the States but one or two, the plaintiff must reply to a counterclaim, or its averments of fact are admitted to be true.1 He ought such, and be so denominated, and the answer shall contain a demand of the judgment to which the defendant supposes himself to be entitled by reason of the counter-claims therein." The plaintiff waives the defect that the counter-claim is not so designated by demurring or replying to it as a counter-claim, even though the objection is raised on the trial: Voechting v. Grau, 55 Wis. 312. [Township of Noble v. Aasen (1898), 8 N. D. 77, 76 N. W. 990: Failure to demur to an alleged counter-claim on the ground that the facts stated do not constitute a counter-claim, waives this objection, and the only point then open to the plaintiff, which can be raised at any time, is that the facts stated in the answer do not constitute a cause of action in favor of defendant that could be enforced against plaintiff under any circumstances. See also First Nat. Bank v. Laughlin (1894), 4 N. D. 391, 61 N. W. 473; Talty v. Torling (1900), 79 Minn. 386, 82 N. W. 632; Campbell v. Jones (1878), 25 Minn. 157; Lace v. Fixen (1888), 39 Minn. 46, 38 N. W. 762; Walker v. Johnson (1881), 28 Minn. 147, 9 N. W. 632. Young v. Gaut (1901), 69 Ark. 114, 61 S. W. 372: Where a defendant sets up a counter-claim to which plaintiff makes no reply, if defendant does not move for judgment on the counter-claim the reply will be deemed to have been waived and the issues treated as made. Lacey v. Lacey (1893), 95 Ky. 110, 23 S. W. 673: The objection that the wife's answer, in a suit for divorce, seeking alimony was not styled a "counter-claim " was waived by the plaintiff's replying and joining issue on the matter set up therein. See also Warren v. Chandler (1896), 98 Ia. 237, 67 N. W. 242.] 1 [Sloan v. Rose (1899), 101 Wis. 523, 77 N. W. 895; City of Huron v. Meyers (1900), 13 S. D. 420, 83 N. W. 553; Ravicz v. Nickells (1900), 9 N. D. 536, 84 N. W. 353. Illsly v. Grayson (1898), 105 Ia. 685, 75 N. W. 518. Action to recover rent, aided by attachment. Defendant pleaded a counter-claim for work and labor, etc. To this plaintiff filed a reply consisting of a set-off for a balance due him upon a note executed by defendant, etc. The court, after quoting the sections of the code bearing on the matter, said: "It will be observed that while they do not mention either set-off or counter-claim in referring to the reply, yet they do recog nize that defences, either negative or affirmative, may be pleaded, provided the matter pleaded be not inconsistent with the petition. Plaintiff could not join the matters pleaded in reply with his action for rent; for the statute says the landlord's lien may be effected (that is, enforced) by action for the rent alone within a limited time. Defendant had the undoubted right to plead his counter-claim; but, if no set-off is allowed by way of reply, he may thus, after litigation ensues, apply any unsettled items of account to his obligation for rent, although he may at the same time be owing his landlord a much larger sum on general account. It may be that such a reply would not be proper in a case where the items included therein could have been embraced in the petition. But where the statute expressly inhibits such a course, it certainly must be true that plaintiff may interpose in his reply, as a matter of defence, any set-off he may have to defendant's counter-claim. . . The cases of Cox v. Jordan, 86 Ill. 560; Galligan v. Fannan, 9 Allen, 192; Mortland v. Holton, 44 Mo. 58; Miller v. Losee, 9 How. Pr. 356; Turner v. Simpson, 12 Ind. 413; Blount v. Rick, 107 Ind. 238; and Starke v. Dicks, 2 Ind. App. 125, - seem to sustain the right to plead in reply a set-off to defendant's counter-claim, provided there is no departure from the antecedent ground of complaint." Dunham v. Travis (1902), 25 Utah, 65, 69 Pac. 468: In an action on a written contract, the answer, after denying the allegations of the complaint, alleged that a mutual mistake had been made in the contract, and prayed to have it corrected, to which no reply was filed. Held, that this constituted a counter-claim and not merely matter in defence, and the counterclaim was admitted by failure to reply. Ashland Land & Live Stock Co. v. not to be subjected to this penalty unless he is told in the most express terms that the pleading is a counter-claim. It would have been better if the courts had laid down the most explicit rule, and had required the defendant to name his pleading: but the cases do not go to this length; and a prayer for relief, appended to the proper allegations of fact, will supply the place of a name. It has been held that when the defendant has set up facts which really constitute a defence, but has mistakenly called them a counter-claim, formally pleading them as such, he must stand by the designation, and cannot treat them as a defence, and have the benefit of them as a bar to the plaintiff's recovery. This ruling, however, is without any cogent reason in its favor, would often work injustice, and seems opposed to some of the cases already quoted.2 Woodford (1897), 50 Neb. 118, 69 N. W. 769: "Where to a counter-claim well pleaded the plaintiff interposes no reply, a verdict in his favor in excess of the amount claimed in his petition, less the amount of such counter-claim, should be set aside as unsupported by the pleading: " Medland v. Walker (1895), 96 Ia. 175, 64 N. W. 797 Failure to plead to a counterclaim does not have the effect of admitting its allegations where every fact pleaded in the counter-claim is put in issue by the allegations of the petition and the amended and substituted answer. Bank of Columbia v. Gadsden (1899), 56 S. C. 313, 33 S. E. 575: Where a plea of set-off is purely defensive, going merely to defeat plaintiff's recovery, and not authorizing any affirmative relief against the plaintiff, the plaintiff is not bound to reply to it, as required in case of a counter-claim, but may on the trial plead the statute of limitations ore tenus, under section 189, providing that new matter in the answer not relating to a counter-claim "is to be deemed controverted by the adverse party as upon a direct denial or avoidance, as the case may require." Replying set-off to set-off: Small v. Kennedy (1893), 137 Ind. 299, 33 N. E. 674: "It has often been held by this court that a plaintiff may reply a set-off to a set-off, and upon the same principle there is no reason why he may not reply a counter-claim to a counter-claim." Per contra: Hammer v. Downing (1901), 39 Ore. 504, 64 Pac. 651: A reply of a set-off to a plea of set-off is bad, and constitutes a departure in pleading.] 1 Ferreira v. De Pew, 4 Abb. Pr. 131 (Sp. Term), per Brady J.; Campbell v. Rontt, 42 Ind. 410, 415. See also McAbee v. Randall, 41 Cal. 136, where the defendant, having named his answer a counterclaim," was not permitted to treat it as a "cross-complaint." 2 See De Leyer v. Michaels, 5 Abb. Pr. 203. [Dismissal of Action as Affecting CounterClaim: Judd v. Gray (1900), 156 Ind. 278, 59 N. E. 849; Adams v. Osgood (1898), 55 Neb. 766, 76 N. W. 446; Rodgers v. Parker (1902), 136 Cal. 313, 68 Pac. 975; Islais, etc. Water Co. v. Allen (1901), 132 Cal. 432, 64 Pac. 713; Southern Pac. R. R. Co. v. Pixley (1894), 103 Cal. 118, 37 Pac. 194; Maffett v. Thompson (1898), 32 Ore. 546, 52 Pac. 565; Bardes v. Hutchinson (1901), 113 Ia. 610, 85 N. W. 797; Rumbough v. Young (1896), 119 N. C. 567, 26 S. E. 143; Axiom Min. Co. v. Little (1894), 6 S. D. 438, 61 N. W. 441 ; Washington Nat. Bank v. Saunders (1901), 24 Wash. 321, 61 Pac. 546. II. The Parties in their Relations with the Counter-Claim. § 625. *749. 1. Relations of Defendant to Counter-Claim. Must be a Demand in Favor of Defendant who pleads it. Test. In all the States whose codes do not contain a provision in favor of sureties or joint-debtors, the rule is established without exception that the counter-claim must be a demand existing in favor of the defendant who pleads it; in other words, the defendant cannot set up and maintain as a valid counter-claim a right of action subsisting in favor of another person, even though there may be close legal relations between himself and such other person. The sure test is very simple. Could the defendant have maintained an independent action upon the demand if he had made it the basis of a separate suit? If he could not, then he cannot use it as a counter-claim. To this proposition there is no judicial dissent nor exception; and the cases which I shall cite are intended to illustrate the various circumstances in which the rule has been applied.1 Relief in Equity. The most § 626.750. Case of Surety. common case is that of a surety. with the principal debtor, he cannot interpose as a valid counter (1898), 123 N. C. 51, 31 S. E. 288; Haygood v. Boney (1894), 43 S. C. 63, 20 S. E. 803; Bunch v. Potts (1893), 57 Ark. 257, 21 S. W. 437.] 1 [Northern Trust Co. v. Hiltgen (1895), 62 Minn. 361, 64 N. W. 909; Taylor v. Matteson (1893), 86 Wis. 113, 56 N. W. 829; Emerson v. Schwindt (1900), 108 Wis. 167, 84 N. W. 186; Sullivan v. Nicoulin (1901), 113 Ia. 76, 84 N. W. 978; Lebanon Steam Laundry v. Dyckman (1900), Ky., 57 S. W. 227. Newton v. Lee (1893), 139 N. Y. 332, 34 N. E. 905: "In an action to recover for goods alleged to have been sold and delivered to defendants, the latter, after a general denial, set up in their answer for a further and separate answer and defence that the transactions set forth in the complaint were between the plaintiff's assignor and a corporation, under a written contract between vendor and vendee; that the vendor failed to perform its contract, by means whereof the vendee was damaged in a manner set forth; that defendants became privy to the contract' by guaranteeing performance on the part of the vendee. Said damages defendants claimed they were entitled to recoup and set off as a counter-claim against the pretended cause of action set forth in the complaint.' Held, that the second defence, assuming the facts therein stated to be true, had no relation to the cause of 'action set forth in the complaint;' that it set up new matter' within the meaning of the provision of the Code of Civil Procedure authorizing a demurrer to a counter-claim; and so, that an order overruling a demurrer thereto was error. It seems, that if defendants had been sued as guarantors or sureties, they could not have availed themselves, in exoneration of their liability, of a cause of action for damages for breach of the contract with their principal." Computing Scale Co. v. Churchill (1901), 109 Wis. 303, 85 N. W. 337: 'A counter-claim must be one existing in favor of a defendant and against a plaintiff between whom a several judgment might be had in the action, and arising out of one of the causes of action mentioned in the statute."] claim any cause of action existing in favor of that principal, not even one arising from a breach by the plaintiff of the very contract in suit. There are instances in which equity will undoubtedly relieve the surety when the principal debtor is insolvent, and holds valid claims against the plaintiff which he might assert; but such equitable relief would not be in the form of a counter-claim it would be defensive merely, and would not include any recovery against the plaintiff by the surety. If the principal debtor and the surety are sued together, and the former interposes the counter-claim existing in his own favor and succeeds on it, the result, of course, operates as a defence in aid of the surety: the plaintiff's demand being partly or wholly extin 1 Gillespie v. Torrance, 25 N. Y. 306, 308, 310, per Selden J.; s. c. 4 Bosw. 36; 7 Abb. Pr. 462; La Farge v. Halsey, Bosw. 171, 4 Abb. Pr. 397; People v. Brandreth, 3 Abb. Pr. N. s. 224 (Ct. of App.), per Hunt and Porter JJ.; East River Bank v. Rogers, 7 Bosw. 493; Lasher v. Williamson, 55 N. Y. 619; O'Blenis v. Karing, 57 N. Y. 649; Gillespie v. Torrance was an action against an indorser of a note. He alleged, as a counter-claim, that he indorsed for the accommodation of Van P., the maker; that the note was given for the price of timber sold by the plaintiff to Van P.; that plaintiff warranted the quality of the timber to the buyer, a breach of this warranty, and consequent damages to Van P., for which defendant demanded judgment. This attempted counter-claim was rejected for the reasons stated in the text. The opinion of Selden J. is very elaborate and instructive. While holding that the surety has no legal counter-claim nor setoff, Mr. Justice Selden is of opinion that he would be relieved in equity if the principal debtor was insolvent. This equitable relief, however, would not be in the shape of a recovery against the plaintiff. In La Farge v. Halsey, the defendants were sureties for the lessee on a lease, and were sued for rent in arrear. They set up, as a counter-claim, damages sustained by the lessee from a breach by the plaintiff of an agreement made between himself and the tenant. This was overruled, because the right of action was in the lessee alone. East River Bank v. Rogers was the ordinary case of a guarantor sued for the debt secured. He pleaded, as a counter-claim, a debt due from the plaintiff to his principal, and it was struck out as frivolous. As to counter-claim in favor of a surety, see also Morgan v. Smith, 7 Hun, 244, citing Lewis v. McMillan, 41 Barb. 420; Smith v. Felton, 43 N. Y. 419, and Gillespie v. Torrance, supra; Davis v. Toulmin, 77 N. Y. 280; Scott v. Timberlake, 83 N. C. 382; Coffin v. McLean, 80 N. Y. 560; Harris v. Rivers, 53 Ind. 216; Stockton Sav. & L. Soc. v. Giddings, 96 Cal. 84; Thalheimer v. Crow, 13 Col. 397. [Bishop v. Mathews (1899), 109 Ga. 790, 35 S. E. 161: A defendant in an action brought against him individually upon a demand for the payment of which he is individually liable, cannot, without showing some equitable reason for being allowed so to do, such as the insolvency of the plaintiff, set off against the plaintiff's claim a debt due by the latter to a partnership of which the defendant is or had been a member. Crowley v. U. S. Fidelity & Guaranty Co. (1902), 29 Wash. 268, 69 Pac. 784: "In an action against the surety upon a building contractor's bond to recover the amount of unpaid bills for material the owner was compelled to pay, the defendant is entitled to offset the value of extra work performed by the contractor, and for this purpose may introduce evidence showing that there was a dispute between the owner and contractor as to the reasonable value of such extras, etc."] guished, the surety would necessarily obtain the benefit of such extinction.1 2 § 627. *751. Rule not Confined to Sureties. Other Instances. The rule is not confined to sureties. It requires, in general, the only exception being the case where a separate judgment is possible, that the counter-claim should exist in favor of all the defendants, and that all the persons in whose favor it exists should be defendants in the action, and that it should be pleaded in their common behalf. Thus, where one is sued, a demand in favor of himself and a former partner not a party to the suit is inadmissible as a counter-claim; and, conversely, in an action. against partners upon a firm liability, a counter-claim interposed by one of them, alleging a demand for damages accruing to him individually from the breach of a separate contract between himself and the plaintiff, must be rejected, because it is not in favor of all the defendants who are thus jointly sued.3 A person sued in a representative capacity-for example, as a receiver to recover trust-funds in his hands, or to enforce the performance of his fiduciary duty, cannot avail himself, by way of counter-claim, of a demand due to himself in his personal and private capacity; 1 O'Blenis v. Karing, 57 N. Y. 649; Springer. Dwyer, 50 N. Y. 19; Green v. Conrad (Mo. Supreme, 1893), 21 S. W. Rep. 839; Becker v. Northway, 44 Minn. 61. Where the principal debtor and the plaintiff are insolvent, the surety, who is jointly bound with his principal, may set off his individual claim against the plaintiff, notwithstanding the statutory provision that the "counter-claim must be one existing in favor of a defendant and against a plaintiff between whom a several judgment might be had in the action." Clark v. Sullivan, 2 N. Dak. 103. 2 Campbell v. Genet, 2 Hilton, 290. See Bird v. McCoy, 22 Iowa, 549, -a peculiar case in which parties were held included as defendants in the firm name against which the action was brought. See also, as to suits against partners and other joint debtors, Weil v. Jones, 70 Mo. 560; Great West. Ins. Co. v. Pierce, 1 Wyo. Ter. 45; Wilson v. Runkel, 38 Wis. 526; Harris v. Rivers, 53 Ind. 216; and cases cited post, in notes to §§ *758, * 759. 8 Peabody v. Bloomer, 5 Duer, 678, 6 Duer, 53, 3 Abb. Pr. 353, per Woodruff J.: "To an action against several joint debtors for a debt due by them as partners, one of them cannot avail himself, either by way of set-off or counter-claim, of such a defence." See this case, and especially the opinion of Hoffman, J. at Special Term on the subject of joint liability. See also Wilson v. Runkel, 38 Wis. 526. [Sullivan v. Nicoulin (1901), 113 Ia. 76, 84 N. W. 978; Brown v. Fresno Raisin Co. (1894), 101 Cal. 222, 35 Pac. 639; Baxter . Sherman (1898), 73 Minn. 434, 76 N. W. 211; McKinnon v. Palen (1895), 62 Minn. 188, 64 N. W. 387; Pope Mfg. Co. v. Cycle Co. (1899), 55 S. C. 528, 33 S. E. 787; Smith v. Diamond (1893), 86 Wis. 359, 56 N. W. 922.] 4 Johnson v. Gunter, 6 Bush, 534; Re Jones (Supreme, 1888), 1 N. Y. Suppl. 127. [Wilkinson v. Bertock (1900), 111 Ga. 187, 36 S. E. 623; Carter v. Tippins (1901), 113 Ga. 636, 38 S. E. 946; Bishop v. Mathews (1899), 109 Ga. 790, 35 S. E. |