
    The Michigan Savings Bank, Plaintiff, v. George W. Millar and William D. May, Defendants.
    First Department,
    January 26, 1906.
    Setoff — tm.maty.red claims against assignor cannot be set up against assignee — Code of Civil Procedure, section 1909, construed,
    In an action by the assignee of a draft, the debtor cannot offset a note of'the assignor, which, though made and delivered before the assignment, did not mature until .after such assignment.
    Such note not yet matured is not a defense of counterclaim “existing” against the transferor at the time of the assignment within the meaning of section 1909 of the Code of Civil Procedure. The words, “ before notice of the transfer,” as used in said section, do not mean that a claim may be offset if it was acquired after assignment and before notice thereof,. unless such claim was due at the time of the assignment. "
    Motion by the defendants, George W. Millar and another, for a new trial upon a case containing exceptions, ordered, to be heard at the Appellate Division in the first instance after a. trial at the FTew York Trial Term..
    
      ■Benjamin F. Blair, for the plaintiff.
    
      T. M. Tyng, for the defendants.
   McLaughlin, J.:

The appeal in this case comes- before the court on á motion for. a new trial Upon exceptions ordered to be here heard in the first instance. ■ ■.. , . . ■ .

. There is no.-dispute as to the material facts involved. On or about-.the 9th of April,. 1904, the Detroit Sulphite Fibre Company ,sold .and delivered to the defendants goods at the agreed price of J>2,064.01 on á credit of two months. Oil the 11th of April, 1904,-the- fibre company borrowed from the plaintiff $1,548 and gave therefor its collateral. promissory notés payable' on demand,.which contained the following statement: Saving deposited with the Michigan Savings Bank.of Detroit as-collateral security, personal property as stated below, we hereby authorize the sale of said- -per- . so'nal property at public or private sale, and with or without notice, on the non-performance of this promise, and we do hereby sell, assign, transfer, and set over to the Michigan Savings Bank the account as herein below described. Account and draft. George W. Millar & Co. Mew York, M. Y., April 9. $2,064.01.” At the same time it delivered to the plaintiff a draft drawn by it on the defendants for $2,064.01, dated April 9, 1904, payable two months after date. Also statement of the account on which was written the > following:

“ This account has been assigned to the Michigan^ Savings Bank,
. Detroit, Michigan.
“DETROIT SULPHITE FIBRE CO.,
“A. G. Lindsay, Treasurer.”

The draft, at maturity, was presented and payment demanded, which was refused, and thereupon the plaintiff, as the assignee of the sulphite company, brought this action to recover the amount of-the assigned claim. ”

The answer admitted that at the time stated the sulphite company sold and delivered to the defendants the goods referred to in the complaint, for which they agreed to pay the price there stated, and denied its other material allegations.. The answer also set up several affirmative defenses, but no evidence was offered to support any of them except one, which the proof did establish, to the effect that on or about the 25th of January, 1904, for a valuable consideration, the sulphite company made and delivered to the defendants its certain promissory note in writing whereby three months after that date it promised and agreed to pay to the defendants the sum of $2,500 at the First Rational Bank of Detroit, Mich.

At the conclusion of the trial both parties moved for the direction of a verdict. The defendants’ motion was denied and plaintiff’s granted, to which the defendants took an exception. This and other exceptions • taken were, as .already said, ordered to be here heard in the first instance.

The real questiqn presented is whether the defendants had a right to offset as against plaintiff’s claim .the note for $2,500 of the sulphite company,- and its determination depends upon the. construction to be put upon section 1909 of the Code of Civil Procedure3 which provides that where á claim or demand caiv be transferred, the transfer thereof passes an interest which the' transferee may enforce by an action or special proceeding or interpose as a defence or counterclaim in his own. name, as the transferor might have done, “ subject 'to any defence or counterclaim existing against the transferor, before notice of the transfer, or against the transferee.”

The plaintiff acquired its' claim by assignment oil the '.l'lth of , April, 1904. ' The nóte which defendants sought to offset against such-claim did not fall due until the twenty-eighth ,of that month,' and, .therefore, on the day when the assignment ivas made' it was not a claim then “existing,” inasmuch as it'could not then-have been enforced. The words of the Code,. subject to any defence or Counterclaim'existing against.the transferor,” have reference to the time when the claim or demand is assigned or transferred. If the ■note.had then been due and could then have been enforced the defend-' ants could have offset the same, even though they did 'not own it at ‘that ti/ne but had acquired'it subsequently'.and before notice of the - assignment was given. The words “ before notice of tlie transfer do not mean that, a claim may be offset if it were acquired after the ' assignment and before notice of it, unless such claim were due at the time of the. ’assignment or transfer. (Fera v. Wickham, 135 N. Y. 223 ; Martin v. Kunzmuller, 37 id. 396 ; Hamilton v. Piza, 6. App. Div. 598.)

This, is the general- rule* and the section of the Code referred to is but an expression of it, that claims or demands sought to be set. off must, not only be mutual ió the extetit that they are owing by each to the other, but they must be due. and payable, and, therefore, a .claim not due cannot be set.off against one which may be thereafter enforced. (De Camp v. Thomson, 159 N. Y. 444.)

The view thus expressed as to the construction of section 1909 of ■the Code of Civil Procedure is strengthened when that section is gead in Connection with section 502, which relates to counterclaims, and provides, in subdivision 1,-that if the action is founded upon a contract’which has been assigned by the party thereto* other than'a ■ negotiable promissory note or bill of exchange, a demand existing against the party thereto ór an assignee of the contract at the timé of the. assignment thereof, and belonging to the! defendant in good faith before notice of the assignment, must be allowed as a eonnterclaim to the amount of the plaintiff’s demand if it might have been so allowed against the party or the assignee while the contract belonged to him. '

In thus construing section 1909 of the Code of Civil Procedure the authorities cited by the defendants have dot been overlooked. An examination of them will show they are not in point or are distinguishable from the question here under consideration.

Other questions are raised by the defendants, but they do not' seem to he of sufficient importance to require consideration.

It follows, therefore, that the defendants’ exceptions must be overruled and the motion for a new tidal denied, with costs.

O’Brien, P. J., Patterson, Laughlin and Houghto'n,- JJ., concurred.

Exceptions overruled and motion for new trial denied, with costs.  