Zimmerman v. Home Ins. Co.

• Decision Date: 10 January 1935
• Docket Number: 13971.
• Parties: ZIMMERMAN et al. v. HOME INS. CO. et al.
• Court: South Carolina Supreme Court

177 S.E. 895

175 S.C. 18

ZIMMERMAN et al. v. HOME INS. CO. et al.

No. 13971.

Supreme Court of South Carolina

January 10, 1935

Appeal from Common Pleas Circuit Court of Richland County; W. H Townsend, Judge.

Action by S. J. Zimmerman and another, as conservator-receivers of the Central Union Bank of South Carolina, against the Home Insurance Company and others, associated in business as the Cotton, Fire & Marine Underwriters, which filed a counterclaim. Judgment for plaintiffs, and defendants appeal.

Affirmed and appeal dismissed.

The order of Judge Townsend is as follows:

This case was heard by me upon notice on behalf of the plaintiffs to strike out the answer, defense, and alleged counterclaim set up by defendants as irrelevant, sham, and frivolous, and not constituting a defense or counterclaim to the cause of action set forth in the complaint, and upon a demurrer raising substantially the same issue. It was conceded by counsel for the defendants that the sole question in the case was whether or not the defendants had the right to set off their deposit in the Central Union Bank of South Carolina against the defendants' liability to pay the rent accruing to the conservator-receivers of the said bank. There was no issue of fact between the parties; it being conceded that the bank closed on 6th of March, 1933 upon the bank holiday being ordered, that during said month a conservator was placed in charge of said bank, and that the same is insolvent and in liquidation by the conservator-receivers pursuant to law. The defendants had on deposit in the Central Union Bank of South Carolina at the time it closed an amount in excess of $4,000, and were occupying as tenants of the bank certain offices in its building under lease from the bank dated 15th of October 1931, under which the lessees covenanted to pay a monthly rental in advance on the 1st of each month of $359.55 (less certain immaterial deductions). There was no rent past due at the time the bank closed, and the claim of the plaintiffs is for rent, all of which fell due after the closing of the bank and appointment of the conservator; that is, for the ten months beginning with April, 1933, and extending through January, 1934, when the action was begun. The defendants claim that they continued to issue checks monthly against their account in the closed bank to cover the monthly installments of rent (which checks were returned unpaid), and that they should be allowed to set off the rent as it became due against their deposit.

I do not think this right of set-off should be allowed. In theory the right of set-off is allowed in such cases on the ground that the real sum owing, or asset of the insolvent, is the balance owing as between mutual debts, and hence that by striking such balance no preference is granted as against the other creditors entitled to the ratable distribution of the estate. So the right of set-off against an insolvent is governed by the state of things existing at the time of the adjudication of insolvency, for then it is that the rights of creditors are fixed. Bank of Anderson v. Allen, 146 S.C. 167, 143 S.E. 646, 60 A. L. R. 580. It is generally held that rent to be earned and accrue in the future is not an existing debt, but a mere contingent liability which may arise in the future. 24 Cyc. 1137. Such a contingent right is not a provable claim in bankruptcy, is not a debt which can be made a basis of an action for attachment (Skalowski v. Joe Fisher, Inc., 152 S.C. 122, 149 S.E. 340, 65 A. L. R. 1427), and, not being ascertained at the adjudication of the insolvency, but its existence and amount depending upon uncertain future events, should not upon principle be allowed as a set-off. Moreover, upon appointment of...