Naglee v. Palmer

Murray, C. J., after stating the facts, delivered the opinion of the Court—Burnett, J., concurring.

The question raised by the statement of this case, is, whether the defendants had shown such a state of facts as entitled them to offset their claims upon Adams & Co. against the claim of BTaglee, in this suit; or, whether they could be compelled to pay the same, leaving them to their legal remedy for whatever might he due from Adams & Go. to them.

The doctrine of set-off is said to have been borrowed from the doctrine of compensation in the civil law, and resembles it in many respects. To authorize a set-off at law, the debts must be between the parties in their own right, and must be of the same kind or quality, and be clearly ascertained or liquidated; they must be certain and determinate debts.

[547]Before the passage of any statute on this subject in England) set-offs were unknown in Courts of Law, although the Court of Chancery claimed to exercise this power in peculiar cases, as grounded on equitable principles. After the passage of various acts of Parliament on this subject, this jurisdiction was exercised alike by Courts of Law and Equity; the latter claiming the right to go farther in certain cases than the former, notwithstanding the rule, that Courts of Law and Courts of Equity were both compelled to follow the statute. Since that time, the rule has been modified by the Courts of England and the United States, and the cases in which Courts of Equity will entertain jurisdiction for the purpose of allowing a set-off, have been greatly multiplied.

As a general proposition, the mere existence of cross demands will not justify a set-off in a Court of Chancery; there must be some peculiar circumstances based upon equitable grounds, to warrant the Court in interfering.

“ If, however,” says Mr. Justice Story, in his work on Equity Jurisprudence, “there are cross demands between the parties of such a nature, that, if both were recoverable at law, they would be the subject of a set-off; then, and in such a case, if either of the demands be a matter of equitable jurisdiction, the set-off will be enforced in equity. As, for example, if a legal debt is due to the defendant by the plaintiff, and the plaintiff is the assignee of a legal debt due to a third person from the plaintiff, which has been duly assigned to himself, a Court of Equity will set-off the one against the other, if both debts could properly be the subject of a set-off at law.” The learned Judge cites the cases of Clarke v. Cost, 1 Craig & Phillips, and Williams v. Davies, 2 Simons; both of which, sustain the text.