established. In an equitable action, a counter-claim consisting of an equitable cause of action, and demanding equitable relief, may be interposed if it possesses all the other elements required by the definition, and may, in many if not most cases, be pleaded by one or more of the defendants less than all against one or more of the plaintiffs. The language of the statute does not confine the use of this affirmative species of defence to legal actions, nor require that it should necessarily be of a legal nature itself. Adapting itself to the character of the action in which it is introduced, in those which are legal it resembles, although much broader and more comprehensive, the former set-off and recoupment, while in those which are equitable it often takes the place of a cross-bill or complaint. In a legal action, also, an equitable counter-claim may be set up and affirmative relief may be granted by its means. As the codes in express terms permit equitable defences in such actions, and as in the self-same provision, and by means of the same language, the statute authorizes the joining of as many defences and counter-claims, whether legal or equitable, or both, as the defendant may have, to deny the possibility of an equitable counter-claim in a legal action, would make it necessary, if any consistency were preserved, to deny also the possibility of an equitable defence. The courts, as may be seen from the citations made below, have, with a few unimportant exceptions, been unwilling to nullify the language, and defeat the design of the legislature in this manner, and following its plain meaning and import, they have freely admitted and sustained the equitable counter-claim in all actions, whether legal or equitable, where that form of relief was appropriate, and was authorized by the descriptive terms of the statute.1

1 Hicksville & C. S. B. R. Co. v. Long Island R. Co., 48 Barb. 355, 360; Fisher v. Moolick, 13 Wis. 321; Sample v. Rowe, 24 Ind. 208; Lombard v. Cowham, 34 Wis. 486, 491, 492, and cases cited, which show that in Wisconsin every equitable defence must be a counter-claim. Vail v. Jones, 31 Ind. 467; Charlton v. Tardy, 28 Ind. 452; Du Pont v. Davis, 35 Wis. 631, 639-641; Spalding v. Alexander, 6 Bush, 160; Jarvis v. Peck, 19 Wis. 74; Grimes v. Duzan, 32 Ind. 361; Woodruff v. Garner, 27 Ind. 4; Eastman v. Linn, 20 Minn. 433; Andrews v. Gillespie, 47 N. Y. 487,

490; Cavalli v. Allen, 57 N. Y. 508, 514. See, per contra, that the counter-claim must always be a legal cause of action, Jones v. Moore, 42 Mo. 413, 419. The following cases furnish additional examples of equitable counter-claims. Lawe v. Hyde, 39 Wis. 345 (no legal counterclaim possible in an action of ejectment); Stowell v. Eldred, 39 id. 614; Perkins v. Port Washington, 37 id. 177; Ingles v. Patterson, 36 id. 373; Glen & Hall Man. Co. v. Hall, 61 N. Y. 226, 236; Cook v. Jenkins, 79 id. 575; Winslow v. Winslow, 52 Ind. 8; Hinkle v. Margerum, 50 id.

§ 641. * 765. Limitation upon Equitable Relief Granted to Defendant: in Actions of Equitable Character; in Actions of Legal Character. Doctrine Maintained by Supreme Court of New York. Illustrative Case. Whether all affirmative equitable relief granted to a defendant must be limited to the cases in which a counter-claim is possible, that is, whether a defendant is unable to set up a case for equitable affirmative relief, and obtain a judgment therefor in his favor against the plaintiff, unless he can bring the facts constituting his cause of action within some one of the species of counter-claim defined by the codes, is another question.1 There

240; McManus v. Smith, 53 id. 211; Gossard v. Ferguson, 54 id. 519; Teague v. Fowler, 56 id. 569; Morrison v. Kramer, 58 id. 38; Tabor v. Mackee, 58 id. 290; Conaway v. Carpenter, 58 id. 477; Jeffersonville, M. & I. R. Co. v. Oyler, 60 id. 383; Hampson v. Fall, 64 id. 382; Schafer v. Schafer, 68 id. 374; Moyle v. Porter, 51 Cal. 639; Whed bee v. Reddick, 79 N. C. 521; Moser v. Cochrane, 13 Daly, 159; Dempsey v. Rhodes, 93 N. C. 120; Boyd v. Beaudin, 54 Wis. 193.

[Stolze v. Torrison (1903), 118 Wis. 315, 95 N. W. 114; Momsen v. Noyes (1900), 105 Wis. 565, 81 N. W. 860; Hotaling ". Tecumseh Nat. Bank (1898), 55 Neb. 5, 75 N. W. 242; Maffett v. Thompson (1898), 32 Ore. 546, 52 Pac. 565; Berthold v. O'Hara (1893), 121 Mo. 88, 25 S. W. 845; Willis v. Barron (1898), 143 Mo. 450, 45 S. W. 289: "It is the settled law of this court that an unsettled partnership account cannot be pleaded as a counter-claim." Salladin v. Mitchell (1894), 42 Neb. 859, 61 N. W. 127; Lahiff ». Hennepin County, etc. Ass'n (1895), 61 Minn. 226, 63 N. W. 493; Vaule v. Miller (1897), 69 Minn. 440, 72 N. W. 452; Smith v. Dickinson (1898), 100 Wis. 574, 76 N. W. 766 meaning of equitable counter-claim.

A debtor of an insolvent bank has an equitable right to set off a claim he holds against the bank against his indebtedness to the bank, whether or not his indebtedness has matured at the time of the bank's insolvency: Mercer v. Dyer (1895), 15 Mont. 317, 39 Pac. 314.

Matthews . Weiler (1893), 57 Ark. 606, 22 S. W. 569: Defendant, in order to "get even "with plaintiff for alleged damages due to plaintiff furnishing a second

hand instead of a new soda-water generator, ordered certain other goods from plaintiff, and then refused to pay for them. Held, that in an action by plaintiff for the price of those goods, defendant could not have an equitable counter-claim for the unliquidated damages connected with the generator, even though the plaintiff was a non-resident and had no property in the State. Equity will not aid fraud.]

1

[Trester v. City of Sheboygan (1894), 87 Wis. 496, 58 N. W. 747; Harden v. Lang (1900), 110 Ga. 392, 36 S. E. 100; Bell v. Ober & Sons Co. (1900), 111 Ga. 668, 36 S. E. 904; Follendore v. Follendore (1896), 99 Ga. 71, 24 S. E. 407; Giles v. Bank of Georgia (1897), 102 Ga. 702, 29 S. E. 600; Daly v. Brennan (1894), 87 Wis. 36, 57 N. W. 963; Richardson v. Doty (1895), 44 Neb. 73, 62 N. W. 254.

See Armstrong v. Mayer (1903), Neb., 95 N. W. 51, from which the following quotation is made: "A considerable portion of the plaintiff's argument in this court is devoted to the proposition that the claims for damages set up by the defendants are not available as counterclaims under sections 100, 101, Code Civ. Proc., and were not maintainable in the present cause for that reason. But we think a defendant in an action is not restricted to the counter-claim provided for in said sections, but, in a proper case, may seek affirmative relief either against the plaintiff or against co-defendants. The code of this State contains no provisions with reference to cross-petitions. Nevertheless, the practice of filing them has long obtained in this jurisdiction, and the right to bring a cross-suit auxiliary to and

are decisions which answer this question in the affirmative, and hold that all such relief must be denied unless the defendant's cause of action is a proper counter-claim. This doctrine was recently maintained by the Supreme Court of New York. An action was brought to restrain the defendant from using a trademark alleged to be the sole property of the plaintiff. The answer asserted that the trademark in question belonged in fact exclusively to the defendant, that the plaintiff had no right to it, but was unlawfully and wrongfully using it, and thereby interfering with and injuring the defendant's business, and concluded by praying for an injunction, an account, and judgment for damages. At the trial, the defendant's allegations were fully sustained by the proofs, and he obtained the judgment demanded. This judgment was reversed on appeal, the court saying: "To entitle the defendant to affirmative relief, the answer must set up a counter

dependent upon the original suit, yet distinct for many purposes, has been recognized, at least, repeatedly."

Peter v. Farrel, etc. Co. (1895), 53 Ohio St. 534, 42 N. E. 690: Sec. 5070, R. S., declaring what an answer shall contain, and sec. 5072, declaring that a counter-claim must be one . . . " in favor of a defendant and against a plaintiff between whom a several judgment might be had in au action," do not abridge the former powers of equity. But taking the code as a whole, in view of its spirit and purpose, and in view of sec. 5071, which provides that "The defendant may set forth in his answer as many grounds of defence, counter-claims, and set-offs as he has, whether they are such as have been heretofore denominated legal or equitable, or both," and "he may claim therein relief touching the matters in question in the petition against the plaintiff or any other defendants in the same action," the court must be held to have the right to grant relief whenever a party shows even a contingent right to property or a fund which is the subject of an equitable action, even though his claim is not one which could be made the subject of a several judgment in his favor against a plaintiff.

Stenberg v. State (1896), 48 Neb. 299, 67 N. W. 190: "The Code of Civil Pro

cedure relating to set-offs authorizes such defences to be interposed before, but not after judgment. A court of equity, where proper grounds exist therefor, may allow a set-off in cases not provided for by statute."

46

The rule is well settled that the insolvency of a party against whose demand a counter-claim is sought to be interposed is a sufficient ground for equitable interference in cases not provided for by statute: "Le Clare v. Thibault (1902), 41 Ore. 601, 69 Pac. 552.

"The system of pleading, consisting of complaint, demurrer, answer, and reply, meets the necessities of all parties, in all cases, and in all courts. The answer setting up new matter constituting a counter-claim, where a defendant seeks affirmative relief against a plaintiff, and the answer setting up facts entitling a defendant to such relief against his co-defendant as the court has jurisdiction to grant under sec. 2883 R. S., take the place of the cross-bill of the old practice. The answer of a defendant, seeking relief of his co-defendant, is in the nature of a cross-bill, but is an answer and a code pleading nevertheless:" Kollock v. Scrib. ner (1897), 98 Wis. 104, 23 N. W. 776. But see Pendleton v. Beyer (1896), 94 Wis. 31, 68 N. W. 415.]

claim.

The claim of defendant for relief is not a counter-claim within the meaning of that term as used in the code. It does not arise out of the transaction set forth in the plaintiff's complaint, nor does it arise on contract."2 The general subject of the affirmative equitable relief which may be obtained by a defendant has been already discussed, and the discussion need not be repeated. Undoubtedly, in the great majority of instances, any equitable affirmative relief properly conferred upon a defendant would fall within some description of a counter-claim; in order that it should not be a counter-claim, it must be a cause of action entirely independent of that set forth by the plaintiff, and not arising from a contract. Under the equity practice and system of pleading which prevailed prior to the codes, the matters which could be set up by a defendant in a cross-bill, as the foundation for affirmative relief to him, must have some connection with the matters originally charged against him by the plaintiff's bill, even if his demand did not directly arise out of such original matters; an entirely distinct and independent cause of action could not be alleged by the defendant in a cross-bill; if he had such a claim, he could only enforce it by a separate suit. The codes do not seem to have, in any express manner, enlarged the scope and operation of the defendant's equitable affirmative relief otherwise than by the provisions relating to the counter-claim. In actions of a legal nature it is very clear that no affirmative relief can be obtained by a defendant, unless his cause of action or demand is a proper counter-claim.

§ 642. * 766. Additional Instances. I shall close this branch of the subject by mentioning some special instances, or actions of a particular character, in which it has been held that a counterclaim is not possible, or that the affirmative relief demanded by the defendant could not be the subject of a counter-claim. In an action for a limited divorce on the ground of cruelty, the defendant's answer, charging adultery by the plaintiff and demand

1 Wright v. Delafield, 25 N. Y. 266; Garvey v. Jarvis, 54 Barb. 179.

2 Glen & Hall Man. Co. v. Hall, 6 Lans. 158, 161, 162. This decision was reversed on appeal, and the counter-claim was sustained as valid. Glen & Hall Manuf. Co. v. Hall, 61 N. Y. 226, 236.

8 Daniell's Chan. Pl. and Prac. 1647; Storey's Eq. Pl. §§ 389, 397.

[Meredith v. Lyon (1902), — Neb. 92 N. W. 122: "A claim not reduced to judgment, for the statutory penalties for failure to release paid chattel mortgages, does not furnish such a cross-demand as can be used for the basis of an equitable action to cancel another mortgage, between the same parties, which has not been paid."]

ing an absolute divorce, is not a proper counter-claim;1 nor, in an action for an absolute divorce because of adultery, is an answer alleging cruelty and praying for a judicial separation. In some States a mechanic's lien is enforced, not by any special proceedings, but by an ordinary equitable suit. An answer in an action for such a purpose, alleging that the premises described in the complaint formed the defendant's "homestead," and were therefore, pursuant to statute, free from all lien or charges in favor of creditors, was held not to be a counter-claim, since it stated no cause of action against the plaintiff, and was, in fact, tantamount to a denial.3

§ 643. *767. Is Counter-Claim Possible in Action to recover Possession of Chattels ? It would seem that, in an action to recover the possession of specific chattels, no counter-claim is possible, unless, perhaps, equitable relief may be awarded under some very exceptional circumstances. A judgment for a return to the de

1 Henry v. Henry, 3 Robt. 614; 17 Abb. Pr. 411.

[But see Woodrick v. Woodrick (1894), 141 N. Y. 457, 36 N. E. 395, from which we quote: "This is an appeal from a judgment of the general term of the second department, affirming a judgment in favor of defendant for an absolute divorce, and from an order denying motion for a new trial. The plaintiff sued for a limited divorce, alleging that the defendant was guilty of cruel and inhuman treatment. The defendant denied the charges of the complaint, and set up by way of counterclaim the adultery of plaintiff, and prayed for a judgment of absolute divorce. The jury found against the plaintiff on her own cause of action, and also on the defendant's counter-claim. It is now insisted on behalf of plaintiff that she was entitled to judgment of separation on the evidence; that the finding of the jury that she committed adultery is unsupported by evidence; and that there were errors of law on the trial that must lead to a reversal of the judgment. In view of the very. serious consequences to the plaintiff fol lowing the affirmance of the judgment and the insistence of her counsel that finding her guilty of adultery was legal error, we have looked into the facts of this case with great care, and are unable to say that either of the findings of the jury is un

supported by evidence. This case was properly submitted to the jury and their verdict is conclusive on the questions of fact." The judgment was affirmed.]

2 Diddell v. Diddell, 3 Abb. Pr. 167; Griffin v. Griffin, 23 How. Pr. 183; Terhune v. Terhune, 40 How. Pr. 258; but see Armstrong v. Armstrong, 27 Ind. 186; McNamara . McNamara, 9 Abb. Pr. 18, in which such relief was granted to the defendants.

140.

3 Englebrecht v. Rickert, 14 Minn.

4 [Phipps v. Wilson (1899), 125 N. C. 106, 34 S. E. 227; Minneapolis Threshing Co. v. Darnall (1900), 13 S. D. 279, 83 N. W. 266; Davis v. Culver (1899), 58 Neb. 265, 78 N. W. 504; Palmer v. Palmer (1894), 90 Ia. 17, 57 N. W. 645; Banning v. Marleau (1894), 101 Cal. 238, 35 Pac. 772; Rennebaum v. Atkinson (1898), 103 Ky. 555, 45 S. W. 874; Collins v. Morrison (1895), 91 Wis. 324, 64 N. W. 1000. See also § *791, and cases cited.

Aultman Co. v. McDonough (1901), 110 Wis. 263, 85 N. W. 980: In an action of replevin brought by a non-resident mortgagee to recover possession of machinery sold to defendant and mortgaged to secure the purchase price, the defendant may counter-claim damages for breach of warranty of the goods sold, and