Defalcation

The act of a defaulter; misappropriation of trust funds or money held in any fiduciary capacity; failure to properly account for such funds. Usually spoken of officers of corporations or public officials.

In re Butts (D. O.) 120 Fed. 970; Crawford v. Burke, 201 111. 581, 66 N. E. 833.

Also set-off

The diminution of a debt or claim by deducting from it a smaller claim held by the debtor or payor.

Iron Works v. Cuppey, 41 Iowa, 104; Houk v. Foley, 2 Pen. & W. (Pa.) 250; McDonald v. Lee, 12 La. 435