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Freeman v. Lomas.

to show what proportion of the debt due to the several sureties is to be attributed to each. Unless, therefore, it can be shown that there has been a special contract between the parties, that the payments, if any, to be made in respect of the suretyship, should constitute a charge upon the legacy, the defendant can have no right of set-off. No such contract has been shown by the evidence. All that is said by the defendant is, that he became surety for the bankrupt, and that he did so in consequence of having the residue of the legacy of 1000%. under his control.

Glasse, (with whom was Bethell,) for the defendant. The evidence in the cause proves payments made by the defendant, in respect of his suretyship, to an amount exceeding the legacy claimed. That being so, if the bankrupt had sued for the legacy, the executor might have said, and insisted, that the bankrupt had received the amount of the legacy. Jeffs v. Wood, 2 P. Wms. 131. The assignees merely represent the bankrupt, and cannot be in a better position. The fact that, in this case, the defendant is residuary legatee as well as executor, and therefore entitled to the residuary assets in his own right, is an answer to the objection that the debts are due in auter droit. It cannot be said that a set-off in this case would be paying one man's debt with another man's money. It is said that, by reason of the bankruptcy, the defendant can only be entitled to a dividend upon his debt. In answer to that, it is submitted, that the relative position of the parties was established before the bankruptcy, and that the assignees do but represent the bankrupt, and can be in no better case. Ranking v. Barnard, 5 Mod. 32. Jeffs v. Wood, 2 P. Wms. 131. Clark v. Cort, Cr. & Ph. 154. Rawson v. Samuel, Id. 161. The defendant, having a fund in his hands, has a claim in the nature of a lien upon the fund, and has a right to pay himself out of such fund. Courtenay v. Williams, 3 Hare, 539. At all events, there is no authority for saying, that where an executor and residuary legatee is sued for a legacy thirty years after the testator's death, he can be said, by claiming to set off a debt due to himself by the legatee, to be seeking to pay one man's debt with the money of another. The bankrupt might long since have sued, and from his omitting to do so, a presumption arises that there was an agreement on his part that sums payable in respect of the suretyship should constitute a lien upon the legacy.

The Solicitor General, in reply. The mere fact that the bankrupt did not file a bill for the legacy is not sufficient as a ground from which to infer an agreement for a lien. The demand, being in auter droit, cannot be made the subject of set-off. That is conclusively settled by the authorities cited; and the fact, that the defendant may also be entitled to the assets as residuary legatee, can make no difference, for, non constat, that creditors may not some day come in.

July 5. SIR GEORGE TURNER, V. C. The plaintiffs in this case were the assignees of James Napier, a bankrupt. The defendant,

Freeman v. Lomas.

Thomas Lomas, was the surviving executor of Thomas Lomas the elder. Thomas Lomas the elder, by his will, dated the 24th of June, 1815, bequeathed the interest of 1000l. to his daughter, Mary, wife of George Wood, for her life, and after her decease bequeathed the principal to and amongst her children who should attain twenty-one. The residue of his property he gave to the defendant, Thomas Lomas, whom, with Richard Bentley, he appointed his executors. The tes tator died in the year 1816, and his will was proved by both executors. Mary Wood, the testator's daughter, had one child only, Martha Lomas Wood; she attained her majority in 1835; in October, 1840, she intermarried with James Napier. Richard Bentley, the coexecutor of the defendant, Thomas Lomas, died sometime previously to the 15th of April, 1842, and on that day 500l., part of the legacy of 1000l., was paid to James Napier, on a joint receipt given by Mary Wood, Mary Lomas Napier, and James Napier, to the defendant, Thomas Lomas, as sole executor and residuary legatee of the testator. In June, 1843, Mary Lomas Napier died, and in December, 1843, James Napier administered to her. Between this period and December, 1847, the defendant, Thomas Lomas, became surety for James Napier to various persons for various sums of money, for one of which sums he took a warrant of attorney from Napier by way of security against his liability. In December, 1847, a fiat in bankruptcy issued against James Napier, under which the plaintiffs are assignees. James Napier has never surrendered to the fiat, and, since the fiat was issued, the defendant, Thomas Lomas, has been called on to pay, and has paid, on account of his suretyship, moneys exceeding in amount what remains unpaid in respect of the legacy. Mary Wood, the tenant for life of the legacy, died in January, 1848, and this bill is filed by the plaintiffs, the assignees of James Napier, to recover the unpaid part of the legacy of 1000., with interest from the death of Mary Wood. The defendant, Thomas Lomas, by his answer, admits assets sufficient for the payment of the unpaid part of the legacy, but claims to retain the amount on account of payments made by him in respect of his suretyship. The question to be determined is, whether he has this right of retainer or not. Questions as to the rights of debtors and creditors, in cases of cross demands between them, appear to have arisen and been determined in equity before the right of set-off was introduced into the statute law of this country, as will be found on reference to Curson v. The African Company, 1 Vern. 121, and Peters v. Soame, 2 Vern. 428, cases, both of which were anterior to the stat. 4 Ann. c. 17, by which the first statutory provision for set-off in bankruptcy was introduced; and there are other cases in equity not falling within the provisions of the statute of Anne, between the date of that statute and the stat. 2 Geo. 2, c. 22, by which the right of set-off at law was given. Dowman v. Matthews, Pre. Ch. 58; Jeffs v. Wood, 2 P. Wms. 131. It is clear, therefore, that the rights of debtors and creditors, in cases of cross demands between them, as those demands subsisted in equity, were not derived from or dependent upon any statutory right of set-off; and, on the other hand, it seems not to be improbable that the statutory rights

Freeman v. Lomas.

were founded on the equitable rule. It is important, therefore, to the determination of the present question, to consider what was the foundation of the equitable rule. Sir Thomas Clarke, in Whitaker v. Rush, Amb. 407,- though the report, erroneously as I conceive, ascribes to him the opinion that the rule was first introduced into our law by statute, refers the rule itself to the Roman law; and I have no doubt he was correct in this. By that law, Dig., lib. 16, tit. 2, it is said, sect. 3, "Ideo, compensatio necessaria est, quia interest nostra potius non solvere, quam solutum repetere." And in the comment on the word "interest" it is said, "Id est, cum lis possit uno judicio definiri, scilicet per actionem, et exceptionem, pluralitas, seu multitudo judiciorum non debet admitti, ut quæ incommoda, sumptus que adferat: quinetiam compensationem æquitas poscere videtur: nam dolo facit, qui petit quod restiturus est." And in sect. 6, it is said, "Etiain quod natura debetur, venit in compensationem." But, although the Roman law was thus liberal in allowing compensation, it would seem that it did not allow it where the cross demands were not in the same right, for in sect. 23, under the same title, it is said, "Id quod pupillorum nomine debetur si tutor petat, non posse compensationem objici ejus pecuniæ, quam ipse tutor suo nomine adversario debet." The rule, then, being thus deduced from the Roman law, it is to be seen how it has been dealt with by our courts; and I believe, that, upon examining the authorities, it will be found, that, except upon special circumstances, courts of equity have never allowed cross demands, existing in different rights, to be set the one against the other. The cases on that point cited on the part of the plaintiff, to which may be added Chapman v. Derby, 2 Vern. 117, are distinct authorities against a right, in an ordinary case, to apply one of such demands in satisfaction of the other. But it is not to be denied, on the other hand, that an agreement, express or implied, may confer such a right, and that slight circumstances may be suffi cient to warrant the court in presuming such an agreement. Thus the right was admitted in Dowman v. Matthews, upon the course of dealing; in Jeffs v. Wood, upon the fact of the legatee having omitted to credit the executor with the goods supplied; and in Jones v. Mossop, 3 Hare, 568, on the ground of the objection, as to the demand being in different rights, having been removed by the answer. This being the position of the general question as it stands upon the authorities, it is hardly necessary to consider the reasons on which the rule of the court is founded. It is sufficient to refer to the judgment in Jones v. Mossop as explaining the principle of the rule, and to the judgment in Bishop v. Church, 3 Atk. 361, as pointing out the inconveniences to which a contrary rule would lead. It may be said, that in the present case the admission of assets removes many of those inconveniences; but surely the right cannot depend upon the amount of the assets. If the right exists where the assets are fully sufficient, must it not exist to the extent to which they are sufficient? The inconvenience, too, of mixing the demands is hardly less, whether the assets be sufficient or not; for if the account afterwards falls to be taken with the residuary legatee, the court would be driven to the ascertain

The Freemen and Stallingers of Sunderland v. The Bishop of Durham.

ment of the debt due to the executor from the legatee; and though in this particular case the executor may be himself the residuary legatee, I cannot see how the right can be made to depend upon that fact. The same state of circumstances existed in Medlicot v. Bowes, 1 Ves. Sen. 208, where Jane Bowes was (as appears from the regis trar's book, though not from the report) the executrix and residuary legatee of Dr. Bowes, but the court nevertheless, in that case, refused the set-off, and acted on the broad general rule, that there was no right of set-off at law, and no right in equity before the introduction of set-off at law. It remains to be considered, then, whether there are any special circumstances, or any ground for presuming an agreement, which will justify the court in allowing a set-off in the present case. I am of opinion that there is not. I think, on the contrary, that the fact of the defendant having taken a warrant of attorney leads to the contrary presumption. I am of opinion that the plaintiffs are entitled to the decree which they ask; and, looking to the case as a contest upon a point of law in which the plaintiffs have succeeded, I must give them their costs. I have not noticed the other cases referred to in argument, as I do not think they have any application to the present question. In none of them were the demands in auter droit, for where the question arises with assignees in bankruptcy, according to the Anonymous Case, 1 Mod. 215, and the authorities cited in the note, the assignees are considered as the bankrupt; a circumstance which has always created a difficulty in my mind as to the decision in Cherry v. Boultbee; although, had it been necessary to consider that case, I should of course have felt myself bound to follow it. The other cases which were cited in argument merely establish the principle, that where one demand is equitable and the other legal, there is set-off in equity if there would be set-off at law, had both the demands been legal. There must be a decree for payment of the legacy.

THE FREEMEN AND STALLINGERS OF SUNDERLAND V. THE BISHOP OF DURHAM.1

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In this case, an issue had been directed to be tried in the county of Durham, by a special jury of that county.

Bethell now moved that the judge might have power to try the issue by a tales, at the request of either party.

LORD CRANWORTH, V. C., made the order.

1 15 Jur. 663.

Peascod v. Tully. - Harford v. Rees.

It seems doubtful whether this order or an order for a special jury can be included in the decree. 2 Smith's Ch. Pr. 89. In Wood v. Thompson, 1 Car. & M. 171, the learned judge, on the trial of an issue directed by the Court of Chancery, was of opinion that he had no power to try the issue by a tales without the leave of the Court of Chancery.

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THIS was a claim for administration by a creditor.

Marett moved, on behalf of seven infant defendants, that Percival Tully, one of the other defendants, might be appointed by the court guardian ad litem to the seven infant defendants, without the attendance of the infants, and without a commission, on the production of the usual certificate, that the proposed guardian had no adverse interest and was a proper person.

LORD CRANWORTH, V. C., made the order.

HARFORD V. REES.2
July 28, 1851.

Production- Admission.

A defendant answered that he had in his possession a book relating to matters improperly inquired into by the bill, and that, save as aforesaid, he had no books, &c., relating to the matters in the bill mentioned:

Held, that this was not a sufficient admission to entitle the plaintiff to production of the book.

THE bill in this case was filed for the administration of the estate of James Ivyleafe, and contained an interrogatory, whether the defendants had not books, papers, &c., "relating to the public and government stocks and funds standing in the name of the testator at his death, and other the matters aforesaid, and whereby, if produced, the truth of such matters would appear." John Lloyd, one of the defendants, by his answer, stated, "that he has in his possession his banker's pass-book, which relates to the affairs and means of this

1 15 Jur. 663.

2 15 Jur. 663.

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