There is no inherent right in equity to set off one demand against another; rather, equitable setoff was conceived as a limited remedy and is available only where the debts are mutual, mature, and "of such a certain and ascertainable character as to be capable of being applied in compensation of each other" ( Smith v. Billings (1896), 62 Ill. App. 77, 85) without the intervention of the court to estimate them. Faber, Coe Gregg, Inc. v. First National Bank (1969), 107 Ill. App.2d 204, 246 N.E.2d 96. Here, Garfield unilaterally withheld funds admittedly belonging to Park, in satisfaction for an alleged debt, including damages, which is the subject of a pending lawsuit.
The doctrine of election of remedies "should be confined to cases where (1) double compensation of the plaintiff is threatened or (2) the defendant has actually been misled by the plaintiff's conduct or (3) res adjudicata can be applied." Faber, Coe Gregg, Inc., v. First National Bank of Chicago, 107 Ill. App.2d 204, 211, 246 N.E.2d 96, 100 (1969). Accord, International Association of Machinists Aerospace Workers v. Industrial Commission, 79 Ill.2d 544, 550-51, 404 N.E.2d 787, 789 (1980).
The right of setoff arises at the time the depositor's indebtedness to the bank has matured. (See Elzy v. Morrison (1913), 180 Ill. App. 711, 715; Faber, Coe Gregg, Inc. v. First National Bank (1969), 107 Ill. App.2d 204, 208, 246 N.E.2d 96.) The fact that the certificates were issued on the same date the loan was made, and that all four instruments bore the same maturity dates, does not add any weight to the bank's argument that it possessed an inchoate lien on the deposits evidenced by the TCD. The loan of $150,000 to Kitzer, Sr., was not secured by the certificates. There is no evidence that the bank required Kitzer, Sr., to deposit the proceeds of the loan with the bank.
An election of remedy occurs only when a party accepts the benefit of pursuing the initial remedy. Ransburg v. Haase, 224 Ill.App.3d 681, 167 Ill.Dec. 23, 28-29, 586 N.E.2d 1295, 1300-01 (3d Dist. 1992), appeal denied, 145 Ill.2d 644, 173 Ill. Dec. 13, 596 N.E.2d 637 (1992); Faber Coe Gregg, Inc. v. First National Bank of Chicago, 107 Ill.App.2d 204, 246 N.E.2d 96, 99-100 (1st Dist. 1969); 25 Am.Jur.2d, Election of Remedies, § 16 at 659 (1966). Here a forfeiture was never effected.
However, in our earlier opinion, we provided for this possibility upon remand inasmuch as it does not amount to double compensation for the plaintiff. See Faber, Coe Gregg, Inc. v. First National Bank of Chicago, 107 Ill.App.2d 204, 211, 246 N.E.2d 96, 99-100 (1969); National Lock Co. v. Hogland, 101 F.2d 576, 587 (7th Cir. 1938). III
See e.g., Luther, 211 Ill.App. at 601; see also Lane v. Volunteer Cooperative Bank, 30 N.E.2d 821 (Mass. 1940). There is no inherent right in equity to set off one demand against another; rather, equitable setoff was conceived as a limited remedy, and is available only where the debts are mutual, mature, and "of such a certain and ascertainable character as to be capable of being applied in compensation of each other," Smith v. Billings, 62 Ill.App. 77, 85 (1896) without the intervention of the court to estimate them. Faber, Coe Gregg, Inc. v. First National Bank, 246 N.E.2d 96 (Ill.App. 1969). See also, Citizens Bank of Md. v. Strumpf, 516 U.S. 16, 18 (1995) (the right of setoff allows parties that owe each other money "to apply their mutual debts against each other, thereby avoiding `the absurdity of making A pay B when B owes A."), quoting Studley, 229 U.S. at 528); In re Murphy, 203 B.R. 972, 975 (Bankr.S.D.Ill. 1997) (citation omitted) ("[T]he right of setoff allows parties that owe mutual debts to each other to assert the amounts owed on these debts, subtract one from the other, and then pay only the balance."
But "equitable setoff was conceived as a limited remedy, and is available only where the debts are mutual, mature, and `of such a certain and ascertainable character as to be capable of being applied in compensation of each other' without the intervention of the court to estimate them." Bank of Chicago-Garfield Ridge v. Park Nat. Bank, 237 Ill.App.3d 1085, 179 Ill.Dec. 240, 244, 606 N.E.2d 72, 76 (1992) (quoting Faber, Coe Gregg v. First Nat. Bank of Chicago, 107 Ill.App.2d 204, 246 N.E.2d 96 (1969)). Since "debts arising at different times out of different circumstances are not mutual," the setoff here was not appropriate. Soo Line R. Co. v. Escanaba Lake Superior R. Co., 840 F.2d 546, 551 (7th Cir. 1988).
Illinois law limits the doctrine of election of remedies to "its true remedial purpose as a doctrine of substance; and . . . should be confined to cases where (1) double compensation of the plaintiff is threatened or (2) the defendant has actually been misled by the plaintiff's conduct or (3) res judicata can be applied." Faber, Coe Gregg, Inc. v. First Nat'l Bank of Chicago, 107 Ill. App.2d 204, 246 N.E.2d 96, 100 (1969) (citations omitted). Thus, seeking damages for future response costs under Illinois law for negligent representation will be barred if it threatens double compensation.
Illinois courts have long acknowledged a right to setoff. In re Doctors Hosp. of Hyde Park, Inc., 337 F.3d 951, 955 (7th Cir.2003) (noting Illinois courts' recognition of a common law right of setoff); Harber Bros., 37 N.E. at 679; Faber, Coe & Gregg, Inc. v. First Nat'l Bank of Chi., 107 Ill.App.2d 204, 246 N.E.2d 96, 99 (1969); Eck v. Penn. R.R. Co., No. 34567, 1931 WL 2976, at *4 (Ill.App.Ct. Mar. 1931) ("[S]etoff ... [is] entirely the subject of statutory regulations."); Sterling-Midland Coal Co. v. Great Lakes Coal & Coke Co., No. 30652, 1926 WL 3795, at *2 (Ill.App.Ct. Mar. 1926); Hammans v. Powell Myers Lumber Co., No. 25618, 1920 WL 1290, at *1 (Ill.App.Ct. Nov. 1920); Kingman v. Draper, 14 Ill.App. 577, 1884 WL 10058, at *1 (Ill.App.Ct. Feb. 1884). In addition, Illinois law recognizes that a party can counterclaim based on setoff.
Illinois courts have long acknowledged a right to setoff. In re Doctors Hosp. of Hyde Park, Inc., 337 F.3d 951, 955 (7th Cir. 2003) (noting Illinois courts' recognition of a common law right of setoff); Harber Bros., 37 N.E. at 679; Faber, Coe Gregg, Inc. v. First Nat'l Bank of Chi., 246 N.E.2d 96, 99 (Ill.App.Ct. 1969); Eck v. Penn. R.R. Co., No. 34567, 1931 WL 2976, at *4 (Ill.App.Ct. Mar. 1931) ("[S]etoff . . . [is] entirely the subject of statutory regulations."); Sterling-Midland Coal Co. v. Great Lakes Coal Coke Co., No. 30652, 1926 WL 3795, at *2 (Ill.App.Ct. Mar. 1926); Hammans v. Powell Myers Lumber Co., No. 25618, 1920 WL 1290, at *1 (Ill.App.Ct. Nov. 1920); Kingman v. Draper, 1884 WL 10058, at *1 (Ill.App.Ct. Feb. 1884).