Green v. Conrad
| Decision Date | 14 March 1893 |
| Parties | Green, Assignee, Appellant, v. Conrad et al |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. Daniel Dillon Judge.
Affirmed.
George A. Madill for appellant.
(1) The defense pleaded in the answer is not a counter-claim existing in favor of the sureties. It would not be a counter-claim in favor of William F. Davidson, if alive, or in favor of his executor if he were a party against whom a judgment is asked. Revised Statutes, 1889, sec. 2050; Barnes v McMullen, 78 Mo. p. 269; Pomeroy on Rights and Remedies sec. 741, also sec. 749, et seq. (2) The judgment in favor of William F. Davidson cannot be invoked by the sureties as a legal or statutory set-off. It could not be so used by the executor of William F. Davidson were a judgment asked against him. Revised Statutes, sec. 8160; May v. Keller, 1 Mo.App. 381; Waterman on Set-off, secs. 142 and 322. To entitle a party to set-off both demands must be liquidated. But appeal bonds on which these suits are based are unliquidated demands. The sureties therefore cannot, nor could William F. Davidson or his executor invoke a set-off as a legal defense. May v. Keller, 1 Mo.App. 381, and cases there cited; Baker v. Corning, 19 Mo. 125; Mahan v. Ross, 18 Mo. 121; Johnson v. Jones, 16 Mo. 494; State v. Meadrell, 15 Mo. 421; State v. Eldridge, 65 Mo. 586. (3) Neither the court nor the sheriff could, under the statute, have off-set the judgment rendered in favor of William F. Davidson against the judgment rendered in favor of the corporation; nor the executions if excutions were issued. (4) The jurisdiction of equity over off-sets existed prior to any statute of off-set and still exists independent of such a statute. And off-sets which do not come within the statute are sometimes allowed if the facts warrant the interposition of the equity powers of the court. Barnes v. McMullen, 78 Mo. 271; Huse v. Ames, 104 Mo. 91; Waterman on Set-off, sec. 410. (5) But insolvency alone of the plaintiff or of his assignor, without concurrence of other circumstances, will not induce a court of equity to enforce a set-off which would not be valid at law. The case must be such that to deny the right (as, e. g., in the case of unliquidated demands) would operate, in effect, as a fraud and be a denial of justice. Howe v. Sheppard, 2 Sum. 409; Lockwood v. Beckwith, 6 Mich. 168; Hole v. Holmes, 8 Mich. 37; Green v. Darling, 5 Mason, 201; Graham v. Idford, 1 Metc. 112. (6) A court of equity therefore allows or rejects an alleged equitable set-off in accordance with the equitable principles by which it is guided and governed. And if the equities against the allowance of an off-set in any case of which it has jurisdiction are superior to those which exist in favor of the party who invokes it the right of set-off is denied. Waterman on Set-off, sec. 439; Holbrook v. Receiver, 6 Paige Rep. 220; Coffin v. McLean, 80 N.Y. 560; Benjamin v. Jorman, 79 Mo. 149; Lingle v. Ins. Co., 45 Mo. 109; Holland v. Heyman, 60 Ga. 174; Chase v. Woodward, 61 N.H. 79; Hovey v. Morrill, 61 N.H. 9. (7) The judgments rendered in favor of the corporation and against William F. Davidson and others and the appeal bonds in suit were assets of the corporation. And after the corporation became insolvent these and all other assets owned by it became a trust fund which the law required to be equally distributed among all its creditors. Williams v. Jones, 23 Mo.App. 132; Roan v. Winn, 93 Mo. 503; Woolen Mills v. Kamps, 38 Mo.App. 229; Rouse v. Bank, 22 N.E. 293 (29 Cent. Law Jour. p. 442); Taylor on Private Corporations, secs. 668, 759; 2 Morawetz on Corporations, secs. 802, 803; Wait on Insolvent Corporations, sec. 162; Shickle v. Watts, 94 Mo. 410; Russell v. Owen, 61 Mo. 185. (8) The motion to strike out part of the answer of Frank L. Johnson, executor, should have been sustained. The suits are not against him but against the sureties. The liability is joint and several. The right of action in favor of the sureties against the estate of William F. Davidson does not arise until they have paid their principal's debt. They have two years after such payment within which to establish their claims against the estate of Davidson. Hence the fact that the bonds in suit were not presented for allowance against the estate of Davidson cannot be pleaded by his executor as a defense in favor of the sureties in these causes. Miller v. Woodward, 8 Mo. 169; Greenbaum v. Elliott, 60 Mo. 25; Burton v. Rutherford, 49 Mo. 255; Chambers v. Smith, 23 Mo. 174; Finney v. State, 9 Mo. 227; Burckhardt v. Helfrich, 77 Mo. 376; Finney v. Tenney, 80 Mo. 668; Priest v. Watson, 75 Mo. 310; Hearne v. Keath, 63 Mo. 84.
James O. Broadhead and Given Campbell for respondents Conrad and Johnson.
(1) The defense is based upon the correct theory that the claim of Davidson was a counter-claim against the Keokuk Northern Line Packet Company, which had matured prior to the appointment of the receiver, and hence prior to the appointment of Green as assignee, and was within the provision of section 2050, Revised Statutes, 1889. Barnes v. McMullen, 78 Mo. 260; McAdow v. Ross, 53 Mo. 199; Empire Trans. Co. v. Boggiano, 52 Mo. 294; Gordon v. Bruner, 49 Mo. 570. (2) This being a counter-claim, the question of whether or not plaintiff's cause of action is one for unliquidated damages is immaterial, as a claim of that character is permissible. Barnes v. McMullen, 78 Mo. 260; Empire Trans. Co. v. Boggiano, 52 Mo. 294; Kamerick v. Castleman, 23 Mo.App. 481. (3) That unliquidated damages may be pleaded as counter-claim, supra, and Scammon v. Kimball, 92 U.S. 362; Parsons v. Sutton, 66 N.Y. 92; Lignot v. Redding, 4 E. D. Smith, 285; Wheelock v. Gas Co., 51 Cal. 223; Gardner v. Risher, 35 Kan. 93. (4) The plaintiff Green being a general assignee is not one for value, and took subject to all the equities and rights existing at the time of the assignment. Peet v. Spencer, 90 Mo. 384; State, etc., v. Rouse, 49 Mo. 586; Jordan v. Shalock, 84 Pa. St. 366; Chenault v. Bush, 84 Ky. 528; Fera v. Wickam, 15 N.Y.S. 892. (5) There is no equity or equality in putting a debtor who has a legal off-set to a corporation claim in a worse position and its other creditors in a better because of its failure. Receivers v. Gas Light Co., 23 N. J. L. 283; Nashville Trust Co. v. Bank, 18 S.W. 822; Rubey v. Watson, 22 Mo.App. 428; Scammon v. Kimball, 92 U.S. 362. (6) Our counter-claim is very comprehensive and is constantly receiving a broadening interpretation; it includes what was known before as set-off and recoupment. Emery v. Railroad, 77 Mo. 339; Hay v. Short, 49 Mo. 139; Gordon v. Bruner, 49 Mo. 570. (7) The statute should be liberally interpreted to the end that controversies between the same parties concerning the same subject-matter be adjusted in one proceeding. Waterman on Set-offs, sec. 24, p. 25; Trans. Co. v. Boggiano, 52 Mo. 295; McAdow v. Ross, 53 Mo. 199; Glenn & Hall Co. v. Hall, 61 N.Y. 226; Carpenter v. Manhattan Co., 22 Hun, 49. (8) In law the surety has the right when sued with his principal to avail himself of any counter-claim his principal may have against the plaintiff. Waterman v. Clark, 76 Ill. 428; Andrews v. Farrell, 46 N.H. 17; Concord v. Pittsbury, 33 N.H. 310.
R. M. Nichols for Sharp, administrator of Lehman.
(1) The notes upon which the judgment sought to be off-set was obtained were dated betwixt December 10, 1879, and October 15, 1880, and were payable on demand; they were consequently due upon their respective dates, and long prior to the date of the assignment, January 15, 1881; they were consequently an equitable set-off or a counter-claim in the hands of William F. Davidson when the assignment was made. Easton v. McAllister, 1 Mo. 662; O'Fallon v. Kerr, 10 Mo. 553; Jameson v. Jameson, 72 Mo. 640; Wheeler v. Warner, 47 N.Y. 519; Huse v. Ames, 104 Mo. 96. (2) Without the aid of a court of equity, Wm. F. Davidson, and consequently respondent Frank L. Johnson, his executor, under the statute may counter-claim because the counter-claim is "existing in favor of defendant and against the plaintiff, between whom a several judgment might be had," and "a cause of action arising also in contract and existing at the commencement of the action." Emery v. Railroad, 77 Mo. 346; Smith v. Spangler, 83 Mo. 408. And because, under the statute of counter-claim, it is not required that the counter-claim should be liquidated, or that there should be any mutual indebtedness. McAdow v. Ross, 53 Mo. 200. (3) The insolvency of appellants' assignor, and the unliquidated demands upon which appellants sue, would be sufficient equity in favor of Wm. F. Davidson, and consequently Frank L. Johnson, his executor, to entitle him to set-off the judgments in a court of equity. Barnes v. McMullen, 78 Mo. 269; Fulkerson v. Davenport, 70 Mo. 541. (4) The judgment sought to be set-off or counter-claimed is liquidated, it is certain and definite, and, the insolvency of the adverse parties being admitted, the chancellor has jurisdiction to retain the matter and give full and final address by decreeing a set-off. Field v. Oliver, 43 Mo. 202; Barnes v. McMullen, 78 Mo. 269. (5) A surety, when sued by a creditor upon his contract, may plead and prove in his defense any set-off or counter-claim which would have been available to his principal had the action been commenced against him. Bryant on Suretyship, sec. 203; Harris on Subrogation, sec. 221; Byles on Surety and Guarantor, page 408; Rubey v. Watson, 22 Mo.App. 428; Jarratt v. Martin, 70 N.C. 459; Cole v. Justice, 8 Ala. 793; Hamrod v. Bough, 85 Ill. 435; Marshall v. Cooper, 43 Md. 60. (6) The equitable doctrine of off-set and counter-claim would be abrogated in all cases of insolvency if the...
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