Marshall v. Cooper

• Decision Date: 22 June 1875
• Citation: 43 Md. 46
• Parties: CHARLES MARSHALL, WILLIAM A. FISHER, CHARLES H. UTTERBACK, and others v. EDWARD K. COOPER. CHARLES MARSHALL, WILLIAM A. FISHER, CHARLES H. UTTERBACK, and others v. EDWARD K. COOPER.
• Court: Maryland Court of Appeals

43 Md. 46

CHARLES MARSHALL, WILLIAM A. FISHER, CHARLES H. UTTERBACK, and others v. EDWARD K. COOPER.

CHARLES MARSHALL, WILLIAM A. FISHER, CHARLES H. UTTERBACK, and others v. EDWARD K. COOPER.

Court of Appeals of Maryland

June 22, 1875

The cause was argued before BARTOL, C.J., BRENT, GRASON and MILLER, J.

John Scott, Jr., for the appellants.

It is settled that there can be no set-off, if the debt be subject to any contingency, and the debt claimed to be due to the complainant is certainly of that character. See Chance vs. Isaacs, 5 Paige, N. Y., 595; Myers vs. Davis, 22 N. Y., 489; Bradley vs. Angel, 3 Comstock, N. Y., 477 and 478; Mohawk Bank vs. Burrows, 6 Johns Ch., 322; Keep vs. Lord, 2 Duer, (N Y.) 81, &c. Ex parte Hale, 3 Vesey, 304; Dade vs. Irwin, 2 Howard, 383, 390.

The complainant is not able to make out his right of equitable set-off. The doctrine of equitable set-off is outside of, and independent of the statute. Some of the precedents from our sister States may justify its extension to the unpaid balance of the complainant's claim under the circumstances of this case, but the clear weight of authority is the other way; and by Judge ORMOND, of Alabama, the mistake was said to have come from their inadvertently copying decisions made under the English statutes of Bankruptcy.

The right of set-off ordinarily is not a common law right, due ex debito justitiæ, but a statutory innovation. The language of the statute is the limit of the right, and where a particular claim is not embraced in its provisions, the Court has no power to extend the application. This case, it must be granted, does not fall within the purview of our Act and the complainant has to resort to the ancient equitable rule on the subject. That rule which is solely of equitable origin, was of course framed on some requirement of equity in order to enforce a right or to prevent a failure of justice. The principle which underlies the cases, is that when two persons are mutually indebted, and he who claims the set-off trusted as a means of paying himself to the debt which he owed, in such a case he has a claim to that particular fund in preference to his debtor, and perhaps to all the world. There must be what the books call not only mutual debts but also mutual credits, which is very different from the mutual credit of the Bankrupt Act, which was the first English statute of set-off.

The ground of jurisdiction is the contract, express or implied which gave the party an equitable property in the debt which he owed. He bargained for this before he would allow his creditor to run in his debt, and permitted the obligation to be incurred only on its faith and credit. He was necessarily, in a very different position from one who had trusted solely to the personal credit of the debtor, and this difference of position gave him a right superior to any other, in the event that this fund was the only means of saving himself from loss. The insolvency of the party against whom the debt is to be set-off, was a necessary condition; for otherwise, the legal remedy was ample, without a resort to the security he had bargained for, but it is error to assert that insolvency alone is sufficient. It is just as necessary that the debt which is claimed to be subject to the set-off was contracted because the creditor himself owed one to which he understood he could resort. See Timms vs. Shannon, 19 Md., 310, 317; Rawson vs. Samuel, 1 Craig & Phil., 172, 175; Ex parte Prescott, 1 Atkyns, 231; Gordon vs. Lewis, 2 Sumner, 633 and 634; Howe vs. Sheppard, 2 Sumner, 414; Greene vs. Darling, 5 Mason, 207, &c. Riddick vs. Moore, 65 N. C., 387; Tuscumbia vs. R. R. Co. vs. Rhodes, 8 Alabama, 229; Freeman vs. Lomas, 5 Eng. Law and Eq., 120; Dade vs. Irwin, 2 Howard, 383, 390; 2 Story's Eq. Jur., section 1436, and notes.

The refusal to allow to Marshall and Fisher, their costs already incurred by them in the Court of Appeals, was an error. They were the equitable assignees of the judgment to the extent of one-third of its amount, and when the case was taken up by appeal, the entry to their use made them responsible for all the costs, amounting in this instance to a large sum. Those costs they have incurred, and are now responsible for; and as a consequence of their success they obtained upon the affirmance of the decision of the Superior Court, a judgment against the complainant to indemnify them for the outlay. They have also an attorney's fee for ten dollars taxed in this Court, and it would be outrageous to make them lose, as this injunction does, not only their taxed fee, but also the costs, for which they have to answer to the clerk, out of their own pocket. The set-off certainly does not prevail against the costs adjudged against the complainant for wrongfully prosecuting his appeal, and which the appellee recovers solely as an indemnity for the outlay it has entailed on him.

Whatever may have been the old law on the subject of attorney's fees, they are now the subject of contract and action, not only in Maryland, but throughout the United States. If they are the subject of contract, they may be secured like any other debt, and the security, enforced by the ordinary process of the Court. Marshall and Fisher, before performing any service, contracted for the amount of their fee, and also for its security, expressly stipulating that they were to have one-third of what was recovered in the action. On the faith of that agreement, and relying entirely on its efficacy, they expended much time and labor; and certainly they ought not to be deprived of the fruit of their labor. It must be admitted that Marshall and Fisher could contract for a lien, and that Utterback could enter into a binding contract for such lien.

But this view of the case proceeds on the assumption that there is no attorney's lien, as such, and is founded entirely on principles of equity, which are common to all contracts. The weight of authority, however, is clearly in favor of the validity of the lien, and this conclusion is supported by the overwhelming preponderance of reason. In the case from Illinois, so confidently cited by the other side, the Judge says that the conflict of precedent is such as to make the matter res nova, and he then proceeds to give his reasons in opposition to the doctrine. According to his statement, the lien is denied in Vermont, New Hampshire, Pennsylvania, Indiana and Missouri; while in New York, Alabama, Georgia and Florida, it is favored and sustained. To these last may be added the Court of Appeals of Arkansas, the High Court of Chancery in England, and the Supreme Court of the United States.

The Supreme Court state it to be the prevailing rule of this country. Lord ELDON expressed surprise at a contrary doctrine, and said the lien was supported by principles of natural justice. The arguments in its favor moreover, has been so strong as to reform the practice of the English Court of Common Pleas, and to beat down all discordant precedents in New York, in which State as in England, the lien now prevails in its fullest vigor.

Some misapprehensions may arise as to those cases in which the Courts say that the claim of set-off is preferable to the lien of the attorney. On examination they will be founded to rest on the principle, that statute law must be obeyed, whether it works injustice or not; and that the Court has no option but to enforce the rule it prescribes. In some of the States, as New York and Texas, the statute allowed one judgment to be set-off against the other; and when the solicitor's lien was claimed the statute was ruled to be paramount. In others, it was held, that the legal right of set-off would be enforced in equity, because the case was one of legal nature, and a uniformity of practice was desirable. This case comes under none of those heads, since the set-off is not provided for by our statute, and the complainant's right is of purely equitable cognizance. In re, Paschal, 10 Wallace, 493, &c. Rooney vs. Second Avenue R. R., 18 N. Y., 368; Ward vs. Syme, 9 Howard's Prac. Rep., (N. Y.,) 25; Hall vs. Ody, 2 Bos. & Pul., 28; Read vs. Dupper, 6 Term, 362; Mitchell vs. Oldfield, 4 Term, 123; Gridley vs. Garrison, 4 Paige, N. Y., 653; Dunkin vs. Vandenberg, 1 Paige, 625, &c Sexton vs. Pike, 13 Arkansas, 194, &c. Ex parte Plitt, 2 Wallace, Jr., C. C., 479, &c. In re Fiddey, a solicitor, 7 Chan. Appeal Cases, 776, &c. The Jeff. Davis, 2 Adm. and Eccl., 2; The Heinrich, 3 Adm. and Eccl., 510.

L. L. Conrad and S. Teackle Wallis, for the appellee.

Has Equity jurisdiction to enforce Cooper's set-off, as against Utterback? Of this we think there can be no doubt. Its jurisdiction in this respect is independent of statute resting on immemorial exercise of power. It is applied whenever a case of natural Equity arises, not within the scope of statute law. Established grounds for its exercise are mutual and connected debts between parties, and insolvency of the party against whom the set-off is claimed. Either of these grounds is sufficient. Both exist here. The hopeless insolvency of Utterback is expressly charged, and is admitted. Nowhere is the general jurisdiction of equity in this regard more fully asserted than in Maryland. The Maryland statute gives a legal right of set-off in cross-demands, such as subsist between the parties here. Where such legal right exists, but the demand due the party claiming the set-off is so situated (and the insolvency of the other party is held to be such a situation,) that he cannot obtain relief at law, equity will compel a set-off. Waterman on Set-off, secs. 14, 344-5, 395-6-7; Kerr on Injunctions, 68; Bispham's Pr. of Eq., 35; Md. Code, Art. 75, sec. 12; Merrill vs. Souther, 6 Dana, 305; Jacoby vs. Guier, 6 Sergt. & Rawle, 448;...