
    Moses Pardo et al. plaintiffs and appellants, vs. George A. Osgood et al. receivers, &c. defendants and respondents.
    1. The assured, by a time policy upon a vessel which provides, that the loss, (if any,) shall be payable at a certain time after proof of loss and interest and that the premium shall be deducted from the loss, are entitled, in case of a general average loss, insolvency of the insurers, and an' appointment of a receiver of their assets, to have such loss set off against the claim of such receivers, on a premium note given by the assured for the premium on such policy.
    2. A loss incurred by a solvent assured under a policy issued by insolvent underwriters, before the insolvency of the latter occurs, is a mutual debt or credit,” within the meaning of the statutes relative to trustees of insolvent debtors, capable of being set off against the premium upon -such policy; although, by the terms of the policy the loss be not payable until a certain time after proof of it and interest, and no such proof was presented to the receivers before such insolvency.
    
      3. In such a case the loss is to be deemed to have occurred at the time of tho injury to the vessel by the peril insured against. The making of the repairs, out of which the claim arises, and the adjustment of such claim, only fix the amount of damages. The right to indemnity is fixed at the time of the injury.
    (Before Robertson, Oh. J., and Monell and Garvin, JJ.)
    Heard November 19, 1867;
    decided January 6, 1868.
    This was an appeal from a judgment overruling a demurrer to an answer. The action was brought to procure an offset of a premium note, (given by the plaintiffs upon a policy of insurance,) against a claim for a loss under the policy, and the cancellation and surrender of the note. The complaint alleged that the plaintiffs were co-partners, under th.e name of “ Pardo, Seixas & Co.” That on the 26th day of April, 1865, at the city of New York, the said “ The Columbian Insurance Company,” in consideration of the premium note of the plaintiffs for $1401.25, (bearing date on that day, and payable in one year thereafter,) to them delivered by the plaintiffs, duly made, executed and delivered to the plaintiffs, their agreement in writing, (known as a valued policy of insurance for $10,000,) bearing date, also, on that day, whereby said corporation, for the consideration aforesaid, and other considerations in said policy expressed, caused to be insured, (and thereby undertook to save, harmless,) the plaintiffs from and against any loss or damage, by perils of the sea, (and other perils therein insured against and specified,) to their Dutch barkantine, Judah Oappe, for the period of one year from the date aforesaid, to an amount not exceeding $10,000, and then and there, by the terms of said policy, said corporation also agreed that, in case of any loss under the said policy, the same should be paid to the plaintiffs in thirty days after due proof of such loss and proof of interest; and it was, also, further expressly provided, by the terms of said policy of insurance, that the amount of said premium note, if unpaid, should also be first deducted from the amount of such loss, as by reference thereto, as part of the complaint, would more fully appear; that after the execution and delivery of said policy of insurance, the said bárkantine, Judah Oappe, on the 20th day of December, 1865, sailed from the port of New York, on a voyage within the provisions of said policy, and before the 20th of January, 1866, by stress of weather, storms and tempest, and perils ' of the sea, so insured against, sustained great injury and damage in respect to her hull and sails; that afterwards, on the 22d of January, 1866, the master of said vessel made protest of the matters last aforesaid, and of said loss and damage, at St. Thomas, W. I. (which was the first port touched at by the vessel after said damage,) before the consul of the Hetherlands, of-all which matters the said insurance company had notice"; that afterwards repairs were then and there made upon said ship, so damaged as aforesaid, to a large amount, all of which were necessary to make said vessel sea-worthy and in as good condition as she was before said disaster and damage occurred; that there was, by reason of the matters aforesaid, a general average loss upon the said ship, so insured against, amounting to the sum of $2252.51, with interest from March 15, 1866; that thereafter, to wit, about March 18, 1866, the amount of such general average loss, so chargeable upon such vessel, and the said corporation as insurers thereof, was duly and properly adjusted, ascertained and liquidated, and the same amounted to said sum of $2252.51; that on or about the said 15th day of March, 1866, the plaintiffs duly presented to the then receivers and representatives of the said “ The Columbian Insurance Company,” due proof of the said loss and their interests therein, and of the adjustment of the amount óf such loss at the said sum; that the said Columbian Insurance Company was a corporation duly organized under the laws of the state of New York, in or about August, 1857; that on the 23d day of January, 1866, Benajah • Lóffingwell and Joseph Morrison were duly appointed receivers of all the property and effects of the said Columbian Insurance Company, by the Supreme Court, at ' a special term thereof, held in the'city and county of New York, upon proceedings duly taken therefor, in an action therein pending between William H. Harbeck, as plaintiff, and the said company as defendants; that afterwards, on the 24th day of January, 1866, the said Leffingwell and Morrison duly qualified as such receivers, and filed all the security required of them by the said- court with the clerk of the city and county of New York, and were duly invested with all the property and effects of said corporation; that the defendants had since been duly appointed receivers in' the place of the persons originally appointed, and were now duly vested with the title to all the property and effects of the said corporation; that the appointment of the defendants as receivers of the said “ The Columbian Insurance Company ” was made upon, and in consequence of, the insolvency of the said company, and upon proceedings founded upon such insolvency, for the better disposition of the assets of said company, and the liquidation of its affairs, in pursuance of the statute in such case made and provided, and that at the time of such insolvency, and of the appointment of the receivers of said company, the said premium note of the plaintiffs passed into the hands of said receivers, and is now held by the defendants, as such receivers ; that the plaintiffs have kept and performed all the stipulations in said agreement, or policy of insurance, on their part to be performed; that the said premium note fell due on the 29th day of April, 1866, and is now in the hands of the defendants, and is still unpaid; that no part of said loss or damage has been paid to the plaintiffs, or actually applied in extinguishment of said note; that the plaintiffs have often requested the defendants, as such receivers, to make an adjustment and offset of their said demand to the extent of the said note, and also to make payment to them of what maybe due above the same, but they have at all times hitherto declined so to do; that afterwards the plaintiffs applied to said Supreme Court by petition, in due form of law, for that purpose, and such proceedings were thereupon had that on the 30th day of October, 1866, at a special term of said court, an order was duly made, authorizing the plaintiff to prosecute the said defendants in any court of record in this state, for any legal or equitable relief they might deem themselves entitled to have by reason of the matters aforesaid.
    Wherefore the plaintiffs demanded judgment, that it might be declared by this court that said receivers took and now hold said note, subject to the legal and equitable rights and offsets of these plaintiffs, under the statute in such case made and provided, and under and by virtue of the conditions and terms of said policy, to have an adjustment (between the plaintiffs and the defendants, as such receivers, as representaves of said company) of the mutual credits and claims of the plaintiffs and said company, which are above mentioned and referred to, and a set-off or deduction of the amount .owing to them for the said general average loss, against, and from said premium note of the plaintiffs, and that thereupon the said premium note might be deducted' from the amount of said loss as adjusted, and the said note delivered up to the plaintiffs to be canceled, and the' defendants directed to pay to the plaintiffs the remainder of such loss, in due. course of administration of the assets of said corporation, and that' the plaintiffs might have such other and further relief, &c. with costs.
    The defendants, in their answer, alleged:
    1st. That the Columbian Insurance Company was, at the time of the appointment of receivers thereof, as set forth in the complaint, insolvent, and entirely unable to pay their creditors in full, and still remain so.
    2d. That immediately upon the appointment of Benajah Leffingwell and Joseph Morrison, as receivers of the said Columbian Insurance Company, they published a notice thereof, for three successive weeks, in the state paper, and in a newspaper printed in the county where the principal •place of conducting the business of the said company was situated, to wit, in the New York Evening Post, of which notice the following is a copy:
    
      “ Notice is hereby given that the undersigned have been-appointed by the Supreme Court of the state of New York, receivers of all the property and effects of the Columbian Insurance Company (Marine) of the city of New York, and that they hereby require,
    
      First. All persons indebted to the said company to render, on or before the 20th day of March, 1866, at the office of the receivers, No. 2 Nassau street, in the city of New York, an account of all debts and sums of money owing by them respectively to the said receivers, and to pay the same.
    
      Second. All persons having in their possession any property or effects of the said company, to deliver the same to the said receivers, on or before the day, and at the place above mentioned.
    
      Third. All the creditors of the said -company to deliver their respective accounts and demands to either of the said receivers, on or before the 20th day of March, 1866, and at the place aforesaid.
    
      Fourth. All persons holding any open. or subsisting contract of the said company, to present the same in writing and in detail, to the said receivers, on or before the 20th day of March, 1866, and at the place aforesaid.
    New York, February 3, 1866.
    Joseph Morrison,
    B. Leeeingwell,
    Receivers.”
    3d. That no notice of protest, or of the loss mentioned in the complaint, was ever received by the said company; but the same was received by the defendants after their appointment as receivers aforesaid and after the first publication of the notice aforesaid, and not before.
    4th. That if the plaintiffs are allowed to set off their premium note against the amount due to them upon the loss'set forth in the complaint, they will thereby secure a preference over other creditors of the said company to the extent of the said note and diminish the fund in the hands of the defendants, which ought to be applied to the payment of creditors in equal proportions.
    Wherefore, the defendants demanded judgment; that the plaintiffs pay to the defendants the amount of the said note, to wit: $1401.25, with interest from April 29, 1866, and that the claim of the plaintiffs be paid out of the funds in the hands of the defendants as receivers, ratably, in just proportion with other debts of the said company.
    The plaintiffs demurred to the amended answer for the, reason that it appeared upon its face not to state facts sufcient to constitute defense to the cause of action allegéd in the complaint, or any counter-claim thereto, and stated only conclusions of law.
    The court, at special term, overruled the demurrer, with liberty to the plaintiffs to amend on payment of costs. The plaintiffs appealed to the general term.
    
      Albert Mathews, for the appellants.
    I. Since the decision upon the demurrer at special term in this action, the precise question involved in this issue has been very fully considered by the Court of Appeals, and the right to the offset clearly established by the decision of that court. That decision must control this case in this court. The question is now res adjudicata. (Osgood, receiver, &c. v. DeGroot, 36 N. Y. Rep. 348.)
    1. In the case of Osgood v. DeGroot, the action was brought by the same receivers upon a like premium note against the makers who had insured in the company, and had sustained a loss covered by their policy ; but the equities and legal rights of the makers of that note were less clear than the plaintiffs’ in this case. In that ease the demand of the insured was long after the premium note fell due, and was not payable by the company until long after the suit was actually commenced by the receivers to recover the amount of the note. In the case now before this court, the demand of the insured was payable lefore the note fell due, and loth were due when this action uas commenced.
    
    
      2. On the argument of that case in the Court of Appeals, the same counsel represented the receivers, and printed copies of the opinion of this court in this case were furnished to that court.
    3. Upon that argument the counsel for the plaintiffs in this action submitted an argument upon the identical questions involved in this action, to which points and authorities he refers now in this case.
    U. The only defense set up in the answer in this case is the legal effect of a notice issued by the receivers. This defense was overruled by the court in this case.
    HE. The facts of this case established a reciprocal right of set-off in both parties, within the equity of the general statute concerning “ set-offs.” If the makers of the note had been insolvent, and yet had sued the receivers for their dividend, pro rata, with other creditors,- could it he urged that the receivers could not set off their demand upon the note ? To hold this would be grossly inequitable. But if the right of set-off exist at all, it must be reciprocal. Like an estoppel, it must be mutual. (2 R. S. 354, §§ 18-25. Bize v. Dickason, 1 T. R. 285. Berry v. Brett, 6 Bosw. 627.)
    IV. The limitations to the duty of set-off in cases of “mutual credits” in suits between trustees of insolvent debtors and creditors of the insolvents, contained in the statutes (2 R. S. 47, § 36; Id. 355, § 18, subds. 10, 11,) do not impair the right or duty of set-off in this case.
    1. This is not an action by an assignee of an insolvent debtor. (2 R. S. 355, § 18, subd. 11.)
    2. The duties and obligations by law imposed on trustees of insolvent debtors belong to receivers, like the defendants, only so far as they are applicable. (2 R. S. 470, § 74.)
    3. Trustees of insolvent debtors are prohibited from a set-off, in cases of “ mutual credits,” only where the claimant would not have been entitled to a dividend. (2 R. S. 47, §§ 33, 35, 36.)
    4. Now, though there may be a doubt whether these plaintiffs’ demand (being unliquidated, and not payable until after the rights of the trustees attached in case of an insolvent debtor) would be a “debt,” entitled to a dividend, and therefore, barred by the debtor’s discharge; still, in the case of a receivership of an insolvent corporation, unquestionably the plaintiffs would take their dividend the same as any other creditor. (2 R. S. 22, §§ 30-34. Id. 471, § 79, subd. 3.)
    
    5. Therefore, inasmuch as the reason and ground of exclusion of the set-off in the cases-of trustees of an insolvent debtor do not apply to the case of receivers of a corporation, the exception contained in the statute referred to (2 R. S. 47, §§ 33, 36) cannot be construed to limit their duty to allow the off-set in a case like the present.
    V. The insolvency of the corporation, instead of being an objection to the set-off, furnishes an additional equity in favor of the plaintiffs, under the facts and circumstances of this "case. Here were reciprocal executory contracts. The plaintiffs agreed to pay their note, if the corporation would indemnify the makers against loss beyond $he amount of their note. The receivers should not be permitted to make a virtue of the company’s failure and inability to keep their promise, so as to compel the plaintiffs to pay a note they could not have been asked to pay, if the company had performed their obligation. The nearest approximation to justice that can be had in the case will be reached by allowing the set-off. The remainder of the plaintiffs’ loss may be irremediable. (Simson v. Hart, 14 John. 76. Columbian Ins. Co. v. Black, 18 id. 149. Miller v. Receiver of Franklin Bank, 1 Paige, 444. Lindsay v. Jackson, 2 id. 581. Wolcott v. Sullivan, 1 Edw. Ch. 399. Barber v. Spencer, 11 Paige, 517. Barbour on Set-off, 193.)
    YI. The judgment should be reversed, and judgment ordered for the plaintiffs, as demanded in the complaint, with costs.
    
      Dudley Field, for the respondents.
    This case differs from that of Osgood v. DeGroot in two material respects, viz 1. That the foundation of the claim in the DeGfroot case was perfect before the receivers’ appointment, except as to the proof of loss; whereas in this case the plaintiffs had no claim at all until after that appointment. 2. That this is an action brought to compel a set-off; whereas, in the DeGfroot case the note was set up only as a defense.
    I. In the DeGroot case it is expressly stated that the loss which was there set off against the premium note, was sustained on November 22, 1865, two months before the receivers were appointed; and on this fact the court makes its judgment depend. (See 36 N. Y. Rep. 350.)
    II. In the present case, the loss was not sustained until after the receivers were appointed. This does not appear, in so many words, upon the face of the complaint; but is clearly to be inferred from its statements.
    1. The loss was a “ general average loss.” This means a loss which is made- to fall upon all the interests at risk, and saved by being averaged upon all. (1 Pars. Mar. Law, 284.) The vessel, it is true, was injured on the 20th of Janary, three days before the receivers were appointed. But the claim of the plaintiffs is not founded upon this injury, for that, would be simply a partial loss, which was not insured against, and is not pleaded as the basis of their claim. The general average loss was founded upon the repairs done in port for the purpose of enabling the vessel to bring the cargo home. That this alone could. be the foundation of a claim for general average is very clearly shown by Parsons in treating on this subject. (1 Pars. Mar. Law, 293.)
    2. The cost of these repairs was not necessarily the measure of indemnity for the partial loss of January 20, even if that had been covered by,the policy; while it was necessarily the measure by which the various contributions to general average were determined. It might be less, or it might be more, according to circumstances; but it was almost impossible that the ship’s contribution to general average should be precisely the same amount as would indemnify it for the original injury. Ordinarily, it would be less; but if the cargo were very valuable, and the vessel/poor, it might be the duty of the captain, in a port where repairs were expensive, and reshipment by another vessel impossible, to spend three times the value of the ship in repairs. The general average loss in such a case might largely exceed the loss for which the insurers would otherwise be responsible. But all that is material to our purpose is to show that the losses are not the same. And this is well settled. (1 Pars. Mar. Law, 293. Padelford v. Boardman, 4 Mass. R. 548.)
    3. The general average loss could not therefore occur until the repairs, which were its foundation, were completed. These repairs were not commenced until ■ after January 22, 1866, and could not possibly have been completed in one day. On January 23, the receivers were appointed. The complaint shows that the loss dated from March 15, 1866. That is clearly the day upon which the repairs were paid for, since the adjustment was not made until three days later. The receivers’ title dates from January 23,1866, the day of their appointment, although their bonds were not filed until the next day. (Rutter v. Tallis, 5 Sandf. 610.) It thus appears that the loss sued upon occurred on March 15, 1866, while the-receivers’ title dates from January 23, 1866.
    III. This is an action for set off, and to compel satisfaction and cancellation of a note. The BeGrroot case is no authority for such a proceeding; and the action cannot be sustained, even if the facts would constitute a defense to the note.
    1. The action is not maintainable under the head of equitable jurisdiction for the cancellation of instruments. The, note was over due when the action was commenced, and could not be transferred so as to deprive the plaintiffs of any set off. In such cases this action does not lie. (1 Story’s Fq. Juris. § 700, a. Threlfall v. Lunt, 7 Sim. 627.)
    2. The action is not maintainable as one founded upon an equitable right of set off; because, if the plaintiffs have any such right, they can avail themselves of it as a defense to an action on the note, and not otherwise. Equitable defenses may be pleaded in ¿very species of action. (Blair v. Claxton, 18 N. Y. Rep. 529. New York Central Insurance Company v. National Protection Insurance Company, 14 id. 85. Crary v. Goodman, 12 id. 266.) This being the case, cross actions cannot be brought for the purpose of restraining suits, though the original claim is strictly legal, and the defense purely equitable. [Arndt v. Williams, 16 How. Pr. 244. Hunt v. Farmers' Loan Company, 8 id. 416. Dederick v. Hoysradt, 4 id. 350. Grant v. Quick, 5 Sandf. 612. See Foot v. Sprague, 12 How. Pr. 355, 358.)
    3. The equitable action for a set-off being founded only upon the inability of the courts of law to allow such a set-off, is made obsolete by the fusion of law and equity under the Code of Procedure, which makes all these cross suits useless and improper.
    
      Mathews, in reply.
    The alleged differences pointed out by the defendants are equivalent to a cognovit. The first is founded neither in fact nor reason. The second has no foundation in law, or support from the authorities cited.
    
      First. It is alleged the plaintiffs had no claim against the insurance company, when the loss' happened, January 20, 1866, nor until after the repairs had been made upon the ship, which, it is' conjectured, was after the defendants’ appointment as receivers, (January 23, 1866;) whereas, in the DeGroot case, the claim arose November 22, 1865.
    I. In the DeGroot case the sea damage occurred on the 22d day of November, 1865, and not the repairs to the ship.
    
      ' II. The damage to the ship, in. this case, is the only injury mentioned in the complaint, and as the loss was a “ general average loss,” to which both cargo and freight must have contributed, of course the “ general average loss ” (as adjusted) was less than the real loss sustained by the ship. The notion is, therefore, novel, as well as fanciful, that the “ foundation of the plaintiffs’ claim ” did not" arise until the .ship was repaired, and the loss averaged. The claim of the plaintiff was not created, but diminished by the average or contribution.
    III. The loss being more than five per cent, the insurers were liable for a partial loss, and the receivers’ counsel is in error in his assumption in this respect. (See similar policy, De Groot case.)
    
    IV. There is no pretense that, in this case, the loss was adjusted until after the appointment of the receiver, (in January, 1866 ;) nor is there any evidence that the loss in the DeGfroot case was adjusted before March, 1866.
    V. It is a solecism to say the “ general average loss ” did not occur until the repairs were done, upon which the average or contribution was computed. The moment the injury happened, the loss occurred, and the claim arose. All that happened thereafter, (down to the expiration of thirty days after presentation of proofs of loss,) was the limitation of the amount of damages, and the maturing of the right to prosecute for non-payment.
    
      Second. It is alleged that the circumstance that, because a •plaintiff, instead of a defendant, invokes the equitable powers of the court to establish a set-off, the decision in the DeGrroot case is inapplicable.
    I. This is a distinction without a difference, inasmuch as “ set-off” is an old and favorite head of equity jurisdiction, and the insolvency of the company is good ground for invoking the equitable powers of the court. (Simson v. Hart, 14 John. 75. Lindsay v. Jackson, 2 Paige, 581.)
    U. The case cited from Simons’ Reports, and Story’s Equity Jurisprudence, was, where a judgment had been recovered upon a note, and the court refused to entertain a bill to order it delivered up, because the note was merged in the judgment.
    ITT. There is no authority for saying that an equitable defense to an apparent but inequitable claim, may not be anticipated by a suit in equity to prevent its enforcement, &c. The books are full of precedents to the contrary.
    IV. The cases cited to the proposition that cross suits cannot be brought to restrain suits, are where actions had already been commenced, and the second suit was brought to restrain the first.
    V. There is nothing in the Code to vary the jurisdiction or rights of parties similarly situated with the parties to this action.
    VI. Besides, the plaintiffs are entitled to have their rights established and liquidated, and not left in doubt and uncertainty
   By the Court, Robertson, Ch. J.

Since the decision of this case at special term, the case of the present defendants against DeGroot and another, involving nearly the same questions, has been determined by the Court of' Appeals, at their last March term, and several principles of law applicable to the present case authoritatively settled therein. The policies in both cases were on time, on vessels to which injury from perils'insured against occurred, before the appointment of receivers ; both made the loss payable a certain time after proof of loss and interest, and contained a similar clause for deducting the premium of insurance from the loss in case any occurred. The claims in both cases were for general average. It does not appear by the report of the case in the Court of Appeals whether such general average was adjusted before the-present defendants were appointed receivers, or not.

The Court of Appeals m the leading opinion in the case just referred to (Osgood and others, receivers, &c. v. DeGroot and another,) adopted several principles. The most important of which was, that both because the liability of the assured on the premium note, and of the insurers on the policy arose out of the same transaction, and the policy provided for a deduction of the premium note from any loss, the same were “mutual credits,” within the meaning of the provisions of the Revised Statutes relative to the authority of trustees of insolvent debtors to set off credits or debts of - such debtor, (2 R. S. 47, § 36;) the power to make similar set offs in the same cases being conferred upon receivers of insolvent insurance companies by other provisions of the same statutes. (Id. 469, §§ 68, 70, 71, 72, 74.) This was so held on the authority of a case decided under a section of the English bankrupt law of 19 Geo. 2, (c. 32, s. 2) which permitted an assured to prove a loss accruing after the bankruptcy, against the assignees of the bankrupt, in like manner as if it had accrued before. (Graham v. Russell, 5 Maule & Sel. 498.) In that case Lord Ellenborough held that underwriters who were solvent might, under the statute just cited, set off a claim for premiums against a loss which did not occur until after a commission in bankruptcy against the' assured; and that the entire distribution of the assets must await the result of the perils ' insured against, during the period covered by the policy. Otherwise, as that learned judge observed, “ the time of the happening, of the event and not the nature of the contract or contingency ” would “ give the rule of decision. And a contract, which would have furnished an item of mutual debt on his (the debtor’s) part or an event happening yesterday, will not even furnish an item of mutual credit upon an event happening to-day.” It would seem, therefore, that that able judge held the distinction between “mutual debts” and “ mutual credits ” to be simply that obligations for the payment of money (at least when connected with each other, by arising out of the same transaction of otherwise,) were mutual debts, if they were both due, (see Murray v. Toland, 3 John. Ch. 569; Dale v. Cooke, 4 id. 11,) and mutual credits if either remained to be paid at a future day. (See Dale v. Cooke, sup.; Duncan v. Lyon, 3 John. Ch. 357; Jones v. Robinson, 26 Barb. 310; In re Van Allen, 37 id. 229.) The learned justice (Hunt) in the case in the Court of Appeals Just cited, (Osgood, receiver, v. DeGroot,) also cited Swords v. Blake, 3 Edw. Ch. 112;) 2 Story’s Eq. Jur. (§§ 19, 34;) Reed v. Bank of Newburgh, (1 Paige, 215;) In re Globe Ins. Co., (2 Edw. Ch. 625,) and the opinion of the vice chancellor in Holbrook v. Am. Ins. Co., (6 Paige, 220,) in support of the same principle.

The learned justice, in his opinion, just referred to, seems either to have taken for granted as matter of fact, that the loss in the case before him not only occurred, but was due, at or before the time of the appointment of the defendants as receivers, notwithstanding the provision in the policy, that it should not be payable until sixty days after proof of loss and interest, since there was no evidence before the court that any such proof was furnished until after the appointment of the receivers, (March 26, 1866,) and their advertised notice, and the pleadings only admitted an assent by the receivers at that time.to the validity and amount of such claim; or else he held, with Chancellor Walworth, in the case of Holbrook v. Receivers of Am. Fire Ins. Co., (ubi sup.) that the New York statute which allowed set offs in case of insolvent debtors (ubi sup.) like the English bankruptcy acts, (5 Geo. 2 c. 30, § 38. 6 Geo. 4, c. 16,) which use the same words, “ embraced not only mutual debts but also, all credits and transactions ex contractu, where the credit or contract must ultimately terminate in a debt, although the ' debt had not been liquidated or payable at the time of the bankruptcy.” In support of that doctrine, the learned chancellor, in the case mentioned, referred to the cases of Grove v. Dubois, (1 Term Rep. 112;) Bize v. Dickinson, (Id. 285;) Koster v. Easan, (2 M. & S. 112.) To which the learned Justice (Hunt) in the case in the Court of Appeals added that of Jones v. Robinson, (26 Barb. 310;) Berry v. Brett, (6 Bosw. 627;) In re Receivers of Globe Ins. Co. (2 Edw. Ch. 625.) But it seems to have been overlooked by both those learned justices that in every one of those cases, one of the mutual debts or credits was due at the time of the bankruptcy or insolvency. For no notice was taken by them of the cases of Glennie v. Edmunds, (4 Taunt. 775;) Sampson v. Benton, (2 Brod. & B. 89,) and Ex-parte Rhodes, (15 Ves. 539,) decided under the statutes of 5 Geo. 2, (e. 30, § 28,) and 6 Geo. 4, (c. 16,) whose language is more explicit in the use of the words “ mutual debts" and “ credits” than that of 19 Geo. 2,(ubi sup.)under which Graham v. Russell, (ubi sup.) was decided. Yet in those cases, notwithstanding the claims arose on contract and must ultimately have terminated in a debt, as they did although not liquidated at the time of the bankruptcy, they were held not to be admissible as a set-off.

The provision of the Revised Statutes also, by which the right offset off by a defendant in a suit by the trustees of an insolvent debtor to recover a claim due him is limited to debts owing by such debtor before public notice of the appointment of the trustees or the commencement of proceedings against him (2 R. S. 41, § 7,) is also overlooked by both the learned justice of the Court of Appeals, and the late eminent chancellor in the two cases already commented on.

Still I am compelled to yield to the authority of such case in the Court of Appeals (Osgood, receiver, v. DeGroot) for the doctrine, that a loss incurred by a solvent assured under a- policy by an insolvent underwriter, before the insolvency of such underwriter, was a mutual debt or credit within the meaning of the statutes as to trustees of insolvent debtors, capable of being set off" against the premiums upon such policy, although such loss was by the terms of the policy not payable until some time after proof of. loss ■ or interest, and no such proof was presented before such insolvency to the receivers.

I regard the loss in this case as having occurred at the time of the injury, by the peril insured against, to the vessel insured. Whatever may be the doctrine as to a mere charge of general average on the cargo or freight, general average upon the vessel is merely the residue of compensation for the' injury, after crediting the amounts received from contributory sources. The making of the repairs and adjustment of the claim only fixes the amount of damages; the.right to indemnity accrues at the time of the injury. The BeGroot case also seems to consider the form of the action or proceeding immaterial. And as1 it disregards the section of the Revised Statutes, to which I have referred, which seems to confine the right of set off to suits against an insolvent debtor, (2 B. S. 41, § 7,) the defense must be considered complete to the premium notes in any action or proccding which either party has a right to bring, in which the court has jurisdiction to pass on the question.

As to the objection that the action is an equitable one by the debtors of the company, which is rendered unnecessary because'they have a right under the Code of Procedure to set it up as a defense in an action, it is to be remarked that the plaintiffs are entitled to a judgment for the residue after making the set-off payable in the due course of administration of assets of the company. If they should prove for the whole claim before the assignees, it might be considered as a waiver of their right of set off, and the assignees might never bring a suit on the note to test the question, or if they did, the plaintiffs could not well get any judgment for the balance. I am not prepared to say that the Code has necessarily abolished the exercise of long established affirmative equitable jurisdiction to enforce a set-off cognizable only in equity. The necessity of and right to, an injunction order, to prevent a suit in which all the rights of the parties cannot be settled, and aid a suit in which they can, is fully sufficient in this case, and the only question in it is, therefore, as to the right of set off.

For these reasons the judgment at special term should be reversed, with costs to abide the event.  