Jones v Mossop
| Jurisdiction | England & Wales |
| Judgment Date | 01 January 1844 |
| Date | 01 January 1844 |
| Court | High Court of Chancery |
English Reports Citation: 67 E.R. 506
HIGH COURT OF CHANCERY
S. C. 13 L. J. Ch. 470; 8 Jur. 1064. See Middleton v. Pollock, 1875, L. R. 20 Eq. 35; In re Morier, 1879, 12 Ch. D. 496.
[568] jones v, mossop. Jwne 8, 10, July 24, 1844. [S. C. 13 L. J. Ch. 470; 8 Jur. 1064. See Middleton v. Pollock, 1875, L. E. 20 Eq. 35; In re Morier, 1879, 12 Ch. D. 496.] A. was indebted on bond to B. B. died, leaving C. his sole next of kin, who obtained letters of administration of his estate. The estate of B. after all debts, &c., were paid, left a clear residue exceeding the amount of the bond debt. A. became surety for C. by joining in promissory notes. C. became an insolvent debtor, and A. was compelled to pay the notes. C. died, and then the assignee under his insolvency took out letters of administration, de bonis non, of B., and sued A. on 3 HAKE, 569. JONES V. MOSSOP 507" the bond: Held, that A. might set off the sums which he had been compelled to pay as surety for C. against the bond debt. The obligor in a bond, becoming surety for advances to the obligee, and being, after the insolvency of the obligee, compelled to pay the debt for which he had become surety, is entitled to set off the sum so paid against the amount due upon the bond. The Plaintiff executed his bond, dated the 29th of September 1834, in the penal sum of 1000, conditioned for the payment by him of the sum of ,500 to John Eeed, his executors, administrators and assigns, with lawful interest thereon. John Eeed died on the 1st of January 1835 intestate, leaving Eichard Eeed his only child and next of kin, and, as such, entitled to a clear residue of his personal estate of several thousand pounds. In consequence of a pretended will of John Eeed being propounded in the Ecclesiastical Court by another party, and of the litigation which thereupon ensued, Eichard Eeed was not able to obtain letters of administration of his father's estate until August 1838. During this interval Eichard Eeed was in want of money, and in July 1835 John Bevan advanced him 100 upon the security of the joint and several promissory note of the Plaintiff and two other persons as sureties for the repayment of such advance and interest. John Bevan afterwards advanced the Plaintiff a further sum of 200, secured by the promissory note of Eichard Eeed, and the Plaintiff and another person, as his sureties. The Plaintiff also lent Eichard Eeed some sums of money, amounting together to about 50. Upon Eichard Eeed obtaining the grant of administration to his father's estate, the bond, being a part of the net residue of that estate, became legally and equitably the absolute property of Eiehard Eeed, and he became entitled to the money due thereon for his own use and benefit. In 1838 Eichard Eeed was imprisoned for debt in Cardiff Gaol. On the 30th of January 1839 [569] a vesting order, under the statute 1 & 2 Viet. c. 110, was made against him, and, in July following, the Defendant was appointed assignee of his estate and effects. Eichard Eeed died in January 1840. The Plaintiff was, in December 1840, compelled to pay John Bevan the sums due on the promissory notes, amounting to 377. After the death of Eichard Eeed the Defendant obtained letters of administration de bonis non of John Eeed, and commenced an action against the Plaintiff upon the bond. The bill stated that the Defendant intended to proceed to judgment, and issue execution for the whole amount of principal and interest secured by the bond; whereas the Plaintiff had offered and requested to come to an account with the Defendant of what was due upon the bond, and upon the said payments made by the Plaintiff, and had requested the Defendant to accept the balance of such account in full satisfaction and discharge of his said bond. The bill charged that the Plaintiff was entitled to the same relief in equity, as if Eichard Eeed was living; that all the debts and funeral and testamentary expenses of John Eeed had been paid, and all the duties of administration discharged; and that whatever the Defendant should be able to recover, as administration lie bonis non of John Eeed, would belong to the Defendant absolutely, and that he meant to retain and appropriate the same in his character of assignee of Eichard Eeed. The bill prayed that, as against Eichard Eeed, as the equitable and beneficial owner of the bond, and the monies secured thereby, and against the Defendant as assignee, it might be declared that the Plaintiff was entitled in equity to set off and be allowed the monies so advanced and paid by the Plaintiff to and for Eichard Eeed, and the monies paid by the Plaintiff, [570] as the surety of Eichard Eeed, in satisfaction of the promissory notes; an account and injunction. The common injunction issued to restrain the action. The Defendant, by his answer, in substance admitted the facts above stated; and he then obtained the order nisi. Mr. Eomilly and Mr. W. M. James, for the Plaintiff, appeared to shew cause on the merits against dissolving the injunction. They insisted that, if Eichard Eeed had been living, and his property had not been aliened by the effect of the vesting order, he could not have enforced payment of the bond from the Plaintiff, without paying to the Plaintiff the sums which the latter had advanced for him, or owing to his default: that neither the death of Eichard Eeed, nor the vesting order, could affect the equities of the parties. The death of Eichard Eeed left that which was 508 JONES V. MOSSOP SHAKE, 571. a part of his estate before a part of his estate still; and the assignee in his insolvency could be in no better situation than Eichard Reed himself. Although the promissory notes were paid after the vesting order, they were paid in respect of obligation previously incurred; and the time of the payment, therefore, did not affect the question of the right to set off the amount against the bond debt. Mr. Eussell and Mr. Fleming, for the Defendant, relied on the fact that the demands were owing in different rights : one claim was by the administrator of A., the other against the assignee of B.; that the rights of the parties at the utmost must be determined at the date of the vesting order, and at that time the Plaintiff had not paid the promissory notes; and that it was not a case of mutual credit within the principle on which cross [571] demands were allowed to be set off one against the other. The cases adverted to in the judgment, and Whitaker v. Rush (Amb. 407), Bishop v. Church (3 Atk. 691), Antrobus v. Davidson (3 Mer. 569), Cherry v. Boultbee (4 Myl. & Or. 442), Clark v. Cort (Cr. & Ph. 154), Rawson v. Samuel (Or. & Ph. 161) and Dodd v. Lydall (1 Hare, 333) were cited. July 24. the vice-chancellor [Sir James Wigram]. If in this case Eichard Eeed and not John Eeed had been the obligee in the bond of September 1834, of which the Plaintiff was the obligor; and if Eichard Eeed had been bankrupt; I should have had no difficulty in deciding this case. But owing to the circumstance that Eichard Eeed was an insolvent debtor and not a bankrupt, it was admitted by the Plaintiff that he could not succeed in his suit unless he could do so upon some general equity of the Court, independently of the statutes which govern the rights of parties in cases of insolvency. It was, moreover, admitted that the Plaintiff had to overcome a further difficulty arising from this, that the Defendant is proceeding upon the bond, not as assignee of Eichard Eeed, but as administrator of John Eeed. Assuming Eichard Eeed to have been obligee in the bond, it is impossible to doubt that, before and at the time of his insolvency, he had the equity which he claims in this suit. As surety he had a right at any moment to [572] pay off the debts which he had guarranteed ; and, as debtor upon the bond, he would have had a right to say he had paid off the debts out of the money he owed upon the bond. - The only question is whether that equity was superseded by the insolvency, or whether it overrode the rights of the creditors interested under the insolvency. My opinion is that it remained notwithstanding the insolvency. The general rule is that the assignee takes whatever belonged to the insolvent subject to all equities affecting that property in the hands of the insolvent. He takes what the insolvent could lawfully transfer, and nothing more : Ex parte Hanson (12 Ves. 346 ; 18 Ves. 232); and in cases not dissimilar in principle from this, an equity has been established upon the general principles of the Court. Thus, the general equity of a trustee to stop the interest due to a tenant for life, who is indebted to the trust, is clear: Priddy v. Rose (3 Mer. 86), Jeffs v. Wood (2 P. Wms. 128). And this equity, it has been decided, exists in favour of the trustees, after the bankruptcy of the tenant for life, in the face of the argument, which was urged with great reason, that the estate for life of the bankrupt passed to his assignees, and that the trustees should prove their debt under the commission : Ex parte Mitford (see the order, 3 Mer. 105), which has been followed in Ex parte Turpin, Re Brown (Mont. 443), in Smith v. Smith (1 Y. & Coll. 338), which received great consideration; and in Ex parte Shute (Mont. & Bligh, 385) and other like cases. In Handford v. Moseley (not reported) the case was this:-In 1825 Eobinson sold the Plaintiff, Hanford, some mills and other property ; in October of that year all the purchase-money was paid except 232, lls. lid.; and it was then agreed that the vendor should remain in possession as [573] tenant at 50 a year, and a promissory note was given by Hanford for the 232, lls. lid. In November 1828 Eobinson became bankrupt, and Moseley was...
To continue reading
Request your trial
-
Secretary of State for Trade and Industry v Frid
...indemnity by a guarantor where the guarantee was given before the insolvency date but the guarantor was called upon and paid afterwards ( Jones v Mossop (1844) 3 Hare 568; In re Moseley-Green Coal and Coke Co Ltd, Ex p Barrett (1865) 12 LT (NS) 10 The effect of these and similar cases was s......
- Day & Dent Constructions Pty Ltd (in Liquidation) v North Australian Properties Pty Ltd
-
Good Property Land Development Pte Ltd (in liquidation) v Societe-Generale
...for this condition is that there must be no real risk of one person`s claim being used to pay another`s liability: see Jones v Mossop (1844) 3 Hare 568; 67 ER 506 at p 574. This rationale also forms the underlying principle on which mutuality is based. A set-off might involve the use of pro......
-
Saudi Arabian Monetary Agency v Dresdner Bank AG
...9 CBNS 448] in Ex p Morier (1879) 12 ChD 491; and that is the explanation which he gave in the same case for the decision of Wigram VC in Jones v Mossop (1844) 3 Hare 568. Thus it was not sufficient for a person seeking to rely on set-off in equity to establish an arguable case of beneficia......