have "contracted a debt" either present or contingent to the pawnor, and consequently the pawnor could make no proof. Next it must be observed, that though the question is on the statute, and though the statutory right of set off extends the right known to the common law, yet the common law principle of mutuality, which is of the essence of set off, must prevail; and if the deposit, or rather its surplus, could not be set off against the demand of the pawnee, so neither shall the pawnor's debt be set off against the surplus. Lord Hardwicke appears to have mainly proceeded on this view in Exparte Ockenden, 1 Atk. 235. Could the miller, he asks, have refused to deliver up the corn in an action at the corn-factor's instance by claiming to set off a debt due, unconnected with the deposit? and, vice versa, could the corn-factor have set off the value of the corn in an action by the miller for money lent at a former time? Holding that both questions must be answered in the negative, he considers this as decisive against the miller's right to set off the debt antecedently due from the pawnor. And Lord Mansfield, in giving the judgment of the Court of King's Bench some years after, in Green v. Farmer, in 4 Burrow, 2224, after reading his own note of Exparte Ockenden, observes, that Lord Hardwicke thought he could not construe a dealing to be within the mutual credit clause of the Bankrupt Act, unless it could be so construed in an action of trover, and adds, "That is certainly so." But if the same test be applied to the present case, there is an end of the question; for, first, no one contends that had Palmer & Co. repaid the monies advanced on the deposit, the Bank could have retained the paper for their antecedent debt, 1836. YOUNG V. BANK OF 1836. YOUNG V. BANK OF which is one of the points made by Lord Hardwicke ; and next, had the Bank brought their action upon the notes which they held as indorsees, it is manifest that Palmer & Co. never could have set off the surplus which might arise from the sale of the paper deposited, which is the second of Lord Hardwicke's points. No doubt the case would have been altogether different, had the Bank actually sold the paper and received the surplus prior to the bankruptcy; for then they would have been debtors in that amount to Palmer & Co., and the case would have been one of mutual debts. Supposing the notes discounted then due, or supposing them not yet due, it would have been a case of credit given to Palmer & Co. by them, and of debt due from them to Palmer & Co., and so clearly within the statute. This is the case of Atkinson v. Elliott, in 7 T. R. 378, but is wholly different from the case at bar. There is nothing inconsistent with what has now been advanced in the decision, in the language used by the Court of Common Pleas in the case of Rose v. Hart, 8 Taunt. 499, where the former case of Olive v. Smith, 5 Taunt. 56, was re-considered, and a material qualification added to the generality of the doctrine which had there been laid down. In Olive v. Smith, a broker had been allowed to set off a debt antecedently due from his employer against the losses recovered from the underwriters on policies deposited in his hands. In Rose v. Hart, the Court held that such a set off is only competent to the pawnee in cases where the thing alleged to be a giving of credit either constitutes a present cross debt, or must end in one. This limitation of the case of Olive v. Smith has, in subsequent cases, been approved and followed; Sampson v. Burton, 2 Brod. & Bing. 89; Rose v. Sims, 1 Barn. & Adol. 521; and although the Court in Easum v. Cato, 5 Barn. & Adol. 861, appeared to hold that it was enough, if the transaction would most likely terminate in a debt, yet it is to be remarked that the argument went entirely upon other grounds, and the decision cannot justly be said to have relaxed the restriction by which the Court of Common Pleas had, in Rose v. Hart, qualified its former opinion. If it be admitted that there can arise no right of set off in respect of mutual credit, unless the dealing be, at the time of the bankruptcy, such as must necessarily, and at all events, terminate in creating the relation of debtor and creditor between the parties, then is the present case out of that rule, and the Bank's claim of set off defeated; nor will the reversal of the judgment below be found repugnant to any of the cases, except Exparte Deeze, 1 Atk. 228, and Olive v. Smith, of which the latter appears to have proceeded almost, if not altogether, upon the authority of the former, not to mention that it falls, in some manner, within the scope of Lord Mansfield's observations in French v. Fenn, to be afterwards cited. It is impossible to regard Exparte Deeze as resting on the ground upon which the report in Atkyns places it; and although Lord Mansfield, in Green v. Farmer, seems to vouch for the accuracy of that report, as well as of the report in the same book, of Exparte Ockenden; he nevertheless refers to Lord Hardwicke's statement in the latter case, that in the former there had been some evidence of a usage, and gives it as the result of his own inquiry respecting Exparte Deeze, that the packer (the pawnee) was, by the usage, in the 1836. YOG v. PAA OF nature of a factor: a reference which we have made to Lord Hardwicke's original note-books has confirmed this statement, that the point of usage was made, and evidence adduced respecting it (a). From hence, and (a) By the kindness of Lord Brougham, the editor is enabled to give the following transcript of the case, as extracted from Lord Hardwicke's note-book; the parts printed in italics are scored under in the original. Mr. Attorney-General for Petitioner. Davis v. Diston, 10th February 1731, Coram King C. Exparte Le Franc, Coram Hardwicke C. Affidavit of Raymond, petitioner; Deeze the petitioner; debt for 3501. for money lent, and 291. for packing. Idem. John Baker's affidavit, book-keeper to petitioner. Believes it to be usual for packers in London, to buy goods for, and lend money to, their merchants, which they would not advance, but on the credit of, and by reason of, their so doing business for, and having often goods of such merchants in their possession. Mr. Solicitor-General. 2 Questions. 1. Whether petitioner had in law or equity any special property in the cloths, either arising from contract, or the course of the trade. 2. If not, whether there has been mutual credit within the Act of 5 Geo. 1, about bankrupts. 1. No evidence of any contract. Petitioner never bought any goods for the bankrupt, and laid out money for him on that account; only pressed the cloths, and sent them on board the ship. There were other dealings between them. Money lent on notes at interest. At the time of the loan no goods were in petitioner's hands. As to the 291. for packing, I do not dispute that may be a lien like a tailor for cloths, a horse to be shod, &c.; but as to that sum we had a set off by a debt for wine. If no pledge by contract, none from the course of trade; no proof of any such practice; not like the cases cited, for those were for the price of the very goods, not for money lent. from Lord Hardwicke's subsequent decision in Exparte 2d point, as to mutual credit within the Act, that must be in case of mutual pecuniary demands. [Not been held so strictly.] In the case of Davis v. Diston, the cloth was sent to the factor to be sold, and the factor had a special property in it. Affidavit of Norton Nicholls, the bankrupt. He is indebted some 301. for packing, and Deeze is indebted to him in 15l. for wine. [This proves mutual credit.] William Price's affidavit. A packer for 14 years; never apprehended that he had any property in the goods; usual for him and other packers to buy goods for their merchants, and when they do so, to name their principles, and the seller debits them for them. Mr. Wilbraham, ad idem. If the packer may lay his hands on the goods, and stop them for another debt, it will be opening bad consequences to trade. The bankruptcy does not give him a greater interest. Mr. Green, ad idem. Ordered an account to be taken, and the money due on the balance of the whole account to petitioner, to be deducted out of the money arising by sale of the Lancashire bags in question, and the surplus paid to the assignees. 1836. YOUNG v. BANK OF |
