
    DURANT v. MURDOCK.
    Promissory Notes; Affidavits of Defense; Set-off; Statute of Limitations.
    1. A promissory note payable to the order of a particular person is the equivalent of a note payable to him or his order, and he can sue upon it without alleging endorsement by him, and without special averment that he is the holder and owner of it.
    2. By the insertion of the words “ at six per cent.” in a promissory note, it will be deemed, in the absence of evidence of a contrary intent, that it was the intention of the maker to provide for the payment of interest at the rate of six per centum per annum from the date of the note.
    3. Sufficient facts must be stated in an affidavit of defense under the 73d rule of the Supreme Court of this District, to enable the court to see that, if true, they would constitute a good defense. It is not enough for the defendant to say that he has a good defense without exhibiting the grounds of it; nor is a vague general allegation sufficient without any specification of statement.
    4. An affidavit of defense in a suit on a series of promissory notes which alleges that they were given upon the dissolution of a partnership that had existed between the plaintiff and the defendant, in consideration of the conveyance by the plaintiff of his interest in the business to the defendant, and of the plaintiff’s afterwards refraining from conducting such a business within a certain territory, and that the plaintiff after the dissolution and before the maturity of the notes had -conducted such a business within such territory, is insufficient, where there is nothing in the pleas or affidavit to show what business it was that the plaintiff carried on in apparent violation of his agreement, or where or how he carried it on, or the extent of it.
    5. A set-off which on its face is barred by the statute of limitations, cannot be pleaded so as to prevent a summary judgment under the 73d rule. '
    6. The running of the statute of limitations against a claim of set-off, as distinct from recoupment, is not stopped by the institution of the action in which the set-off is pleaded, unless the set-off has some relation to the principal claim, but statute continues to run against the defendant until the filing of such plea.
    No. 293.
    Submitted March 19, 1894.
    Decided April 2, 1894.
    
      Hearing on an appeal by the defendant from a judgment of the Supreme Court of the District of Columbia, holding a law term, under the 73d rule of that court, in an action of assumpsit on promissory notes.
    
      Affirmed.
    
    The Court in its opinion stated the case as follows:
    This is an appeal from a judgment rendered by the Supreme Court of the District of Columbia, in a suit at common law, upon certain promissory notes, under the 73d rule of that court, providing for summary judgments upon affidavits.
    The parties, James F: Durant and Edwin F. Murdock, had been partners in some business designated as the “ handling of patented sheet-steel ceilings in a territory consisting of the States of Maryland, Virginia and the District of Columbia.” Murdock withdrew from the business and sold his interest in it to his partner, Durant, who, in consideration thereof, executed and delivered to Murdock his four several promissory notes, dated the istday of November, A. D. 1892, each for the sum of $196.38, and payable respectively in three, six, nine and twelve months after date. Three of the four notes became due and remained unpaid; and on September 21, 1893, the present suit was instituted to enforce payment of them. The notes differing only in the period of payment, were in form as follows:
    “$196.38. Washington, D. C., Nov. 1, 1892.
    “Three months after date I promise to pay to the order of Edwin F. Murdock one hundred and ninety-six and 38-100 dollars at six per cent. Value received.
    (Signed) “James M. Durant.”
    The declaration .contained four counts, three special counts on the three several notes in which the notes are specifically set forth in accordance with their express terms, and the fourth the common counts supplemented by a bill of particulars including and incorporating copies of the notes. And it was supported by the plaintiff’s affidavit for the purpose of procuring judgment under the 73d rule of the court.
    
    As a defense to this declaration, the appellant interposed six pleas — two of them being the general issue, three alleging a partial or total failure of consideration, and the sixth consisting of a set-off. And there was an affidavit of defense annexed.
    
    
      This defense was deemed insufficient by the court below; and on motion of the plaintiff judgment was rendered in his favor for the amount of his claim. From this judgment the defendant appealed.
    
      Mr, D. A. McKnight for the appellant.
    
      Mr. W. L. Cole for the appellee.
    
      
      
        Plaintiff’s Affidavit. State of California, City and County of San Francisco, ss: Edwin F. Murdock, 'being' duly sworn, deposes and says that he is the plaintiff named in the foregoing declaration; that James M. Durant, the defendant named in the said declara-ration, and the said plaintiff were partners in business in Washington, D. C., under the firm name of Murdock and Durant; that on the first day of November, 1892, the said defendant purchased from the plaintiff his interest in said firm and business, signing and delivering therefor to the said plaintiff his four promissory notes dated the first day of November, 1892, for the sum of $196.38 each, and payable in three, six, nine, and twelve months after date respectively; that three of said notes are now overdue and are mentioned and described in the first, second, and third counts of said declaration; a copy of said three notes overdue appears in the particulars of demand attached to the declaration in this case; that the genuine signature of the defendant appears on each of them; that no portion of the principal sum or the interest due upon the said notes or either of them has been paid or satisfied in any manner whatsoever, but the whole of said three notes are now overdue and unpaid; that the causes of action of the plaintiff in the said declaration are grounded upon the said three overdue promissory notes, and that for such causes of action the sum of five hundred and eighty-nine and dollars t$589.14), with interest as therein claimed, is justly due and owing to the plaintiff from the defendant, exclusive of all set-offs and just grounds of defense. E. F. Murdock.
      Subscribed and sworn to before me this 14th day of September, A. D. 1893. [Seal.] James SI. Ellis, Notary Public in and for the City and County of San Francisco, State of California.
    
    
      
      
        Defendant’s pleas.
      
      Now comes the defendant and for pleas to each and all of the counts of plaintiff’s declaration says:
      1. He never was indebted as alleged.
      2. He never promised as alleged.
      3. The consideration of the said notes was the plaintiff’s interest in a partnership business of the plaintiff and defendant at date of its dissolution and the plaintiff’s afterwards refraining from conducting such a business within the reasonable territorial limits included in said partnership, and there never was any other consideration therefor, and plaintiff afterwards refused and still refuses to pay defendant said consideration, but conducted such a business within said territorial limits prior to the maturity of said notes.
      4. The consideration of said notes was the plaintiff’s interest in a partnership business of the plaintiff and defendant at date of its dissolution and the plaintiff’s afterwards refraining from conducting such a business within the reasonable territorial limits included in said partnership, but the plaintiff afterwards and prior to the delivery of said notes and without the knowledge of the defendant conducted such a business within said territorial limits and concealed the same from the defendant with intent to defraud the defendant and thereby fraudulently obtain the making and delivery of said notes.
      5. The plaintiff at the commencement of this suit was and still is a non-resident of the District of Columbia and was and still is indebted to the defendant for damages for the breach of the contract between the plaintiff and defendant under which said notes were made and delivered in the sum of one thousand dollars, as appears by the particulars of said debt hereunto annexed, and the defendant claims judgment for the same as a set-off against the plaintiff’s demand.
      6. The plaintiff at the commencement of this suit was and still is indebted to the defendant for money loaned in the sum of three hundred dollars, with interest thereon at the rate of six per centum per annum from the twenty-fifth day of December, in the year of our Lord one thousand eight hundred and ninety, as appears by the particulars of said debt hereunto annexed, and the defendant is willing that the same may be set off against the plaintiff’s demand. D. A. McKnight, attorney for the defendant.
      
        
        Particulars of Debt.
      
      1. Plaintiff and defendant were partners in the business of handling patented sheet-steel ceilings in a territory consisting of the States of Maryland and Virginia and the District of Columbia, and upon the dissolution of said partnership the defendant promised to pay to the plaintiff the sum of one thousand dollars as a consideration for the interest of the plaintiff in said business and of his afterwards refraining from conducting such a business in the said territory; defendant paid to the plaintiff said sum in cash and in the notes mentioned in the declaration, but plaintiff after the date of the dissolution of said partnership and prior to the maturity of said notes conducted such a business within said territory, whereby the plaintiff was damaged in the sum of one thousand dollars.
      2. The defendant at the plaintiff’s request loaned the plaintiff fifty dollars on May 13, 1890, and fifty dollars between May 13, 1890, and September 25, 1890, and two hundred dollars on September 25, 1890.
      
        Affidavit of Defense.
      
      District of Columbia, To wit: The undersigned, James M. Durant defendant, being first duly sworn, deposes and says that he has carefully read over the third, fourth, fifth, and sixth foregoing and annexed pleas and particulars of debts, and that the claims and facts therein stated are just and true to the best of his knowledge and belief, and he therefore denies the claim of the plaintiff in manner and form as it is alleged in the declaration.
      James M. Durant.
      Subscribed and sworn to before me this 7th day of November, 1893. [Seal.] Harry M. Earle, Notary Public.
    
   Mr. Justice Morris

delivered the opinion of the Court:

The appellant’s position is: 1st. That the plaintiff is not entitled to recover, because the notes were made payable to the order of the plaintiff, and not to the plaintiff, and are so described in the declaration; 2d. That no breach of the contract is alleged, inasmuch as it is not alleged that the plaintiff had indorsed the notes; 3d. That the plaintiff was not entitled to interest upon the notes; 4th. That the plaintiff’s affidavit was insufficient to justify a judgment under the 73d rule; 5th. That the appellant’s affidavit of defense sufficiently stated a failure of consideration for the notes in suit, and a sufficient set-off to defeat the plaintiff’s demand, at least in part.

An able and ingenious argument has been submitted on behalf of the appellant to sustain his first and second point. Without attempting to follow counsel in this argument, it must suffice for us to say that we have not been persuaded by it. We regard it as well settled law that a promissory note payable to the order of a particular person is the equivalent of a note payable to him or his order; and that he can sue upon it without alleging indorsement by him, and without special averment that he is the holder and owner of it. Smith v. M’ Clure, 5 East, 476; Harvey v. Cane, 34 L. T., N. S., 64; Howard v. Palmer, 64 Me., 86; Story on Bills, Sec. 56. This being so, the declaration in the present case is the equivalent of a statement that the notes were made to the plaintiff or his order; and such a statement is sufficient to support a judgment in favor of the plaintiff.

We are not disposed to regard the appellant’s contention in reference to the interest as any' better founded than the argument based upon the form of the notes. The notes, it seems, were drawn upon a printed form. After the line for the statement of the amount, there was a blank line with the word “at" in the beginning of it, evidently intended for the place of the payment of the note, if any such should be designated; and thereafter followed a line with the words “ value received, with interest at per cent, per annum." The words “with interest at per cent, per annum” were ..stricken out from the notes as executed, by having a line drawn across them; and in the previous line, after the word “ at,” were inserted the words “ 6 per centIt is claimed that these words, “ at 6 per cent.,” are ambiguous, and that the determination of their meaning should be left to a jury. It is not denied that they were in the notes when they were delivered.

In negotiable paper, as well as in other instruments of writing, various abbreviations have become customary, and are undoubtedly allowable. Dates are very generally abbreviated. Names of places occasionally are shortened. “ Company” is almost universally written "Co.” Figures are sometimes substituted in the body of a note for the words denoting value; for fractions of a dollar almost invariably so. A figure is often inserted instead of the corresponding word when the rate of interest is mentioned. The words “per annum” are often omitted, and it is very rare indeed that the word “ centum ” is written out in full. These abbreviations and omissions are very well understood; no one is deceived or misled by them. They are universally recognized; and no two persons would read them differently. While precision and certainty are eminently desirable in negotiable paper, and in all other instruments of writing that are intended to pass from man to man and to constitute either muniments of title or security for money, it should be the effort of courts to give‘the effect to such terms in them as those terms are plainly intended to have. No reasonable man can doubt for a moment that, by the insertion of these words “ ató per cent!' in these notes, it was the intention, of the parties to provide for the payment of interest upon them' at the rate of six per centum per annum from their date. And if the notes had |aeen submitted'to a jury upon the statements contained in this record, and the jury had held differently, it would have been the duty of the court promptly to disregard their verdict. We do not think that the judgment of the court below ought to be disturbed on this ground.

The sufficiency of the plaintiff’s affidavit is questioned. We regard the affidavit as full and complete, and amply sufficient under the rule to justify a judgment in favor of the plaintiff, in ¿he absence of any adequate defense; and we find nothing in the argument of the counsel for the appellant on this point to warrant any different conclusion.

But the failure of consideration, and the set-off pleaded by the appellant in defense of the suit are entitled to more consideration from us. Failure of consideration is, of course, a good defense as against the payee in a promissory note; and a proper set-off is always, under existing law, properly pleadable in bar of a plaintiff’s demand. But to have their due effect, these defenses must be distinctly stated. An affidavit ofi defense should set forth facts which, if true, would be sufficient to defeat the plaintiff’s action, in whole or in part. It need not state these facts' in detail, nor need it state the proof of them. But sufficient facts must be stated to enable the court to see that, if true, they would constitute-a good defense. It is not enough for a defendant to say that he has a good defense, without exhibiting the grounds of it; nor is a vague general allegation sufficient without any specification of statement. Tested by these principles, the defendant’s affidavit is wholly insufficient. The defense set up in it is, 1st. That the notes in suit had been given, upon the dissolution of the partnership that had been in existence between the plaintiff and the defendant, in consideration of the conveyance by the plaintiff of his interest in the business to the defendant and of the plaintiff’s afterwards refraining from conducting such a business in the said territory; and that the plaintiff, after the dissolution and before the maturity of the notes, conducted such a business within said territory; and, 2d. That the defendant on and before September 25, 1890, had lent the complainant three hundred dollars. It is not stated either in the plea or in the affidavit what business it was that the plaintiff carried on in apparent violation of his agreement, or where or how he carried it on, or the extent of it. It is not even expressly stated that there was any agreement to refrain from such business. The statement is most extraordinarily vague and indefinite, when the facts, whatever they were, must have been well known to the defendant, and could have been easily stated by him.

Nor is the plea of set-off, as made here, an adequate defense. Besides the apparent incongruity of leaving the alleged loan of three hundred dollars outstanding and unsettled, when the notes in suit were given and there was a proper occasion for a general settlement of account between the parties, of which there is no attempt to explain their failure to avail themselves, the set-off on its face is barred by the statute of limitations; and while it might be that the plaintiff might not take advantage of the statute in reply to the plea, yet in proceedings under the 73d rule of the Supreme Court of the District of Columbia, it is not sufficient as a defense to show that a claim of set-off once existed; it must appear to be a valid subsisting claim; and it must so appear by-proper allegations of fact. Otherwise, any attempt to take advantage of the 73d rule might be defeated by a defendant, if there ever at any time had been transactions between himself and the plaintiff resulting in the temporary indebtedness -of the plaintiff to him, notwithstanding that such indebtedness might long since have been satisfied. For if the plaintiff replies to the defendant’s plea, he must be assumed to abandon his right to summary judgment; and if the defendant can compel him to reply to such a plea, then it is in the power of any defendant, by suppressing part of the truth, to defeat the useful purpose for' which the rule was enacted. We cannot give our sanction to a practice that would have that result.

It is very true that in the present case the defendant says in his plea that “ the plaintiff at the commencement of this suit was and still is indebted to the defendant for money loaned in the sum of three hundred dollars.” And such may well have been the fact, if there was such a loan and the money was never repaid. But this does not constitute a subsisting legal liability, without the intervention of something to take the case out of the operation of the statute, in opposition at all events to the plaintiff’s right to the protection of that statute, if he chooses to avail himself of it, which he undoubtedly does in this instance in the only way in which, under the circumstances, he can avail himself of it, and at the same time have the benefit of the rule, and that is by moving for judgment.

On the whole case, we find no error in the judgment of the court below; and we therefore affirm that judgment, with costs.

In denying a petition for a rehearing, Mr. Justice Morris, for the court, May 24, 1894, said:

The appellant has filed in this cause a petition for rehearing on the ground that the decision of this court was based, in part at least, upon a mistake of fact, with reference to the application of the statute of limitations to the case.

The suit was instituted by the appellee as plaintiff below on September 21. 1803. One of the defendant’s pleas, which were filed on November 7, 1893, was a plea of set-off for money claimed to have been lent by the defendant to the plaintiff to the amount of $300; and in the particulars of demand annexed to the pleas, it is stated that $50 of this sum were lent on May 13, 1890; $50 between May 13, 1890, and September 25, 1890, and $200 on September 25, 1890. The court in its opinion held that this claim of set-off was barred by the statute of limitations. The claim of the appellant in his petition for rehearing is that the sum of $200 of the amount of the set-off was lent within three years before the date of the institution of the suit; that while the defendant’s plea was not filed until after the lapse of three years from and after the time of the lending, yet the filing of his declaration by the plaintiff stopped the running of the statute against any claim that might-properly be pleaded as a .set-off against him, and that therefore the set-off, to the extent at least of the sum of $200, was not barred by the statute of limitations.

As we have already stated in the principal opinion in this ■case, it is. not at all apparent that the plea' of set-off and the affidavit of defense in support of it are set forth with the precision and clearness that would entitle them to consideration under the rules of the court in which the suit was instituted. On the contrary, they are remarkably deficient in precision-and clearness, and for the absence of explanation and even for the absence of statement that the money is due and payable by the plaintiff to the defendant, the affidavit of defense is not such an affidavit as is contemplated by the rule.

But discarding this objection, we proceed to consider how far in our opinion the appellant’s contention is well founded.

The argument is that the institution of an action in which a claim of set-off is pleaded stops the running of the statute ■of limitations against the claim of set-off, although otherwise the bar of the statute might have accrued before the date of the filing of the plea. And in support of this position the authority is cited of Wood on Limitations, Secs. 281 and 282.

That excellent author, it is true, does state the rule to be as claimed by the appellant; and there are several cases cited by him which support the statement. But the rule has its qualification; and Mr. Wood does not ovérlook the qualification, which is that the set-off, in order- thus to have the benefit of the statute of limitations, as of the time of the filing of the suit by the plaintiff, must have some relation to the principal claim. It would be a rather -starfling proposition, that the institution of a suit by a plaintiff should have the effect, ipso facto, of arresting at once and for an indefinite period of time the running of the statute of limitations against any and all claims that the defendant might have ‘against the plaintiff, provided that they were afterwards at any time pleaded in such suit as a set-off. Under a statute like ours in which judgment is authorized to be rendered in favor of the person to whom the balance shall be found due upon consideration of the counter-claims of the parties, that would give a claim of set-off a longer period of limitations than the owner of it would be entitled to have in an independent suit. And, indeed, if the rule is correct to the extent claimed for it by the appellant, a plaintiff, in the institution of a suit at law, thereby always revives and gives new life to any and all claims that the defendant ever had against the plaintiff, no matter how long they may have been barred by the statute of limitations, if at any time such claims were a proper subject of set-off against the plaintiff’s claim. We cannot think that a proposition which would have this result can be correct. Set-off, it must be remembered, did not exist at common law, and is entirely founded upon statutory regulation. United States v. Eckford, 6 Wall., 484. And it is carefully to be distinguished from recoupment, which is a right existing at common law, and which arises when there are counter-claims accruing upon the same general contract. The theory of set-off, on the other hand, contemplates the balancing against each other of separate, distinct and independent claims of the same general character, so as to avoid the necessity of separate suits upon them, and the further necessity of a recourse to a court of equity to compel the setting off of the judgments against each other, as was formerly the practice.

Now, wherever recoupment was proper, it would be most inequitable, especially in the • equitable action of assumpsit, to allow a plaintiff to recover, and yet to rule out a counterclaim of a defendant on a replication of the statute of limitations, when in the nature of things such counter-claim was a proper offset to the plaintiff’s demand, and all the claims arose out of one contract. So, also, when by agreement of the parties, the several counter-claims have been intended to be balanced against each other, although originally separate and independent, the same rule is applied. Thus, in the case of King v. King, 9 N. J. Eq., 44, in a suit upon a bond, a set-off was allowed of a board bill, the greater part of which was barrred by the statute of limitations, because there had been an agreement that the amount of it should be credited upon the bond. And a similar set-off was upheld under somewhat similar conditions in the cases of Smith v. Winter, 12 C. B., 487; Rawley v. Rawley, Law Rep., 1 Q. B. Div., 463; Ord v. Ruspini, 2 Esp., 569. It is very true that there are some.cases which seem to go farther than this, and to hold that, in all cases of set-off, the period of limitations is to be regarded as determined by the date of the institution of the suit, and not by the date of the filing of the plea or the bringing forward of the set-off. It was so held in the case of Walker v. Clements, 15 Q. B., 1046 (69 E. C. L.), where the reason assigned is that both the claims are in the nature of cross-suits instituted at the same time. But the reasoning in that case is very brief and unsatisfactory; and the decision is in direct opposition to the general current of authority in States more nearly related to us and upon statutes more analogous to our own.

Thus, in Pennsylvania, the rule adopted and uniformly adhered to, is that the statute runs against the plaintiff until the issuing of his writ and against the defendant until the filing of his plea. M’ Clure v. M’ Clure, i Grant’s Cases, 222; King v. Coulter, 2 Grant’s Cases, 77; Gilmore v. Reed, 76 Pa. St., 462. Such also has been the invariable rule in Maryland. Webster v. Byrnes, 32 Md., 90; Sprogle v. Allen, 38 Md., 331. And in the latter State, as well as in this District, it has always been held, under creditor’s bills, that as to claims not exhibited until after bill filed, the period of limitations is not determined by the date of the filing of the bill, but the time when they are exhibited in the suit. Hall v. Creswell, 12 G. & J., 36; McDowell v. Goldsmith, 24 Md., 214.

It is not believed that the precise point now under consideration has ever been the subject of adjudication in any reported cases in this District, so far as we are advised. But it has been repeatedly held at nisi prius that the law is as here stated, and the form of replication always used in such cases is that the alleged set-off did not accrue within three years before the filing of the plea, contrary to what was ruled in the case of Walker v. Clements, supra. And the principle has been held, in the case of Johnston v. District of Columbia, 1 Mack., 427, wherein it was decided that “ the amendment of a declaration so as to state for the first time a cause of action, is equivalent to bringing a new suit as of the date of the amendment; and if the statutory period of limitations has elapsed the action will be barred, notwithstanding that the original declaration was filed within the statutory period.” This is in accordance, too, with the decisions of the Supreme Court of the United States in several cases. Sicard v. Davis, 6 Pet., 124; Holmes v. Trout, 7 Pet., 171 ; Miller v. McIntyre, 6 Pet., 61.

Plainly, under these decisions, it is not the institution of a suit, but the exhibiting of a cause of action, that determines the application of the statute of limitations, whether it be by amendment of the declaration, or bill of complaint, by addition of new and independent counts to a declaration, or by the interposition of a counter-claim by way of a plea of set-off, which may of itself be the foundation of a substantial judgment for the defendant.

We do not think, therefore, that there was any error in our decision of this case; and the petition for a rehearing must accordingly be denied.  