PembertON, C. J.
— The court below evidently held that the defendant under the pleadings and evidence was entitled in equity to offset the appellant’s demand against the bank’s indebtedness to the county. The appellant contends that such holding is error. He insists that by allowing the offset an unauthorized preference was given to the defendant, which he claims is prohibited by section 5242 of the National Bank Law. This section is as follows:
“Sec. 5242. All transfers of the notes, bonds, bills of exchange or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or' creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void; and no attachment, injunction or execution, shall be issued against such association or its property before final judgment in any suit, action or proceeding, in any state, county, or municipal court.”
In Scott v. Armstrong, 146 U. S. 499, Mr. Chief J ustice Fuller, construing this statute in acase similar to the one under consideration, says: “The argument is that these sections by implication forbid this setoff, because they require that, after the redemption of the circulating notes has been fully provided for, the assets [321]*321shall be ratably distributed among the creditors, and that no preferences given or suffered, iu contemplatiou of or after committing the act of insolvency, shall stand. And it is insisted that the assets of the bank existing at the time of the act of insolvency include all its property without regard to any existing liens thereon or setoffs thereto. We do not regard this position as tenable. Undoubtedly, any disposition by a national bank, being insolvent or in contemplation of insolvency, of its choses in action, securities or other assets, made to prevent their application to the payment of its circulating notes, or to prefer one creditor to another, is forbidden; but liens, equities or rights arising by express agreement, or implied from the nature of the dealings between the parties, or by operation of law, prior to insolvency and not. in contemplation thereof, are not invalidated. The provisions of the act are not directed against all liens, securities, pledges or equities, whereby one creditor may obtain a greater payment than another, but against those given or arising after or in contemplation of insolvency. Where a setoff’ is otherwise valid it is not perceived how its allowance can be considered a preference, and it is clear that it is only the balance, if any, after the setoff is deducted which can justly be held to form part of the assets of the insolvent. The requirement as to ratable dividends is to make them from what belongs to the bank, and that which at the time of the insolvency belongs of right to the debtor does not belong to the bank.”
While the case just cited was pending in the circuit court of appeals for the sixth circuit the court certified to the supreme court for instructions as to the proper decision thereof, among others, this question: “1. Where a national bank becomes insolvent and its assets pass into the hands of a receiver appointed by the comptroller of the currency, can a debtor of the bank set off against his indebtedness the amount of a claim he holds against the bank, supposing the debt due from the bank to have been payable at the time of its suspension, but that due to it to have been payable at a time subsequent thereto”? The supreme court answered this question in the affirmative.
Iu Yardley v. Clothier, 49 Fed. Rep. 337; 51 Fed. Rep. 506, [322]*322the court holds that: “A depositor in an insolvent bank, who had indorsed a note that was subsequently discounted by said bank, can, in a suit by the bank to recover the amount of the note, set off his deposit against this amount, when the note matured after the insolvency of the bank.”
In this case the court further says: “The doctrine of setoff' is founded on the principles of equity, and, within certain limits, is universally recognized and applied. Where parties" dealing together become mutually indebted, the balance appearing on their accounts is, generally, alone recoverable. Well defined and easy of comprehension as the doctrine is, however, its application to the varying state of facts which arise is attended with the same degree of difficulty that attends the administration of other plain legal principles, under unusual circumstances. In the distribution of insolvents’ assets, whether under voluntary trusts for creditors, insolvent laws, in bankruptcy, or proceedings on decedents’ estates, its application has frequently been resisted on the ground that its allowance would create preference among creditors. To enter upon an examination of the questions raised and the distinctions drawn would be unprofitable. It is sufficient to say that in every instance in which this objection has been made (in the absence of controlling statutory provision) where the proposed setoff was due when the creditors’ rights attached, the courts have overruled it, whether the defendant’s debt, in suit, was due at the time or matured subsequently.”
In Van Wagoner v. Paterson G. L. Co., 23 N. J. L. 283, the court, discussing the doctrine of equitable setoff, say: “ I am of opinion, both upon principle and authority, that the debtor of an insolvent corporation loses none of his rights by the act of insolvency; that he has the same eqnitable right of setoff against the receiver that he had against the corporation at the time of insolvency, and, consequently, that the debtor of a bank, whether his indebtedness has actually accrued or not at the time of insolvency, may in equity set off against his debt either a deposit in the bank or the bills of the bank bona fide received by him before the failure occurred. It is said the object of the act is to do equal justice to the creditors, and that equality is equity. But equality of what, and among whom? [323]*323Clearly of the assets of the bank, among the creditors of the' bank. In cases of cross-indebtedness the assets of the bank consist only of the balance of the accounts; that is, all the fund which the bank itself would have to satisfy its creditors in case no receiver had been appointed. And there is no equality, and no equity, in putting a debtor of the bank, who has a just and legal setoff against the corporation, in a worse position and the creditors in a better position by the bank’s failure and the appointment of a receiver.” Yardley v. Clothier, supra, is cited as authority in Scott v. Armstrong, supra, and is evidently in harmony therewith.
In view of these authorities we are unable to see how the defendant could be placed in a worse position and the creditors in a better one by the bank’s insolvency and the appointment of a receiver. If the bank had not failed and was now prosecuting this suit it would be hardly claimed that the defendant could not offset this claim.
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PembertON, C. J.
— The court below evidently held that the defendant under the pleadings and evidence was entitled in equity to offset the appellant’s demand against the bank’s indebtedness to the county. The appellant contends that such holding is error. He insists that by allowing the offset an unauthorized preference was given to the defendant, which he claims is prohibited by section 5242 of the National Bank Law. This section is as follows:
“Sec. 5242. All transfers of the notes, bonds, bills of exchange or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or' creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void; and no attachment, injunction or execution, shall be issued against such association or its property before final judgment in any suit, action or proceeding, in any state, county, or municipal court.”
In Scott v. Armstrong, 146 U. S. 499, Mr. Chief J ustice Fuller, construing this statute in acase similar to the one under consideration, says: “The argument is that these sections by implication forbid this setoff, because they require that, after the redemption of the circulating notes has been fully provided for, the assets [321]*321shall be ratably distributed among the creditors, and that no preferences given or suffered, iu contemplatiou of or after committing the act of insolvency, shall stand. And it is insisted that the assets of the bank existing at the time of the act of insolvency include all its property without regard to any existing liens thereon or setoffs thereto. We do not regard this position as tenable. Undoubtedly, any disposition by a national bank, being insolvent or in contemplation of insolvency, of its choses in action, securities or other assets, made to prevent their application to the payment of its circulating notes, or to prefer one creditor to another, is forbidden; but liens, equities or rights arising by express agreement, or implied from the nature of the dealings between the parties, or by operation of law, prior to insolvency and not. in contemplation thereof, are not invalidated. The provisions of the act are not directed against all liens, securities, pledges or equities, whereby one creditor may obtain a greater payment than another, but against those given or arising after or in contemplation of insolvency. Where a setoff’ is otherwise valid it is not perceived how its allowance can be considered a preference, and it is clear that it is only the balance, if any, after the setoff is deducted which can justly be held to form part of the assets of the insolvent. The requirement as to ratable dividends is to make them from what belongs to the bank, and that which at the time of the insolvency belongs of right to the debtor does not belong to the bank.”
While the case just cited was pending in the circuit court of appeals for the sixth circuit the court certified to the supreme court for instructions as to the proper decision thereof, among others, this question: “1. Where a national bank becomes insolvent and its assets pass into the hands of a receiver appointed by the comptroller of the currency, can a debtor of the bank set off against his indebtedness the amount of a claim he holds against the bank, supposing the debt due from the bank to have been payable at the time of its suspension, but that due to it to have been payable at a time subsequent thereto”? The supreme court answered this question in the affirmative.
Iu Yardley v. Clothier, 49 Fed. Rep. 337; 51 Fed. Rep. 506, [322]*322the court holds that: “A depositor in an insolvent bank, who had indorsed a note that was subsequently discounted by said bank, can, in a suit by the bank to recover the amount of the note, set off his deposit against this amount, when the note matured after the insolvency of the bank.”
In this case the court further says: “The doctrine of setoff' is founded on the principles of equity, and, within certain limits, is universally recognized and applied. Where parties" dealing together become mutually indebted, the balance appearing on their accounts is, generally, alone recoverable. Well defined and easy of comprehension as the doctrine is, however, its application to the varying state of facts which arise is attended with the same degree of difficulty that attends the administration of other plain legal principles, under unusual circumstances. In the distribution of insolvents’ assets, whether under voluntary trusts for creditors, insolvent laws, in bankruptcy, or proceedings on decedents’ estates, its application has frequently been resisted on the ground that its allowance would create preference among creditors. To enter upon an examination of the questions raised and the distinctions drawn would be unprofitable. It is sufficient to say that in every instance in which this objection has been made (in the absence of controlling statutory provision) where the proposed setoff was due when the creditors’ rights attached, the courts have overruled it, whether the defendant’s debt, in suit, was due at the time or matured subsequently.”
In Van Wagoner v. Paterson G. L. Co., 23 N. J. L. 283, the court, discussing the doctrine of equitable setoff, say: “ I am of opinion, both upon principle and authority, that the debtor of an insolvent corporation loses none of his rights by the act of insolvency; that he has the same eqnitable right of setoff against the receiver that he had against the corporation at the time of insolvency, and, consequently, that the debtor of a bank, whether his indebtedness has actually accrued or not at the time of insolvency, may in equity set off against his debt either a deposit in the bank or the bills of the bank bona fide received by him before the failure occurred. It is said the object of the act is to do equal justice to the creditors, and that equality is equity. But equality of what, and among whom? [323]*323Clearly of the assets of the bank, among the creditors of the' bank. In cases of cross-indebtedness the assets of the bank consist only of the balance of the accounts; that is, all the fund which the bank itself would have to satisfy its creditors in case no receiver had been appointed. And there is no equality, and no equity, in putting a debtor of the bank, who has a just and legal setoff against the corporation, in a worse position and the creditors in a better position by the bank’s failure and the appointment of a receiver.” Yardley v. Clothier, supra, is cited as authority in Scott v. Armstrong, supra, and is evidently in harmony therewith.
In view of these authorities we are unable to see how the defendant could be placed in a worse position and the creditors in a better one by the bank’s insolvency and the appointment of a receiver. If the bank had not failed and was now prosecuting this suit it would be hardly claimed that the defendant could not offset this claim. The appellant claims that the warrant in suit was not due at the time the bank became insolvent, because it had not been called for payment. Under the authorities cited we think this contention of little importance. But we are not satisfied that it is true that the warrant was not then due. The warrant is dated May 31, 1893, and there is no time specified when it is payable. It is indorsed “Presented and registered June 10, 1893. Not paid for want of funds.” But did the fact that the treasurer had no funds to pay it with at the date of its issue or presentation prevent its maturing until called for payment after funds had accrued to pay it with?
The evidence in the case shows that the officers of the bank knew this deposit was county money, placed in the bank for the sole purpose of paying the indebtedness of the county by the defendant as treasurer. And the circumstances of the case are such that the bank understood that, when the treasurer should seek to settle this account with it, either would have the right to claim credit for any cross-indebtedness that might exist. We think the facts and circumstances of this case are sufficient to establish the right to the equitable setoff claimed by defendant.
In this holding we do not intend to be understood as in any [324]*324manner intimating that by the action of the county commissioners, as shown by the evidence, in treating this deposit by the treasurer as cash on hand, the defendant would be in any way relieved from liability as treasurer of said county, if loss should result by the insolvency of the bank.
The judgment of the court is affirmed.
Affirmed.
De Witt, J., and Hunt, J., concur.