Page:Federal Reporter, 1st Series, Volume 4.djvu/647

 IN EB TOBTTEB. 633 �is cîiaracterîzed by ability and research. But I am not per- Buaded, either by the reasoning of the register or the author'- ities cited by him, of the correetnesa of his conclusion. What is this case ? It is one of mutual dealings — of cross- demanda arising ex contractu ; and, in my Judgment, the right of set- off here claimed bas its foundàtion in natural equity. Upon what just principle can Brainard be cornpelled to pay to the bankrupt's estate the balance in his hands arising from the partnership transactions, and come in with the other creditors for a mere fro rata dividend? It is said in Holbrook v. The Receirers, etc., 6 Paige, 2i!0, 231, that the natural equity to have mutual but uneonneoted demànds between two parties ■who bave been dealing with each other set off, is, as a gen- erai rule, saperior to the claims of any other creditor whô bas not dealt with the insolvent upon the faith of the specifie fund, against which the right of set-off is claimed. �In Gaij V. Gay, 10 Paige, 369, where oneof two copartners in a mercantile firm filed a bill against his copartner for an account and settlement of the partnership transactions, and to obtain his share of the profits of the firm in the hands of the defendant, and the defendant at the time of the com- mencement of the suit was an indorser for the complainant upon notes on which the holders afterwards recovered judg- ments against such complainant, and the defendant, who was liable as such indorser, paid the judgments and took an assignment thereof for his protection and indemnity, before the termination of the suit for an accouut, it was held that the defendant had an equitable claim to have such judgments set oiï against the balance upon the partnership accounts found due to the complainant, who was insolvent ; and this notwithstanding the complainant had assigned ail his interest in the suit to a third person, pending the suit, but after the iudgments had been assigned to the indorser. �Upon principle and authority, therefore, it may be assumed that, in the absence of bankruptcy proceedings, had Voetter filed a bill against Brainard for the settlement of their part- nership transactions, the latter could have availed himself of the set-ofi he now claims upon showing Voetter's insolveney. ����