Craighead v. Swartz

Citations

• 219 Pa. 149
• 67 A. 1003
• 1907 Pa. LEXIS 617

Syllabus

<p>Principal and surety — Insolvency of principal — Indemnifying surety— Set-off.</p> <p>When a principal has become insolvent, the surety may retain the moneys oí the principal or the amount of his indebtedness to the principal as a fund for his indemnity.</p> <p>As between principal and surety, courts of equity always lend their aid for the protection of the latter. As soon as the surety’s obligation to pay becomes absolute, he is entitled in equity to require the principal debtor to exonerate him, and he may file a bill to compel exoneration, although the creditor has not demanded payment from him.</p> <p>In general, in order to support a set-off there must be cross demands between the same parties and in the same rights, such as would sustain mutual actions against each other, yet wherever there is the practicability of avoiding circuity of action and needless costs, with safety and convenience to all parties, or where there is a special equity to bo sub-served, and no equity of third parties to be injured, a set-off will be allowed upon equitable principles, though the case does not come within the language of the statute.</p> <p>Where the payee of promissory notes under seal assigns them at a time when he is insolvent, and the notes are overdue, the maker of the notes may set off against them, in a suit by the assignee, a liability which had matured against the maker on notes indorsed by him as surety for the payee of the notes in suit.</p>