STATES BUNG' MANUF'G
(Oi'l'ooit Court;S. D. Ohio, W. D. February29,1888.)
i f ..
Tlle, 'volun.tary paymeq.t by the, maker of a promissorl with a .full knowledge 'of all the facts.,op'erates as an abandonment andw1\lver of &11 rIght tt)$et oft cross'demands at independent debts, and a bill disclosing such facts preseu,t& 110 Cllose equitabillrelief by of
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In: Equity· On demurrer .tobiU. , Thej,United States Bung Mllllufacturing Company,as maker, paid David: Armstrong as receiver. of the Fidelity National Bank a certain promissory note, and afterwards file<itheir bill in equityto secure right of offset. .The defendants. demurred toplaintiff'l\ bill. I M.' B. Ha.gan8, for compla,ipant. E. W; KUtredge and W. B. ·Burnet, for respondent. JAdItsON; J., The demurrer to this bill is well taken, and must be sustained. The complainant's right of offset was waived or abandoned by itspnyment of the note described in the bill. That payment was made voluntarily, with full knowledge of all the facts. It was made by therri8.ker 6f the parly legaJlyboundto pay. Such payment as an equitable assignment· of the collecting bank's rights as 'against the Fidelity Bank or its receiver. If the comtllainant had intended to rely upon its debts against the Fidelity National Bank as a set-off'llgainst its note, it should have declined payment of the note, stood suit thereon, and set up its counter-claim as aeet-off. This was .not done, but it paid its note voluntarily, and now invokes the aid of this courtto enforce what is called its "equitable right of ,set-off." The factspresanted by the bill do not raise any such equitable right. It is well settled that the mere existence of cross-demands or independent debts does not create any- right to an equitable set-off. There must exist a mutual credit between thaparties,founded at the time upon the existence of some debt, due by the crediting party to the "By mutual credit," saYI:! Story, Eq. Jur. § 1435, "in the sense in which the terms are here used, we are to understand a knowledge on both sides of an existing debt due to one party, and a credit by the other party, founded on and trusting to such debt as a means of discharging it." Mutual credit means something different from mutual debts. Mutual credit, such as will give rise to an equitable set-off, applies only to that class of cases where there has been mutual trust or understanding that an existing debt should be discharged by a credit given upon the ground of such debt. The bill presents 110 such case. It discloses nothing more than the existence of cross-demands or independent debts, which could have been set off at law, if complainant had asserted its right to do so at the proper time, and in the proper mode. Having voluntarily waived or abandoned this legal right and remedy by paying the note to avoid
V. Cl;l'Y OF HOUSTON.
heingsueCi thereon, it presents no case for equitable relief by way of equitable set-off under the authorities. . This demurrer is accordingly sustained, and the bill is dismissed with' costs.
et aZ. v.
CITY OF HOUSTON. l
(Circuit Court, E. D. Texa8. March 1,1888.)
· MUNICIPAL CORPORATIONS":"BoNDS-DIVERSION OF FUNDS-INJUNCTION.
of the bonds the revenue of the market was to be devoted to the payment of the interest on the bonds and to form a sinking' fund to redeem them. After the issuance of the honds, the corporation obtained a new charter, authorized by which they devoted the revenue of the market to other purposes than that provided for in the ordinance authorizing the bonds. Plaintiffs. holders of sqme of these bonds, brought a bill in equity to comperspecitic performance. and asked for an injunction to prevent further diversion of the market-house revenues. Held, the facts being admitted, that an injunction pendente lite, as prayed for, should issue.
lmed sOtile bonds to ·provide a fund for building a market-house. By the terms
4: municipal corporation, under an ordinance authorized by its charter, is-
SAMB-ORDINANCES-CoNSTITUmONA.L LAW-IMPAIRING OBLIGATIONS OF CONTRACTe.
A corporation, under an ordinance authorized by their charter; issued· some bonds to provide· a. fund for building a market-house. By the terIDS, of the bOllds the revenue 9f the market was to. be. devoted to the pay; mentof the interest, on the bonds, and to form a smkmg fund to redeem them; lleld, that as the ordinance was authorized by the charter, and there· fore valid; it constituted a contract between the holders olthe bonds and the ,city, aDd that subsequent ordinances of the city making any other disposition ,91. market revenue were void, and that so much of a charter granted· the city' afier the issue of the bonds &sauthorized the city council to divert any of such revenue froID the special fund as contracted in the ordinance under which the bonds were issued was inoperative. as impairing the obligations of a contract in violation of Const. U. S. art. 1, § 10. 2
'In·Equity. Bill for specific performance and injunction. The city 'of Houston, authorized, by its charter, passed an ordinance for the i13Suance of bonds to raise a fund for building a market. Und r,the terms of the ordinance the revenue from the market was to interest on the bonds, and to constitute be devoted to the paymen\ of
t&ported byChas. B. Stafford,Esq., oUhe New bar. By' the obligation of a contract is meant the means which, at ,the time of its creation, the lawa1fordsfor its enforcement. Where a contract is made upon the faith that levied, repealing or modifying the taxing power of a corporation so as to a:eprive tlieholder of the contract of his is unconstitutional, because impairing.. the obligation of a contract. State v. Police oIUry, 4 Sup. Ct. Rep. 648. Respecting ot.her legislation, col1sidered with rellpect constitutional inhibition against impairing the obligation of contracts. see Seibert v. U. 'S.:.I-7 Sup. Ct. Rep. 1100 ; Water Co. v. Borough of Easton, Id.916; Water-Works Co. v. water-Works Co.· ld. 405 ; FiSk. v.'. Police Jury, 6 Sup. .... and note i Bridge C? v. Railway CO;j 1(.!P.a.) 8 Atl. I\ep,.,2!l3j State v.Jersey C1ty, . .J.} Id.l23; t;tate v. Railroad Co., (N. J.) 7Atl :a,ep, 826, note; Railroad.Co. v. City a Savannah, 80 Fed. Rep. Willis v. Mlller, 29 1<'00. Rep.· Gas-Light Co. v. City'of Saginaw, 28 Fed. Rep. 52\1, and note; Com v.. MS.nryJ-.. (V.8 1 S. E. Rep'. 185: Com. v. Weller, ld.loo; com..v. Jones, Id. 84<; an.d .·) .. S\lperinteDdent, (1110.)8 B. W. Rep. 888; Tait's Ex'r v.AsylU1n,(Va.) 4 B. J1i. Rep. 697. '