Payment by a Bill or Note.-Release.

623

v. Greene, ante, p. 621. A vendor took from his vendee, as collateral security, a bill accepted by a third person, indorsed by the drawer and payee to the vendee; the bill was dishonoured, but no notice thereof was given by the vendor; it was held, in an action for goods sold, that the laches of the plaintiff operated so as to make the bill payment pro tanto. Peacock v. Purssell, 14 C. B., N. S. 728; 32 L. J., C. P. 266. See also Yglesias v. River Plate Bank, 3 C. P. D. 60, 330, C. A. So, a creditor who takes from his debtor's agent on account of the debt, the cheque of the agent, is bound to present it for payment within a reasonable time, and if he fail to do so, and by his delay alter for the worse the position of the debtor, the debtor is discharged, although the latter was not a party to the cheque. Hopkins v. Ware, L. R., 4 Ex. 268. See also Smith v. Mercer, L. R., 3 Ex. 51. Pearse's Claim, L. R., 8 Eq. 506, decided by Stuart, V. C., is hardly reconcilable with these cases. The defendant gave the plaintiff a cheque on his bankers in payment of a claim, and the cheque was duly presented by post by the plaintiff's bankers to the defendant's bankers, who neither remitted the amount nor returned the cheque till after their stoppage: it was held that there was no payment. Heywood v. Pickering, L. R., 9 Q. B. 428.

Other kinds of payment.] A payment may be made by the mere transfer of figures in an account without any money passing. Eyles v. Ellis, 4 Bing. 112; Bodenham v. Purchas, 2 B. & A. 39.

In an action on a bill of exchange the defendant pleaded payment. It appeared that the plaintiff had sold shares for A. on credit, but that A., being in the want of money, obtained an advance from the plaintiff of the amount due for the shares, the defendant giving his acceptance also for the amount as further security; but it was agreed between the plaintiff and defendant and A. that the plaintiff should apply the proceeds of the sale of the shares, when paid, in payment of the bill. The plaintiff received the proceeds it was held that these facts constituted payment. Hills v. Mesnard, 10 Q. B. 266.

If a debtor pays a sum of money to a third person, by direction or with the assent of his creditor, in discharge of a liability of the creditor, it is the same as if the money were paid into the creditor's own hands. Waller v. Andrews, 3 M. & W. 312; Bramston v. Robins, 4 Bing. 11; Chit. Contr. 10th ed. 684.

In

If goods be accepted in satisfaction of a debt this constitutes payment. Cannan v. Wood, 2 M. & W. 465; Hooper v. Stephens, 4 Ad. & E. 71. neither of these cases did the question arise upon a plea of payment, but it seems that giving goods in satisfaction might be proved under that defence.

Release.

A release must be specially pleaded, Rules, 1883, O. xix., r. 15, ante, p. 283; and the evidence depends on the reply. After breach, a contract can only be discharged by a release under seal, or by accord and satisfaction; but before breach it may be discharged by parol. Ante, p. 28. The defence should state specifically that the release was by deed, otherwise it would be supported by proof of a parol discharge. Harris v. Goodwyn, 2 M. & Gr, 405. See, however, Thames Haven Dock v. Brymer, 5 Exch. 696, 711, 712; which has been recently followed by Young v. Austen, L. R., 4 C. P. 553; and Abrey v. Crux, L. R., 5 C. P. 37, cited ante, p. 366. As to proof of deed, vide ante, pp. 123, et seq., and post, p. 636.

As to effect of cancelled deed, vide post, p. 636.

As to effect of alteration of deed, vide ante, pp. 588, et seq.

Where there were cross debts, and the plaintiff sued for the whole of his

debt, and defendant pleaded a release of the whole, it appeared that plaintiff had signed a composition deed releasing the defendant from any debts owing to the plaintiff; the deed left the amount of debt released, in blank; and the blank had, after execution, but without the plaintiff's authority, been fillei up with the whole amount of the debt sued for; held that, on a finding by the jury that the debt meant to be released was the difference between the plaintiff's debt and a set-off of less amount, the plaintiff was entitled to a verdict on the issue of non est factum replied to the release. Fazakerly v. McKnight, 6 E. & B. 795; 26 L. J., Q. B. 30. Semb. the defendant should have pleaded the set-off and a release of the difference. See Bullen and Leake on Pleading, 3rd ed. 671.

A release of one of two joint, or joint and several, debtors, is a discharge of all. Nicholson v. Revill, 4 Ad. & E. 675. But although a release of the whole debt, given to one of two joint, or joint and several, contractors, ensures to the benefit of both, yet receiving a portion of a debt and putting an end to an action against one of them, is not a release of the other. Watters v. Smith, 2 B. & Ad. 889. And a release to one of several contractors if qualified,- -as a release, reserving the right to join the releasee in a suit for the purpose of recovering against the others,-is not pleadable as a release of all. Solly v. Forbes, 2 B. & B. 38. So, a release of one co-debtor reserving remedies against the other; Willis v. De Castro, 4 C. B., N. S. 216; 27 L. J., C. P. 243; or a release of the principal debtor, reserving rights against a surety; Kearsley v. Cole, 16 M. & W. 128; Price v. Barker, 4 E. & B. 760; 24 L. J., Q. B. 130 ; Green v. Wynn, L. R., 4 Ch. 204; Bateson v. Gosling, L. R., 7 C. P. 9; amount only to a covenant not to sue, and not to a release, and are not pleadable by the co-debtor. So, where the original contract reserves to the creditor the right of giving a release to the principal debtor, without discharging the surety, a release granted to the debtor is not pleadable by the surety. Cowper v. Smith, 4 M. & W. 519; Union Bank of Manchester v. Beech, 3 H. & C. 672; 34 L. J., Ex. 133. But, where the right is not reserved in the original contract or release itself, oral evidence of the reservation cannot be given. Cocks v. Nash, 9 Bing. 341. further, ante, p. 435.

See

An unqualified covenant not to sue has the effect of a release on the ground of avoiding circuity of action; 2 Wms. Saund. 47 gg, Id. 150, (2); Ford v. Beech, 11 Q. B. 853; but, a covenant by one of several joint creditors not to sue the defendant, is not pleadable as a release, to an action by all. Walmesley v. Cooper, 11 Ad. & E. 216. And, a covenant not to sue for a certain time was at law inoperative as a bar. 2 Wms. Saund. 47 99, 48; Id. 150, (2); Thimbleby v. Barron, 3 M. & W. 310; Ford v. Beech, supra. If, however, such a covenant is founded on valuable consideration, it would seem that, on equitable principles, it would now form a bar to an action brought within the time. And it was so, even at common law, if there were a proviso that it should be pleadable in bar to any action brought within the time. Gibbons v. Vouillon, 8 C. B. 483; Walker v. Nevill, 3 H. & C. 403; 34 L. J., Ex. 73; Corner v. Sweet, L. R., 1 C. P. 456.

The discharge in bankruptcy of A. does "not release any person, who at the date of the receiving order, was a partner or co-trustee with the bankrupt, or was jointly bound, or had made any joint contract with him, or any person who was surety, or in the nature of a surety for him;" Bankruptcy Act, 1883, s. 30 (4). And "the acceptance by a creditor, of a composition or scheme, shall not release any person who, under this act, would not be released by an order of discharge, if the debtor had been adjudged bankrupt;" sect. 18 (15). So in the case of a joint and several liability, a composition accepted by the joint creditors does not affect the several liability. Simpson v. Henning, L. R., 10 Q. B. 406, Ex. Ch.

Rescission.-Set-off and Counter-claim.

625

Wild v.

Fraud practised on the releasor must be replied, if relied upon. 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 ante, 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.

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, an 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, O. 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 O. 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 O. 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 O. xxiii., r. 4, "where a counter-claim is pleaded, a reply thereto shall be subject to the rules applicable to statements of defence." O. xvi., r. 3, provides that

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. Â. in McGowan 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 defendant, 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 sometimes raised by counter-claim which amount to a defence to the action; see Lowe 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. Newton 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 been 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. Brown 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 Beddall 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, O. 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, O. 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 defendant 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 debt 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 lega