Sec 1014

That a set-oft' does not extinguish the debt, but only affects the remedy, is shown by numerous rulings. Thus a tender, as we have seen, is not good if limited to the defendant's indebtedness after deducting the set-off.2 - A lien for a specific mortgage debt continues, notwithstanding that the lien creditor is indebted independently to the lien debtor for an amount exceeding the lien.3 - Nor can a set-off be used to cancel a forfeiture of a real right.4

Sec 1015

A defendant having a claim (not consisting of part payment) against the plaintiff, is not bound, according to the English practice, to introduce it as a set-off. He may reserve it for a cross-action, or he may keep it as a defence to a subsequent suit by the same plaintiff', or "he may plead it to an action upon a judgment, although the debt accrued before the commencement of the original action."5 The question is whether, by the lex fori, the using the set-off is obligatory. Where it consists of a part payment, the weight of authority is that it ought to be offered on trial of the debt claimed to be partially paid:6 though it may be otherwise as to set-offs which are purely equitable, or consist of counter-claims 7 - When a creditor becomes insolvent after obtaining judgment, equity may compel the allowance of any set-off the debtor may have against him, though it existed at the time suit was brought, provided it was not adjudicated against in the suit.8

Set-off does not extinguish debt but only affects remedy.

Use of setoff on trial is optional.

1 Martin V. Mohr, 56 Ala. 221. But a claim recoverable only by an action of account, or by a bill in equity, cannot, it is said, be introduced as a set-off. Russell V. Metier, 54 Penn. St. 154.

2 Supra, sec 978.

3 Clark V. Fell, 4 B. & Ad. 404.

4 Johnson V. Lyttle, L. R. 5 C. D. 692; see Leake, 2d ed. 1004; infra, sec 1030.

5 Leake, 2d ed. 1005, citing Lord.

Campbell, L. C, in Jenner V. Morris, 3 D. F. & J. 54.

6 Wh. on EV. sec 789, and cases there cited; supra, sec 936 - 7.

7 Ibid.; Davis V. Hedges, L. R. 6 Q. B. 687; Davenport V. Hubbard, 46 Vt. 200; Bridge V. Gray, 14 Pick. 55; McEwen V. Bigelow, 40 Mich. 215; supra, sec 936-7.

8 Chicago R. R. V. Field, 86 Ill. 270.

Sec 1016

In England, by an order of the supreme court of judicature, a defendant is entitled to set up as "counter-claim" any right or claim against the plaintiff, "whether such set-off or counter-claim sound in damages or not." If there is a balance due the defendant, judgment may be given for such balance. "Counterclaim," under this order, is distinguished from set-off in covering an independent liability from the plaintiff to the defendant, and in permitting judgment to be entered for either party as the merits may require.1 - Costs are proportioned to the balance found, and not to the amount of claim proved.2

Sec 1017

Only actionable claims can be introduced either as Bet-offs or as counter-claims.3 Hence a debt contracted in infancy, and thus barred, cannot be introduced as a set-off without proof of ratification;1 nor can a debt barred by the statute of limitations,2 nor debts not actionable under the statute of frauds.3 - It is no objection to a debt as a set-off that a suit has been brought on it which is still pending;4 nor that a judgment has been entered on such claim in the defendant's favor, provided he is the beneficial owner.5 But the judgment must be virtually between the same parties.6 - Hence a claim to be thus set off must be owned absolutely by the defendant. It cannot be borrowed by him for the occasion.7

Practice as to counterclaims.

1 Leake, 2d ed. 1006; Mostyn V. West Mostyn Coal Co., L. R. 1 C. P. D. 145; Harris V. Gamble, L. R. 6 C. D. 748; Crowe V. Barnicot, L. R. 6 C. D. 753.

2 Staples V. Young, L. R. 2 Ex. D. 324. As to practice, see further, Newell V. Bank, L. R. 1 C. P. D. 496; Nor-ris V. Beesley, L. R. 2 C. P. D. 80; Young V. Kitchen, L. R. 3 C. P. D. 127. As to counter-claim in this country, see Wacker V. Straub, 88 Penn. St. 32; Ritchie V. Hayward, 71 Mo. 560; Sel-leck V. Griswold, 49 Wis. 39; Delaney V. McDonald, 47 Wis. 408; Read V. Tioga Co., 66 Ind. 21; Mobile, etc., R. R. V. Clanton, 59 Ala. 392; see infra, sec 1299. In Lebanon Bk. V. Karmany, Sup. Ct. Penn. 1881, 12 Rep. 540, it was held that to an action against a national bank for the penalty imposed of double the amount of interest obtained on a usurious loan, the defendant could not set off the note. The court said: "The plaintiff's claim is not within the defalcation act, which applies where the parties are 'indebted to each other upon bonds, bills, bargains, promises, accounts, or the like.' It arises from the defendant's violation of a statute remedial and penal, which gives the borrower the right to recover, for the two-fold purpose of compensation and example. Overholt V. Bank, 82 Penn. St. 490; S. C, Thomp. Nat. Bk. Cas. 883. It was decided in Barnet V. Bank, 8 Otto, 555; S. C, Browne's Nat. Bk. Cas. 18, that in an action on a bill of exchange the defendant could not set off a claim for twice the amount of illegal interest he had paid the bank; that his remedy for the wrong was a penal suit, and he could have redress in no other mode or form of proceeding. That set-off is not allowed in such action is well settled. When the prescribed action for recovery is debt, or action in the nature of debt, it gives no right of set-off. After the plaintiff shall have obtained judgment, if the defendant have a judgment against the plaintiff in another case, there is power in the court to order one judgment to be set off against the other, governed by equitable principles. But such principles do not apply in a suit when the claim is in the nature of a penalty for violation of a statute so as to allow defalcation." 3 See Libby V. Hopkins, Sup. Ct. U. S. 1882, 25 Alb. L. J. 153; Messmore V. Larson, 86 Ill. 268. In Garrison V.