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Rescission. --Set-off and Counter-claim.

625 Fraud practised on the releasor must be replied, if relied upon. Wild v. Williams, 6 M. & W. 490 ; and where the clerk of the defendant's attorney procured a cunningly-worded release from an illiterate plaintiff, this was held evidence of fraud. Sargent v. Wedlake, 11 C. B. 732. As to fraud, vide ente, p. 590.

Fraud can only be relied on in reply to a release, contained in a contract, when the plaintiff can disaffirm the contract, and remit the defendant to his former state. Urquhart v. Macpherson, 3 Ap. Ca. 821, P. C.

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Rescission. Before breach a simple contract may be rescinded and discharged by a mutual oral agreement. Milton v. Edgeworth, 6 Bro. P. C. 587, and see cases, ante, p. 28. To a declaration on a general breach of contract to deliver goods weekly for a year, it was pleaded that the contract was rescinded before breach. It was held that if there was a single breach before rescission, the plea failed in toto. Burgess v. De Lane, 27 L, J., Ex. 154.

Where there is an agreement good under the Statute of Frauds, invalid oral agreement to vary the terms does not operate by way of rescission of the original agreement. Noble v. Ward, L. R., 2 Ex, 135, Ex. Ch.

The defence is sometimes pleaded in the form of exoneration and discharge, but the defendant must prove a proposition to exonerate on the part of the plaintiff, acceded to by himself, which is to effect a rescinding of the contract previously made. King v. Gillett, 7 M. & W. 55, 59.

As to rescission of contract of marriage, see Davis v. Bomford, 6 H. & N. 245; 20 L. J., Ex. 139, cited ante, p. 446.

Set-off and Counter-claim. The plea of set-off was first given by 2 Geo. 2, c. 22, s. 13, & 8 Geo. 2, c. 24, ss. 4, 5, which enabled mutual debts to be set off between the plaintiff and the defendant; this right is now very much extended, for, by Rules 1883, 0. xix., r. 3,“ A defendant in an action may set off, or set up by way of counter-claim against the claims of the plaintiff, any right or claim, whether such set-off or counter-claim sound in damages or not, and such set-off or counter-claim shall have the same effect as a cross action so as to enable the court to pronounce a final judgment in the same action, both on the original and on the cross-claim. But the court or a judge may, on the application of the plaintiff before trial, if in the opinion of the court or judge such set-off or counter-claim cannot be conveniently disposed of in the pending action, or ought not to be allowed, refuse permission to the defendant to avail himself thereof." By 0. xxi., r. 10, “Where any defendant seeks to rely upon any grounds, as supporting a right of counterclaim he shall, in his statement of defence, state specifically that he does so by way of counter-claim.” By r. 16, although the action of the plaintiff is stayed, discontinued, or dismissed, the counter-claim may nevertheless be proceeded with ; and by r. 17, ante, p. 273, the court may give judgment for the defendant for any balance found in his favour. Under 0. xix., rr. 15, et seq., ante, p. 283, all matters in answer to a counter-claim or set-off must be pleaded in the same way as if it were a statement of claim, and by 0. xxiii., F. 4,“ where a counter-claim is pleaded, a reply thereto shall be subject to the rules applicable to statements of defence.' 0. xvi., r. 3, provides that

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the improper or unnecessary joinder of a co-plaintiff shall not defeat a set-off or counter-claim, if the defendant prove it against the other plaintiffs. The nature of a counter-claim was much considered by the C. A, in McGoran v. Middleton, 11 Q. B. D. 464.

A counter-claim must contain, in itself, a specific statement of the facts on which relief is elaimed, and it is not sufficient that those facts are stated in the defence, which forms with it one document in consecutive paragraphs, unless they are incorporated in the counter-claim by reference. Holloway v. York, 25 W. R. 627, M. R. ; Crowe v. Barnicot, 6 Ch. D. 753. In these cases leave to amend the counter-claim was refused. It is sufficient, however, if the counter-claim refer to facts previously stated in the pleadings, without repeating them in extenso; Birmingham Estates Co. v. Smith, 13 Ch. D. 506. And it is not necessary that the counter-claim should be separately headed as such. Lees v. Patterson, 7 Ch. D. 866.

As to the delivery of particulars of set-off and their effect, vide ante, pp. 84, et seq.

The distinction between a set-off and counter-claim is still material for some purposes, and especially with reference to costs, vide ante, p. 275. A set-off alleges a liquidated demand due from the plaintiff to the defelidant, which balances the liquidated claim of the plaintiff

, and shows that on the whole account, between the plaintiff and the defendant, nothing is due to the plaintiff

. A set-off to an amount equal to the plaintiff's claim is therefore a defence to the action. As to what constitutes such liquidated demand, vide post, p. 627. A counter-claim, which is a creature of the J. Acts, vide ante, p. 625, is, on the other hand, in the nature of a cross action by the defendant, which may be made, although in respect of, or against a claim for unliquidated damages. Stooke v. Taylor, 5 Q. B. D. 576, et seq., per Cockburn, C. J.; Baines v. Bromley, 6 Q. B. D. 694, per Brett, L. J. See also Gathercole v. Smith, 7 Q. B. D. 626, C. A. Matters are sometime raised by counter-claim which amount to a defence to the action ; see Love v. Holme, 10 Q. B. D. 286. As to costs generally in the case of a set-off' or counter-claim, vide ante, pp. 274, 275. As to the effect of the County Courts Act, 1867, s. 5, and the J. Act, 1873, s. 67, vide ante, pp. 276, 277.

Where the defendant has been obliged to finish work which the plaintiff had contracted to do, and for which he seeks to recover a general money claim, the amount laid out by the defendant is not a set-off, but matter of deduction on a denial of the debt. Turner v. Diaper, 2 M. & Gr. 241. So, if the defendant find materials for work done by the plaintiff for him, he may deduct the value of such materials in an action for the work, without a set-off. Neuton v. Forster, 12 M. & W. 722. So, where there are no cross demands, but the nature of the employment or dealings necessarily constitutes an account consisting of receipts and payments, debts and credits, the balance only is the debt. See Green v. Farmer, 4 Burr. 2221; Le Loir v. Bristow, 4 Camp. 134.

If the defendant put in evidence, to prove a set-off, an account rendered by the plaintiff, he must take both sides of the account, even where the plaintiff was an attorney, and the other side of the account consisted of the plaintiff's bill of costs, and no signed bill had been delivered by the plaintiff under the statute. Harrison v. Turner, 10 Q. B. 482. It has heen held that a solicitor's bill may be set off without any previous delivery of a signed bill; for the 6 & 7 Vict. c. 73 (cited ante, p. 450), only prevents a solicitor from bringing “any action » before such delivery. Broren v. Tibbits, 11 C. B., N. S. 855; 31 L. J.,C. P. 206 ; in which the decisions under the old acts, 3 Jac. 1, c. 7, and 2 Geo. 2, c. 23, which were not uniform, are reviewed. See, however, Rawley v. Rawley, 1 Q. B. D. 460, C. A., decided on similar words in 9 Geo. 4, c. 14, s. 5.

Set-off and Counter-claim.-Nature of Debt. 627 In Original Hartlepool Collieries Co. v. Gibb, 5 Ch. D. 713, Jessel, M.R. held that a cross claim, on a counter-claim, must have been complete at the <late of the writ, on the ground that such proceeding was in lieu of a cross action brought at the same time as the plaintiff's action. In Bellall v. Maitland, 17 Ch. D. 174, however, Fry, J., gave relief on a counter-claim in respect of a cause of action accrued to the defendant after writ issued ; and in Toke V. Andrews, 8 Q. B. D. 428, the plaintiff was allowed, in answer to such a counter-claim, to claim a debt which accrued due after writ issued. And a pecuniary set-off which has arisen since action brought, may be so pleaded under Rules 1883, 0. xxiv., r. 1. Ellis v. Munson, 35 L. T., N. S. 585, C. A. Where a counter-claim is founded on a continuing cause of action, damages are now, under Rules, 1883, 0. xxxvi. r. 58, ante, 284, assessed down to the time of assessment. The rule was formerly otherwise. See Original Hartlepool Collieries Co. v. Gibb, supra. In order to reply the Statute of Limitations with effect, it must appear that the set-off was barred before action Walker v. Clements, 15 Q. B. 1046. This principle will apply to a counter-claim.

As to set-off to action brought by assignee of chose in action, vide post, p. 629.

By the Truck Act, (1 & 2 Will. 4, c. 37), s. 5, in an action for wages of an artificer or workman in certain trades, a plea of set-off for goods supplied by the employer cannot be pleaded. See also 37 & 38 Vict. c. 48, s. 5. But a special reply of these statutes would be necessary.

Where the issues in the claim and counter-claim are the same, the plaintiff is not entitled to adduce fresh evidence, to contradict the defendant's evidence. Green v. Sevin, 13 Ch. D. 589.

Nature of the debt set off, and of the debts against which it is set off.] As above observed, it is still sometimes necessary to determine whether the «lefendant has a strict right of set-off as distinguished from a counter-claim, and for this purpose the following principles and decisions may be found useful. The debt set off may now be either a legal or an equitable debt. Agra and Masterman's Bank v. Leighton, L. R., 2 Ex. 56. So, the defendant can now set off a bond given by the plaintiff to a third party and assigned to the defendant. Cochrane v. Green, 9 C. B., N. S. 448 ; 30 L. J., C. P. 97. So, a set-off may be met by a reply that the plaintiff is suing as trustee only, and that the defendant had had notice of the assignment of the debt. Watson v. Mid Wales Ry. Co., L. R. 2 C. P. 593; and see Wilson v. Gabriel, 4 B. & S. 243. Thus, where bonds are issued by a company, with the intention that they should be negotiable, it cannot, as against the equitable assignee of the bond, set off a debt due to the company from the obligee of the bond in whose name the action is brought. Dickson v. Swansea Vale, &c. Ry. Co., L. R., 4 Q. B. 44 ; Higgs v. Northern, Assam Tea Co., L. R., 4 Ex. 387 ; In re Northern Assam Tea Co., L. R., 10 Eq. 458 ; In re Imperial Land Co. of Marseilles, L. R., 11 Eq. 478; In re Hercules Insur. Co., L. R., 19 Eq. 302. See further as to the principles on which a set-off was allowed in equity, Middleton v. Pollock, L. R., 20 Eq. 29. A joint and several note of the plaintiff and others to defendant may be set off against a debt due from defendant to plaintiff alone. Owen v. Wilkinson, 5 C. B., N. S. 526 ; 28 L. J., C. P. 3. But a debt due from the plaintiff to the defendant and another jointly, cannot be set off against a alebt due to the plaintiff from the defendant alone. Bowyear v. Pawson, 6 Q. B. D. 540. The two debts must be mutual and due in the same right. Arnold v. Bainbrigge, 9 Exch. 153 ; 23 L. J., Ex. 59. Where, on A.'s death, a banker, B., transferred the balance of A.'s account to the account of “C., executor of A.,” C. being also residuary legatee ; held, that this balance might be set off against other overdrawn accounts of C. with B., the legatees not having given B. any notice of claim on the balance. Bailey v. Finch, L. R., 7 Q. B. 34. See also Taylor v. Taylor, L. R., 20 Eq. 155. But where A. had a separate account with a banker C., which was overdrawn, and A. and B. had also, as executors of D., a joint account with C., A. being residuary legatee of D., and A. and B. jointly liable for some unpaid claims; it was held that one account could not be set off against the other, because a Court would not, without any terms, or any further inquiry, compel B. to transfer the joint account to A. alone. Éc pte. Morier, 12 Ch. D. 491, C. A. A set-off is not an equity which runs with a bill or note indorsed when overdue; and therefore a set-off between the maker and indorser, of such a note, cannot be set up against the indorsee. Whitehead v. Walker, 10 M. & W. 696 ; Oulds v. Harrison, 10 Exch. 572; 24 L. J., Ex. 66 ; Ex pte. Swan, L. R., 6 Eq.344.

An antecedent debt cannot be set off against an instalment of a pension which is by statute not transferable. Gathercole v. Smith, 17 Ch. D. 1 C. A. ; 7 Q. B. D. 626, C. A.

A judgment might be pleaded by way of set-off though a writ of error be pending thereon. Reynolds v. Beerling, cited 3 T. R. 188; see Curling : Innes, 2 H. Bl. 372 ; and, where in an action on a promissory note for 30., the plaintiff took a verdict for the whole sum, and the defendant had at the same sittings an action against the plaintiff for 11l., to which there was : set-off' of the note, the court held that, notwithstanding the verdict, the note might be set off. Baskerville v. Brown, B. N. P. 180 ; 2 Burt. 1229 ; Evans v. Prosser, 3 T. R. 186. A debt cannot be set off till it is actually due. Rogerson v. Ladbroke, 1 Biny. 99; but where it has become due after action brought, it may now be so pleaded. Ellis v. Munson, ante, p. 627. A debt barred by the Statute of Limitations cannot be set off ; and if pleaded the plaintiff may reply the statute ; B. N. P. 180 ; and it must be replied if relied on. Rules, o. xix., r. 15, ante, p. 283. See as to this reply, ante, p. 627.

A defendant may counter-claim a several claim, against one of two joint plaintiff's, and another several claim, against the other plaintiff

. Manchester &c. Ry. Co. v. Brooks, 2 Ex. D. 243.

By Bankrupts.] The cases on mutual credit and set-off between a bankrupt and other persons will be found, post, Part III., tit. Actions by Trustees of Bankrupts. Where one of several joint debtors becomes bank. rupt, there was no set-off. New Quebrada Co. v. Carr, L. R., 4 C. P. 651.

By and against executors.] Vide post, Part III., tit. Actions by and against executors.

By factors and agents.] An agent employed to recover a sum of money is entitled to retain a just allowance for his labour and service therein, and, as such allowance is not in the nature of a cross demand or mutnal debt, he may give it in evidence under a denial of the debt in an action for money had and received. Dale v. Sollet, 4 Burr. 2133. See also the cases cited ante, p. 627.

Where a factor sells goods without disclosing the name of his principal, the purchaser, being ignorant of the fact, in an action by the principal for the price, may set off a debt due to himself from the factor. Rabone v. Williams, 7 T. R. 360, n. ; George v. Clagett, 7 T. R. 359 ; Carr v. Hinchliff, 4 B. & C. 547. So if

, on a sale of goods to defendant, the agent hold himself out as owner, and not as agent of the plaintiff, the real owner, and the jury find that the plaintiff ostensibly allowed him to do so, then the plaintitt's claim is subject to any right of set-off existing between the agent and defendant. Ramozotti v. Bouring, 7 C. B., N. S. 851 ; 29 L. J., Č. P. 30; Borries v. Imperial Ottoman Bank, L. R., 9 C. P. 38; Ex pte. Dizon, 4

Set-off by Factors and Agents.- Tender.

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Ch. D. 133. But, if the factor was known to be such, and to sell in that character, no such set-off can be pleaded against the principal; Fish v. Kempton, 7 C. B. 687 ; even though the defendant did not know who the principal was ; Semenza v. Brinsley, 18 C. B., N. S. 467 ; 34 L. J., C. P. 161. See Maspons v. Mildred, 9 Q. B. D. 530, C. A. ; 8 Ap. Ca. 874, D. P., cited ante, p. 539 ; and if, before the goods are all delivered, and before any part is paid for, the purchaser is informed that they belong to the plaintiff, it has been ruled that the purchaser cannot set off a debt due to him by the factor. Moore v. Clementson, 2 Camp. 22 ; see Warner v. M'Kay, 1 M. & W. 591; on this last case see Fish v. Kempton, 7 C. B.,687, 693, per Cresswell, J. If the purchaser buy through an agent, the knowledge of the agent that the apparent seller is an agent, will affect the purchaser, and exclude the set-off. Dresser v. Norwood, 17 C. B., N. S. 466 ; 34 L. J., C. P. 48, Ex. Ch. Where A.'s agent, B., by A.'s authority, employs a subagent, C., to sell A.'s goods in B.'s name, there is no privity between A. and C. (vide ante, p. 539), and in an action by A. against C. for the price realised, C. may set off any sum due from B. to C. New Zealand, dc. Land Co. v. Watson, 7 Q. B. D. 374, C. A.; Kaltenbach v. Lewis, 23 Ch. D. 54, 84, C. A. But in the case of goods sold after the revocation of C.'s authority by B.'s death, no such set-off is available, as the sale is wrongful ; S. C. This head of set-off arises from the rule of law that a vendor, who accredits his agent and authorises him to contract, as principal, with a purchaser, who knows him only as principal, cannot, by resuming the character of principal, deprive his vendee of the equities which he has against the apparent vendor, whether by common law (as by payment), or by a set-off. It has been held that a broker (whose character differs materially from that of a factor), in selling goods without disclosing the name of his principal, acts beyond the scope of his authority, and that the buyer, therefore, cannot set off a debt due from the broker to him, in an action for the price by the principal ; Baring v. Corrie, 2 B. & A. 137 ; though, of course, the relation is capable of being modified by the course of dealing between the broker and his principal. See notes to George v. Clagett, 2 Smith's Lead. Cases. A mutual credit with an agent who becomes bankrupt is not within the principle of George v. Clagett, supra, in a case where the damages are unfiquidated. Turner v. Thomas, L. R., 6 C. P. 610.

If a creditor sues one of two debtors jointly liable, the defendant may show that fact, and plead a set-off of a debt, due from plaintiff to the defendant, and his co-debtor. Stackwood v. Dunn, 3 Q. B. 822.

In action by company in course of vinding up.] See post, Part III., tit. Actions by companies---Companies Act, 1862—Special defences to callsSet-off

To action by assignee of chose in action.] A builder D. entered into a contract with the defendant to build a house ; D. assigned his interest in the contract to the plaintiff, who sued the defendant thereon under J. Act, 1873, s. 25 (6), ante, p. 281, it was held that the defendant might set off or deduct from the plaintiff's claim, the damages he had sustained by Do's breach of the contract, but could not recover damages against the plaintiff. Young v. Kitchin, 3 Ex. D. 127.

Tender. On issue joined as to the tender, the date of the writ, as stated on the statement of claim, is evidence of the commencement of the action; see Whipple v. Manley, 1 M. & W. 432.

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