tingencies; as to mode of valuation, capable of being ascertained by fixed rules, or assessable only by a jury, or as matter of opinion." The repealed Act which made all debts and demands which were provable against the estate of the bankrupt the subject of set-off, contained clauses providing for the proof of debts payable upon a contingency and liabilities to pay upon a contingency, upon the construction of which there were numerous judicial decisions; but the extensive words of the new Act seem to have been expressly intended to include cases which were held not to come within those clauses, and, therefore, those decisions no longer require notice here (i).]

Finally, we must notice the right which may arise in some cases to an equitable set-off, under the provisions of 17 & 18 Vict. c. 125, s. 83.

Equity will sometimes give relief where the party sued has Equitable set-off. a counter-claim which cannot be set-off at law (j). Accordingly a plaintiff at law has been restrained from taking out execution on a judgment, where the defendant had a judgment against him to a greater amount, which the Court of King's Bench refused to allow him to set-off. The Vice-Chancellor said that the lesser judgment was, in point of fact, satisfied (k).

Lord

This case, however, seems to have been treated as rather transcending the limits within which equity gives relief. Cottenham says, "This equitable set-off exists in cases where the party seeking for the benefit of it can show some equitable ground for being protected against his adversary's demands. The mere existence of cross-demands is not sufficient, although

[() They will be found, if required, in pp. 58-60, 1st ed.]

[) The counter-claim must be in respect of an ascertained sum; see Kerr on Injunctions, c. 4, s. 5, p. 66; 1 Joyce on Injunctions, 489. Where there is a clear natural connexion between claim and counter-claim, and both originate in one transaction, a Court of Equity will sometimes interfere to prevent the one party from enforcing his claim without allowing the claim of the other, even though it be unliquidated, ibid. 67, and see cases cited there. A right to set-off has been held not to exist where the cross-claims were for freight and damage to cargo; Stimson v. Hall, 1 H. & N. 831; 26 L. J. Ex. 212; for non-repair under a demise and re-demise, Minshull v. Oakes, 2 H. & N. 793; 27 L. J. Ex. 194; for money lent and damage from negligent sale of securities, Atterbury v. Jarvie, 2 H. & N. 114; 26 L. J. Ex. 178; for a judgment in an action for excessive distress and cross claim for rent and dilapidations, Maw v. Ulyatt, 31 L. J. Ch. 33. See further, Throckmorton v. Crowley, L. R. 3 Eq. 196; and as to set-off of debts against legacies, Bousfield v. Lauford, 1 De G. J. & S. 459; Stammers v. Elliott, L. R. 3 Ch. 195; 37 L. J. Ch. 353.]

(k) Williams v. Davies, 2 Sim. 461.

Must impeach title to legal demand.

Where one demand is equitable.

Assignee.

Admissible in action for

unliquidated

damages.

it is difficult to find any other ground for the order in Williams v. Davies as reported. In all the cases upon the subject, except Williams v. Davies, it will be found that the equity of the bill impeached the title to the legal demand" (1).

Where there are cross-demands of such a character that, if both were recoverable at law, they would be the subject of legal set-off, then, if either of the claims is of an equitable nature, equity will enforce the set-off (m). But it seems undecided whether the mere fact that the defendant is the assignee of a legal debt, arising between the plaintiff and a third party, will entitle him in equity to the benefit of such a set-off. The decision in Williams v. Davies goes much further than such a case would require (n).

[The assignee of a debt takes it, subject to the debtor's right to set off debts which accrue due to him from the assignor before he has notice of the assignment (o), but not, in the absence of special circumstances showing a connection between the transactions out of which the cross-claims arise, debts which accrue due after such notice, even though resulting from a contract entered into previously (p). It is now settled that in an action at law by proper equitable plea, a defendant may set off against the plaintiff's claim, a debt due from the plaintiff to a trustee for the defendant (g), or may allege that the plaintiff is suing as trustee for a third person, and set off a debt due to the defendant from such third person (r).]

When the equitable set-off is, per se, proper to be allowed, it is no objection that the action against which it is set up is one of tort or for unliquidated damages, in which no set-off is

(1) Rawson v. Samuel, Cr. & Ph. 178, 179, where all the cases are considered.

(m) Clark v. Cort, Cr. & Ph. 154.

(n) Per Lord Cottenham, Clark v. Cort, ubi sup.

[(0) Cavendish v. Geaves, 24 Beav. 163; 27 L. J. Ch. 314; Wilson v. Gabriel, 4 B. & S. 243. But the debtors may, by their original contract with the plaintiff, or by their subsequent dealings with the assignees, deprive themselves of the right of set-off; Higgs v. Assam Tea Co. Limited, L. R. 4 Ex. 387; 38 L. J. Ex. 233; Dickson v. Swansea Vale Ry. Co., L. R. 4 Q. B. 44; 38 L. J. Q. B. 17.]

[(p) Watson v. Mid-Wales Ry. Co., L. R. 2 C. P. 593; 36 L. J. C. P. 285; Jeffryes v. Agra and Masterman's Bank, L. R. 2 Eq. 674; 35 L. J. Ch. 686.]

[(q) Cochrane v. Green, 9 C. B. N. S. 448; 30 L. J. C. P. 97.]

((r) Agra and Masterman's Bank v. Leighton, L. R. 2 Ex. 56; 36 L. J. Ex. 33.]

admissible at law (s). Set-off has been enforced in equity where the claim was of an equitable nature, not amounting to a mutual credit under the statute then in force (t). It was also allowed where the action was by a shipowner against each of several consignees for freight, while their claim against him arose out of an injury to the cargo, the loss falling upon each of them being unascertained, and therefore incapable of being the subject of legal set-off (u).

The rule that debts to be set off must arise in the same right, prevails in equity as well as law (x). But where an administrator and sole next of kin sued on a bond given to his intestate, and it appeared, from the state of the property, that he was in fact suing for his own benefit, a set-off of a debt due from him in his own right was allowed (y). And vice versâ, where an agent sues for the price of goods sold by him for his principal, it would, if not a legal, be at all events a good equitable defence, that his lien was satisfied, and that the defendant had a set-off against the principal (2).

debt.

At law, too, a joint debt cannot be set off against a separate Joint debt set-off debt; but where it is clearly proved that the joint debt arises against separate out of the same series of transactions as those which produced the separate debt, it seems it may in equity. For instance, where in dealings between a customer and a bank, the joint debt to the bank arose out of a joint promissory note given by the father, and the son as his surety, for advances; and the separate debt from the bank arose out of a deposit of stock, made by the father as security for the same series of loans, Lord Eldon appeared to think that equity would allow a setoff (a). On the same principle, where the joint debt is a bond by principal and surety, a separate debt due to the principal

(8) Cawdor v. Lewis, 1 Y. & C. 427.

(t) James v. Kynnier, Ves. 108.

(u) Jones v. Moore, 4 Y. & C. 351. [The cross-claim in this case was for the proceeds of the sale of oil which had leaked from the casks of the different consignees, and had been sold by the captain in one mass. It was not a claim for damages against the captain, as in Stimson v. Hall, ante, p. 93, note (j).]

(x) Gale v. Luttrell, 1 Y. & J. 180; Lambarde v. Older, 17 Beav. 542. (y) Jones v. Mossop, 3 Hare, 568.

(z) Holmes v. Tutton, 24 L. J. Q. B. 346; and see Farebrother v. Welchman, 3 Drew. 122; 24 L. J. Ch. 410.

(a) Vulliamy v. Noble, 3 Mer. 593, 618.

Pleas in avoidance of circuity of action.

may be set off in equity, because the joint debt is nothing more than a security for the separate debt; and upon equitable considerations, a creditor who has a joint security for a separate debt, cannot resort to that security without allowing what he has received on the separate account, for which the other was a security (b). And so where A. & B., partners, gave a joint and several bond to C., and C. became indebted to A., and B. became bankrupt; C. proved the bond under the commission, and then brought a joint action upon it against A. & B., to which of course A. could not plead his set-off: it was held that C., by proving under the commission, had elected to proceed severally upon his bond, and an injunction was issued against the joint action (c).

Something analogous to the statutory right of set-off, is the power which has always existed at common law, of setting off one right of suit against another, for the sake of avoiding circuity of action. This exists even where the right which is pleaded in bar is a right to sue for unliquidated damages. It is absolutely necessary, however, that the damages recoverable in each action should be strictly identical, and should appear upon the record to be so (d).

As to payments made by a tenant, which he may deduct from his rent, see post, p. 188.

(b) Ex parte Hanson, 12 Ves. 346; 18 Ves. 232, S. C. and see Ex parte Stephens, 11 Ves. 24.

(c) Bradley v. Millar, 1 Rose, 273.

(d) See the cases collected, 2 Wms. Saund. 150; Ford v. Beech, 11 Q. B. 852; Belshaw v. Bush, 11 C. B. 191; Charles v. Altin, 15 C. B. 46; 23 L. J. C. P. 197; Thompson v. Gillespy, 24 L. J. Q. B. 340; [Alston v. Herring, 11 Ex. 822; 25 L. J. Ex. 177; Minshull v. Oakes, 2 H. & N. 793 ; 27 L. J. Ex. 194; Schloss v. Heriot, 14 C. B. N. S. 59; 32 L. J. C. P. 211.]

CHAPTER III.

1. Damages Limited by Amount 2. Liquidated Damages and Penalty. laid.

BEFORE proceeding to discuss the rules of law, by which damages are limited in the various forms of action, it will be necessary to point out two cases in which they are limited by the acts of the parties themselves.

exceed amount

laid.

The first case involves no difficulty. It arises out of the Damages cannot rule, that the plaintiff cannot recover greater damages than he has claimed in his declaration (a). It is said indeed by Lord Coke (b), that in some cases the plaintiff might have judgment for more damages than he has counted for; and this dictum was relied on by Lee, C. J., in Ray v. Lister (c). It has been pointed out, however, by Lord Ellenborough, that the mistake arose from a misconception of an old case in the Year Books (d). "It by no means establishes that the plaintiff may have more damages against the defendant than what he has counted for against him, but that having counted in detinue against the defendant for damages to a certain amount, he may recover against the garnishee, (against whom he has alleged no particular amount of damages) a greater sum than he has laid as his damages against the defendant" (e).

The second case presents much greater difficulty. It is that in which the parties to a contract, by previous agreement, fix

(a) Cheveley v. Morrison, 2 W. Bl. 1300; Watkins v. Morgan, 6 C. & P. 661. As to the consequences of greater damages being given, see post, P. 440.

(b) 10 Rep. 117 b.

(c) Andr. 384.

(d) 8 Hen. VI. 5, a.

(e) 4 M. & S. 99; 1 Roll. Abr. 578.

Nor amount liquidated by

previous agree

ment.

H