Week

The action is to enforce the statutory liability of defendant as a stockholder in a corporation known as The Luthy Company. For the purposes of the first branch of the case it may be conceded that plaintiff is a creditor and that defendant, save and except for the defense hereinafter to be discussed, was liable to plaintiff in an amount proportionate to defendant’s share of the issued stock of the corporation at the time of the creation of the indebtedness which is the foundation of the action.

However, in response to plaintiff’s claim defendant entered the plea that he, as well as being a stockholder, was likewise a creditor of the corporation and that by reason of this fact he was entitled to set off against the claim of plaintiff the corporation’s indebtedness to him. It might be well to note here that the claim of defendant is not that he is entitled to a set-off in its strictest statutory sense, but rather it is his contention that his defense is in the nature of an equitable defense in the nature of a set-off. It will be unnecessary to go minutely into the distinction suggested. It may be conceded that a right of equitable defense may exist where the provisions of the code…