Merrill v. Souther

• Decision Date: 26 April 1838
• Citation: Merrill v. Souther, 36 Ky. 305 (Ky. Ct. App. 1838)
• Parties: Merrill v. Souther and Fowler.
• Court: Kentucky Court of Appeals

36 Ky. 305

Merrill v. Souther and Fowler.

Court of Appeals of Kentucky.

April 26, 1838

FROM THE CIRCUIT COURT FOR M'CRACKEN COUNTY.

Messrs Crittenden & Cates for appellant.

Mr. J T. Morehead for appellees.

OPINION

ROBERTSON CHIEF JUSTICE

Merrill filed a bill in chancery against Souther and Fowler, alleging that, after a fieri facias on a judgment which he had obtained against Souther, had been returned nulla bona, the latter had obtained a judgment against him for a smaller sum, and, being hopelessly insolvent, had fraudulently assigned it to his co-defendant, Fowler; and therefore, praying for an injunction against the latter judgment, and for a final decree of set-off.

Where cross demands exist, and one of the parties is insolvent, the other has an equitable right of set-off--which can not be divested by an assignment of the demand against him.

A court of equity has jurisdiction to decree a set-off, where either of the parties is insolvent, or non resident--notwithstanding, the demands are judgments, and both in the same court, where the set-off might be directed by a com. law order.

Where a judg't has been assigned, and the def't claims a set-off against it, he should assert that claim in chancery where the assignee--who could not be a party to a motion for a set-off at law--may be heard.

In their answers, both defendants denied the imputed fraud insisted that the assignment had been made bona fide, and for a valuable consideration, and therefore resisted the proposed set-off.

Upon a final hearing on the bill, answers and exhibits without other proof, the Circuit Court dissolved the injunction, with damages, and dismissed the bill, with costs And that decree is now to be revised.

Although there is no proof of the alleged fraud, nevertheless, as there is, in our opinion, sufficient evidence of Souther's insolvency at the date of the assignment, the decree seems to us to be erroneous.

As Souther was insolvent when he obtained his judgment against Merrill, the latter had eo instanti, and of course at the time of the assignments, an equitable right to pay the judgment by setting off his own judgment against it.Robbins, & c., v. Holly,(1 Mon., 191.)Had the assignment, therefore, vested in Fowler, a legal right Souther's judgment, he would, according to an express provision in the statute of assignments, have taken that right subject to the pre-existent equity of the...