Binenstock v. Willing

• Decision Date: 23 March 1936
• Docket Number: No. 8757.,8757.
• Citation: 18 F. Supp. 262
• Parties: BINENSTOCK et al. v. WILLING.
• Court: U.S. District Court — Western District of Pennsylvania

18 F. Supp. 262

BINENSTOCK et al. v. WILLING.

No. 8757.

District Court, E. D. Pennsylvania.

March 23, 1936.

Isadore Katz and Robert T. McCracken, both of Philadelphia, Pa., for plaintiffs.

Thomas J. Minnick, Jr., of Philadelphia, Pa., for defendant.

KIRKPATRICK, District Judge.

The Commercial National Bank was taken over by the Comptroller of the Currency as of February 28, 1933. On that day Swinger and Binenstock, partners, were jointly indebted to the bank upon promissory notes in an amount in excess of $20,000 (subsequently somewhat reduced by credits allowed). Binenstock had an individual deposit with the bank in excess of $30,000 and Swinger an individual deposit of about $1,500.

Binenstock, as surviving partner, and Mrs. Swinger, as executrix of Swinger, deceased, have filed this bill in equity, setting out the above facts and also alleging that the receiver of the bank is about to bring action against them for the balance of the joint indebtedness, and that he has refused to allow the individual deposits of the two parties as a set-off against it. The prayer of the bill is for a decree against the receiver requiring that the individual deposit obligations be set off against the joint obligation of the partners upon the notes, canceling the liability and establishing the balances in their favor (or at least in favor of Binenstock). The respondent has moved to dismiss.

The law of the state of Pennsylvania, if applicable, would clearly sustain the bill. The decisions of that state allow individual claims to be set off in equity against a joint liability even though the party asserting the joint liability is solvent. Stewart v. Coulter, 12 Serg. & R.(Pa.) 252, 14 Am.Dec. 680; Cochran v. Cutter, 18 Pa.Super. 282. See, also, Mintz v. Tri-County Natural Gas Company, 259 Pa. 477, 103 A. 285.

The Pennsylvania rule should be followed by this court if the question seems to be "balanced with doubt." Burgess v. Seligman, 107 U.S. 20, 2 S.Ct. 10, 22, 27 L.Ed. 359; Sim v. Edenborn, 242 U.S. 131, 37 S.Ct. 36, 61 L.Ed. 199; Trainor Company v. Aetna Casualty & Surety Company, 290 U.S. 47, 54 S.Ct. 1, 78 L.Ed. 162.

The only question involved upon this motion is whether the decision of the Supreme Court in Gray v. Rollo, 18 Wall. (85 U.S.) 629, 21 L.Ed. 927, in which the set-off was not allowed, rules the case. If it does, all doubt disappears and I may not follow the state law.

But I think that Gray v. Rollo involves a basically different situation, that the distinguishing fact in that case was the point upon which the decision turned, and that it was so important a point that the Supreme Court took occasion to point out that, had it not been present and had the facts been as they are in the case now before me, the decision would have been otherwise.

In Gray v. Rollo, the insolvent claimant was a fire insurance company. It held notes on which Moses Gray and one Gaylord were jointly liable. It owed money upon a fire loss, not to Moses Gray individually, but to a partnership consisting of himself and his brother Franklin Gray. Moses Gray attempted by a bill in equity to compel the insurance company to set off the amount due on the policies to Gray Brothers against the joint obligation of himself and Gaylord. He alleged in his bill that his brother Franklin assented to and authorized...