It is shown that Baxter & Co., in the usual course of business, deposited various sums of money in the Shajtard Bank, at different times, aggregating the sum of $2,755.29, no part of which had been drawn out of said bank, but for which entire amount said bank was and is still indebted to said Baxter & C'o.
The bank, afterwards, became insolvent,, and ceased to do business. On the 3rd of March, 1904, it made a general assignment'to N. P. Renfro and A. L. Dowdell, for the benefit of its creditors.
In the usual course of business between them, said Baxter & Go. became and was indebted to complainant, A. B. Yarbrough, in the sum of $2,500.00; and without paying to complainant their indebtedness to him, said Baxter & Co., on the 30th day of January, 1904, ceased to do business and made a general assignment to Geo. J. Vestner, for the benefit of their creditors. As soon as complainant learned that said Baxter & Co. had ceased to do business, and before he knew what, if any disposition had been made by them of their assets, on the same day — January 30,1904, — sued out an attachment against Baxter & Co., returnable to the circuit court of Lee county, for the sum of $2,500.00 due to complainant by said *495Baxter & Co., which said writ of attachment was, on the same day it was sued out, executed by the sheriff of the county by serving a writ of garnishment on said Simpar d Bank.
After the levy of said attachment, without knowledge 01 notice of an assignment by Baxter & Co., and before the bank made an assignment for the benefit of creditors, the complainant made an arrangement with the bank by which it ivas agreed, that on the faith of a deposit in said bank by and in the name of Baxter & Co., and the. probability that complainant would acquire the same, he might borrow and check on said bank for such amounts as he would need for his individual use and for the use of his firms, as they might respectively need, and repay the amounts out of the Baxter & Co. deposit, eu scon as he could acquire the same by operation of law or otherwise, He had, as stated airead), sued out his attachment against Baxter & Co. for the debt they owed him and had garnisheed the bank. He drew against that fund for his individual use $255.16, which ivas charged to his individual account; the sum of $580.54, which was charged to the account of J. T. Yarbrough & Co., and the sum of $692.00, which ivas charged to the account of A. B. Yarbrough & Co., mailing a total loan of $1,507.07 for which complainant became individually indebted to said hank, which was loaned under the circumstances named and with the distinct understanding and agreement that complainant should repay said loan out of the said deposit of Baxter & Go. in said hank on which complainant had, as is averred, an attachment lien at the time said loan and agreement were made-. This agreement between complainant and the bank Avas bad and the checks drawn under it by complainant, aggregating $1,507.07 as appears, before the bank made an assignment for the benefit of its creditors.
The complainant insists that he is entitled to an equitable set-off against the deposit in the bank of Baxter & Co., to the extent he dreAV against it under agreement with the bank. “Where parties have agreed that mutual demands shall satisfy each other, or one debt has been contracted on the faith of, or as a consideration for a debt- due from the crediting party, equity has jurisdie*496tion to enforce the set-off. In such case the agreement that the set-off shall be made need not be expressed, but may be inferred from the conduct or course of dealing of the parties.” — 19 Ency. Pl. & Pr. 725; Simmons v. Williams, 27 Ala. 507; Tate v. Evans, 54 Ala. 16.
In Scott v. Armstrong, 146 U. S. 499, 13 Sup. Ct. 148, 36 L. Ed. 1059, it was said, “Courts of equity frequently deviate from the strict rule of mutuality when the justice (if the particular case requires it, and the ordinary rule is that where the mutual obligations have grown out of the same transaction, insolvency on the one hand justifies set-olf of the debt due upon the other.” — Farris v. Houston, 78 Ala. 250; Wood v. Steele, 65 Ala. 436.
In the Farris Case above cited it was said,, that “when a cross-demand, rightfully held, cannot be made available by a suit at law, and yet, ex aequo- et tono, ought to be received as payment, chancery, in the exercise of its restraining powers, will intervene, and compel the one having this legal advantage to do- justice. Cases of insolvency furnish illustrations of this rule. Demands purely legal are often thus liquidated, one by the other.”
Unless the right of set-off of complaint is protected in this proceeding, complainant may be compelled to pay in full Ms indebtedness to the Shapliard Bank, and for his claim against said bank to receive on a distribution of the insolvent assets, only a pro rata and probably a, very small share of the indebtedness of the bank to him. This would be against the contract set forth in the bill. The insolvency of the bank is a distinct equitable ground entitling complainant to relief, and to the enforcement of his right of set-off, as disclosed by the bill.
We find no error in the decree of the court and it is affirmed.
Affirmed.
Tyson, Simpson and Denson, JJ., concur.