I hardly think that this Court would be authorized to reverse the decree of the court below. In the *Page 482 first place, in my opinion, the allegations of the answer do not set out facts which show that McMullen had a good claim of setoff against Rinehart. The strongest statement of the defendant, McMullen, as to the character of this alleged setoff is contained in paragraph 11 of the answer, which was stricken. This paragraph alleges that at the time of the institution of this suit the complainant Rinehart was indebted to McMullen in the sum of $4,000.00, plus interest, on January 19, 1927, "for monies received by Charles W. Rinehart from said F. G. McMullen on said day to apply on a certain indebtedness due by G. G. McMullen to Charles W. Rinehart in the amount of $10,000.00, which the said Rinehart did not apply on said indebtedness, but, on the contrary, applied to his own use, without the knowledge, consent, approval or ratification of the said F. G. McMullen, and the said Charles W. Rinehart did not return same although he has often promised to do so. Whereby the said Charles W. Rinehart then and there became and was indebted to the said F. G. McMullen for money had and received by the said Charles W. Rinehart, for the use of said F. G. McMullen in the amount of $4,000.00, plus interest at 8% per annum on said amount from January 19, 1927."
It will be noted that this paragraph does not directly allege that at the time Rinehart received said monies from McMullen, the latter specifically directed the application of said payment on said "certain indebtedness" of $10,000.00, nor is the character of said indebtedness alleged, nor is it made to appear that Rinehart had no legal right to retain the money thus paid, and use the same as he saw fit, in spite of the fact that he may not have credited and applied the same in reduction of the $10,000.00 debt.
It is a well recognized rule that money voluntarily paid *Page 483 under a claim of right to the payment, and with knowledge of the facts by the person making the payment, cannot be recovered back, and this is true even though the claim thus paid was illegal; the theory of the law being that if a party would resist an unjust demand, he must do so at the threshold, and such resistance should precede payment. 21 Rawle C. L., 141, 143. Furthermore, if a debtor does direct the application of payment, while the duty is thereby imposed on the creditor to apply the money as directed, or return it to the debtor, yet if he fails to return it, it is regarded by law as having been applied as directed, no matter how the creditor in fact applied it. 21 Rawle C. L. 88, 89. Now, this answer admits that McMullen was indebted to Rinehart in the sum of $10,000.00 and paid him $4,000.00. If the answer be sufficient to show that McMullen directed the application of this payment to the "certain indebtedness of $10,000.00" which he acknowledges owing Rinehart, he could not recover back the $4,000.00 thus paid, even though Rinehart did not credit it on the particular debt, because the law itself would make the application, and if Rinehart ever sued McMullen on that debt, by operation of law, the $4,000.00 would be credited on said debt. So I do not think the answer sets up a good claim of setoff, even though the principles of equitable setoff, as enunciated in the opinion of Mr. Justice ELLIS, be admitted. See in this connection 24 Rawle C. L. 792-854.
I am also seriously doubtful of appellants contention that the Inland Realty Corporation had been shown by the answer to have violated Section 6026, C. G. L., by acquiring, holding or disposing of property in this State, without having qualified to do business therein as required by said section. Undoubtedly, if the Inland Realty Corporation, being a foreign corporation, not qualified under Section *Page 484 6026, C. G. L., had acquired in this State property located in this State, or even a lien thereon, it could not (Section 6029, C. G. L.) maintain an action in any of the courts of this State, so long as it failed to comply with such provisions of Section 6026, but for aught that appears in the specific averments of the answer, the Inland Realty Corporation may have acquired the mortgage in question and received the assignment of the same in Maryland, the State of its creation. The assignment of the mortgage, a copy of which is attached to the bill and introduced in evidence, does not show where it was executed. It is true that the acknowledgment, which was taken about six months later, was made before a notary public in St. Lucie County, Florida, but this is not conclusive as to the place of execution and delivery of the assignment itself. The bill does not allege that the assignment was executed or delivered in Florida. Neither does Section 17 of the answer so allege. The answer merely alleges that the transaction by which Inland Realty Corporation acquired the interest of Charles W. Rinehart in the note and mortgage was forbidden by the statute, 6026 C. G. L. This is a mere conclusion of the pleader. Such being the case, I am inclined to the view that the mere allegation of an assignment of the note and mortgage by a citizen of Florida to a foreign corporation is not per se an allegation of a violation of Section 6026, unless it is further alleged that the assignment was executed and delivered in this State. See 14-A C. J., page 1302, citing (in note 7) O'Reilly Co. v. Green, 41 N.Y. S. 1056. See also 14-A C. J., page 1308, Section 4113. I am free to confess, however, that this is a rather close and difficult question. But I am inclined to think that it was not the intention of Section 6029 to close the doors of the courts of this State to a foreign corporation which has violated no law of this *Page 485 State and which had a valid demand otherwise enforceable here. If, for instance, a citizen of Florida walks into the office of a New York or Maryland corporation and sells and assigns to them a mortgage on Florida property, this would not, in my judgment, violate Section 6026 nor prevent such corporation from enforcing such mortgage in our courts by reason of Section 6029. If such corporation sends an agent into Florida, and while in this State such agent bought and took an assignment of a Florida note and mortgage, this transaction would amount to acquiring property in this State within the meaning of the statute, and the corporation would have to pay the fees and file the papers required by Section 6026 before it could maintain a suit in our courts to enforce such note and mortgage.
For the reasons above stated, I cannot see my way clear to reverse the final decree on the ground that the chancellor erred in striking certain portions of the answer, and therefore concur in the affirmance of the decree appealed from.
DAVIS, J., concurs.