Johnston v. Davis

• Decision Date: 01 June 1925
• Docket Number: No. 4188.,4188.
• Citation: 6 F.2d 713
• Parties: JOHNSTON v. DAVIS et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

6 F.2d 713 (1925)

JOHNSTON v. DAVIS et al.

No. 4188.

Court of Appeals of District of Columbia.

Submitted May 5, 1925.

Decided June 1, 1925.

J. C. Mackall, of Washington, D. C., for appellant.

W. W. Millan and R. E. L. Smith, both of Washington, D. C., for appellees.

Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.

MARTIN, Chief Justice.

This is an appeal from an order of the lower court dismissing a petition wherein appellant sought leave, in a settlement with the receivers of an insolvent corporation, to set off a debt due to him from the corporation, against a debt which he owed to it. The following statement sufficiently sets out the controlling facts in the case:

On March 29, 1923, a petition was filed in the Supreme Court of the District of Columbia by certain stockholders of C. M. Woolf & Co., a local corporation, for its dissolution. In the petition it was alleged that the corporation was solvent, but subsequently it was found to be insolvent. On April 2, 1923, the appellees were appointed temporary receivers. On July 30, 1923, a decree was entered dissolving the corporation and appointing appellees as permanent receivers to wind up its affairs.

On February 28, 1923, the appellant, who was a stockholder, director, and vice president of the corporation, but took no part in the active management of its affairs, became the accommodation indorser for the corporation upon a certain promissory note for $1,800, payable 30 days after said date. This note was discounted before maturity for the benefit of the corporation at a local bank, and was held by the bank at and after the time when the proceedings for the dissolution of the corporation were begun. The note was not paid when due. It was then protested for nonpayment, and placed in the hands of attorneys for collection. Demand was made upon appellant for payment, and on July 12, 1923, he paid the note, together with an attorney's fee of $90; the latter being demanded of him by virtue of a printed notation on the note as follows: "With an attorney's fee, if cash payment shall not be made at maturity." A formal proof of claim against the corporation because of this payment was duly filed by appellant with the receivers.

At the time when the petition for dissolution was filed appellant was indebted to the corporation for merchandise in the sum of $1,800.10, which debt was then overdue, and appellant claimed the right to set off the amount paid by him upon the said note, against the indebtedness due from him to the corporation. This claim was refused by the receivers, whereupon appellant filed a petition praying that the receivers be directed to allow such a set-off. The court dismissed the petition, and this appeal...