text:
    The Peoria Marine and Fire Insurance Company v. Daniel W. Perkins.

      Policy of Insurance: Construction. The policy of insurance in this case was upon a stock of boots and shoes, and provided that the application should be taken and deemed to be a warranty on the part of the assured, and should so remain during the insurance, and that it was made and accepted in reference to the conditions annexed, to be used and resorted to in order to explain the rights and obligations of the parties in cases not therein otherwise provided for. The conditions provided for continuing the policy in life by renewal, for sharing the loss, if any, with any other company having a risk on the same property and for cancelling the policy at the election of the company, for any cause. It was also provided by the conditions that in taking applications the agent of the company should be held as agent for the applicant, and that in case of renewal the policy should be considered as continued under the original warranty in so far as it should not be waived by a new warranty. Upon the trial, a witness for the insured testified that there was $1,500 additional insurance in the North American Insurance Company, on the stock of “boots and shoes, leather, shoemakers’ findings and materials, and such other articles as are usually kept in a boot and shoe store ”; that such policy covered leather and findings, upon which there was a loss, which was deducted from the amount of the sum insured. On cross-examination the witness was asked, “What amount of insurance did you have on leather and shoemakers’ findings in the North American Insurance Company at the time of the fire?” This question was objected to as immaterial, and the Objection sustained.

      Held, That there was no error in this ruling, as the second policy contained no specification of the amount insured in leather or shoemakers’ findings, or both, and it must have been impossible to state the amount insured on any particular items unless the whole sum of $1,500 should have been considered as such amount.

      Suit on Policy of Insurance: Evidence: General Issue: Affidavit of merits. The plaintiff declared upon the policy as issued in August, 1864, and continued hy renewal until August, 1866, and the policy and renewal certificate were put in evidence. The company offered to prove that the plaintiff was at the renewal of said policy, and for some time before, had been the agent of the company, and that the original policy was cancelled, and that the renewal certificate, if- given at all, was fraudulently given by the plaintiff after the fire, which was objected to as incompetent and immaterial. The court below held the testimony admissible to affect the credit of the plaintiff as a witness, but inadmissible for any other purpose.
    Reid, That there was no error in this ruling of which the company could complain. The policy and instrument of renewal constituted the contract sued upon, and since they were in writing their due execution as alleged could not be questioned under the plea of the general issue without the affidavit prescribed by rule *79. The renewal, if well executed, as admitted by the plea, gave life to the policy which continued to the time of the fire, even though there had been a cancellation prior to the renewal.

      Internal Bevenue Law: Collector's certificate, where stamp is omitted. The assignment of the policy to plaintiff, together with the certificate of the collector of internal revenue of the stamping of the assignment was admitted in evidence under objection. The assignment contained an agreement stamp.

      Reid, That the evidence was competent. The action of the collector is, in a limited sense, judicial, and no collateral inquiry into the grounds of it could be permitted. His certificate partakes of the character of the act, and more resembles the memorial of a judicial determination than an ordinary official certificate, and may be admitted within the principle which allows various public documents, surveys, plats, entries and the like, to be given in evidence; and that the assignment was shown by legal evidence to have been properly stamped.

      Reid, further', That the power contained in the assignment to collect the insurance was entirely nugatory, since the same authority it assumed to have existed without it, and therefore no additional stamp was required.

      Policy of insurance: Misrepresentation. In the application for the policy, the assured, in reply to certain questions, answered that “the building was used for stores,” and further that there were “two tenants.”
    The preliminary proof showed that the buildings were used as stores, and that the second story and garret were “used as-sleeping rooms, and for no other purpose whatever;”

      Rdd, That the statement in said proof was not inconsistent with the truth of the representations in the application.

      Policy of insurance: Construction. The policy in this case referred to the conditions for an explanation of the rights and obligations of the parties in all ‘cases not otherwise provided for in the policy itself.
    Those conditions required that the application should specify the situation of the building containing the goods “with respect to contiguous buildings and their construction and materials,” while neither the policy or conditions required the application to set forth the distance between any buildings, nor required a diagram, or defined the word “ contiguous.”
    The policy was issued, and referred to the application as follows: “All as particularly described in the application of the assured now on file.”
    The application contained the following question and answer: Q,. Describe all other buildings, and how occupied, and all other exposures to fire, their distance from risk and from each other within one hundred and fifty feet?” A. “North, nothing within one hundred and twenty feet; east, fifty feet to small building; south., ninety feet to across street; west, sixty-six feet to brick hotel across street.” A diagram was also furnished, exhibiting two streets crossing each other, and the site of the hotel and the place where the goods were.

      Held, That as the company issued the policy on the application, it must be considered that the description in the said answer and diagram was regarded as a substantial compliance with the policy and conditions.

      Heard April 8th.

      Decided April 14th.

    Error to Bay Circuit.
    This was an action of assumpsit, brought to recover damages on a policy issued by plaintiff in error to Messrs.
    Leidlein & Burger, and by them assigned to defendant in error.
    Defendant pleaded the general issue and gave notice of special matter.
    A verdict was rendered for the plaintiff below.
    The facts are stated in the opinion.

      I. Marston, for plaintiff in error.

      John W. McNamara, for defendant in error.
   Graves J.

This is a writ of error to the Circuit Court for the county of Bay.

The suit was brought in the court below against the plaintiffs in error by Daniel W. Perkins as assignee of a policy of insurance, issued by the plaintiffs in error on the 26th day of August, 1864.

The policy was for 11,500 on a stock of boots and shoes in a building in East Saginaw, to continue from August 26, 1864, to August 26, 1865.

It provided that the application should be taken and deemed to be a warranty on the part of the assured, and should so remain during the insurance, and that it was made and accepted in reference to the conditions annexed to be used and resorted to, in order to explain the rights and obligations of the parties in cases not therein otherwise provided for. The conditions provided for continuing the policy in life by renewal, for sharing the loss, if any, with any other company having a risk on the same property, and for cancelling the policy at the election of the company for any cause.

It was also provided by the conditions that in taking applications the agent of the company should be held as agent for the applicant, and that in case of renewal the policy should be considered as continued under the original warranty in so far as it should not be varied by a new warranty. The case was tried by a jury, who returned a verdict against the company for eight hundred and eighty-eight dollars and seven cents damages.

Upon the trial, Burger, one of the insured, testified for the plaintiff that there was $1,500 additional insurance in the North American Insurance Company on the stock of boots and shoes, leather, shoemaker findings and materials, and such other articles as are usually kept in a boot and shoe store; that such policy covered leather and findings upon which there was a loss of $447 55, which was deducted from the $1,500.

Upon cross-examination on the part of the company, the following question was put to the witness: “What amount of insurance did you have on leather and shoemakers’ findings in the North American Fire Insurance Company at the time of the fire”? To this question the plaintiff’s counsel objected on the ground of immateriality, and the court sustained the objection, and the defendant’s counsel excepted; and this is the first error assigned.

The policy issued by the North American Company was an open one, containing no specification of the amount insured on leather or shoemakers’ findings, or both, but it simply insured to the amount of $1,500 on the “stock of boots and shoes, leather, shoemakers’ findings and materials, and such other articles as are usually kept in a boot and shoe store.” It must have been impossible, then, to state the amount insured on any particular items, unless the whole sum of $1,500 should have been considered as such amount. The question, however, seems to have been intended to elicit a statement by the witness of some amount less than the whole as applying to the particular items mentioned, and as the case was not susceptible of any such answer the question was properly over-ruled.

The plaintiff in his declaration counted upon the policy as issued in August, 1864, and continued by renewal until August, 1866, and on the trial submitted in evidence the policy and instrument of renewal.

Testimony having been given on the part of the plaint-tiff to show that he was at the time of the renewal, and for some time theretofore had been, the agent of the company, the latter offered several items of testimony, and consisting chiefly of entries in the insurance register of said plaintiff, with the avowed purpose of proving that the original policy was cancelled, and that the renewal receipt, if given at all, was fraudulently given by the plaintiff after the fire.

The plaintiff opposed the admission of this testimony as incompetent and immaterial, and the court held the testimony admissible to affect the credit of the plaintiff as a witness, and inadmissible for any other purpose; and this is the second error assigned.

It is very evident that the policy and instrument of renewal constituted the contract on which the action was brought; and since these were in writing, their due execution as alleged could not be questioned by the company under their plea of the general issue without the affidavit prescribed by rule seventy-nine. No such affidavit appears to have been made. When the party makes no such affidavit, it is an admission that he does not mean to contest the. fact, and by such admission he is bound. The consequence must be that the policy and renewal must both be taken as having been duly executed as alleged. Such being the case, there could be no occasion to inquire as to a supposed cancellation of the policy before the renewal, inasmuch as the latter, if well executed, as admitted, gave life to the former, which continued to the time of the fire.

There was nothing therefore in this decision of which the company can complain.

All the other material questions in the case are raised by the refusal of the court to charge as requested, and are covered by the third assignment of error.

The first point to be noticed under this head, is founded on objections by the defendants to the admission in evidence of the assignment of the policy to the plaintiff, together with the certificate of the collector of internal revenue of the stamping of the assignment.

These objections were in substance that the certificate was not evidence, and that the agreement stamp upon the assignment was insufficient, inasmuch as the assignment contained a power to collect the insurance, and the instrument in respect to that remained unstamped.

By the act of Congress approved July 13, 1866, authority was conferred upon the collector to remit the penalty and affix the appropriate stamp within the time prescribed by the act, when it should appear to him on oath, or otherwise to his satisfaction, that the omission to stamp was the result of accident, mistake, inadvertence, or urgent necessity, and without any willful design to defraud the United States of the duty, or to evade or delay the payment of it.

The act further provides that, in case the instrument is so stamped, it may be used in all courts and places in the same manner and with the like effect as if it had been rightly stamped when made or issued. In the present case the assignment was stamped as an agreement in pursuance of this provision.

It will be observed that the authority confided in the officer by the act of Congress, is to be exercised in his discretion, upon an examination of facts of which he is constituted the exclusive judge; and it is believed that, in the absence of any controlling provision, his decision upon those facts must be conclusive. His action is, in a limited sense, judicial, and certainly no collateral inquiry into the grounds of it could be permitted.

His certificate partakes of the character of the act, and more resembles the memorial of a judicial determination, than an ordinary official certificate. It derives confidence from the circumstance that it is made by an authorized public officer, in the ordinary discharge of his duty as such, and in a matter concerning the government.

The refusal to receive it in evidence in such cases as the present, would produce great embarrassment and injustice. It would often necessitate the compulsory attendance of these officers as witnesses when possible, at places many hundred miles distant, at great expense to parties, and with serious detriment to the public service. If their attendance or testimony could not be secured by reason of their absence, or otherwise, it is not perceived how the proof could be supplied if the certificate should be held incompetent.

On the whole, it is conceived that the certificate may be admitted within the principle which allows various public documents, surveys, plats, entries, and the like, to be given in evidence. See cases in Cowen and Hill’s notes (note 804).

The objection that the power contained in the, assignment was unstamped, is sufficiently answered by saying that the power itself was totally nugatory, since the same authority it assumed to give would have existed without it. It was not offered in evidence as a power, and had no more effect upon the case than blank paper.

If it became evidence at all, it must have been as an integral part of the assignment, and if that was the case, no additional stamp was required.

These views lead to the conclusion that the assignment was shown by legal evidence to have been properly stamped. The plaintiffs in error have mainly relied upon supposed breaches by the assured of warranties made by the latter in applying for the policy.

These warranties are found by bringing together the language of the policy, the conditions as they are called, and the application. The policy and conditions were made by the company, and contained what they stipulated to do, and what they stipulated for; and the application referred to in the policy and conditions, consisted of questions put by the company to the applicants, and the answers thereto by the latter. Those parts of the policy and conditions essential to the present purpose, with a single exception to be noticed hereafter, have been already mentioned.

The seventh question in the application was as follows: “For what purpose used?” alluding to the building containing the property to be insured. The answer was, “it is used for stores.” The eighth question was: “How many tenants?” and the answer was, “two.” It is contended on the part of the company that the preliminary proofs showed that “divers parties slept in the same building,” and that the foregoing answers were thereby shown to have been untrue.

On turning to the preliminary proofs, we find it stated “that the building containing the property destroyed was occupied in its several parts by the parties hereinafter named and for the following purposes, to wit: The east half of the lower story by said deponent as a retail boot and shoe store and shop; the west half of the lower story by Francis Otto, as a retail tobacco and cigar store and news room; the second story and garret as sleeping rooms, and for no other purpose whatever.” It is upon this, and this alone, that the company asked the court to believe that “divers parties slept in the same building,” and that the answers to the seventh and eighth questions were accordingly untrue. The statement in the preliminary proofs would be satisfied if the tenants themselves slept occasionally in the rooms over their stores; and surely it could not be argued that by so doing the foregoing answers would be falsified. If the company would defeat a recovery on the ground stated, they could only do so by proving the delinquency. It would not be presumed.

It was further maintained, on the part of the company, that in answering the twenty - fourth question in the application, and in making a diagram on the latter, the applicants became warrantors of the correctness of the answer and plan, and that both answer and diagram were actually untrue. As already stated, the policy referred to the conditions for an exposition of the rights and obligations of the parties in all cases not otherwise provided for in the policy itself.

If in obedience to this express stipulation we turn to the conditions for light on the point now presented, we find it provided in condition numbered four and a half, that the application should specify the situation of the building containing the goods, with respect to contiguous buildings and their construction and materials, while neither the policy or conditions required the application to state the distance between any building, or required the applicant to make any diagram, or in any manner defined the meaning of the word “ contiguous.”

In accordance with these provisions, the application was made and filed in the office of the company. The policy was thereupon issued with an express reference to the application in the following words: “All as particularly described in the application of the assured numbered 25 on file in the office of this company.”

The application so made and filed, and on which the company issued the policy, contained the question and answer alluded to.

The question was as follows: “Describe all other buildings, and, how occupied, and all other exposures to fire; their distance from risk and from each other, within one hundred and fifty feet.” The answer was, “North, nothing within one hundred and twenty feet; east, thirty feet to small building; south, ninety feet to across street; west, sixty-six feet to brick hotel across street.”

There was also a diagram on the back of the application, exhibiting two streets crossing each other, and the site of the brick hotel and the place where the goods were.

Since the company issued the policy upon this application, the inference seems irresistible that the -description in the foregoing answer and in the diagram was regarded as a substantial compliance with the policy and conditions.

The conduct of the parties amounted to a practical construction of that passage in the condition last quoted, and may be considered as declaring that the buildings mentioned in the answer were not “ contiguous” in any sense requiring a statement of their construction or materials.

It was manifest that the answer to the twenty - fourth question did not assume to describe all the buildings within one hundred and fifty feet, or to give the construction or materials of those mentioned; and yet the company accepted the application in this regard as sufficient, and there was nothing in the policy or conditions to render this course incompetent or improper.

This view of the “obligation” of the assured, to use the language of the policy, is an answer to the claim that the reply to the twenty - fourth question, and the diagram, con-constituted a warranty which was broken, and disposes of the only remaining questions in the case which are at all material.

The judgment of the court below is affirmed, with costs to the defendant in error.

Cooley Ch. J. and Campbell J. concurred.

Christiancy J. did not sit.


source: Caselaw Access Project

author: Cooley Ch. J.

license: Public Domain

text:
    Simeon Smith, for use of, etc., v. William Warner and Albert L. Catlin.

      Pleadings: Setoff: Unliquidated damages. There is nothing in the statute which makes the right to set-off depend upon the form of the plaintiff’s declaration, or upon his having asserted other claims than those to which the set-off is made. If the demand of the defendant is one in other respects within the statute so as to be a proper set-off, the only restriction upon the right is that the plaintiff’s action shall be “founded upon demands which could themselves he the subject of set-off according to law.”
    Where the plaintiff joins an unfounded claim for unliquidated damages in the same suit with other claims which are the subject of set-off the legal inference is that the plaintiff’s action is based not upon the baseless demand that was asserted, but rather upon the others that were not only asserted, but established by evidence.

      Special and Common Counts: Set-off. The plaintiff declared specially for the non-performance by defendant of an agreement in writing, and tbe only special breach alleged was in the non - delivery of certain personal property, although there was a general averment that the defendant had failed to perform the contract in each and every other particular. The common counts were also added.
    As without the special assignment of breach the declaration would have been subject to special demurrer, the defendant was justified in supposing the plaintiff’s claim under that count was confined to that one demand, especially as he joined the common counts which were sufficient to cover all his other claims.
    All the allowances made to the plaintiff by the referees must therefore be considered as made under the common counts.

      Demands, when subject of set-off: Notice. Demands are a proper set-off if they belonged to a defendant in good faith before notice of assignment. A defendant is not bound to presume that, because he knew the plaintiff was insolvent, and had been for a long time, the plaintiff had disposed of the demands against them; much less where it affirmatively appears that plaintiff did not in fact dispose of the same until the defendants had become owners of more than enough to extinguish it.
    The fact that such demands were purchased by defendants at a very great discount is no evidence that they do not hold them in “good faith,” as these terms are used in the statute. All the statute contemplates is, that the claims offered in set-off shall be actually and not merely colorably owned by the defendants, and that the amount paid for them is immaterial.

      Heard April 10 and 11.

      Decided April 14.

    Error to Wayne Circuit.
    This was an action of assumpsit to recover damages for a breach of contract.
    Tbe declaration contained a special count, and also tlie common counts. The defendant pleaded tlie general issue and gave notice of set-off. The cause was referred. The referees in their report allowed defendant’s set-off to the amount of the plaintiff’s claim, and also allowed their costs of suit. The report was confirmed in the court below.
    The facts are stated in the opinion.

      Levi Bishop, for plaintiff in error.
    1. At the time the demand sought to be set off was brought by defendants it was over due, and Smith, the nominal plaintiff, was well known by the defendants to be notoriously insolvent, and they bought this claim at a nominal sum, for the avowed purpose of setting it off in a suit which they anticipated on the claim now sued on. In other words, they bought this demand for the express purpose of destroying, with a nominal sum of money, a just claim to a large amount against them.
    The referee finds this just demand, to a large amount, due from the defendants, and we submit that there is manifest injustice in allowing stale demands which have been raked up, as these were, by the defendants to defeat a just debt, and more especially when they are urged, as these are, against third parties. Simply to state such a case would seem to be a sufficient argument of it.
    It is a general rule of extensive application, that claims against an insolvent plaintiff, which have been purchased after they became due, cannot be set off against the assignee of the plaintiff’s claim. Every intendment, including constructive notice, and even presumptions of fraud, will prevail against such claims, when necessary to prevent injustice. 1 Selwin’s Nisi Prius, 152; 2 Dallas, 43; 5 Gill, 485, 505-6; 8 Rich. S. O. 273; 22 Conn. 639; 8 8. & R. 425; 3 Barr, 470; 6.Id. 421; 1 Johns. Oases, 51, Per Rad-cliff & Kent, J. J; 2 Caine's C. 302; Same case in Court of Nrrors; 2 Johns. R. 274 ; 6 Coto. 613.
    The defendants paid for this claim, sought to be set off, four per cent, of the amount of it. This inadequacy of consideration would of itself, in a proper case, afford ground for relief, on the ground of constructive fraud. If the transaction was not “grossly unreasonable” and “grossly against conscience,” as between the defendants and the nominal plaintiff, it most certainly has these characteristics when the attempt is made to deduct the full nominal amount of the claim as against a bona fide purchaser. In such a case even a court of law will relieve against a hard and unreasonable bargain. 1 Story’s Eq. § 324, note.

    ■ 2. The statute in regard to set-offs does not stand in the way of the ends of justice. 2 O. L. 4180.
    This is an enabling statute. Certain claims may be set off. The statute is permissive. It was not designed to promote the ends of injustice. Set-offs are allowed in cases coming within the'act, provided it is just and proper that they should be allowed, and that no injustice will thereby be done.
    A defendant is not required to avail himself of the privilege of the act. 5 Gill. 485, 505.
    It is submitted with confidence, that if the allowance of a set-off will work injustice in any way, the court will itself deny the privilege, and refuse to allow the set-off.
    Furthermore, the statute expressly provides, that in order to be allowed as a set-off, a demand must have belonged to the defendant in good faith, before notice of the assignment of the plaintiff’s claim. 2 G. L. 4180.
    The price paid for this claim negatives any such presumptions.
    At most, no more should be allowed on them than the amount and interest actually paid for them by the defendants. This is the full extent of any just claim the defendants can have. Bestrict the defendants to this amount, and there may be some show of reason and justice in the case they make. There can be none beyond this. 3 Barr. 470; 6 Id. 421. •

    3. No set-off at all can be allowed in the case.
    It is insisted that, although no set-off can be allowed against the unliquidated damages claimed by the plaintiff under his special count, yet, where the common counts are added to a declaration, and the plaintiff recovers any sum under them, in addition to his unliquidated damages, that a set-off may be litigated in the same suit, and allowed as against the sum so recovered under the common counts.
    It will not be contended, that if the claims which the plaintiff sets up in his special count, could not be set off, or if a set-off could not be allowed against them, a set-off may still be allowed, because we have added the common counts in our declaration.
    As I 'have said, the statute only authorizes counter claims to be litigated in a proper case, in order to obviate the necessity of a second suit for the purpose.
    The privilege can be extended no further than is expressly authorized by the statute. ■
    The design of the statute was, not to allow counter claims to be litigated in the same suit, where the claims on either side should be for unliquidated damages. If they are of this character on either side in a given case, no hardship is done by not allowing the set-off, and the defendant has only to bring his cross action, as before the statute.
    It was not the intention of the statute to complicate the trial of causes, as must be the case if a set-off is allowed where the claim on either side is unliquidated. If such had been the intention, the legislature would have said so, and would have imposed no restrictions, as to the character of claims in actions ex contractu, with reference to the privilege of set-off.
    Again: if a set-off is to be allowed in cases where a part of the plaintiff’s demand might be set off, and a part not, the set - off should manifestly be confined to that part of the plaintiff’s claim which could be set off. The statute forbids it with reference to the other part. This would open a door to the greatest confusion in the trials of causes. The limitation imposed upon the right or privilege of set - off was intended among other things, to exclude this very confusion.

      The only safe and convenient rule is, to exclude a set-off where any part of the plaintiff’s claim is of a character to require, so far as that part is concerned, such exclusion under the statute.

      B. G. Holbrook, and G. V. N. Lothrop, for defendant in error.
    1. The only question to be considered is, whether the set - off offered in this case was rightfully allowed; it distinctly appearing that such set-off was not offered as to any claim except such as could or might be recovered under the common counts, separate and distinct from' the special count.
    The referee having found that the plaintiff was not entitled to recover any unliquidated damages, of course the claims on both sides were subject to mutual set-off.
    The demands sought to be set off are all within the statute allowing them to be set off. Comp. L. § 4180.

      a. The demands arose upon contracts express and implied.

      b. They were money had and received, and personal property sold.

      c. They were due to defendants in their’ own right.

      d. They existed before commencement of suit, and then belonged to defendants.

      e. The plaintiff’s demands were subject to be set off against defendants.
    /. The demands were against the plaintiff.

      g. The demands were, except $1,341.26, assigned to defendants before the plaintiff assigned to Tennis & Dangler, and the $1,341.26 were assigned afterwards, but without any notice or knowledge of assignment by plaintiff to Tennis & Dangler, and before suit commenced.
    2. The defendants are entitled to a set - off for the whole amount of claims, without regard to. the amount they paid for them, as there is nothing in the law which prevents the purchase of debts against a creditor or other person.
   Cooley Ch. J.

When this case was presented for our consideration before, the principal question which arose upon the record was, whether the claim of the plaintiff of damages for the non-delivery of a portion of the personal property which, by the contract, the defendants were to transfer to him, was to be considered a claim for unliquidated damages or not. It was not disputed, as we understood it, that an allowance had been made by the referee for such damages; but whether that was so or not, there was nothing in the referee’s report to show that he had not done so, and the inference that he had was fairly deducible. We did not intend, in our decision, to go beyond the case then before us to discuss other questions; and the decision was carefully restricted to the precise points then presented by the record.

The present record presents a different case. It now appears distinctly from the report of the referees, whose con-, elusions of fact we must receive as correct, that although the plaintiff presented for their consideration a claim for unliquidated damages, yet that claim turned out on investigation, to be baseless, and that the only claims which the plaintiff was able to substantiate before them were claims which are subject to set-off under the statute. Upon this report the question arises, whether the joinder by the plaintiff of an unfounded claim for unliquidated damages in the same suit with other claims which are subject to set - off, will preclude the defendants from that legal right which they would have had to reduce the plaintiffs’ just demands by counter claims, had the latter been sued alone?

If this question is decided in the, plaintiff’s favor, it must be upon the mere fact that the claim lo unliquidated damages is asserted by Mm. It cannot depend upon his motives in making the assertion, because in most cases it would be impossible to determine what those motives were. It is very easy where parties hare had mutual dealings to assert an unfounded claim; and if the mere assertion, and perhajos the offer of some evidence in its support, will be sufficient to exclude the legal right to a set - off, it will be easy enough to accomplish that result and defeat the purpose of the statute of set-off in a large proportion of the cases where it is justly applicable.

There is nothing in the statute, however, which makes the right to a set-off depend upon the form of the plaintiff’s declaration, or upon his having asserted other claims than those to which the set-off is made. If the demand of the defendant is one in other respects within the statute, so as to be a proper set-off, the only restriction upon the right is, that the plaintiff’s action shall be “founded upon demands which could themselves be the subject of set-off according to law.” Now, when it appears by the record that a demand was asserted that was baseless, but that others were not only asserted but established by evidence, it seems to us somewhat difficult to say that the plaintiff’s action was based upon the unfounded claim. The contrary is clearly the legal inference; and as it also gives effect to the plain intention and purpose of the statute — which is to make claims of a certain nature offset each other — we think the referees were right in holding the case to be one in which set-offs were allowable.

There may be difficulties in the practical application of this ruling in some cases; but the practical administration of the law of set-off is always open to difficulty, and this fact, therefore, is not sufficient reason for an attempt to put a construction upon the statute different from that which a reasonable interpretation of its terms will warrant. There are many cases where it is admissible for a defendant to put in evidence of a set-off, which after all may require to be rejected by the jury, because their finding upon some disputed fact makes the set-off not allowable, when, had their finding on that fact been otherwise, it would have been admissible. This may happen where the plaintiff’s claim has been assigned, and the time of the assignment is disputed, and also when the defendant gives evidence of. an assignment as a foundation for introducing a set-off against the assignee; and the plaintiff denies that any such assignment has been made. We suggest these cases as presenting the same difficulty which is supposed to be so formidable here; but many others might also be indicated.

It is also insisted that the allowance of set-off was erroneous because the principal portion of the plaintiff’s demand was established under the special count in his declaration; while the offer of set-off was expressly confined to the common counts. This objection, however, does not seem to us well founded. The plaintiff declared specially for the non-performance by defendants of an agreement in writing; but while he averred in general terms that the defendants had failed to make good and perform the contract in each and every other particular, the only special breach alleged was in the delivery of the personal property The claim upon that was for unliquidated damages; and as without that special assignment of breach, the declaration would have been subject to special demurrer, the defendants were justified in supposing the plaintiff’s claim, under that count, was confined to that one demand; especially as he joined the common counts, which were sufficient to cover all his other claims. The notice of set - off was evidently confined to the common counts because the 'special count asserted a claim which was not the subject of set-off; and we think all the allowances made to the plaintiff by the referees, must be considered as made under the common counts.

The plaintiff also claims that all the demands allowed to the defendants should have been excluded because purchased by them under such circumstances as would preclude their claiming to be owners thereof in good faith; and to this point a number of oases were cited. All of those cases, however, were cases where the plaintiff’s demand had become, either legally or equitably, a fund for the payment of his debts, and where it would be plainly inequitable to creditors to allow the set-off to be made. They evidently have no application to the case at bar. The plaintiff’s demand in this case has been assigned, but not to creditors, and the assignees in law are not recognized as having any greater rights or equities than he would have had himself. All the demands of the defendants were owned by theni at the time of the assignment save one, and that was purchased before notice of the assignment, and before the suit was commenced. The statute makes the demands a proper set-off if they belonged to the defendants in good faith before notice' of the assignment. The plaintiff says they did not, because the defendants well knew he was insolvent, and had been for a long time; and the defendants were bound to presume that under such circumstances he had disposed of the demand against them. But a party can hardly be bound, in the law, to presume things which do not exist; and in this case it affirmatively appears that plaintiff did not dispose of his demand until defendants had become owners of more than enough to extinguish it. But it is also objected that the fact that defendants bought the demands at a very great discount, is evidence that they do not hold them in good faith. This objection, however, evidently proceeds upon a misapprehension of the meaning of the terms “good faith,” as used in the statute in reference to the ownership of the claims offered in set-off. All that the statute contemplates is, that the demands shall be actually, and not merely colorably, owned by the defendants; and the actual ownership by defendants is not disputed in this case. The amount they paid for them is immaterial.

The judgment of the court below must be affirmed, with costs.

Campbell and Graves JJ. concurred.

Christiancy J. did not sit.


author: Campbell J.

text:
    Henry Weber v. James Henry.

      Illegal levy by United States Marshal: State Process: Effect of release of levy. The rule which protects property in the hands of a United States Marshal from levy under State process, does not prevent the Marshal from surrendering an illegal levy voluntarily; and where, upon a levy by the Sheriff, it does not appear that the Marshal notified him that he claimed the property officially, or objected on that account to giving it up, there is no clashing of process.
    An officer’s release of a levy discharges it; and where such levy was tortious and gave no right to the officer making it, such release would be entirely proper, and no more than a matter of honest duty. A levy on the property of a stranger to the suit, is a trespass which confers no right on the officer. Buck v. Golbaih, 8 Wall. 83k.

      Waiver of return: Replevin: Special property: Damages. Where a person setting up only a special property in chattels replevied waives a return and claims only pecuniary damages, his recovery can not exceed the extent of his interest as shown. L. 1865> p. 885. No presumption can be raised concerning the extent of a special interest beyond the amount proved.

      Heard April 11.

      Decided April 14.

    Case made from Wayne Circuit.
    This was an action of replevin brought by plaintiff against defendant for the unlawful detention of certain goods and chattels mentioned in the writ, and to recover damages therefor.
    The plea was the general issue, with a notice thereto ánnexed, that defendant would give in evidence on the trial of the cause, that the goods and chattels described in the plaintiff’s declaration were taken and seized by defendant, acting as Marshal of'the United States for the Eastern District of Michigan, in a cause pending in said court, wherein John B. Goodsell is plaintiff, and Emil Dablheimer and Adolph Bieber are defendants; and that at the time of the commencement of this suit the defendant held said goods and chattels under and by virtue of said writ of attachment.
    The jury rendered a special verdict, on which judgment was rendered in favor of defendant for the value of the property; the return of the same having been waived. So much, of the facts as are material are referred to in the opinion.

      H. M. & W. E. Cheever, and D. C. Holbrook, for plaintiffs.
    1. Replevin is a concurrent remedy with trespass, and may be maintained in all cases where the latter will lie. “Whenever any goods or chattels shall have been unlawfully taken, or unlawfully detained, an action of replevin may be brought for the recovery thereof, and for the recovery of the damages sustained by such unlawful taking or detention.” — Comp. L. § 5005.
    The doctrine that state courts may exercise jurisdiction in cases-authorized by the laws of such state, and not prohibited by the exclusive jurisdiction of the Federal Courts, has been often recognized. — 5 Wheat. 1; 6 Hoisted, 370.
    In a number of cases the jurisdiction of the state courts to relieve by habeas corpus against unlawful detention by an officer of the United States has been asserted and exercised. — 10 Johns. 328; 5 Hall’s Law J. 301, 486; 11 Mass. 68; 2 South. 529. — -And while it. is conceded that Matter of Spangler, 11 Mich. 298, settles the question in this state, these authorities are cited as indicating the extent to which the courts of many of the states have not hesitated to go.
    2. By the writ under which defendant acted, he was directed to attach the goods and chattels of Emil Dahlheimer and Adolph Bieber. The absolute property in goods seized, must be in the debtor, and if the officer take the goods of a stranger he is a trespasser. He must at his peril take notice whose the goods are.- — Bacon’s Ab. 2 p. 714 Tib. Ex.

    In Jackson v. Dean, 1 Doug. 525, this court say that an officer seizing under such circumstances is as really a trespasser as if he had taken the goods from the custody of the owner, and no demand need be made before replevin.
    We insist that plaintiff can maintain this action in the Circuit Court for the county of Wayne. — 2 Curt. C. C.
      466; 6 Hoisted, 370; 14 Gray, 570; 7 Wis. 329; 2 Wheat. 9; 3 Martin’s La. R. 416; 1 Kent’s Gom. 410; 31 III. 120; 6 Blaclcf. 520; 3 Wall. 335.
    3. Those cases which hold a contrary doctrine are mainly where proceedings were in rem, either in admiralty to enforce maritime lien, or for forfeiture.
    Where property is proceeded against, or made subject of judicial inquiry in courts of the United States, those courts haying first obtained jurisdiction thereof, State courts can not interfere. — 20 How. 583.
    In the case at bar, the property seized under attachment, is neither proceeded against, nor made subject of judicial inquiry. “ Attachment is not a proceeding in rem.” II. 602. The writ commanded defendant to seize the goods of Dahlheimer and Bieber — •any goods; not these particular goods. The question of property in the goods seized is entirely collateral, and one which the Federal Court could neither hear nor decide in the action pending before it. The only issue in that cause was the indebtedness of the defendants Dahlheimer & Bieber to the plaintiff, who could proceed to judgment and haye execution thereon, although the property attached might be taken from the Marshal’s possession. We submit, then, there could arise no conflict of jurisdiction.

      L>. M. Diclcinson, for defendant.
    1. Persons or property once in the Custody of one court, can not be interfered with by process issuing out of another, of concurrent jurisdiction. But the first attaching authority shall retain the custody of the person or thing until its final disposal by such authority. This is an old rule of law. — 4 East, 523.
    But the rule has been strengthened and carefully guarded in this country, to the preservance of harmony between federal and state authority.
    The jurisdiction of the state and national courts may be concurrent, until one or the other acts; but then the object comes within the exclusive jurisdiction of the authority first acting, and is as far removed in this judicial jurisdiction from the reach of the process of the other set of courts, as if in a jurisdiction territorially foreign. —11 Mich. 298; Ableman v. Booth, 21 How. 523; 20 Id. 394; 24 Id. 455.
    In this case the United States Court was the first attaching authority. The custody of its ministerial officer, the Marshal, and defendant in this cause, is the custody of that court .acquired by its process. —10 Pet. 400; 3 Wall. 341; 20 How. 583.
    The question of whether the goods were held by virtue or by color of United States authority, is a traversable fact; but in this, the jury in the court below have found in the affirmative. This being once established, the validity of that authority, and the legality of the seizure, are questions for the United States Court alone. See 11 Mich. 298, above cited.
    Whether the officer properly executed his ,.writ in the seizure of goods or in any other particular, or whether the officer, by the process, was authorized to do any act under it, are all jurisdictional questions, which can only be determined by the court, under whose authority such officer had assumed to act. If in one particular the validity of the national authority may be passed upon, the whole question of jurisdiction is opened to the state court, and the action of tjie federal court must needs wait upon the decision of a state court in every instance of this kind.
    Upon any state of facts, the action of replevin can not be maintained in a state court for property seized by virtue or under color of process issuing out of a federal court, and vice versa.

    The writ of replevin issuing out of the state court became a nullity when attempted to be executed in another judicial jurisdiction. — 24 How. 450; 3 Wall. 335; 34 Ill. 422; 2 Wheat. 1.
   Campbell J.

To a declaration in replevin defendant pleaded the general issue in bar, and gave notice under it that he • had levied upon the property as United States Marshal, under an attachment from the United States Circuit Court in favor of John B. Goodsell against Emil Dahlheimer and Adolph Bieber, and held the property under that writ at the commencement of this suit. The jury find specially that he did so levy on it, but that it belonged to plaintiff. The Circuit Court found thereupon in favor of defendant, who waived a return, and judgment was thereupon rendered in his favor for the full value of the goods, viz: six hundred dollars.

It seems to have been supposed on the argument that this case falls within the decisions of the United States Supreme Court, which hold that property held under the process of one court can not be seized by the process of another. But upon the pleadings and facts as .found, no such point is properly before us. It may be questionable whether such a defence is not one which should be pleaded to the jurisdiction, and not in bar. But, admitting it properly raised upon a plea in bar, the defendant has not made it out, and has waived it if made.

It can not be pretended that in levying upon the property of a third person, he was not a trespasser, and his writ could not protect him from liability personally for his wrong doing. As a wrong-doer it was his duty to restore the property to its owner upon demand, and the only effect of any of the decisions of the United States Supreme Court is to prevent any clashing of process, and not in any way to legalize his trespass. The remedy may be obstructed, but he gets no sanction for his trespass. The case of Bucle v. Colbath. 3 Wall. 334, is decisive on this point. And if he chose to relinquish his levy, his relinquishment would discharge it. Property once discharged from levy by the voluntary act of the officer can not be reclaimed by him.

It does not appear from the special verdict that when the sheriff replevied the property defendant informed him of his levy or set up any right to hold the property under it. The sheriff could not be bound to know any such fact without being informed, and defendant had the power legally to release the illegal levy. In the absence of any proof or finding to the contrary we can not assume that the sheriff undertook to seize property claimed under legal process.

But had this appeared, the defendant having waived a return of the property and elected to take a judgment for damages, the judgment rendered in the court below is in contravention of the finding. It was probably rendered under a mistake as to the present condition of the statutes on that subject. There was formerly some ambiguity as to the judgment to which a defendant was entitled, who waived a return, and who set up only a special property in the goods replevied. Section 29 of the Replevin Act contemplated a judgment only to the extent of the special interest, while section 34, if construed by itself, would permit him to have judgment for the entire value. But by act No. 195 of the statutes of 1865, the ambiguity is removed, and the judgment under section 34 is made expressly “ subject to the provisions of section 29 of this Chapter” L. 1865, p. 325.

The verdict shows that defendant had no right whatever in the property, inasmuch as his levy was tortious. And had it been valid, no showing was made, and no finding was had concerning the amount claimed to be due in the attachment proceedings. He could have no recovery in any case beyond the pecuniary extent of his special interest, and that not being shown he is entitled to nothing.

The judgment below should be reversed and judgment rendered in this court in favor of the plaintiff for nominal damages and the costs of both courts.

Cooley Ch. J. and Graves J. concurred.

Christiancy J. did not sit.


text:
    Caroline Cohen v. James Henry.
   Case made from Wayne Circuit.

This case was heard with the preceding case of Weber v. Henry, and depends upon the principles decided therein.