Teutonia Bank & Trust Co. v. Kirn

Citations

• 9 Teiss. 345
• 1912 La. App. LEXIS 89

Syllabus

<p>I. Compensation takes place, as a general rule, even unknown to the debtor by mere operation of law and simultaneously existing debts are reciprocally extinguished to - the amount of their rer spective sums.</p> <p>43. Compensation ■ does not take place, however, in the confidential contracts arising from irregular deposits, such 'as deposits of money with a banker, and the depository is not authorized to apply the funds on deposit in his hands to the payment of the debts of the depositor, in the absence of a special mandate from him.</p> <p>3. But the prohibition of the Statute does not extend to the depositor who may therefore exercise the right of compensation.</p> <p>4. The doctrine of compensation by way of exception is liberally interpreted by the Court and carries as a result that, if the insolvent fiduciary could not have successfully resisted the plea, neither can its representative in behalf of the creditors.</p> <p>3. The endorser on a note sued in solido with -the maker may plead his deposit in compensation of his liability on the note.</p>