A court of equity will not interfere where the complainant has a
proper remedy at law or where the complainant claims a setoff of a
debt arising under a distinct transaction unless there is some
peculiar equity calling for relief.
Nor will it interfere where the setoff claimed is old and stale,
with regard to which the complainant has observed a long silence,
and where the correctness of the setoff is a matter of grave
doubt.
The case was this:
In the years 1824 and 1828 Jane Dade executed two deeds of trust
to one William Herbert for the purpose of securing a debt which she
owed to Thomas Irwin, the deceased.
In 1830, Thomas Irwin Jr. the executor of Thomas Irwin (who had
died in the meantime), filed a bill against Jane Dade for the sale
of the property. Herbert, the trustee, was alleged to be a lunatic,
and the bill therefore prayed that a commissioner might be
appointed to make the sale.
Jane Dade in her answer admitted the justice of the claim as
stated in the bill. A decree was entered in conformity with the
bill, and William L. Hodgson appointed commissioner to carry the
same into effect.
On 21 November, 1834, Jane Dade filed another bill on the equity
side of the court, stating that the sale was to take place in a few
days and praying that it might be suspended. She alleged that she
was entitled to a credit under the following circumstances: that in
1817 she had loaned to one James Irwin $680; that in 1821,
Page 43 U. S. 384
he executed his promissory note to her for $826.63, which was
the amount of the above sum with interest; that to secure the
payment of the note, he assigned a debt due to him from Henderson
and Company, which debt was guaranteed by Thomas Irwin, who had
become liable for the same; and that the amount of this debt, with
interest, should be deducted from the sum for which Thomas Irwin's
executor was about to sell her property. The bill further alleged
that Thomas Irwin, the deceased, had become personally liable from
having sold some cordage to Henderson and Company contrary to his
instructions. The assignment of the debt from James Irwin to Jane
Dade, (through her agent, John Adam) and the admission of a
personal liability by Thomas Irwin were alleged to be in the
following terms:
"I do hereby assign to John Adam the debt due me by Alexander
Henderson for cordage sold him by Thomas Irwin, as my agent, for
which debt said Irwin is himself liable, having received said
Henderson's note without my consent. This assignment is made to
secure to Jane Dade the payment of six hundred and eighty dollars,
with interest thereon from 16 October, one thousand eight hundred
and seventeen, money borrowed from her by said Adam for my use, for
which I have given him my note, payable in eighteen months, with
interest."
"Given under my hand and seal this 20 May, one thousand eight
hundred and twenty-one."
"JAMES IRWIN [Seal]"
"[Endorsed] JOHN ADAM"
"Test: LEWIS COLE"
"Endorsed. If the within debt cannot be recovered from Alexander
Henderson, I am liable for the same, provided full time be allowed
for the prosecution of the suit."
"THOMAS IRWIN"
The bill further alleged that full time had been allowed for the
prosecution of the suit against Henderson, and that there was no
prospect of anything being recovered.
Upon filing this bill, an injunction was granted to stay the
sale.
In February, 1835, Thomas Irwin, Jr., the executor, filed his
answer, denying all knowledge of the note said to have been given
by James Irwin, and denying the assignment above recited. The
answer admitted that Thomas Irwin had sold some cordage to
Henderson and Company, for which he had taken their note; that
the
Page 43 U. S. 385
note had been put in suit, judgment rendered upon it, and
execution issued; that Henderson was discharged under the insolvent
act; that the recovery of the money due on the said note being
considered as desperate, his testator had charged the amount to his
principals, James Irwin and Company. The answer denied altogether
the signature of Thomas Irwin guaranteeing the debt and alleged
sundry other matters to show the absence of equity in the claim of
the complainant.
In November, 1835, the court refused to dissolve the injunction,
and suggested that an issue should be made up, to be tried at the
bar of the court sitting as a court of law, to try the question of
the genuineness of the signature of Thomas Irwin.
This was done, but the jury were not able to agree, and was
discharged.
Numerous depositions were then taken and filed, and the case
came on to be heard, when the court decreed that the injunction
should be dissolved and the bill dismissed with costs.
The complainant, Jane Dade, prayed an appeal to this Court.
Page 43 U. S. 389
MR. JUSTICE STORY delivered the opinion of the Court.
In the year 1824, the appellant, Jane Dade, became indebted to
Thomas Irwin, the testator, and executed two deeds of trust for the
security of the debt. At the November term of the Circuit Court of
Alexandria County, 1830, Irwin, the executor, filed his bill to
obtain a decree of the sale of the estate so conveyed in trust, and
a decree was made without objection for the sale, the appellant
admitting the justice of the claim, and the original trustee having
become insane, William L. Hodgson was appointed trustee to make the
sale. After sundry delays, the trustee advertised the estate for
sale on 28 November, 1834, and on the day preceding the intended
sale he present bill was filed by the appellant for an injunction
against the sale. The bill made no objection to the original debt
or decree, but simply set up a claim, by way of setoff or discount
of a totally distinct nature and unconnected with the original debt
as due by the testator to her, and for which she alleged in her
bill that she ought to receive a credit, to which in equity and
strict justice she was entitled. The claim thus set up had its
origin in this manner. In May, 1821, James Irwin gave his note for
$826.63 to John Adam or order, for Mrs. Dade, for money borrowed of
her, which note was endorsed by Adam, and on the same day James
Irwin, as collateral security therefor, assigned to Adam a debt due
to him by Alexander Henderson for cordage sold him by Thomas Irwin
(the testator) as his agent, and for which the assignment alleged
Thomas Irwin was liable, having received Henderson's note without
the consent of James Irwin. Upon the back of this assignment there
now purports to be the following endorsement,
"If the within debt cannot be recovered from Alexander
Henderson, I am liable for the same, provided full time be allowed
for the prosecution of the suit."
The supposed note referred to in the assignment was dated in
January, 1804, and was for the payment of $901.83 to the order of
Thomas Irwin, and was signed by Alexander Henderson & Co. This
note the bill alleged to include the debt due to James Irwin.
Judgment was obtained upon this note in 1805. Afterwards Henderson,
in 1806, became insolvent, and in 1816 a bill in equity was filed
for the satisfaction of the judgment out of supposed effects in the
hands of certain garnishees, which suit was not finally disposed of
until October, 1835, and was then abated by Henderson's death.
Page 43 U. S. 390
The answer to the present bill by Thomas Irwin, the executor,
denied the whole equity thereof. It denied that James Irwin ever
executed the supposed assignment. But he admitted the origin of the
debt due by Henderson and Co., and that the note taken by the
testator included it, but that, Henderson having become insolvent,
he was not liable for that amount, and charged it in his accounts
against James Irwin and Co. He also denied the supposed endorsement
on the assignment to be genuine, but alleged the same to be a sheer
fabrication.
The injunction prayed for by the bill was granted, and
afterwards the court directed an issue to be tried by a jury to
ascertain whether the testator's signature to the endorsement was
genuine or not. That issue was tried by a jury, which was unable to
agree upon a verdict. The order for an issue was then rescinded and
the cause came on for a final hearing in 1839, when the bill was
dismissed with costs. There is a great deal of evidence on both
sides as to the genuineness of the signature of the testator and
also as to the appearance of the ink of the endorsement being that
of recent writing. It is also remarkable that in the long interval
between the time when the deed of trust was given in 1824 and the
time when the sale was advertised and the bill filed, no demand was
ever suggested by or on behalf of Mrs. Dade for the present
supposed debt due her as a setoff or otherwise. On the contrary,
although repeated and earnest applications were made for delay of
the sale, from the time of the decree in 1830 until the
advertisement in 1834 and some correspondence took place on the
subject, no allusion whatsoever was made to any such supposed claim
or setoff, but an entire silence existed on the subject. It is also
somewhat singular that when the bill upon the trust deed was filed
and the decree therein obtained, no suggestion was made by Mrs.
Dade in answer thereto of this supposed claim, nor any postponement
of the decree of sale asked upon this account.
Now upon this posture of the case, several objections arise as
to the maintenance of the suit. In the first place, the present
bill is of an entirely novel character. It is not a bill of review
or in the nature of a bill of review founded upon any mistake of
facts, or the discovery of any new evidence. It admits in the most
unambiguous terms that the decree was right. Then it sets up merely
a cross-claim or setoff of a debt arising under wholly independent
and unconnected transactions. Now it is clear that courts of equity
do not act upon the subject of setoff in respect to distinct and
unconnected
Page 43 U. S. 391
debts unless some other peculiar equity has intervened calling
for relief, as for example in cases where there has been a mutual
credit given by each upon the footing of the debt of the other,
see 2 Story, Eq.Jurisp. §§ 1435, 1436, so that a
just presumption arises that the one is understood by the parties
to go in liquidation or setoff of the other. In the next place, the
remedy for Mrs. Dade, if any such debt as she has alleged exists,
is at law against the executor, and there is no suggestion that the
estate of the testator is insolvent and that his assets cannot be
reached at law. So that the bill steers aside of the assertion of
any equity upon the foundation of which it can rest for its
support.
In the next place, the nature and character of the claim itself,
now for the first time made, long after the decease of both the
Irwins and thirteen years at least after its supposed origin. To
put the case in the least unfavorable light, it is a matter of
grave doubt whether the endorsement of the testator's name on the
assignment is genuine or not. That very doubt would be sufficient
to justify this Court in affirming the decree of the court below
and leaving Mrs. Dade to her remedy at law, if any she have. But
connecting this with such a protracted silence for thirteen years,
without presenting or making any application for the recognition or
allowance of the claim to the testator or his executor, it is
impossible not to feel that the merits of the claim at such a
distance of time can scarcely be made out in favor of the
appellant. It is stale, and clouded with presumptions unfavorable
to its original foundation or present validity. Besides, in cases
of this sort, in the examination and weighing of matters of fact, a
court of equity performs the like functions as a jury, and we
should not incline as an appellate court to review the decision to
which the court below arrived unless under circumstances of a
peculiar and urgent nature.
The decree of the circuit court is therefore
Affirmed with costs.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Columbia holden in and for the County of Alexandria and was argued
by counsel. On consideration whereof it is now here ordered and
decreed by this Court that the decree of the said circuit court in
this cause be and the same is hereby affirmed with costs.
