seems impossible, on any just construction of the instrument, to imply from the condition an absolute agreement. This is not the proper place for a more elaborate discussion of the matter, but it could not with propriety be altogether overlooked. I cannot, however, say that the opinion here advanced is supported by any judicial authority; on the contrary, in New York, the Supreme Court has clearly intimated an opinion that an action of covenant will lie on a bond to enforce the condition.* There may be other cases besides those which we have been just considering, where although a penalty is provided, damages at large may be demanded. So it has been held, that where by the contract of sale of certain premises a deposit was to be made, and to be forfeited, as liquidated damages, provided the agreement was not entirely carried out by the purchaser, that the plaintiff was not limited to the deposit, but might recover at large.† enant lies upon a bond." The third was covenant on a covenant proper; the word oblige only being used instead of the usual phrase; and Lord C. B. Comyns, with his usual precision, says, "covenant lies, if an agreement appear, in an obligation." This is unquestionably true-" if the agreement appear." But in the condition of a bond to do or refrain from doing any particular act secured by a given penalty, does any agreement appear, absolutely to do the act, or to respond in indefinite damages? Practically, we well know that it is not so understood; the obligor always considers the penalty as limiting the extent of his obligation." *Clark vs. Bush, 8 Cowen, 151. In Martin vs. Taylor (1 Wash. C. C. R., 1), in an action of covenant on an agreement secured by a penalty, Washington, J., said, that "where there is a penalty in an agreement under seal, the party injured may at common law sue for the whole penalty, and must be satisfied with it, or he may bring covenant, and recover in damages more or less than the penalty." It is to be remarked here that the agreement contained an express covenant to do the act for the non-performance of which the action was brought. The case, therefore, decides nothing as to the main point, whether covenant can be brought on a bond upon an agreement contained in the condition, and whether in such suit damages can be assessed beyond the penalty. + Icely vs. Grew, 6 Nev. & Man., 441. CHAPTER XVII. SET-OFF AND RECOUPMENT OF DAMAGES. No Set-off at Common Law-Introduced by the Courts of Equity-Statutes on the subject-Original meaning of Recoupment-Cases in England-Where suit brought on the original contract; or on a Bill or Note given under it—Where Fraud set up-Necessity of notice-American signification of the term-Cases in this country-Payment after suit brought. BEFORE We leave the examination of compensation in actions of contract, we have to consider the principles upon which an acknowledged right for redress or remuneration is reduced in its amount by the establishment of an adverse or counter claim, which is taken into consideration in the same suit, to use technical language, by way of set-off or recoupment. An analogous rule exists in regard to actions of tort, where, however, it is known by the term mitigation. The doctrine of set-off is so fully treated in the various treatises devoted to that particular subject, that it would be improper to do more than allude to it here. It is sufficient to say, that at common law no right of set-off existed, it being the object of the system to confine every suit to the particular subject of litigation which gave rise to it. The courts of equity, however, in this, as in many other cases, lent a ready ear to the appeals made to them from the narrow remedies and harsh doctrines of the common law, and to prevent circuity of action and multiplicity of litigation, introduced the principle of set-off, a principle well known to the civil law by the name of compen sation. This doctrine, which is nothing more than a system of settling cross demands in one suit, finally appeared so equitable, that legislation was resorted to, to get rid of the necessity of applying to a court of equity; and the principle of set-off is now fully established in both American and English legislation. It is unnecessary here to enter upon an examination of the various statutes of set-off; it is sufficient to say, that, as a general rule, where adverse or counter claims of a pecuniary character exist between the same parties, and the demands are liquidated, the principle is applied. But the object of the statutes of set-off is to settle mutual accounts and debts. Wrongs or torts done, and unliquidated damages claimed, have never been permitted to be set-off.* And unliquidated damages have been defined as follows: "Unliquidated damages are such as rest in opinion only, and must be ascertained by a jury, the verdict being regulated by the peculiar circumstances of each particular case, which cannot be ascertained by computation or calculation, as damage for not using a farm in a workmanlike manner, for not building a house in a good and sufficient manner, on warranty in the sale of a horse, for not skillfully amputating a limb, and other cases of like character."+ In Illinois, however, unliquidated damages arising out of contract, express or implied, may be set off in actions ex contractu, unless they are totally disconnected with the plaintiff's cause of action.‡ The same reasons which operated to introduce the original doctrine of set-off, have tended to enlarge it; and the severity of the statute has introduced the practice of Recoupment. Recoupment, or as it was originally called, Recouper, is a very ancient term of our law, but had at one period fallen into considerable disuse. It has been recently revived in this country, with, however, a material modification of its meaning. As far back as the reign of Henry VIII.§ we find it laid down, "If a man disseise me of land, out of which a rent charge is issuant which has been in arrear for several years, and the disseisor pay it, if the disseisee recover in an assize, * Butts vs. Neilson, 13 Wend., 156; McDonald vs. Neilson, 2 Cowen, 140; Hick vs. Sheener, 4 Serg. & R., 249; 10 S. & R., 14; U. S. vs. Robison, 9 Pet., 325; U.S. 18. Buchanan, 8 Howard, 88; Howlet vs. Strickland, Cowp., 56; Freeman vs. Hyatt, 1 W. Black., 894. Butts vs. Collins, 18 Wend., 189. Sargeant vs. Kellogg, 5 Gilman, 273; Kaskaskia Bridge Co. vs. Shannon, 1 Gil man, 15. § Dyer's Reports, 2, b. the rent that the disseisor has paid, shall be recouped in damages." Lord Coke also says, "If a man makes a lease for life rendering rent, or if there be lord and tenant by fealty and rent, and the rent is behind two years, and afterwards the lessor, or the lord, disseises the terre-tenant, and afterwards the tenant recovers against him in an assize, and the rent which incurred during the disseisin is recouped in damages, yet the lord or lessor shall recover in the assize the arrearages before the disseisin, and the bar of the later years is no bar of the arrearages before." And so he again says: "And as to the case of recouper in damages in the case of rent service, charge or seck, it was resolved that the reason of the recouper in such case is, because otherwise, when the disseisee reënters, the arrearages of the rent service, charge or seck would be revived; and therefore to avoid circuity of action-and circuitus est evitandus, et boni judicis est lites dirimere, ne lis ex lite oriatur—the arrearages during the disseisin shall be recouped in damages." So, again, where an appeal of maihem was brought, and for the defense it was urged that the plaintiff had recovered in a previous action of trespass in assault and battery, and it was held a good bar, it is cited in the index as a case "where recouper of damages shall lie, because the plaintiff recovered in another action before." And again, if the feoffee or lessee of the second disseisor, sows the land, or cuts down trees or grass, &c., and carries away, yet after the regress of the disseisee, he may take as well the corn as the trees, &c., to what place soever they are carried; and if the disseisee takes them, they shall be recouped in damages against the disseisor.** * Pennant's Case, Rep., Part III., 65. + Coulter's Case, Rep., Part V., 2, 81. And in this case it was held, that an executor of his own wrong could not recoupe or retain out of goods in his own hands the amount of a debt due him by the decedent. In the case, however, above cited from Dyer, it was held that executors might pay the debts of the testator out of their own money, and retain so much of the effects of the testator as would be necessary to satisfy them; and this was held good under a plea of plene administraverunt. Other cases of recouper or retention will be found referred to in this (Coulter's) case, chiefly from the Year Books. See, also, as to Recouper, a note to the case of Icely vs. Grew, 6 Nev. & Man., 467; 86 E. C. L. R., 440. $ Part IV., 43. Cases of Appeals, &c. So again in Slade's case, Part IV., 94. But this is not a case of former recovery. ** And in the same sense the maxim of the civil law is applied: nemo locupletior In this same sense the phrase is used in a modern English case, where* suit was brought upon a policy on the life of Mr. Pitt. The plaintiffs had been creditors of Mr. Pitt, and insured his life for their own protection. After his death, however, the debt was paid by his executors out of moneys voted by Parliament to relieve his estate, and it was held that the plaintiffs could not recover, having received no damage; and in the case next cited, Lord Ellenborough likened this to a case of recoupment.+ So where an action was brought on a policy of insurance to Russia, with a provision, that if the cargo were denied permission to be landed, the master should, on his return, receive in London, £2,500-the outward cargo was denied landing, but the master, instead of returning direct, went by Stockholm and earned freight. The plaintiff claimed to recover the £2,500, but it was held that the freight earned was to be recouped; and the principle of this case has been recognized in this country.§ Again, in a case of assumpsit by underwriters on freight, after abandonment and payment of total loss, to recover freight earned after the abandonment, it was insisted by counsel arguendo, that whether entitled under the abandonment or not, the plaintiff ought to have his damages recouped pro tanto, out of the freight earned by the defendants on the homeward voyage.T faciendus est ex aliena jactura. So Grotius: "Minus autem quis ñabere ac proinde damnum fecisse intelligetur, non in re tantum, sed in fructibus qui propriæ rei fructus sunt, sive illi percepti sunt sive non, si tamen ipse eos percepturus fuerat, deductis im pensis quibus res melior facta est aut quæ ad fructus percipiendos fuerunt necessariæ, ex regula quæ nos vetat locupletiores fieri cum aliena jactura.”—De Jur. Bel. et Pac., Lib. II., C. cxvii.; § 4. Rutherforth's Institutes, Book I., ch. 17. *Godsall vs. Boldero, 9 East, 72. See this case cited with approbation in the Court of Errors in New York, Tyler vs. Ætna Fire Ins. Co., 16 Wend., 385. + Mr. Ellis says (Insurance, 126), that notwithstanding this decision, the office paid the amount before leaving court. It does not appear, but it may be supposed that the suit was brought for the benefit of the estate. Pullen vs. Staniforth, 11 East, 232. § Hecksher vs. McCrea, 24 Wend., 304. See, also, Cortigan vs. Mohawk and Hudson R. R. Co., 2 Denio, 610. Barclay vs. Stirling, 5 M. & Sel., 6 and 10. See, also, Richardson arguendo, in Williams vs. London Ass. Co., 1 M. & Sel., 318 and 323. And such is the definition given of the word in the Lexicons; "Recoupe," says Jacobs (in Voc.), "from the French Recouper, signifies the keeping back or stopping something which is due, and in our law, we use it for defalk or discount." |