Jump v. Leon

• Decision Date: 04 September 1906
• Citation: 192 Mass. 511,78 N.E. 532
• Parties: JUMP v. LEON.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

192 Mass. 511

78 N.E. 532

JUMP v. LEON.

Supreme Judicial Court of Massachusetts, Suffolk.

September 4, 1906

COUNSEL

Walter H. Thorpe, for plaintiff.

Fred L Norton, for defendant.

OPINION

BRALEY J.

Under Rev. Laws, c. 174, § 1, if suit on the promissory notes set out in the declaration had been brought by Bates in his own name, and after his death prosecuted by his executrix, the defendant by reason of the statute could not at law have had by way of set-off the benefit of the counterclaim now pleaded as an equitable defense, though the notes held by him were purchased in the lifetime of the testator, because he did not acquire title until after the commencement of the action. Cook v. Mills, 5 Allen, 36; Backus v Spaulding, 129 Mass. 234, 236.

By repeated decisions beginning with Little v O'Brien, 9 Mass. 423, it has been settled that the holder of negotiable paper indorsed in blank to which he has no legal title, or in which he has no beneficial interest may maintain after maturity a suit thereon against the maker, with the assent of the real owner to whom when recovered he is accountable for the proceeds. Whitten v. Hayden, 9 Allen, 408; Wheeler v. Johnson, 97 Mass. 39; National Pemberton Bank v. Porter, 125 Mass. 333, 335, 28 Am. Rep. 235; Spofford v. Norton, 126 Mass. 533; Parks v. Smith, 155 Mass. 26, 31; Prescott National Bank v. Butler, 157 Mass. 548, 32 N.E. 909; Regina Flour Mills Co. v. Holmes, 156 Mass. 11, 30 N.E. 176; Haskell v. Avery, 181 Mass. 106, 63 N.E. 15, 92 Am. St. Rep. 401; New England Trust Co. v. New York Belting & Packing Co., 166 Mass. 42, 45, 43 N.E. 928; Fay v. Hunt, 190 Mass. 378, 77 N.E. 502. See Towne v. Wason, 128 Mass. 517. It is unnecessary, however, to decide whether the placing of the notes by Bates in the hands of an attorney at law with directions to collect them, but with no further instructions, or whether there being no disclosure of any facts on the evidence which rendered such a course on his part necessary or advisable, constituted a sufficient authorization for him to transfer them to the plaintiff for the purpose of having the suit brought in his name, for the exceptions to the refusals to rule, that for this reason as neither the beneficial interest nor legal title passed the action could not be maintained have not been argued, and must be considered as waived. This leaves as the only question whether the defendant has a right to an equitable set-off of the unmatured notes. Beyond the mere form in which the present action is cast is the substance of the contractual relations of the parties in interest even if the demands are unconnected, and in equity, or at law, the nominal difference of parties plaintiff, where the litigation in reality is for the sole use and benefit of a party not named in the writ, but whose title is shown to be absolute, is not a bar which prevents the other party from maintaining his claim in set-off. Rev. Laws, c. 174, § 5; Com. v. Phoenix Bank, 11 Metc. 129, 136; Tyler v. Boyce, 135 Mass. 558, 560; Boyden v. Mass. Life Ins. Co., 153 Mass. 544, 548, 27 N.E. 669; Stewart v. Coulter, 12 Serg. & R. (Pa.) 252, 14 Am. Dec. 680.

The notes held by the defendant, apparently as a purchaser for value and in good faith, matured December 10, 1904, and the maker died December 13, 1904, and a year not having elapsed since the appointment of the executrix an action against her cannot be maintained until its expiration. Smith v. Hill, 8 Gray, 572, 573; Rev. Laws, c. 141, § 1. No unreasonable delay in bringing an action, therefore, can be imputed, and from the evidence of the executrix it may be inferred that the estate is not solvent, and if before verdict it had been represented insolvent, the set-off claimed could have been enforced although the notes were not due at the date of the plaintiff's writ. Rev. Laws. c. 174, § 5. Bigelow v. Folger, 2 Metc. 255; Phelps v. Rice, 10 Metc. 128, 131; Aldrich v. Campbell, 4 Gray, 284, 286.

The position then in which the defendant is placed is this: He holds valid outstanding promissory notes against an estate the solvency of which is admitted by the executrix to be doubtful, and is unable to enforce them independently, by reason of the special statute of limitations. The equity arising from such a situation is urged by him as a reason why he should be given the opportunity to try the question of the insolvency in fact of the estate, and upon this issue being found in his favor then to set off one debt against the other. In other jurisdictions this equitable right has been held to be created by the fact of insolvency of one of the parties where there are mutual debts similar as to their maturity to those shown in this case, and the relief given is not made dependent on a formal adjudication of the debtor as an insolvent, or a bankrupt. See Ford's Adm'r v Thornton, 3 Leigh (Va.) 695, 698; Lindsay v. Jackson, 2 Paige (N. Y.) 581; American Bank v. Wall, 56 Me. 167; Gay v. Gay, 10 Paige (N. Y.) 369, 376; Levy v. Steinbach, 43 Md. 212; Twigg v. Hopkins, 85 Md. 301, 37 A. 24; Goodwin v. Keney, 49 Conn. 563, 569; Stewart v. Coulter, ubi supra; Smith v. Felton, 43 N.Y. 419, 423; Nashville Trust Co. v. The Fourth National Bank of Nashville, 91 Tenn. 336, 18 S.W. 822, 15 L. R. A. 710; Ex parte Stephens, 11 Ves. 24; Williams v. Davies, 2 Sim. 461; Agra Bank v. Hoffman, 34 L. J. (N. S.) Ch. 285; Schuler v. Israel, 120 U.S. 506, 7 S.Ct. 648, 30 L.Ed. 707; Carr v. Hamilton, 129 U.S. 252, 255, 9 S.Ct. 295, 32 L.Ed. 669; Scott v. Armstrong, 146 U.S. 499, 13 S.Ct. 148, 36 L.Ed. 1059; North Chicago Rolling Mills v. St. Louis Ore & Steel Co., 152 U.S. 596, 14 S.Ct. 710, 38 L.Ed. 565; Camden National Bank v. Green, 45 N. J. Eq. 546, 17 A. 689, and note; In the Matter of Hatch, 155 N.Y. 401, 50 N.E. 49, 40 L. R. A. 664. But in Spaulding v. Backus, 122 Mass. 553, 556, 23 Am. Rep. 391, where the doctrine of equitable set-off was fully considered, with a review of some of the earlier authorities, it was said 'that a party whose debt is not due has no equitable right to have it set off against a debt of his own already due, in the hands of a party who is insolvent,' and hence of his executor or administrator, but where neither the debtor, nor the estate has been so adjudicated, and this doctrine was approved and followed in Wiley v. Bunker Hill National Bank, 183 Mass. 495, 497, 498, 67 N.E. 655. The rule established by these cases so far as they relate to this question is that if a decree had been passed by the probate court declaring the estate of Bates insolvent this defense would have been immediately available, but as the executrix has not chosen to take such action the fact of actual insolvency cannot be shown under Rev. Laws, c. 173, § 28, permiting an equitable defense which entitles a defendant to be unconditionally relieved against either the claim, or the judgment, by any form of appropriate relief recognized by a court of equity. Barton v. Radclyffe, 149 Mass. 275,...