All the provisions of this chapter shall apply to the case of any debt or demand on the contract, alleged by way of setoff on the part of a defendant. The time of limitation of such debt or demand shall be computed in like manner as if an action had been commenced therefor at the time when the plaintiff’s action was commenced. The fact that a setoff is barred shall not preclude the defendant from using it as such if he held it against the debt sued on before it was barred.
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