K owed the plaintiff andpound;5,000 plus interest. He also owed the defendants, who were his bankers, andpound;647. When he retired from the army the proceeds of sale of his commission, namely andpound;3000, were sent to the defendants as his bankers and paid into his account. Before that K had covenanted with the plaintiff by deed that the proceeds of sale of his commission would be applied towards the discharge of his debt to the plaintiff and that such monies should stand charged with and be security for such discharge. Notice of that assignment of the debt to the plaintiff was, however, received by the defendants only after the andpound;3000 had been paid into K’s account. The plaintiff claimed the sum of andpound;3000 from the defendants, who asserted that they were entitled to set off K’s liability to them for andpound;647. It was held by this court that they were entitled to do so. James LJ said: ‘The Government paid to Messrs Cox and Co a certain sum of money to the use of Lord Charles Ker. He has assented to that payment being made to them for his use. After that Lord Charles Ker had a claim against them which made them liable, not merely to a suit in equity, but to an action at law by Lord Charles Ker for the money, as being money paid to his use. It appears to me that beyond all doubt they could have pleaded a set-off in that action for the money that was due to them from him. Both rights were Common Law rights. There was a simple contract debt due from A to B, and at the same moment a simple contract debt due from B to A. There was a claim by Lord Charles Ker for money had and received to his use, and a claim by Cox and Co for money due, so that if the action had been brought by Lord Charles Ker himself the right of set-off would have been clear. It is not brought by him, but it is brought by a person who claims as assignee of the chose in action belonging to him. Now an assignee of a chose in action , according to my view of the law, takes subject to all rights of set-off and other defences which were available against the assignor, subject only to this exception, that after notice of an assignment of a chose in action the debtor cannot by payment or otherwise do anything to take away or diminish the rights of the assignee as they stood at the time of the notice. That is the sole exception. Therefore the question is, was this right of set-off existing at the time when the notice was given by the Duke of Roxburghe? Under the old law the proper course for the Duke to take would have been, not to come into a Court of Equity, but to use the name of Lord Charles Ker at law; the proper course for an assignee of a chose in action , unless there were some equitable circumstances to justify him in coming to a Court of Equity, having been to sue at law in the name of the assignor. In that case set-off could have been pleaded as against the assignor, and in the present mode of procedure that defence is equally available.’
(1881) 17 Ch D 520
England and Wales
Cited – Smith v Muscat CA 10-Jul-2003
The tenant was sued by his landlord for arrears of rent, but sought an equitable set-off for damages for disrepair accruing under the previous landlord.
Held: If the entitlement to recover arrears of rent passes from assignor to assignee, and . .
Lists of cited by and citing cases may be incomplete.
Updated: 29 April 2022; Ref: scu.185868