Rawson and Another v. Samuel.

HIGH COURT OF CHANCERY

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Original Citation: (1839, 1840, 1841) Cr & Ph 161

English Reports Citation: 41 E.R. 451

Feb. 23, 27, 1839; Nov. 19, 20, 1840; Jan. 23, April 15, 1841.

S. C. 10 L. J. Ch. 214; 3 Jur. 947. See Watson v. Mid Wales Ry. Co., 1867, L. R. 2 C. P. 599; Best v. Hall, 1872, L. R. 8 C. P. 15; Middleton v. Pollock, 1875, L. R. 20 Eq. 36. See also Clark v. Cort, Cr. & Ph. 154.

161] Rawson and Another v. Samuel. Feb. 23, 27, 1839 ; Noe. 19, 20, 1840:

Jan. 23, April 15, 1841. r J

Where cross-demands exist between two parties, one of whom is proceeding by an action at law, and the other by a suit in equity for an account and payment, the Court of Equity, although it may be of opinion that the facts of the case entitle the Plaintiff in equity to have one demand set off against the other, will not give that relief, unless it has been distinctly prayed by the bill.

Equitable set-off exists in cases where the party seeking the benefit of it can shew some equitable ground for being protected against his adversary's demand. The mere existence of cross-demands is not sufficient. Still less will the Court interfere,

452 BAWSON V. SAMUEL CR. & PH. 182.

on the ground of equitable set-off, to prevent a party from recovering a sum awarded to him by a jury as damages for a breach of contract, merely because there is an unsettled account pending between him and the party against whom the action is brought, although the subject-matter of the account consist of dealings and transactions arising out of the contract, the breach of which is the subject of the action. Principle upon which the Court acts in advancing causes.

lu the month of January 1835 an agreement was entered into between the Plaintiffs, who carried on business in London, under the firm of Eawson, Norton, it Co., and the Defendant, who was a merchant at Glasgow, the details of which were matter of dispute between the parties, being partly expressed in a written memo¡randum, and partly to be collected from certain previous transactions Iwtween tlio same parties, which were referred to in that document. The outline, however, of the agreement, upon which there was no dispute, was that the Defendant should make consignments of goods, on his own account and risk, to certain mercantile houses in the East Indies, in which the Plaintiff Rawson was interested ; and that,. upon the shipment of every cargo of goods which he should so consign, he should be at liberty to draw bills of exchange, at six or twelve months, upon the Plaintiffs, for the amount of his charges and disbursements in respect of such shipments, including a commission of 5 per cent. ; that the goods should be sold by the foreign houses, according to their own discretion, at a certain rate of commission ; and that the pro ceeds of such sales should be remitted, in the first instance, to the Plaintiffs for their indemnity against the amount of their acceptances.

[162] In pursuance of that agreement, consignments of goods to a very largo-amount were made by the Defendant to the foreign houses referred to, during the years 1835 and 1836, against which bills of exchange were, from time to time, drawn by him upon the Plaintiffs. All the bills so drawn which were presented previously to the month of January 1837 were duly accepted; but several bills, to the amount of upwards of .20,000, which had been drawn by the Defendant upon the Plaintiffs in respect of certain shipments made by him in and subsequently to the month of August 1836, upon being presented to the Plaintiffs in the month of January 1837,. for acceptance, were dishonoured ; and thereupon the Defendant brought an action against the Plaintiffs for an alleged breach of the agreement, in which ho laid the damages at 30,000.

Upon that action being brought the Plaintiffs filed the bill in this cause, in which,, after setting forth the memorandum of agreement, and stating the previous trans¡actions therein referred to, they alleged that it was one of the terms of the agreement that the goods should be invoiced at their actual cost prices, and that the sums for which the bills were to be drawn should be the amounts of such invoices, with no-other addition than the actual charges of shipment and a commission of 5 per cent. : and that it was also part of the agreement that the bills should be renewed by the Defendant in case the Plaintiffs should so require ; and that the goods to be shipped by the Defendant should, upon reaching their destination, be sold forthwith by the foreign houses, and that the proceeds should be remitted in such a manner as that the Plaintiffs might never be obliged to come under any actual cash advance upon their acceptances. The bill then alleged that the bills which the Plaintiffs had accepted under the agree-[163]-ment had been so accepted on the faith and assurance that, before they became due, the returns from the sales of the goods against which they were respectively drawn would have come in; but that, in consequence of the-Defendant's having fraudulently charged the goods in the invoices above their actual cost prices, and also of his having, by various means, evaded renewing the bills, and of his having, in contravention of the agreement, sent out private instructions to the foreign houses, by which the sales of the goods had been delayed until the market* had fallen, a considerable portion of the goods were, in the month of January 1837,. still unsold, while the Plaintiffs had, at the same time, come under large cash advances, for which the goods so remaining unsold wore a very inadequate security ; and that it was under these circumstances that they had refused to accept the additional bills. which were then presented to them.

In fact, the bill alleged that at the time when the Plaintiffs refused to accept the.

CR. & PH. 164. RAWSON '('. SAMUEL 453

bills in question they were under an actual cash advance of 53,000 and upwards, and. that they were liable upon bills which they had previously accepted, and which were then running, to a still greater amount; and that the total amount of such Advances and liabilities at that time greatly exceeded the value of the goods then remaining unsold, including the shipments in and subsequent to the mouth of August 1837.

The bill then set forth the substance of the declaration filed in the action, and of the pleas which the Plaintiffs had put in to it, two of which it stated to be to the following effect:-first, that it was a condition of the agreement that the Plaintiffs òshould not be required to accept any bills while there should be a balance due [164] to them for payments made on account of former acceptances, after giving credit for -all returns ; and that there was such balance still due : and, 2dly, that the Defendant had charged the invoices of the shipments above the market price, and that the Plaintiffs had thus given credit, and were in advance for the credit so given to a large excess, beyond the total amount for which, according to the agreement, they were liable to have given credit in respect of such shipments ; and that the amount .so overdrawn exceeded the amount for which the bills in question were drawn.

The bill then charged that the Defendant had, iti fact, before the month of January 1837, in divers particulars fraudulently broken the agreement, or failed to perform it on his part; and that he had also, by divers false representations, prevailed upon the Plaintiff's to make advances to him, under the agreement, to an amount consider--ably beyond the value of the goods shipped by him ; and that so it would appear, if the Defendant would answer and set forth the several matters thereinafter charged òand enquired after. Then followed a long series of special charges in relation to the -actual cost prices of the goods which had been shipped, and to the prices at which they had been invoiced : after which the bill proceeded to charge, that if the I efendant would set forth a full and true account of the dealings and transactions which had taken place between him and the Plaintiffs under the agreement, and if -an account thereof were taken under the direction of the Court, it would appear that, at the time when the Plaintiffs refused to accept the bills in question, the Defendant was indebted to them, in respect of such dealings and transactions, to an amount greatly exceeding the value of any goods which had been shipped by the Defendant, -and the proceeds of which wore then coming [165] to the Plaintiffs; and that after giving credit to the Defendant for all sums which the Plaintiffs had received since their refusal to accept those bills, there still remained due to them from the Defendant 4.1 very large sum : and the bill charged that it would also appear from such account, if so taken, that the Plaintiffs were fully justified in not accepting the bills.

The bill then charged that the Defendant was residing at Glasgow, out of the jurisdiction of the Court, and that he had become so much embarrassed in his circum¡stances as to have been obliged to suspend the payment of his debts.

The prayer of the bill was, that an account might be taken under the direction of the Court of the dealings and transactions between the Plaintiffs and the Defendant; .and that the Defendant might be decreed to pay to the Plaintiffs what might appeal1 òflue from him to them, they being willing to pay what, if anything, should appear to be due from them to him ; and that the Defendant might make a full discovery of the matters enquired after by the bill, and that the Plaintiffs might have the benefit òof such discovery at the trial of the action: and that the Defendant might, in the meantime, lie restrained, by injunction, from proceeding in his action, and from com¡mencing or prosecuting any other action or actions, and from in any other manner proceeding at law against the Plaintiffs touching the matters in question.

The Defendant, by his answer, stated what he understood to have been the true intent and meaning of the agreement, both with reference to the prices at which the goods were to be invoiced, and to the renewal of the bills, in both which particulars his view of the agreement differed from that insisted upon by the bill; [166] and he òdenied that the agreement, as he so explained and understood it, had been broken by him in either of those particulars, or in any other respect. He also denied having sent out any instructions to the foreign houses respecting the sales of the goods, further than by giving them a general caution not to make precipitate sales in an unfavourable state of the market. With respect to the accounts, the Defendant stated that he had, from time to time, since the month of January 1835, received from the

454 RAWSON V. SAMUEL OR. & PH. 167,

Plaintiffs statements purporting to be accounts of the net proceeds of the remittances, from the foreign houses; arid he admitted that it did appear from their statements of accounts that the Plaintiffs had, in and previously to the month of January 1837, come under an actual cash advance of 53,000 and upwards; but he said that those statements of accounts had not been vouched, arid that he had from time to time objected, and did still object, to many parts of them ; and that if such objections, should be allowed, as he believed they ought to be, the amount of that apparent advance would be greatly reduced : he insisted, however, that it was no part of the agreement that the Plaintiffs should not be bound to accept more bills so long as they should be under a cash advance upon previous acceptances, and consequently that the state of tho account in the month of January 1837, whatever it might have been, could not relieve the Plaintiffs from their obligation to accept the bills in question : accordingly, he said that in the pleadings at law no issue was tendered by him in respect of the balance alleged to have been due to the Plaintiffs in the month of January 1837, but that, for the purposes of that action, it was admitted on his part, that a balance was due from him to the Plaintiffs at the time of their refusal to accept those bills.

[167] The Defendant then stated his belief that if all the goods shipped by him, and for the amount of which the Plaintiffs had accepted bills, were realized, and the proceeds thereof remitted, and if the accounts were to be fairly and properly taken, such remittances would be found more than sufficient to cover the amount of the Plaintiffs' advances. He then admitted that he had become embarrassed in his circumstances, and that he had been obliged to suspend the payment of his debts ;; but he stated that such embarrassment was wholly occasioned by the Plaintiffs having refused to accept the bills in question according to their agreement.

Before the answer was put in the Plaintiffs obtained the common injunction, which was afterwards extended to stay trial. On the coming in of the answer the Defendant moved, before the Vice-Chancellor, to dissolve the injunction; upon which motion His Honour ordered that the injunction should be dissolved so far as it stayed the trial of the action, and that in other respects it should be continued.

From that order both parties appealed to the Lord Chancellor : the Plaintiffs, by a motion that so much of the Vice-Chancellor's order as directed that the injunction should be dissolved, so far as it stayed the trial, might be discharged; the Defendant,, by a motion that the order, so far as it stayed execution in the action, might be discharged, and that the Plaintiffs at law might be at liberty to sign judgment, and issue execution in the action in due course.

Feb. 23, 27. The two appeal motions were heard together1.

Mr. Wigram and Mr. Hull, who appeared for the Defendant, and began, contended that the Plaintiffs [168] having obtained all the discovery that was material to their flefence at law, there was no longer any reason for staying the trial of the action, and that, so far, the Vice-Chancellor's order was right: but they said that the rest of His Honour's order had proceeded upon a supposed right in the Plaintiffg to set off the amount of damages which would be recovered in the action against the balance of the account in equity, whereas those two demands, even supposing the balance to be in favour of the Plaintiffs, which was not admitted to be the case, were not so connected together as to be the subjects of set-off; and that, even if they were, the bill was not properly framed with a view to such relief: and, therefore, they contended that the injunction ought to have been dissolved together.

Mr. Knight Bruce, Mr. Jacob, and Mr. Blunt, for' the Plaintiffs, argued that the Vice-Chancellor's order, so far as it continued the injunction, was right, both with reference to the frame of the bill and to the merits of the case. The argument on the merits was repeated in greater detail on a subsequent motion, which will be found in its place in this report. With respect to the rest of the order, they referred to the issues tendered by the two pleas alwve mentioned, as shewing that the fraudulent practices with which the Defendant was charged by the bill, and upon which the Plaintiffs relied for their defence to the action, were inseparably connected with the subject-matter of the account; upon which ground they contended that the trial of the action ought to be postponed until the account should have been taken.

the lord chancellor. With respect to that part of the Vice-Chancellor's order which allows the action to proceed to trial, I am [169] clearly of opinion that it

CR. & PH. 170. RAWSON V. SAMUEL 455

was right. The action is for an alleged breach of the contract by the Defendants at law in refusing to accept bills, under circumstances, as to which it is a question in the action whether those circumstances did or did not justify the refusal to accept the bills. The suit in equity is for the purpose of having the account taken under the agreement, so long as it subsisted between the parties; and also for the purpose of obtaining discovery in aid of the Plaintiffs' defence to the action. The Plaintiffs were undoubtedly entitled to such discovery ; and so long as that discovery was incomplete it was right that the trial should be stayed. But now, instead of being a matter of discovery, the application is that the trial of the action may be postponed until the account itself shall have been taken: and for the purpose of shewing that there is some equity to suspend the trial, two of the pleas, and two only, have been referred to. The first ia tliat which alleges that the Plaintiffs were not bound to accept bills when the balance was against them, and that there was such balance still due. Now, upon that plea, the issue denies that it was part of the contract that the liability to accept should be limited to the cases in which the balance was in favour of the Plaintiffs. It is quite clear that the account has nothing to do with that. The next plea is that in which it is pleaded that the Defendant charged higher prices for the goods than he ought to have charged under the agreement; and that, by so doing, he obtained from the Plaintiffs acceptances for a larger sum than by the contract he was entitled to ask for. If that be proved, and be an answer to the action, it must be so independently of the result of the account, which therefore cannot possibly be material to the trial of that issue. Then why is this Court to interfere with the trial of the action 1 This Court has no jurisdiction over the subject-matter of the action : it cannot try the [170] damage sustained by the breach of the contract: that must, at some time, in some shape or other, become the subject of investigation at law; and the answer being sufficient, the parties have now got all the discovery they can get from their opponents : the discovery is now complete. Not only, therefore, do I not see any reason for interfering with the trial, but I do not see what right the Court has to interfere with it, or what jurisdiction it has to prevent a party, who claims a right to damages for a breach of contract, from proceeding to establish that claim in the only way in which it can be established, namely, by an investigation before a jury.

It is quite a different question, whether the Court will allow the Defendant, in the event of his succeeding in that action, to receive the fruits of it; that is to say, whether it will not interfere for the purpose of preventing him from compelling payment of the damages, if any, which he may recover in the action while he leaves unpaid the balance which, on taking the account, shall be found due from him to the Plaintiffs. Upon that question, however, I do not feel that, in the present state of this record, I ought to express any opinion; because it would be administering an equity between the parties, not as matter of account, but as matter of set-off, between the balance of the account coming to the Plaintift's, and the damages which may be recovered in the action by the Defendant. If such an equity exists, it will be to be administered by the Court in a suit containing, at least, allegations and a prayer adapted to such relief. Not only, however, is no such case stated or alluded to upon this record, but I find a relief prayed for which is totally inconsistent with any such equity being administered in this suit; for the bill prays that an account may be [171] taken of the dealings and transactions between the Plaintiffs and the Defendant, and that the Defendant may be decreed to pay to the Plaintiffs what shall appear to be due to them upon taking such account, the Plaintiffs being ready and willing to pay what, if anything, shall appear to be due from them to the Defendant: whereas the relief applicable to the case now made at the Bar would be, not that the Defendant might pay the Plaintiffs the balance, but that the balance might go and be applied in satisfaction of the damages, if any, which the Defendant would otherwise be entitled to receive.

The bill then goes on to pray that the Defendant may make a full discovery, and that the Plaintiffs may have the benefit of such discovery at the trial of the action ;-and that the Defendant may, in the meantime, be restrained by injunction from proceed ing in his said action, and from commencing or proceeding in any other action, and from in any other manner proceeding at law against the Defendant. That is the ordinary language of a bill of discovery, and is not the form of a proceeding where the

456 RAWSON V. SAMUEL OK. 6 PH. 172.

Plaintiff thinks he has established a case which is not to be disposed of by an action at law, but is to form a matter of equitable adjudication. The words " in the mean¡time" are clearly to be referred to the last antecedent, which is, that the Defendant may make discovery, and that the Plaintiffs may have the benefit of it upon the trial of the action.

Being, therefore, of opinion, as I have already said, that there is no case made for restraining the trial of the action, and there being, according to the view I take of the bill, no injunction prayed against the execution, the injunction must be dissolved altogether; but let it be understood that, so far as it restrains execution, I [172] dissolve it entirely on the frame of the bill, and that I express no opinion upon the merits.

Noo. 19, 20, 1840. The bill was then amended, and charges were introduced (amongst others) to the effect that, both at the timewhen the bills in question were dishonoured, and at the time when the action was commenced, there was due to the Plaintiffs, on the balance of their accounts with the Defendant under the agreement, a sum much greater than the amount of the bills in question, and also much greater than the sum of 30,000, at which the damages were laid in the action; and that, under those circumstances, the Defendant ought to be restrained from proceeding to trial in the action; or, at all events, from enforcing payment against the Plaintiffs of the amount, if any, which he might recover in such action, until the accounts should have been taken ; and that the Plaintiffs ought to be allowed to set off the amount which, on the balance of such accounts, might be found due to them against any sum which the Defendant might recover in such action.

The prayer of the bill, as amended, was that the account might be taken, as before prayed, and that, in the meantime, the Defendant might be restrained from proceed¡ing to trial, or, at all events, to execution in the action ; and that it might be declared that the Plaintiffs were entitled to set off, against the amount which might be recovered by the Defendant in the action, the amount which, upon taking the account, should be found due from him to the Plaintiffs; the Plaintiffs being willing and thereby offering to pay the difference, if any, which there might be between the amount so to be recovered by the Defendant and the balance which should be [173] found due to the Plaintiffs on such account, in case such balance should fall short of the amount so to be recovered.

On the coming in of the answer to the amended bill, which did not materially differ from the former one, the Vice-Chancellor, upon the motion of the Plaintiffs, granted an injunction to restrain execution in the action until the further order of the Court.

The Defendant now moved before the Lord Chancellor that that order might be discharged.

Mr. Wigram and Mr. Hull, for the Defendant.

The right of set-off exists only between demands connected together in their nature or by contract; whereas the Defendant's right to damages in this action is wholly collateral to the account which is sought by the bill. Besides which, the injury of which the Defendant complains is not merely that his bills have not been accepted, but that they have not been accepted at the time when they ought to have been accepted. As time is of the essence of the injury, so it must be of the damages which are to be assessed by the jury; whereas the effect of the Vice-Chancellor's order is to say that if a jury shall find that 30,000 paid now is only an equivalent for the damage which the Defendant has sustained by not having bills accepted a year ago, this Court will alter that verdict by postponing the payment of the 30,000 until after the accounts shall have been taken.

Mr. Knight Bruce, Mr. Jacob, and Mr. Blunt, for the Plaintiffs.

It is not correct to say that the subject-matters of the action and of the suit are collateral to each other; [174] for not only do both of them arise out of the same transaction, but the one is connected with and dependent on the other, inasmuch as the propriety or impropriety of the Plaintiffs' refusal to accept the bills, and conse¡quently the amount of damages, to which the Defendant is entitled, supposing a breach of the contract to have been committed, will materially depend upon the state of the account at the time when such refusal took place. Nor is it any objection to the claim of set-off in equity that one of the demands is founded in tort, and the other in

OE. & PH. 176. BAWSON V. 8A3IUEL 457

contract; because, when once a, judgment is recovered in an action for damages, the amount of such damages constitutes a mere civil demand, although the ground of the judgment was a tort. Accordingly, this Court, which looks to the substance of the demands, and not to the technical distinctions which exist in Courts of law between the different forms of action, has in numerous instances given relief, by way of a set-off, between the damages recovered by one party at law, and a debt claimed by the other in equity; Becaley v. D'Arcy (2 Sch. & Lef. 403, n.), Piggott v. Williams (6 Mad.' 95), Lord Cawdor v. Lewis (1 Y. & Coll. 427), Williams v. Dames (2 Sim. 461).

In this case, the circumstance of the Defendant's being out of the jurisdiction, which is not denied by the answer, and of his insolvency, which is admitted, furnish additional reasons why the Court should afford this species of relief. For, if the Defendant he allowed to recover damages in the action, and the result of the account turn out in favour of the Plaintiffs, the Court will have lost the power of doing justice between the parties. Whereas, if the injunction be continued, the Court will be able to secure the amount of damages, if [175] any shall be recovered, to await the result of the account.

the loed chancellor intimated to the Defendant's counsel that it was unneces¡sary for him to address himself, in his reply, to the circumstances of the Defendant's being out of the jurisdiction, and insolvent, inasmuch as those circumstances could give the Plaintiffs no equity.

Mr. Wigram, in reply.

After what your Lordship has said, the dry question of equitable set-off is the only one with which it is necessary to deal; and with respect to that, the whole of the argument on the other side proceeds upon a confusion between cases of set-off and cases of security or lien. All the authorities which have been cited, except that of Williams v. Da-vies, are of the latter description. In Beasley v. D'Arcy, the injury, for which damages were claimed by the tenant, was an injury to the thing out of which the landlord's rent was to come; and, as the injury was committed by the landlord himself, it was reasonable that the amount of damages for it should be deducted from the amount of rent which he was entitled to recover. So also in Piggott v. Williams, the subject-matter of the solicitor's claim being compensation for his professional services, it was right that the damages, which his client had sustained from his negligent discharge of those services, should be brought into the account and deducted from the amount of his claim. In the case of Lord Cawdor v. Lewis, the Plaintiff claimed an equitable lien upon the land in question, and consequently upon the mesna profits of it, which were the subject-matter of the Defendant's action. That, therefore, was not a case of set-off, properly speaking, but of lien. With respect to Williams v. Davies, it is [176] one of those extreme cases which answer themselves: for if that decision be correct, this Court might interfere by injunction to restrain a party from recovering damages for an assault or any other personal injury, in any case, in which he might happen to be indebted to the other party on the balance of an account. In the present case, however, there is not even an admission that the balance of the account is in favour of the Plaintiffs; on the contrary, the Defendant states his belief (which is all that can be expected from him, considering that his only means of infor¡mation are in the hands of the Plaintiffs) that if the accounts were properly taken, a. balance would he coming to himself.

Jan. 25,1841. the lord chancellor. The mercantile arrangement between the Plaintiffs and the Defendant, which has led to the existing litigation both at law and equity between them, was, so far as regards the question before me, shortly this :-

The Defendant Samuel was to send out goods to several houses in distant ports, connected with the Plaintiffs' house in this country, who were to sell, and remit the proceeds to the Plaintiffs, and they were to accept bills to be drawn upon them by the Defendant, upon the shipments taking place. The result was that the Plaintiff* became largely in advance, the bills becoming due and being paid by them before remittances or consignments were received from abroad to meet them. The Plaintiffs, allege that this arose, in a great degree, from the misconduct of the Defendant in drawing bills upon them for larger sums than the value of the goods shipped justified, and in directing the houses abroad not to sell, and in refusing to renew the bills : but, however that may turn out in the progress of [177] the cause, I do not find in the answer any admissions which can, upon this motion, enable the Plaintiffs to proceed

C. xxi.-15*

458 RAWSON V. SAMUEL CE. & PH. 178.

upon, the ground that any of those allegations are so established as to entitle them to any order founded upon their being true : but it is admitted that there is a compli¡cated account to be taken between the Plaintiffs and the Defendant, upon the result of which, however, the Defendant says he believes that a balance will be found due to him.

The subject of the action at law ia the refusal of the Plaintiffs in equity to accept bills drawn by the Defendant, in pursuance of the agreement, upon certain shipments made to the houses abroad. The Vice-Chancellor's order permits the trial of this action, but restrains the execution, in case a verdict should be found for the Plaintiffs at law. The case, therefore, to be considered is the Plaintiffs' recovering a verdict; that is to say, the case of the Plaintiffs in equity having broken their contract, and improperly refused to accept the bills; and the question is, whether the Defendant in equity, having obtained a verdict, as compensation for such a breach of contract and consequential injury, ought to be restrained from receiving the sum so awarded to him, until the complicated account stated in the bill shall have been taken, and the balance ascertained. This would produce the most obvious injustice, if the balance should be found in favour of the Plaintiff at law, which he has sworn he believes it will; but whatever weight may be attached to this statement of belief as to the probable balance of a long and complicated account, the case is certainly not one in which the Plaintiffs in equity can ask the Court to assume that the balance will be in their favour. The equity, therefore, must rest upon the admitted evidence of a com¡plicated and unsettled account.

[178] It was said that the subjects of the suit in this Court, and of the action at law, arise out of the same contract; but the one is for an account of transactions under the contract, and the other for damages for the breach of it. The object and subject-matters are, therefore, totally distinct; and the fact that the agreement was the origin of both does not form any bond of union for the purpose of supporting an injunction.

The question then comes to this: Is the Defendant, in a suit in this Court for an account, the balance of which I will suppose to be uncertain, to be restrained from taking out execution in an action for damages against the other party to the account until after the account shall have been taken, and it shall thereby have been ascer¡tained that he does not owe to the Defendant at law, upon the balance of the account, a sum equal to the amount of the damages 1 If so, it cannot be upon the ground of set-off, because there is not at present any balance against which the damages can be set off; nor can it be because the damages are involved in the account, for certainly they can form no part of it.

We speak familiarly of equitable set-off, as distinguished from the set-off at law ; but it will be found that this equitable set-off exists in cases where the party seeking the benefit of it can shew some equitable ground for being protected against his adversary's demand. The mere existence of cross-demands is not sufficient; f'f^hyte v. O'Brien (1 S. & S. 551); although it is difficult to find any other ground for the òorder in Williams v. Davies (2 Sim. 461), as reported. In the present case, there are not even cross-demands, as it cannot be assumed that the balance of the account will be found to [179] be in favour of the Defendants at law. Is there, then, any equity in preventing a party who has recovered damages at law from receiving them, because he may be found to be indebted, upon the balance of an unsettled account, to the party against whom the damages have been recovered ? Suppose the balance should be found to be due to the Plaintiff at law, what compensation can be made to him for the injury he must have sustained by the delay 1 The jury assess the damages as the compensation due at the time of their verdict. Their verdict may be no compensation for the additional injury which the delay in payment may occasion. What equity have the Plaintiffs in the suit for an account to be protected against the damages awarded against them 1 If they have no such equity, there can be no good ground for the injunction.

Several cases were cited in support of the injunction; but in every one of them, except Williams v. Dairies, it will be found that the equity of the bill impeached the title to the legal demand. In Beasky v. D'Arcy (2 Sch. & Lef. 403, n.), the tenant was entitled to redeem his lease upon payment of the rent clue ; and in ascertaining the amount of such rent, a sum was deducted which was due to the tenant from the

CR. *PH.1W. RAWSON V. SAMUEL 459

landlord for damage done in cutting timber. Both were ascertained sums, and the equity against the landlord was that he ought not to recover possession of the farm ior non-payment of rent whilst he owed to the tenant a sum for damage to that ;8ame farm. In O'Connor v. Spaight (1 Sch. & Lef. 305) the rent paid formed part of a complicated account; and it was impossible, without taking the account, to ascertain what sum the tenant waa to pay to redeem his lease. In Ex-parte [180] Sttfihens ò(11 Ves. 24) the term equitable set-off is used ; but the note having been given under a misrepresentation, and a concealment of the fact that the party to whom it was Driven was at the time largely indebted to the party who gave it, the note was ordered to be delivered up as paid. In Piggott v. Williams (6 Mad. 95) the complaint Against the solicitor for negligence went directly to impeach the demand he was attempting to enforce. In Lord Cawilor v. Lewis (1 Y. & Coll. 427) the proposition is too largely stated in the marginal note; for, in the case, the action for mesne profits waa brought against the Plaintiff, who was held, as against the Defendant, to be, in equity, entitled to the land. None of these cases furnish any grounds for the injunction in the case before me.

In Preston v. Sirutton (1 Anstr. 50) the pendency of an unsettled partnership .account, upon which the balance was in dispute, was held to he no ground for an injunction to restrain execution upon a judgment which had been obtaitied upon a note given for a balance upon a former settlement.

When this case was before me, in 1838, as reported in 8 Law Journal, 75, the Plaintiffs had not had all the discovery they required. I am there reported to have said "The Court must be satisfied how the evidence stands, as applicable to the points stated in the bill, before it can safely dispose of the question whether the action shall proceed; all of which will be open to the Court when it is satisfied that the Plaintiffs have had the opportunity of investigation which they ask. If they find nothing to bear on the issue, the result will be accordingly." It never occurred to me that if the Plain-[181]-tiffs were not able, from admissions in the answer, or irom documents produced by the Defendant, to establish, for the purpose of the injunction, the case made by the bill, they could sustain it by the mere fact of the pendency of the account. The case, however, is now reduced to that, and that will not, I think, justify the order appealed from; which must, therefore, be discharged, .and the motion for the injunction refused, with costs.

April 15. Several commissioners having been sent abroad for the examination of witnesses, whose -depositions were to be used at the trial of the action, the Plaintiffs moved, before the Vice-Chancellor, that this cause, which had been previously set down for hearing, might be advanced, and appointed to be heard on an early day. His Honour refused the motion, with costs. The Plaintiff now moved, by way of -appeal, before the Lord Chancellor, that the order of the Vice-Chancellor might be -discharged or varied; and that the cause might be advanced, and appointed to be heard before the Lord Chancellor or the Vice-Chancellor, on an early day.

Mr. Knight Bruce and Mr. Blunt, in support of the motion, said, that in order to give time lor the return of the commissioners from abroad, the trial would necessarily have to be postponed until the month of February 1842; and, that if the cause were now brought speedily to a hearing, it was hoped that the account might be taken in the Master's office, and the cause heard on further directions before the action could be disposed of: by which means, if the balance should turn out to be in favour of the Plaintiffs, and the Defendant should recover a verdict ugainst them, they would be in a situation to set off one judgment debt against another. [182] They also observed that, as the decree would be a simple decree for an account, which would be almost of course, the hearing would occupy but a very short time, and they insisted that they were the more entitled to the indulgence of the Court, from the circumstance of their having to contend with a party who waa availing himself of the Courts of this country while he continued to reside out of the jurisdiction.

Mr. Wigram, contra.

the lord chancellor (after observing that he should be very unwilling to interfere with the Vice-Chancellor's control over his own paper) said that it could not be assumed, upon an application of this kind, that a cause would occupy but a short time in hearing; and that, although any objections which the Defendant might

460 CALDECOTT V. CALDECOTT CB. ft ?H. 183-

personally make to the application, were entitled to very little attention, yet that it was due to the other suitors of the Court whose causes were also waiting to be heard, that no suit should be allowed a precedence, unless upon some special reason being shewn why justice could not otherwise be effectually administered in it, and that a strong case would therefore be required to justify a departure from the ordinary course. Now, in the present instance, it did not appear likely that any advantage would be gained by advancing the cause, even supposing that the Plaintiffs were, upon the merits, entitled to ask for such a privilege; for considering that the accounts related to transactions in distant parts of the world, it was extremely improbable that the Master's report could be obtained before the month of February in the next year, when it was said the trial was to take place. But, independently of that circumstance, this did not appear to be a case in which justice at all required that the cause should be taken out of its turn. For if the [183] Plaintiffs were-right, they would have a verdict in their favour; and then they would have no interest in advancing the cause: on the other hand, if they were wrong, they were asking the Court to depart from its ordinary course in order to protect them from the consequences of their breach of duty. They were therefore coming to ask this, indulgence in a case in which they could not require it, unless they should turn out-to have done that for which they were liable to damages in an action at law. Th& motion must be refused, with costs.