§ 790. (4.) Cases in which the Demands of both Parties are for Damages arising from Tort. Counterclaims of damages from torts, when attempted to be enforced against causes of action for damages also arising from other torts, have, with few exceptions, been rejected. The courts have been inclined to adopt, or at least to assume, a general principle that such a cross-demand can never arise from the transaction set forth by the plaintiff as the foundation of his claim. It will be seen, however, that this doctrine has not been universally accepted. In all the cases. placed in the foot-note, the proposed counterclaims were overruled on the ground that the cross-demands were for unconnected torts. Opposed to this array of authorities, all announcing the same general doctrine, there are a few cases which sustain a counterclaim of tort against a tort under special circumstances.2

ject of the present action. We are clear that it was the intention of those who initiated and inaugurated the present Code of Procedure that parties litigant might, and perhaps should, determine in each suit all matters in controversy between them which could legitimately be included therein, keeping in view their substantial rights. As proceedings so distinct as those were at law and in equity are no longer required to be separated, but are now blended in one action, we are unable to see any reason for requiring two actions to determine a controversy in which the rights of each party are so dependent upon the rights of the other as in the case at bar. There is most surely an equitable view of this question, as presented in the case at bar, which renders it distinct and different from an ordinary case in which one should convert the property of another, and then set up as a defence that the owner was indebted to him for some other and distinct transaction." The Supreme Court of North Carolina has recently approved this doctrine in the most emphatic and general manner, holding that opposing demands on contract and for tort may arise out of the same transaction, Bitting v. Thaxton, 72 N. C. 541, 549. For a case in which such a counterclaim was rejected because it did not "arise out of the same transaction," &c., see Pattison v. Richards, 22 Barb. 143.

1 Askins v. Hearns, 3 Abb. Pr. 184,

187; Schnaderbeck v Worth, 8 Abb. Pr. 37; Barhyte v. Hughes, 33 Barb. 320; Henry v. Henry, 3 Robt. 614; 17 Abb. Pr. 411; Murden v. Priment, 1 Hilt. 75; Shelly . Vanarsdoll, 23 Ind. 543; Lovejoy v. Robinson, 8 Ind. 399; Macdougal v. Maguire, 35 Cal. 274, 280; the last case holding that the objection is not removed by replying and going to trial instead of demurring.

2 Tarwater v. Hannibal & St. Jo. R. R., 42 Mo. 193. In McArthur v. Green Bay, &c. Canal Co., 34 Wisc. 139, 146, the action was brought for injuries done to the plaintiff's boat while passing through the canal, caused by a break in the canal alleged to have resulted from defendant's negligence; the defendant set up, as a counterclaim, that the break itself was caused by the plaintiff's negligence, and prayed a judgment for the damages. This counterclaim was sustained, the court saying: "If it does not arise out of the transaction set forth in the complaint, it certainly is connected with the subject of the action." See also Walsh v. Hall, 66 N. C. 233, 237, in which the plaintiff sued to recover possession of a horse which defendant had sold him in exchange for a tract of land, and the defendant counterclaimed damages arising from the plaintiff's fraudulent representations in reference to the land so exchanged. This case certainly carries the doctrine of counterclaim to its extreme limits.

The court of last resort in Kentucky has even gone to the extent of holding that, in an action for an assault and battery, a counterclaim of damages for an assault and battery committed by the plaintiff at the same time, and as a part of the same affray, can be interposed, because it arises out of the same transaction, thus giving to that word a very broad and liberal meaning.1

§ 791. Second Class: Legal Actions in which the Judgment is other than for Money. I pass now to the consideration of legal actions in which the judgment is other than for money; that is, for the recovery of chattels or of lands. In all instances of this class, the question would present itself, and would be the controlling one, whether the counterclaim has such a relation to the plaintiff's cause of action that a recovery upon it would defeat, lessen, or modify the relief which would otherwise be obtained by him. The practical question, therefore, is, When, if ever, may there be a counterclaim of money in an action brought to recover possession of chattels? In some exceptional cases such counterclaims have been allowed, and in my opinion properly allowed. For example, an answer stating the circumstances under which the goods demanded by the action came into the defendant's possession, that the plaintiff was indebted to him in a specified amount, that the chattels were delivered to him as a security for such debt, and that he held them by virtue of the lien thus created by the pledge, and demanding judgment for the debt itself, was adjudged a proper counterclaim.2 The New York Court of Appeals has also sustained the counterclaim under circumstances involving the same principle. The result of these authorities is, that a cause of action on contract for money may so arise out of the transaction which is the foundation of the plaintiff's claim that it can be interposed as a counterclaim in an action brought to recover the possession of chattels. The case of a pecuniary counterclaim in an action to recover possession of lands has already been fully discussed.

§ 792. Third Class: Cases in which the Plaintiff's Cause of Action, or the Defendant's Counterclaim, or both, are equitable in their Nature. The general subject of equitable counterclaims

1 Slone v. Slone, 2 Metc. (Ky.) 339. 2 Brown v. Buckingham, 11 Abb. Pr. 387 (Sp. Term). See also Walsh v. Hall, 66 N. C. 233, 237; but see, per contra, Gottler v. Babcock, 7 Abb. Pr. 392 (n.).

Thompson v. Kessel, 30 N. Y. 383, 389; per contra, see Moffat v. Van Doren, Bosw. 609.

has already been examined, and illustrated by numerous exam-, ples. It is thoroughly settled as a fundamental doctrine of the new procedure in relation to pleading, that an equitable counterclaim may be interposed to a legal cause of action, and a fortiori to one which is itself equitable. I shall not repeat the discussion to be found in a former part of this section, but shall simply collect in the note a few examples which will illustrate the modes by which such species of cross-demands may arise out of the transactions set forth by the plaintiff in his complaint or petition.1

III. Cases in which the Cause of Action alleged by the Defendant as a Counterclaim is or is not connected with the Subject of the Action.

§ 793. Little need be added under this particular head to what has been already said in the foregoing subdivisions. The cases cited in the preliminary general discussion contain all the most important attempts to give a judicial construction to the phrase "connected with the subject of the action; many of those which have been quoted to explain and illustrate the clause "arising out of the transaction," &c., were also referred by the courts which decided them to the language of the statutory definition now under consideration, that is, the counterclaims were held valid because they were "connected with the subject of the action," as well as because they "arose out of the transaction set forth in the complaint." Finally, it may be said that each one of the cases in which the counterclaim was overruled is an

1 Sandford v. Travers, 40 N. Y. 140, 143; Akerly v. Vilas, 15 Wisc. 401; Allen v. Shackelton, 15 Ohio St. 145, 147; Moberly v. Alexander, 19 Iowa, 162; Hill v. Butler, 6 Ohio St. 207, 216. The foregoing were foreclosure suits of purchasemoney mortgages, in which the mortgagor counterclaimed damages for the breach of the covenants of title in the plaintiff's deeds, or for the breach of some other collateral agreement, or for the plaintiff's fraud; but, in such an action, a counterclaim for a slander of title in respect to the land cannot be sustained, Akerly v. Vilas, 21 Wisc. 88, 109; Briggs v. Sey. mour, 17 Wisc. 255. It has been inti

mated that in a mortgage foreclosure suit a counterclaim of debt or damages on any contract is proper, Briggs v. Seymour, 17 Wisc. 255. The following were actions for other kinds of equitable relief: Grimes v. Duzan, 32 Ind. 361; Woodruff v. Garner, 27 Ind. 4 (actions to set aside a deed of land); Eastman v. Linn, 20 Minn. 433 (to quiet title); Vail v. Jones, 31 Ind. 467; but if the cross-demand does not arise out of the transaction which is the foundation of the plaintiff's cause of action, and is not connected with the subject of his action, it cannot be a counterclaim, Town of Venice v. Breed, 65 Barb. 597, 605.

illustration of a demand in favor of the defendant not connected with the subject of the action.

§ 794. The language of the phrase is exceedingly general and vague. To construe it requires a satisfactory interpretation of the terms "subject of the action" and "connected with." It may, I think, be regarded as settled that the connection here spoken of must be direct and immediate. At the same time, it must be considered as something different from "arising out of;" in other words, the defendant's cause of action may be sufficiently connected with the subject of the action," although it do not "arise out of the transaction." It can hardly be said, however, that the courts have definitely settled what is a sufficient connection of itself, when not so complete that the defendant's cause of action could also be said to arise out of the transaction set forth by the plaintiff; unfortunately, in nearly all the cases where the judges have held that the counterclaim was connected with the subject of the action according to the true meaning of the statute, they have also said that it arose out of the transaction stated in the complaint. The most that can be asserted with any degree of assurance is, that the connection must be immediate and direct, and something that the parties can be assumed to have contemplated in their dealings with each other. I shall merely cite in the note a few cases which contain a discussion of the clause, and serve to illustrate and explain its scope and operation.1

C. Counterclaims embraced within the Second Subdivision of the Statutory Definition and Set-offs.

66

§ 795. The form of this provision, as found in the codes which make up the first group, as originally classified at the commencement of this section, is, " 2. In an action arising on contract, any other cause of action also arising on contract, and existing at the commencement of the action." This is substantially the

1 Ashley v. Marshall, 29 N. Y. 494; Vose v. Galpen, 18 Abb. Pr. 96; Xenia Bank v. Lee, 7 Abb. Pr. 372; 2 Bosw. 694; McAdow v. Ross, 53 Mo. 199, 207; Jones v. Moore, 42 Mo. 413; McArthur v. Green Bay, &c. Canal Co., 34 Wisc. 139, 146; Eastman v. Linn, 20 Minn. 433; Walsh v. Hall, 66 N. C. 233, 237; Bitting

v. Thaxton, 72 N. C. 541, 549; Thompson v. Kessel, 30 N. Y. 383, 389; Vilas v. Mason, 25 Wisc. 310, 319; Judah v. Trustees, 16 Ind. 56, 60; Wadley v. Davis, 63 Barb. 500: Waugenheim v. Graham, 39 Cal. 169, 176; Nolle v. Thompson, 3 Metc. (Ky.) 121.

definition of "set-off" given in the codes of the second group. The language of this clause plainly includes all cases of counterclaim based on contract when the plaintiff's cause of action is also on contract. Since, however, the first branch of the definition covers all those instances where the counterclaim and the plaintiff's right of action both spring from the same contract, the discussion of this second subdivision will be confined to the instances in which, the cause of action being on contract, the counterclaim arises from a different contract. For the reasons before given, and which need not therefore be repeated, this construction of the two parts into which the entire definition is divided seems to me to be in conformity with the plain intent of the legislature and the evident design of the statute.

§ 796. In reference to the most important and controlling requisite of this provision and that defining set-off, no questions of difficulty can arise, since the language itself is so simple and direct that no room is left for doubt as to the construction. If the plaintiff's cause of action arises on contract, any counterclaim, legal or equitable, or set-off, also arising on contract, is admissible, provided the general rule heretofore stated is complied with, that the relief granted to the defendant shall in some manner interfere with, lessen, or modify, if not destroy, that otherwise obtained by the plaintiff. This clause greatly enlarges the scope of the former legal "set-off," for it admits demands for unliquidated damages as well as for debts or amounts ascertained and fixed by the stipulations of the parties. It is also much broader in its operation than the "equitable set-off," which was permitted by Courts of Chancery, for affirmative equitable relief may be obtained by the defendant which would come within no description of an "equitable set-off," as the term was formerly understood. So far as relates to the subject-matter, therefore, in all actions to recover money, either debt or damages arising on contract, any counterclaim of debt or damages arising on another contract is valid. When the relief asked for by the plaintiff, or that demanded by the defendant, is equitable, whether the counterclaim is proper must depend upon the nature of these reliefs; that is, upon the fact of their interfering with each other so that one tends to destroy, or at least to modify, the other. While there can be little or no difficulty, therefore, in applying this provision, so far as the subject-matter of the counterclaim is con