White v. Henly

• Decision Date: 31 January 1874
• Citation: 54 Mo. 592
• Parties: GEO. T. WHITE, Administrator of G. B. HENLY, deceased, Defendant in Error, v. JNO. HENLY, SR., Plaintiff in Error.
• Court: Missouri Supreme Court

54 Mo. 592

GEO. T. WHITE, Administrator of G. B. HENLY, deceased, Defendant in Error,

v.JNO. HENLY, SR., Plaintiff in Error.

Supreme Court of Missouri.

January Term, 1874.

Error to Cole Circuit Court.

Edwards & Son, and Lay & Belch, for Plaintiff in Error.

I. The notes given by Green Henly, with the defendant as his surety for money borrowed by Green Henly, and due in the life-time of Green Henly, which were paid by defendant before suit brought against him in this case, Green Henly being insolvent at the time of the execution of the notes and at the time of his death, were proper counter-claims in this action, and the court erred in striking them out. (Morrow vs. Bright, 20 Mo., 300; 1 T. R., 662; Reppy vs. Reppy, 46 Mo., 572.)

II. The interest of a trustee of an insolvent, is exactly that of an insolvent himself, as it is effected by countervailing equities at the time of the assignment. Administrators occupy the same relation to their intestates and their estates, as trustees and their insolvents. (Krause vs. Beitel, 3 Rawle, 199 Nickerson vs. Gilliam, 29 Mo., 456.)

III. When an insolvent plaintiff is suing, equity will take jurisdiction of unliquidated claims and allow off-sets, which would not be allowed at law; but the demand must exist against the plaintiff in favor of the defendant at the time of the commencement of the suit. (Wat. Set Off, p. 80; Bradley vs. Angell, 3 Comst., 475; 2 Bart., 253.)Ewing & Smith, for Defendant in Error.

I. Because defendant's attorneys choose to term their demands counter-claims, the statute is not thereby changed. The demands do not come within the definition of counter-claims. They are, after all, nothing but set-offs. And the second section of the statute (R. C., 1855, p. 1462,) provides that a debt to be the subject of a set-off, must be due at the time of the death of the deceased, and from the deceased to defendant.

II. Neither could defendant claim to be subrogated to the rights of the payees of the notes, by paying them off so as to use their demands as set-offs or counter-claims. The only subrogation permissible in such a case, would be to have any collaterals or liens that the payee may have had, transferred to them upon their paying the debt. (Miller vs. Woodward, 8 Mo., 173; Furnold vs. Bank of Missouri, 44 R., 339; Hays vs. Wand, 4 John. Ch. R., 129.)

III. To promote and encourage trade and commerce, legislators and courts have enacted and sanctioned rules by which, one man holding another's note, may, in the course of trade, transfer it to a third party, investing him with the same right to receive the amount that he had; but the debt is extinguished if a mere volunteer steps in and pays off the debt, or one of the payees pays it off. In both these instances, the debt is extinguished. (1st Sto. Eq., § 444; Colman vs. Whoelock, 42 Barb., 207; 34 N. Y. [7 Tiff.], 440; Benton vs. Rutherford, 49 Mo., 258; Blake vs. Downey, 51 Mo., 437, 438.)

IV. The procedure amounts to nothing else than purchasing demands on plaintiff's intestate after his death for the purpose of using them as off-sets, which is clearly not permissible. (Root vs. Taylor, 2 Johns. Ch., 137; Whitehead vs. Cade, 1 Howe [Miss.], R., 95; Wat. Set Off, p. 381.)

The court had the right to render judgment on the findings of the jury. (Spalding vs. Mayhall, 27 Mo., 377, 380.)

WAGNER, Judge, delivered the opinion of the court.

Some confusion is apparent in this record, from the anomalous character of the proceedings upon the trial. In some respects, the case was treated as a suit in equity, and in other regards, as an action at law. It is manifest, that it had very little of the elements of an equitable suit, as it demanded simply a judgment in money, and no case was shown, either in the pleadings or evidence, which would warrant a decree by a chancellor. The petition avers, that the plaintiff's intestate, who was the son of the defendant, bought, in 1853, of one Ring, for the sum of six hundred dollars, an eighty acre tract of land, and took possession of the same, and, in consideration that defendant agreed to loan the deceased said sum of money, and did loan the same for the payment of the purchase money, it was agreed, at the time of the purchase, that Ring should convey the land directly to the defendant, and that defendant should hold the land as a security for the repayment of the money and in trust for the intestate; and that defendant would convey the same to the deceased, whenever he had repaid to defendant the money so furnished; that, in pursuance of said agreement, the intestate, after taking possession of the land, at various times from and after that time, made various payments to defendant up to the month of October, 1857, when a balance was found due to defendant of the sum of two hundred and fifty dollars, for which said intestate executed his promissory note, and departed this life without paying the same; that, whilst the said intestate occupied the land, he claimed it as his own, and, with the knowledge and consent of defendant, proceeded to make valuable and lasting improvements on the same to the amount of at least fifteen hundred dollars, whereby the selling price of the land was greatly enhanced, and by means of which the defendant was enabled to sell, and, in the year 1863, did, for the sum of two thousand dollars, wrongfully, and in violation of the rights of the creditors of the deceased (his estate being insolvent), sell and convey said land to an innocent purchaser, who received a conveyance and paid over to defendant said sum of money, without having any knowledge or notice of the equities of the representatives of the intestate, in and to the same; and that defendant, in fraud of the rights of the creditors of the intestate, wrongfully neglected and refused to pay over the proceeds of said sale, after he had reimbursed himself for the amount that he had so loaned. There was then a prayer for judgment for the amount defendant had received on account of the sale, less whatever...