
    Holliman v. Rogers.
    Where the defendant pleaded “that the notes sued on have been fully paid, satisfied, and discharged on or about the 1st of April, 18-lii:” Held, That no question could be raised as to the sufficiency merely of the plea as a plea of payment; that if the defendant offered evidence of payment under such a plea, the question would then arise whether the evidence should be rejected because it liad not been sufficiently and distinctly stated either in the plea or an accompanying statement. (Noto H.)
    The proper mode of objecting to defects of form in pleading is by exceptions, not by motion to strike out.
    Where the defendant pleaded that the real interest in the notes sued on was in a person who was a joint maker with himself, and that he, the defendant, had a set-off against such pre-son. setting it out fully in his answer: Held, That evidence that the joint, maker had paid and taken up the notes sued on after ihey were due was improperly excluded Where a note is paid by one of several makers, he cannot, although ho be a mere surely, maintain an action on the note. IIis remedy would be upon the implied assumpsit in ills own name, the implied assumpsit not being assignable. (Note 15.)
    The general rule that a defect of parties can be taken advantage of by plea in abatement only is subject to exceptions, and one exception is that a defendant may take a Jvantage of a defect in a party plaintiff on the trial if it should appear from the evident», although not pleaded.
    The principle of •‘compensation” as it is called in the civil law, is not recognized either by the common law or by statute, except in the case of running accounts.
    Therefore the question whether a note which is pleaded in set-oif is barred by the statute of limitations is unaffected by the fact of mutual indebtedness between the plaintiff and defendant.
    Appeal from Liberty. This suit was brought by the appellee against the appellant on the 8lh of'August, 1S45, on two notes, under seal, for live hundred dollars each, both dated the 1st of August, 1840; one payable on the 1st day of January following, and the other on the 1st day of January, 1842, to one Elijah Erauk or bearer, and botli executed jointly by the defendant, Isaac C. O’Neil, and James II. Grace.. The defendant pleaded a general denial, the statute of limitations, and that the plaintiff liad no interest in the suit, but was the agent of the aforesaid Jamos II. Grace, iii whom the real interest ivas, and against whom the defendant liad a large claim, which consisted of promissory notes of the said Grace. These were pleaded in set-off, were dated the 22d of July. 1833, and were payable six months after date.
    The defendant' pleaded further “that the notes sned on have been, fully paid, satisfied, and discliarged on or about the 1st of April, A. D. 1842.” This last plea was, on motion of the plaintiff, stricken out “as being defective under the statute.” On the trial the plaintiff gave in evidence the notes sued on. '
    “The defendant offered to prove by the answer of ouc Battle, to an interrogatory propounded to him, that lie. Battle, was the holder and owner of the notes sned on, and that James II. Grace had paid and taken them up on the 1st of April, 1S42;” which evidence was ruled out by the court, to which ruling the defendant, by his counsel, excepted. The court ruled out further testimony which was offered to prove that Grace had paid the notes as alleged. But the defendant was permitted to introduce evidence tending to prove that Grace was the party really interested, and that plaintiff was merely his agent. The defendant then proved the notes which laid been pleaded by liim in set-off.
    The court charged the jury “that if the notes offered in set-off by the defendant liad been due four years at the passage of the statute of limitations, on the 3th of February, 1841, then six-tenths of four years from, the passage of the statute would be the period of time within which they could be sued on or set up in set-off, and not afterwards, if the statute of limitations was invoked against them;” to which charge I lie defendant’s counsel excepted.
    The defendant’s counsel asked the court to charge the jury “ that if they believed from the, evidence that the notes sued on were the property of James II. Grace, and that the several notes offered by the defendant as evidence in set-oil' were genuine notes of James II. Grace, and were unpaid, and were in the possession of the defendant,''&< hi.-, property, at any time before they were barred by tbe law of limitation, and while the notes sued on were the property of James II. Grace, tlie notes offered in set-off operated as payment or compensation pro tantowhich the court refused.
    There was a verdict and judgment for the plaintiff for tlie full amount of his claim.
    
      B. G. Franklin, for appellant.
    I. The first point which the appellant presents t,o the, consideration of tlie appellate court, arises out of the decision of the court below on the exceptions of tlie plaintiff to tlie pleas filed by defendant. The court sustained the exceptions to tlie plea of payment. That there is manifest error in this there can be, no doubt. Tlie case of Wells, Administrator, v. Fairbanks, decided at this term of the Supreme, Court, is directly in point; and for this error the judgment should be Reversed.
    IL There was error also in excluding all evidence Jirnt the note had been paid by Grace, one of the joint makers." Hero the court below must have seen tlie injustice done to the defendant in his former ruling, lie should have set aside bis former ruling and admitted the evidence, for otherwise he would be permití ing a recovery to be had against tills defendant on a promissory note, all liability on which had been extinguished by the payment of the note by one of the joint makers. 'Tlie debt was extinguished by that payment, and no action could bo maintained on the notes. It seems to me that tlie testimony was admissible as going to sustain the first plea that James II. Grace was “the real party in interest,” and that the plaintiff had no interest in the claims sued on.
    III. At what time would tlie notes pleaded in set off be barred, under the, statute, of limitations, according to tlie decision of this court in the case, of Gamier v. Franklin? They were dated 22d July, 1830, and were all due at six months, or on the 22d January, 1S37, so that they would not be barred until tlie 1st of July, 1843. Grace paid the notes to Battle about the 1st of April, 1S42 ; so that at the time and up to the 1st July, 1S43,' the claims were mutual claims, and in Grace’s hands, if he, had not have been one of the payers of the notes sued on. He could have had no just claim against the, defendant that was not. extinguished by the notes which the defendant held against him then duo and unpaid and not barred by tlie statute of limitations.
    "IV. Tlie fourth bill of exceptions presents error also in tlie ruling of tlie court; because it sustains the principle, that though there may have been mutual de.iits, because the notes pleaded in set off were barred at the time of tlie plaintiff’s suit, 8th August,. 1843, they could not be pleaded so as lo show that the debt founded on tho notes sued on was extinguished at any timei before lliey were barred.
    Y. The evidence admitted proved that tbe plaintiff liad no legal or equitable interest in tlie notes sued on. And that constituted a good bar to the plaintiff’s action; for so long as tlie facts existed as they did exist at the time of instituting tlie suit by tlie plaintiff, be could not maintain a suit.
    
      W. 0. Abbott, for appellee.
    I. The first cause assigned for error is that tho court sustained the motion to strike out tlie plea of payment. If language has any force, and the statutes of the State are to be observed, the court'could not have done otherwise. (Hart. Dig., art. G07.) If it is necessary for a party to state distinctly the nature of tlie payment, and that lie shall not be entitled to prove before the jury tlie nature of tlie payment unless it be so plainly and particularly described in tlie plea as to give the plaintiff full notice of tlie character of it, it would seem that a simple averment that the notes were paid would not meet tlie requirements of tlie statute.
    II.- 'The second cause assigned is that tlie court ruled out the testimony so far as it went to prove payment. The admissibility of evidence depends upon Its materiality. If testimony is impertinent it is inadmissible. And if tlie ruling of the court was correct in ruling out the plea of payment, it necessarily followed that evidence to prove payment was inadmissible, tlie statute above referred to declaring that it shall not be admitted.
    III. Tlie third cause assigned is answered by the case of Gautier v. Franklin.
    IV. The fourth cause assigned is that the court misdirected the jury in refusing to charge that tlie notes offered in effect were payment or compensation" pro tanto. If the notes were barred by^he statute of limitations, they were not good in set-off, nor were they good in payment or compensation.
   Lipscomb, J.

In striking out the plea of payment “as being- defective under tlie statute,” it is presumed tlie judge liad reference to tlie second section of the act of 1840, allowing discounts and set-off. (Hart. Dig., art. 607.)

“ That in every action in which a defendant shall desire to prove any payment or set-off lie shall flic with his plea an account stating distinctly the nature of such payment or set-off, and the several items thereof, and on failure to do so lie shall not be entitled to prove before the jury such payment or set-off unless tlie same be so plainly and particularly described in the plea as to give the plaintiff full notice of tlie character thereof.”

If the judge supposed that want of a distinct statement of tlie manner in which payment was made accompanying the plea made it so defective as to justify striking it out, I apprehend lie misconceived the true construction of the statute. In my opinion such omission in no manner affected the formality of the plea, and no question could be raised as to its sufficiency merely as a plea of payment. If the defendant offered evidence of payment under such plea., tlie question then would arise whether the evidence so offered could be received, because it liad not been sufficiently and distinctly stated, either in the plea or an accompanying statement. I apprehend, however, that if tlie payment had been direct in money at the time stated in the plea to tlie legal holder of the note, such fact could have been given in evidence under the jilea of payment as pleaded. If the payment, however, was a conclusion of law from a certain state of facts, then those facts, it seems, should be specially alleged in the plea. Again, if the jilea had been defective under the statute, and not altogether bad,'it was not the proper mode of taking advantage of such defect. It ought not to have been by motion, but by exceptions pointing out the particular defects in it.

In ruling out tile testimony of tlie payment made by James IT. Grace about the 1st of April, 1842, to Battle, of the two notes sued, and also the declaration of tlie said Grace as to his having paid tlie notes, and as to his being Clio real holder of tlie notes sued on, the judge is believed to have erred. The judge was, no doubt, influenced by tlie fact that there was no plea standing of payment. But then there was Hie special plea showing that Grace was tlie real owner aud party in interest in the suit. And there was also the jilea of the general issue, usually called with us the general denial. To establish the truth of tlie sjieeial pica, which had in view tlie set-off alleged to be due from Grace to (he defendant, there surely could be no better evidence than that of Battle, who swore that lie was the holder and owner of the notes sued on, and that about tlie 1st of April, 1812, Grace paid him the amount aud be delivered them to him. No legal objection can be perceived against the admissibility of this evidence. It fixed the interest in tlie notes, if any remained after such payment, in him, and his declarations showed that lie was the interested jiarty at the time of the commencement of tlie suit, and that Rogers, the named plaintiff, was only his agent. And this would have let in any debt due from Grace to tlie defendant as a set-off. (Duggs v. Rockwell, 11 Wend. R., 504; Tuttle v. Bebee, 8 Johns. R., 152; Thompson v. Cartwright, 1 Tex. R., 172.)

There, is another aspect in which the rejected evidence, or part of it at least, ought to have been' received. It will be recollected that the notes sued on in Lilis case were the joint notes of the defendant, Holliman, Grace, and O’Neal. The record does not disclose whether the two last named were securities o£ the former or not; bat to put it on the footing, that Grace put it on himself in speaking of the payment of the notes, which testimony was ruled out by the court, that he had paid the notes as the security of Holliman, such payment amounted to an extinguishment of the original liability, and no suit could be maintained on the notes in the name of either Grace or his agent, Rogers. Grace would have a right of action against Holliman for the money of the amount paid, but not founded on the notes, because they had been paid off and the debt secured by them extinguished. The right of action would liave been founded on,an implied assumpsit, to which there could have been no other party plaintiff hut the security, Grace, 'who had paid the money. Rogers was not the proper party even at law, because it was as holder of the notes alone that he could he permitted to be a nominal plaintiff. They having been extinguished by operation of law on their payment, he could not be a proper party plaintiff', the implied assumpsit not being assignable. Ilis right of. action was derived from the notes. If they liad been extinguished before suit, lie liad no right at all. These are well-established principles of law. (Garlock v. Geortner, 7 Wend. R., 198.)

Should it be said that a defect of parties can only be taken advantage of by ¡ilea in abatement, tiie answer is that the general rule that exceptions to parties should be taken advantage of by a plea in abatement, giving to the party a better writ, is subject to exceptions; and one of these exceptions is that a defendant may take advantage of such defect in a party plaintiff on the trial, if it should appear from the evidence, although not pleaded. Not so, however, as to a want of proper parties defendant. Tiffs the defendant must show by liis plea and give the names of the parties that should liave been joined with him. If, however, the evidence went to show that the plaintiff in the suit had not merely presented his right defectively, hut that he liad no right at ail, in any form of presentation, it would seem that it was admissible under the plea in bar.

We will now proceed to the last point; that is, to the charge given and the charge refused by the court on ilie trial of tiffs case in the court below. Both are believed to present the single proposition that if the notes offered in evidence by way of set-off by the defendant were barred by the statute of limitations before the commencement of this suit, they could not bo a valid and legal set-off. This, as a common-law proposition, it is believed, cannot he .successfully controverted, because to make it a valid set-off it must he a valid subsisting debt due from the plaintiff to the defendant at the time suit was brought. Now, if the debt was barred l>y the statute of limitations, it was not .a valid subsisting debt due. (2 Cow. R., 139; 1 Murph. R., 353.) Some confusion lias arisen on tiffs subject by confotmdiug compensation with set-off. The former is an acknowledged principle of the civil-law jurisprudence. Whenever there were cross-debts, as soon as it occurred, without the act of either party, or even their knowledge at the time of the existence of such cross-debts, it by operation of the law struck the balance between the parties. A demand so held was payment to the extent of its amount, and the balance defined the character of creditor or debtor. Tiffs principle is unknown to the common-law jurisprudence, except in the single instance of running accounts biff,ween merchants, and by analogy we felt ourselves authorized, in the case of Hall v. Hodges. (2 Tex. R., 323,) to extend it to miming accounts between parties not mercli.uits. Set-off' was also unknown to the common law. Each party was left to his cross-action for the collection of their respective debts. It is the creation of the statute. (Richardson, Judge, in Chandler v. Drew, 6 N. 11., 469.) Our statute authorizing discounts and set-offs does not introduce the civil-law doctrine of compensation : and as the common law is the law of our court in regulating rights and remedies accruing since the introduction of the common law, wo do not feel authorized to extend the principle of compensation beyond what we have heretofore done. We are therefore of opinion that the court below did not err in refusing to give the charge asked nor in the-charge given; bnt that in striking out the plea’of payment and in rejecting the evidence referred to in this opinion there is error, for which* the judgment must be reversed and remanded.

Note 14. — 'Proof of payment of a debt in money is admissible under a general plea of payment; but proof of payment in land or any other commodity than money, cannot, if objected to, be received under such a plea. (Able v. Lee, post, 427.) As to form of plea see Marley v. McAnelly, 17 T., 658.

Note 15.- — The payee of a promissory note who indorses it, and afterwards pays and takes it up, stands with reference to the makers in the same attitude as if he had never parted with it; his remedy being upon the note, and not upon an account for money paid to the use of the maker. (Williams v. Durst, 25 T., 667; Sublett v. McKinney, 19 T., 438.).

Judgment reversed.  