Sec 963

"When it is agreed between debtor and creditor that certain goods are to be taken in satisfaction of a debt, the delivery and acceptance of the goods will be regarded as a payment, either in full or pro tanto, as the case may be.4 The exchange of goods for goods is a barter; and so is an exchange of goods for labor; "and barter, so far as concerns the remedy, is distinguishable from sale, in that in barter the declaration must be special."5 " In both cases," however, "the title to the property is absolutely transferred, and the same rules of law are applicable to the transaction, whether the consideration of the contract is money or by way of barter."6 Whether the giving or receiving of goods is a payment, is a question of fact. It may happen that it may be a matter of doubt whether the goods were received as payment, or as items in a line of business transactions, so as to constitute simply a set-off. As to this, the intention of the parties, as evidenced by their words and dealings, must determine.7

Payment in goods may by agreement be equivalent to payment in money.

1 Wh. on EV. sec 1323, and cases there cited; and see supra, sec 961.

2 Gordon V. Strange, 1 Exch. 477; Walter V. Haynes, Ry. & M. 149; Allen V. Blunt, 2 Wood. & M. 121.

3 Wakefield V. Lithgow, 3 Mass. 249; see Phillips V. Scott, 43 Mo. 86; and cases cited to sec 961.

4 Leake, 2d ed. 889; Hands V. Burton, 9 East, 349; Saxty V. Wilkin, 11 M. & W. 622; Williamson V. Berry, 8 How. U. S. 544; Costello V. Cady, 102 Mass. 140; Stevenson V. State, 65 Ind.

409; Edwards V. Cottroll, 43 Iowa, 194.

5 Barbe V. Parker, 1 H. Bl. 287; Harrison V. Luke, 14 M. & W. 139; Guerreiro V. Peile, 3 B. & Ald. 616; Mitchell V. Gile, 12 N. H. 390; Vail V. Strong, 10 Vt. 457.

6 Bigelow, J., Com. V. Clark, 14 Gray, 372.

7 Strong V. Kennedy, 40 Mich. 327; see Bacon V. Lamb, 4 Col. 578. As to set-off, see infra, sec 1009.

Sec 964

It may be part of the understanding of parties dealing with each other, that the cash indebtedness of the one to the other shall be limited to the balance, after subtracting from the account debts admitted on both sides. If so, the set-off is equivalent to a payment, and may be so pleaded.1 The courts will give such effect to agreements of this class, if executed in good faith, as is calculated to promote the best interests of all parties.2 "The way in which an agreement to set one debt against another of equal amount, and discharge both, proves a plea of payment, is this: if the parties met, and one of them actually paid the other in coin, and the other handed back the same identical coin in payment of the gross debt, both would be paid. When the parties agree to consider both debts discharged without actual payment, it has the same effect, because in contemplation of law, a pecuniary transaction is supposed to have taken place by which each debt was then paid."3 The set-off, however, must be perfected in order to be operative.4

Sec 965

When there is an agreement between A. and B. for mutual set-off, whether such agreement be express or implied, debts from A. to B., which would be outlawed under the statute of limitations, are extinguished by the common set-off. The old outlawed debts are thrown into a gross mass with those not outlawed, and the balance due from A. is not within the statute.5 If an agreement of general set-off is shown, it operates even to cancel debts of which the consideration may be illegal.6 An agreement, however, for a general set-off' must be shown in order to have this effect, since without such an agreement the mere existence of counter-claims will not exclude the statute, or preclude the illegality of a consideration from being excepted to.1

Set-off, when agreed to, equivalent to payment.

Set-off appropriated to debts excluded by statute. and to illegal debts.

1 Benj. on Sales, 3d Am. ed. sec 711; Leake, 2d ed. 889; citing Co. Lit. 213 a; Sinclair V. Baggaley, 4 M. & W. 312; Cellander V. Howard, 10 C. B. 290; Sturdy V. Arnaud, 3 T. R. 599; Leeds V. Burrows, 12 East, 1, where it was said that this mode of payment may be part of the original agreement in contracting the debts. As to set-off generally see infra, sec 1009 et seq.

2 Doyle V. Donnelly, 56 Me. 27.

3 Lord Campbell, C. J., in Livingstone V. Whiting, 15 Q. B. 723; Mellish, L. J., in Livingstone V. Whiting, 15 Q. B. 723; Spargo's case, L. R. 8 Ch. 414; Rance's case, L. R. 6 Ch. 104; cited Leake, 2d ed. 889.

4 Gray V. White, 108 Mass. 228; see infra, sec 1009 et seq.

5 Leake, 2d ed. 890; Ashby V. James,.

11 M. & W. 542; Scholey V. Walton,.

12 M. & W. 510; Worthington V. Grims-ditch, 7 Q. B, 479.

6 Owens V. Denton, 1 C. M. & R,. 711.