is here without any exceptions to the ruling of the court concerning the set-off; but, in the view we take of the case, it is unnecessary to consume time in discussing this question, and we proceed to dispose of the case on its merits. The facts concerning the alleged equitable set-off are these: The hotel association became insolvent and made the assignment on the 24th June, 1884, and this suit was commenced by the assignee on the 27th of the same month. From January to 17th May, 1884, the defendant had indorsed the paper of the association to the amount of about $24,000. Some three or four of the indorsed notes matured before the date of the assignment, and others matured thereafter. One note for $1,800, which matured before the assignment, was paid by the defendant in July, 1884, which was after the assignment, and after the commencement of this suit. In July and August, 1885, a year or more after the assignment, the defendant paid on judgments recovered by holders of the indorsed notes the aggregate sum of $14,867.19. It is the payments thus made which defendant sets up as a set-off.

An accommodation indorser occupies the position of a surety; and the contract of the principal to indemnify the surety for any payment which the latter may make takes effect from the time when the surety executed the contract by which he became liable for the debt of the principal. The liability of the surety becomes fixed, in the case of an indorser, by the protest of the note, though the agreement for indemnity relates back to the date of the note. The surety, however, has no cause of action against the principal until he has paid the debt, or some part of it. Hearne v. Keath, 63 Mo. 84. There was, therefore, no debt due to the defendant, either at the date of the assignment or at the commencement of this suit; and it is clear that he had no set-off, within the statute upon that subject. Says Burrill: "A claim acquired after assignment cannot be set off against the assignee; nor a liability existing, but not due, at the time of the assignment, even if it becomes due before the suit was commenced." Burrill, Assignm. (4th Ed.) § 403. If the defendant has any set-off, it is on some equitable grounds. The law is now well settled that an assignee for the benefit of creditors takes the assigned property subject to all equities existing at the date of the assignment. State v. Rowse, 49 Mo. 593; Peet v. Spencer, 90 Mo., 388, 2 S. W. Rep. 434. While the insolvent is not bound to pay otherwise than according to his contract, it is considered no hardship that he should accept payment of a demand owing to him before maturity. Hence it has been often ruled in the state of New York, and is now the law of this state, that if the claim against the assignee was due at the date of the assignment, then there is an equity because of the insolvency of the assignor, and the debt so due may be set off against the claim in favor of the assignee, though the claim held by the assignee was not due at the date of the assignment. Smith v. Spengler, 83 Mo. 408; Smith v. Felton, 43 N. Y. 419; Smith v. Fox, 48 N. Y. 674; Coffin v. McLean, 80 N. Y. 560. But the claim against the assignee must be due at the date of the assignment, and, if it is not then due, there is no equitable set-off. Keep v. Lord, 2 Duer, 78; Myers v. Davis, 22 N. Y. 489; Chipman v. Bank, 120 Pa. St. 86, 13 Atl. Rep. 707. A demand cannot be set off, because of the insolvency of the plaintiff, in equity any more than at law, unless it existed against the plaintiff, in favor of the defendant, at the time of the commencement of the suit, and had then become due. Reppy v. Reppy, 46 Mo. 572; Spaulding v. Backus, 122 Mass. 553; Pom. Eq. Jur. § 704; Lockwood v. Beckwith, 6 Mich. 168. If the defendant has an equitable set-off against the assignee, it must arise from the fact of insolvency of the plaintiff's assignor, taken in combination with the fact that defendant was the surety for the assignor. This brings us to the exact point in contest. Morrow v. Bright, 20 Mo. 298, was an action by the assignees for the benefit of creditors against Bright for money due upon a note. Bright pleaded, as a set-off, money paid by him after the assignment on a protested note of Morrow, on which Bright was indorser. The note was protested before assignment, and paid by Bright after that date. The facts of that case presented the question of law now before us. It was then held that there would be no impropriety in allowing the set-off, in analogy to the statute upon that subject concerning suits brought by executors and administrators. But another reason for allowing the set-off was stated in these words: "But in substantial justice, as Bright was Morrow's surety, and compelled by law to pay the debt, and as Morrow was insolvent, Bright may be regarded as the creditor of Morrow from the time the note was protested. Then, as there was an indebtedness on the part of Morrow to Bright, and as the very act of assignment was evidence of insolvency, by which Bright became absolutely bound, there was...