Banks. Right to Set-off Unmatured Note. Equitable Retainer
The Virginia Law Register
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... out Early Journal Content at http://about.jstor.org/participate--jstor/individuals/early-journal--content. JSTOR is a digital library of academic journals, books, and primary source objects. JSTOR helps people discover, use, and build upon a wide range of content through a powerful research and teaching platform, and preserves this content for future generations. JSTOR is part of ITHAKA, a not--for--profit organization that also includes Ithaka S+R and Portico. For more information about JSTOR, please contact firstname.lastname@example.org. VIRGINIA LAW REGISTER. VIRGINIA LAW REGISTER. FOR THE JUNIORS. BANKS-RIGHT TO SET-OFF UNMATURED NOTE-EQUITABLE RETAINER. -The right of a bank to set-off against a check by an insolvent depositor who had made an assignment for creditors, his debt to the bank which had not yet matured, is denied in Merchants' Nat. Bank v. Robinson (Ky.), 28 L. R. A. 760. In Virginia, under the ruling in Ford v. Thornton, 3 Leigh, 695, a court of equity would give the bank the right to retain the balance on deposit, to the extent of the unmatured note, in preference to the rights of the check-holder. In that case Tucker, P., said: "Had Gregory [the depositor] sued the bank for the deposit, though it could not set-off at law, because his note was not due, yet upon showing in a court of equity that Gregory and his endorser were insolvent, there could be no question of its right there, to stop the amount in its own hands. Equitable set-offs, or discounts, existed prior to and independent of the statute: Ex Parte Stephens, 11 Ves. 24; Ex Parte Blagden, 19 Ves. 466-7; Ex Parte Flint, 1 Swans. 30, 34. And the doctrine of stoppage in equity has always been far more extended than the doctrine of set-off, even under the broad language of the English statute respecting mutual credits and our own statute resp-cting discounts; 1 Rev. Code, p. 487. Thus in the case just put, although the bank could not at law setoff a debt payable in futuro against a debt due in presenti, yet it will scarcely be denied that upon proof of danger of insolvency, equity would stop the payment; for in equity it matters not that the debt due to the defendant, which he seeks to ,set-off, is payable in futuro." See further on the subject of the right to set-off a debt not due, in case of insolvency: Feazle v. Dillard, 5 Leigh, 30; McClellan v. Kinnaird, 6 Gratt. 352; Atkinson v. Elliott, 7 T. I. 378; 4 Minor Inst. (3d Ed. ) 792; Jones on Liens, sec. 246; 1 Morse on Banks and Banking, (3d Ed.) sec. 329. The case of Williamson v. Gayle, 7 Gratt. 152, is an excellent illustration of how far a court of equity will go in discarding the technical rules of law in order to accomplish the ends of justice. In that case Botts had a blooded mare in his possession belonging to Gayle, a non-resident. Gayle was indebted to him for several years' keep of the mare and her colts, and also for fees for services by his stallion, and for other moneys. Williamson, a creditor of Gayle, brought an attachment in equity against the latter as a non-resident, and made Botts a party defendant as garnishee. The mare was sold by order of the court, and Botts claimed priority for his debts over the debt of Williamson, the attaching creditor. The court deemed it unnecessary to decide whether Botts was entitled to a common law lien on the property, but gave him priority on the ground of equitable retainer. The opinion of Judge Baldwin will be found well worth reading in this connection.