Burroughs & Springs v. Bank of Charlotte

RodM&N, J.

This action is brought to recover on certain bills issued by the defendant.

The defence is that the bills sued on were, when the suit was brought, and for sometime before had been, in fact, the property of Taylor, who was a debtor to the bank, and who agreed to apply them in payment of his debt to the bank, and the bank agreed to receive them ; and the defendant demand judgment, that the debt of Taylor be set off against plaintiff’s demand on the bills.

It will probably be admitted that if Taylor had retained the interest in the notes sued on, which he acquired on his purchase from McAden, the set-off pleaded would have been a good answer to the action to the extent of his interest. Now, what was Taylor’s interest ? It was what might be left after the payment of his note to the First National Bank for which the bank bills were pledged as collateral. The purchase and the pledge were parts of one transaction. As the bills were bought for sixty cents in the dollar, and Taylor paid in cash ten cents, his estate may be taken for the present to have been one sixth. Taylor assigned all his interest to Hart. But Hart is not said to have paid any consideration beyond assuming the payment of Taylor’s debt to the First National Bank, and Burroughs & Springs paid no more when they purchased from Hart.

The question, then, is, did Hart take Taylor’s one-sixth free from its liability to be set off by'Taylor’s debt to the defendant. The answer alleges that Taylor agreed with the defendant that the bank bills should be set off against his debt, and the case states that Taylor purchased them for that purpose, but it does not clearly state that he agreed with the defendant to that effect. It it had, the case would have resembled Martin v. Richardson, 68 N. C., 255. The case states, however, that while Taylor owned an interest in the bank bills, he told the cashier of the defendant bank, that he owned some of its bills with which he expected to pay off his indebtedness. "We think we must presume that the defendant acceded to the offer, and thus the ease is brought within Martin v. Richardson. It makes no difference that Hart had no knowledge of Taylor’s indebtedness on the debt now pleaded by the defendant. The rule is that an assignee of non-negotiable or dishonored notes (as the bank bills sued on were,) takes them subject to all equities, against his assignor whether he knows of them or not. Consequently Hart took Taylor’s estate (supposed, for convenience, to be one-sixth) subject to the defendant’s right of set-off against Taylor. As to the other five-sixths, he was not the assignee of Taylor, who never had any beneficial interest in that share, but of the First National Bank.

For convenience of discussion, we have assumed Taylor’s interest in the bills at one-sixth. His real interest, however, is what may remain, after the bills are converted into money, or their value in money ascertained, and the lien wdrich the First National Bank had, is paid off to its assignee. The bills taken out by ITart for the purpose of paying his debt as surety for Taylor, are, for the purpose of ascertaining Taylor’s interest in the remaining bills, to be counted among them. Those bills were applied by Hart in his own exoneration, and such payment cannot impair the right of the defendant to have the entire interest of Taylor set off against his debt to it.

Judgment reversed, and case remanded to be proceeded in, &c.

Pek Cueiam.. Judgment reversed.