ments and features, which, depending upon the particular terms of the statutes, demand a more critical examination.

§ 611. 735. One Class of Cases Included in Term "Set-off'

under Former Procedure not Included in Counter-Claim. Mere Defence not a Counter-Claim. There are certain conclusions which are evident upon the mere reading of the statute. Under the former procedure, the term "set-off" included two quite distinct classes of cases: namely, (1) those in which the defendant might recover an affirmative judgment for a "debt" against the plaintiff; and (2) those in which the demand in his favor could only be used defensively to diminish, or perhaps defeat, the recovery by the plaintiff. The codes provide for both these classes of cases. Those sections which permit the action to be brought by an assignee of a thing in action, and allow under certain circumstances the same matters to be interposed as a defence against him which would have been available against the assignor, and those sections which permit the action to be brought by a trustee of an express trust, and allow the same matters to be set up as a defence against him which would have been available against the party beneficially interested, these sections plainly embrace the second class of "set-offs" above mentioned; namely, those in which the demand could be used as a defence, but not as the basis of an affirmative recovery against the plaintiff. On the other hand, these cases are not included within the description given of a counter-claim.1 A defence, even though it consists of a claim for relief against some person, but does not permit a recovery against the plaintiff, is not a counter-claim. The first class of "set-offs" above mentioned is embraced within the definition of the counter-claim as given by those codes which constitute the first group according to the division made in a former paragraph.2 In the codes which constitute the second group, the same class of "set-offs" is substantially described under the original name which belonged to that species of answer in the old procedure.3

§ 612. * 736. Recoupment a Species of Counter-Claim. How Modified and Enlarged. The "recoupment of damages" has undergone a most important modification. It is confessedly covered

1 [Piedmont Bank v. Wilson (1899), 124 N. C. 561, 32 S. E. 889; Lindsay, etc. Co. v. Carpenter (1894), 90 Ia. 529, 58 N. W. 900.]

2 See §*726.

8 [St. Louis Nat. Bank v. Gay (1894), 101 Cal. 286, 35 Pac. 876.]

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by the definition of counter-claim given in all the codes without exception. In those forming the two principal groups according to the classification heretofore made, it is described by the express language, "a cause of action arising out of the contract set forth in the complaint as the foundation of the plaintiff's claim;" in that of Indiana it is described by the language, any matter arising out of or connected with the cause of action which might be the subject of an action in favor of the defendant, or which would tend to reduce the plaintiff's claim or demand for damages;" and in that of Iowa by the language, “a cause of action in favor of the defendants, or some of them, against the plaintiffs, or some of them, arising out of the contract set forth in the petition." It is beyond dispute, then, that the recoupment of damages, as the same was authorized by the courts under the old practice, is made a species of counter-claim by all the codes. But its effects have been greatly enlarged. As it has been transferred into a counter-claim, it partakes of all the essential features conferred upon that kind of defence by the statute. For this reason, the defendant, who would formerly have set up the facts in recoupment of damages, and who now pleads the same facts as a species of counter-claim, may upon the basis of those facts obtain a judgment for damages in his favor against the plaintiff, if the proofs upon the trial warrant such a result.

ן

§ 613. * 737. Counter-Claim Broader than Set-off and Recoupment. Kinds of Causes of Action that may be interposed as Counter-Claims. The two classes of affirmative relief mentioned in the foregoing paragraphs, important as they are, do not exhaust the scope and efficacy of the counter-claim. The causes of action which were the basis of a "recoupment of damages or of a "set-off," as those terms were legally defined, all necessarily arose from a breach of contract. The language employed by the codes speaks of causes of action as constituting a counterclaim, which do not arise out of contract. It mentions three alternatives, causes of action (1) arising out of the contract set forth in the complaint, or (2) arising out of the transaction set forth in the complaint, or (3) connected with the subject of the action. Unless we would accuse the legislature of the most absurd and misleading tautology, this language was intended to

1 See p. 697, ante, where statutes are given in full.

affirm that there may be counter-claims which do not arise out of contract. Arising out of the "transaction," and "connected with the subject of the action," are placed in opposition to "arising out of contract." As "recoupment of damages" and "setoff" must be based upon the non-performance of a contract, it follows that the counter-claim was designed to include other demands to which neither of these two terms can apply. What are these other demands? I do not now attempt to answer this question in detail: it is enough to point out the general nature of all such possible cases. If causes of action are for the recovery of money only, they must either be upon contract or for a tort. Is there any possible cause of action upon contract, which is neither a "set-off" nor a "recoupment of damages," and which may be embraced within the definition of a counter-claim? There is: a cause of action for the breach of a contract other than the one sued upon, when the demand is for damages merely, to be assessed by the jury, and not for a debt, is neither a "set-off " recoupment," and yet is plainly described by the second subdivision of the definition found in all the codes which form the first group, and by the definition of "set-off" found in all those which make up the second group. As the word "trans

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action" seems to imply causes of action not necessarily upon contract, those arising from tort may perhaps, under proper circumstances, be the subject of counter-claim; but the discussion of this particular question will be deferred to a subsequent part of this section. I will now sum up the possible cases, or classes of cases, which may be included within the broad definition of the counter-claim as given in the codes of the first group: if we pass to the second group, certain of these classes would fall within the term "set-off" rather than counter-claim. Of the causes of action which terminate in a recovery of money alone, the counter-claim expressly embraces (1) the matters which under the former procedure gave rise to a recoupment of damages; (2) the cases of "set-off" in which a judgment for debt against the plaintiff was possible; (3) demands to recover unliquidated damages for the breach of a contract not the foundation of the plaintiff's suit, and possibly (4) demands to recover damages for torts, if the same arose out of the "transaction" set forth in the complaint or petition, or are connected with the subject of the action. These exhaust all the possible instances of a

mere pecuniary recovery. Counter-claim may also embrace cases of an equitable nature in which affirmative relief is granted to the defendant. Such cases are as plainly described by the general language of the codes as those of a purely legal character which seek only a pecuniary judgment. In order to shut out these claims for equitable relief, and to limit the counter-claim to causes of action for the recovery of money, the terms of the statute must be read with restrictions interpolated into their midst which were not placed there by the legislature. Were it not that the ancient set-off and recoupment could only be used in legal actions brought to recover money, no judge would have thought that a like limitation must be put upon the language of the codes. How far the counter-claim includes equitable relief will be fully discussed in the sequel. Finally, the only other cases which could possibly come within the definition of counter-claim are legal causes of action to recover possession of lands, or to recover possession of chattels.

*

§ 614. 738. Essential Elements and Test of Counter-Claim. Must be a Cause of Action. Having thus enumerated the different kinds of causes of action and of relief which may be used by the defendant as counter-claims, I shall proceed to point out some essential features and elements which must exist in each of these cases; that is, some essential elements which enter into the very notion of the counter-claim. (1) It must be a cause of action. In other words, the facts must be such that they would constitute the entire matter proper and necessary to be set forth in the complaint or petition, if the defendant had chosen to insti

1 [Kollock v. Scribner (1897), 98 Wis. Helmer v. Yetzer (1894), 92 Ia. 627, 61 104, 73 N. W. 776.]

(1903), - Neb. -,

2 [Richards v. Am. Desk & Seating Co. (1894), 87 Wis. 503, 58 N. W. 787; Union Mercantile Co. v. Jacobs (1897), 20 Mont. 270, 50 Pac. 793; Waller v. Deranleau 94 N. W. 1038; Babcock v. Maxwell (1898), 21 Mont. 507, 54 Pac. 943; Askew v. Koonce (1896), 118 N. C. 526, 24 S. E. 218; Stotsenburg v. Fordice (1895), 142 Ind. 490, 41 N. E. 313; Nicholls v. Hill (1894), 42 S. C. 28, 19 S. E. 1017; Tron v. Yohn (1896), 145 Ind. 272, 43 N. E. 437; Harris v. Randolph County Bank (1901), 157 Ind. 120, 60 N. E. 1025; Lindsay, etc. Co. v. Carpenter (1894), 90 Ia. 529, 58 N. W. 900;

N. W. 206; Bardes v. Hutchinson (1901), 113 Ia. 610, 85 N. W. 797; Rumbough v. Young (1896), 119 N. C. 567, 26 S. E. 143; Kahrs v. Kahrs (1902), 115 Ga. 288, 41 S. E. 649; Gulliver v. Fowler (1894), 64 Conn. 556, 30 Atl. 852; Rhea v. Bagley (1899), 66 Ark. 93, 49 S. W. 492; Gurske v. Kelpin (1901), 61 Neb. 517, 85 N. W. 557; Lacey v. Lacey (1893), 95 Ky. 110, 23 S. W. 673; Arthurs v. Thompson (1895), 97 Ky. 218, 30 S. W. 628; Farrell v. Burbank (1894), 57 Minn. 395, 59 N. W. 485; White v. Blitch (1900), 112 Ga. 775, 38 S. E. 80; Center Creek Water Co. v. Lindsay (1900), 21 Utah, 192, 60 Pac. 559.]

tute an independent action between himself as plaintiff and the plaintiff as defendant. When a counter-claim is pleaded, the defendant becomes, as far as respects the matters alleged therein, an actor: there are substantially two simultaneous actions pending between the same parties, each of whom is at the same time a plaintiff and a defendant. Since the counter-claim states a cause of action, it is to be governed and judged by the rules which apply to the complaint or petition: 2 the facts alleged must be sufficient to constitute the cause of action, and the relief to which the defendant is entitled should be properly demanded. In short, the pleader should, for the time being, regard himself as acting for a plaintiff, and as drawing a complaint or petition. This rule is so simple and so plain, that it seems almost impossible to mistake it; and yet the books of reports are full of cases in which facts have been set up as counter-claims, which, if admitted to be true, would not have entitled the party pleading them to any relief. The test thus suggested is of universal application. Would the facts averred taken by themselves, if admitted, entitle the defendant to a

1 ["An answer setting up a counterclaim must contain the substantial requisites of a complaint, and allege facts which legally entitle the defendant to recover in a suit instituted by him for that purpose against the plaintiff; and, if his pleading omits any allegation that would be necessary to state a cause of suit, it will be vulnerable to a demurrer interposed on that ground:" Le Clare v. Thibault (1902), 41 Ore. 601, 69 Pac. 552. "A counter-claim must, to be good, contain every allegation which would be needed in a complaint founded on the same cause of action: " Daggs v. Phoenix Nat. Bank (1898), Ariz., 53 Pac. 201.

"To constitute a counter-claim, the facts stated must amount to an independent cause of action; when they merely serve to defeat plaintiff's cause of action, they amount to a defence, not a counterclaim: " Walker v. Ins. Co. (1894), 143 N. Y. 167, 38 N. E. 106. "A counterclaim, as our decisions affirm, is not a defence to a plaintiff's action, but it is a cross-action by the defendant; and it must state facts sufficient in law to constitute a cause of action; otherwise it will be held

bad on demurrer:" Indiana, etc. Ass'n v. Crawley (1898), 151 Ind. 413, 51 N. E.

466.

A counter-claim is an action, and to be properly pleaded it must be set forth with all the allegations necessary to uphold an original petition founded on the same cause of action:" Prichard's Executrix v. Peace (1895), 98 Ky. 99, 32 S. W. 296. "An answer is a statement of defence. It is not its office to demand affirmative relief, unless upon a counter-claim; nor can it properly be made to take the place of a motion to cite in new parties. So far as used for such purposes it may be disregarded by the trial court: Russell v. Easterbrook (1898), 71 Conn. 50, 40 Atl. 905.

A counter-claim which charges fraud and misconduct in general terms, without specifying particular acts, does not state a cause of action: Alden v. Christianson (1901), 83 Minn. 21, 85 N. W. 824.]

2 It is within the discretion of the court to allow him to amend his pleading by adding another count: Venable v. Dutch, 37 Kan. 515.