Joint and separate for a special purpose, and A. and B. became bankrupts, it was held, that in an action brought by their assignees debts. (together with the solvent partner C.) against D., for the proceeds of the bills, the defendant could not set off against such claim a debt due to him from A. B. and C. (1) SECTION IV. Of Set-off between particular Persons. A debt, due to an executor in his representative character, Executors. cannot be set off against a debt due from him on his private account. (2) And though the executor also happen to be residuary legatee, such a set-off will not be allowed; for these are debts in different rights, and there is no mutual credit. (3) But, where an executor had furnished money and goods to a legatee, who became bankrupt-upon which the executor filed a bill against the assignees for an allowance to be made to him out of the legacy, on account of the money which the bankrupt owed him, the Court decided, that a legacy due from an executor (who admits assets) is in equity a debt due from the executor, and in this case allowed the set-off. (4) So, an executor may set off a debt due to the testator against a legacy bequeathed to the bankrupt; for when the assignees bring their bill against the executor, they can only stand in the place of the legatee, and can have no better right than what the legatee himself possessed. (5) (1) Staniforth V. Fellowes, 1 Marsh. 184.; and see Thomason v. Frere, 10 East, 418. (2) Bishop v. Church, 3 Atk. 691.; and see Willes, 103. for cases which determine, that a debt, accruing to a party in the lifetime of the testator, cannot be set off Particular persons. A debt due from the bankrupt to a trustee, on account of his trust, cannot be set off by the trustee against a debt due Trustees. from him in his own right. Therefore, where third persons holding the acceptance of a trader (who was known to be then in bad circumstances) agreed with the defendants, as a mode of covering the amount of the bill, that it should be indorsed to them, and that they should purchase goods of the trader to be paid for by a bill at three months' date, or made equal to cash in three months (before which time the trader's acceptance would be due) — but without communicating to the trader that they were the holders of his acceptance and the goods were purchased by the defendants according to the mode agreed upon; -it was held, that the trader having become bankrupt, and his assignees having brought assumpsit to recover the value of the goods sold and delivered to the defendants, the latter could not set off the bankrupt's acceptance; as they did not hold it in their own right, but in effect as trustees for the persons who had indorsed it to them for the above-mentioned purpose. (1) This case was decided on the ground of fraud, and that the defendants were not the bona fide holders of the bill, but had lent themselves improperly to the real owners, to obtain for the latter a right of set-off. Where, however, a creditor buys goods of his debtor in the ordinary mode of business, though the contract be to pay for the goods in ready money, the creditor will then not be prevented from setting off his debt against the price of the goods. (2) If an action be commenced by a trustee in right of his trust, the defendant may set off a debt due to him from the cestui que trust. (3) Directors of a public company. The directors, or trustees, of a public company incorporated by act of parliament, cannot set off a debt due to them from the bankrupt for a loan of money before his bankruptcy, against a demand made upon them by the (1) Fair v. M'Iver, 16 East, 130. (3) Bottomley v. Brook, Whitm. B. L. 204. Rudge v. Birch, ibid. Webster v. Scoles, ibid. assignees for the amount of the stock held by the bank- Particular rupt, the loan not being made on the credit of the stock; persons. for it was considered, that the bankrupt was indebted to them upon the loan as private persons, and that the stock was due to him from the company in their corporate capacity: it was considered, also, that the company could have no lien upon the stock, having no such special property in it as could give them a lien; for they were vested with the stock in their corporate capacity only, and for the particular purposes directed by the act; but the specific stock of each proprietor was vested in himself alone. (1) But where there was an express bye-law subjecting the stock of each member of a company to be distrained for such debts as he should owe them, and the bankrupt was indebted to them for a balance in his hands as their banker, or cashier, the company was allowed in this case to set off the debt, against the stock and dividends belonging (2) to the bankrupt. So, also, where a director of a public company assigned his salary and share to the company, in order to secure a debt due from him to them on his private account, and empowered the company to direct the treasurer to retain his salary and dividends, and sell his shares for the payment of the debt-but the power given to the company had not been exercised, and the shares still remained in the director's name, it was held, that though the shares on his bankruptcy passed to his assignees, as being in his order and disposition, yet that the company had a right of set-off for the dividends and salary due to him at his bankruptcy. (3) Debt due to or from the A debt owing by the bankrupt to the wife, dum sola, cannot be set off against a debt due from the husband. (4) And it has been decided also upon the general statute of wife, dum set-off, that a debt due from the wife, dum sola, cannot be sola, can (1) Meglioruchi v. Royal Exchange Assurance Company, 1 Eq. Ca. Ab. 9. (2) Gibson v. Hudson's Bay Company, 1 Str. 645. (3) Nelson v. London Assurance not be set persons. off in an or against the husband. Legacy to the wife. Particular set off in an action brought by the husband alone — unless, indeed, he has promised to pay the debt after marriage, and thereby made it his own. (1) But where a legacy was action by given to the wife of a bankrupt, and she died without asserting any claim to it, the Court held, that as at law a legacy to the wife is a legacy to the husband (though subject in equity to her right to a provision) — this legacy, being discharged of that equity in consequence of her death, would have become the absolute property of the husband if there had been no bankruptcy: that, as against the husband, the executor would have had a right to satisfy the legacy, by writing off so much of the debts due from the husband: and that he must have the same right against the assignees. (2) And, in a subsequent case of this description, the executors were allowed to set off a debt due from the bankrupt to the testator, against a moiety of a legacy given to the wife- the other moiety being ordered to be settled on the wife for life, with remainder to the issue of the marriage. (3) Insurance broker. The right of a broker, who effects a policy of insurance, to set off the money due for losses or returns of premium against the claim of the assignees of the underwriter, depends in a great measure upon the fact, whether or not the broker receives a del credere commission-and whether he effects the policy in his own name, or in that of his principal. If a broker acting under a del credere commission effects the policy in his own name, the right of set-off is allowed; for a commission del credere being an absolute engagement to the principal from the broker, and rendering him liable at all events, places the broker himself in the nature of a principal as to the underwriter, and clothes him with all the rights of the principal, unless the latter steps in between him and the underwriter. (4) And the same is also held 32. (1) Wood v. Akers, 2 Esp. 594. (3) Ex parte O'Farrall, 1 G. & J. 34.; but see Carr v. Taylor, 10 Ves. 578. (4) Grove v. Dubois, i T. R.112. Bize v. Dickason, ibid. 287. under the general statutes of set-off. (1) But where the Particular broker does not act under a del credere commission, he is persons. then not entitled to such right of set-off; for, in this case, . the losses or the returns of premium are a debt properly A broker, however, may have the same right of set-off by Broker's virtue of a lien (7), as that which he possesses by virtue of set-off in respect of a lien. |