favor of the defendant may arise out of a tort to property committed by the plaintiff in the course of the "business or "negotiation" or "conduct of affairs," such as a claim for the taking or conversion of goods, or for a trespass to or wrongful detention of land. Indeed, the difficulty in conceiving of distinct torts arising from one and the same "transaction" is confined almost entirely to the cases of torts to the person. It may be noticed that most of the decisions already cited, in which the possibility of distinct torts having such a common legal origin is denied, directly relate to personal wrongs alone; and the reasoning of the courts is extended from them to all torts, without any discrimination between their different classes, and the different rules which may govern them.1

§ 646.770. Case of Scheunert v. Kaehler. Criticism. The cases thus far cited have all been decided by courts of New York; I shall now quote a few which have arisen in other States. A complaint alleged that the plaintiff delivered certain flour to the defendant to be sold on commission, but that the latter had converted the same, or the proceeds thereof, to his own use, and prayed judgment for its value as damages. The answer set up the following facts as a counter-claim: that defendant had leased a flouring-mill to the plaintiff, who covenanted in the lease that he would furnish to defendant constant employment during the continuance of the term for two teams in drawing flour to Milwaukee at a stipulated sum for each load, and further covenanted that all the flour sent from the mill should be delivered to the defendant at Milwaukee, to be sold by him on commission, in pursuance of which agreement the flour mentioned in the complaint was in fact delivered; that the plaintiff had neglected and refused to perform both of his said covenants, by reason of which the defendant had sustained damages to a specified amount, and judgment was demanded for such sum. A demurrer was interposed to this counter-claim, and was sustained by the Supreme Court of Wisconsin.2 This opinion, quoted at large in the note,

1 [Blue v. Capital Nat. Bank (1896), 145 Ind. 518, 43 N. E. 655; Watts v. Gantt (1899), 42 Neb. 869, 61 N. W. 104; Sheibley v. Dixon County (1901), 61 Neb. 409, 85 N. W. 399.]

2 Scheunert v. Kaehler, 23 Wis. 523, per Dixon C.J.: "Assuming that a coun

ter-claim may be pleaded to an action of tort, a question not necessary to be decided, - and assuming also that no objec tion exists, because the contract for the breach of which the defendant claims damages is not set forth in the complaint, but that the counter-claim would be ad

necessarily leads to the conclusion that when the plaintiff has an election to adopt one or the other of two forms of remedy, one on the contract for the breach thereof, and the other in tort for a

conversion, and the like, the ability of the defendant to plead a counter-claim depends upon the kind of action selected; in other words, the propriety of the counter-claim does not depend upon the actual facts out of which the plaintiff's remedial rights arise, but upon the mere nature of the remedy which he elects to enforce, and of the means which he employs for such enforcement. The result would be, that by changing the kind of action the plaintiff may cut off a counter-claim otherwise admissible. In my opinion, it was not the intention of the legislature, in adopting the reformed procedure, that the essential rights of defendants should be made to rest in this manner upon the form of remedy chosen by the plaintiffs.

§ 647. *771. Cases in Indiana and Kentucky.

Discussion of

the Meaning of the Phrases “Arising out of," "Connected with," and "Transaction in these Cases. In a case already quoted under a former head, an action brought to set aside a deed of lands on account of the defendant's fraud, to which a counter-claim was pleaded denying the fraud, alleging the validity of the conveyance, the plaintiff's continued possession of the land and pernancy of the rents and profits, and praying a judgment awarding possession, quieting title, and giving damages, the Supreme Court of Indiana sustained the answer, and granted the relief demanded by the defendant.1 The same court has discussed the legal meaning of the phrases "arising out of" and "connected with," and has arrived at one general principle, at least, which may aid in

1 Woodruff v. Garner, 27 Ind. 4, per Frazer J.: "The plaintiff's cause of action is the alleged fraud of the defendant in procuring the deed sought to be rescinded. The defendant's cause of action averred in the counter-claim does not arise out of the plaintiff's cause of action, for it cannot even exist consistently with it. If the fraud alleged by the plaintiff was perpetrated, then the defendant cannot have any right of action whatever. So the defendant found it necessary to deny the fraud. But the deed sought to be set aside constitutes part of the transaction upon which the plaintiff and the defendant both rely for a recovery. It is the link which forms the direct connection between the two diverse causes of action. So the counter-claim for possession is connected with the cause of action of

the plaintiff directly, and is therefore authorized by the statute." The "transaction" set forth in the complaint was not simply the alleged fraud: it was the entire business or matter of agreeing to sell and purchase the land, and of executing and delivering the deed in pursuance of such agreement. The plaintiff averred that the defendant was guilty of fraud; and such fraud was therefore a part of the transaction, according to the plaintiff's version. The defendant's cause of action arose out of the same transaction, in fact it was the entire transaction, except the element of fraud, which he asserted did not exist. No plainer illustration of a cause of action arising out of the transaction which was also the foundation of the plaintiff's claim could be imagined.

manner.

determining their application to all particular cases. The action was to recover money deposited with the defendant who had refused to deliver it when demanded. The defendant pleaded by way of counter-claim that the plaintiff had falsely charged him with stealing the money deposited, and had slandered him by uttering such charge in the presence of others, and prayed judgment for damages. In sustaining a demurrer to this answer the court suggested a rule of construction which may be followed in all cases. The High Court of Appeals in Kentucky has construed the phrases "arising out of the transaction" and "connected with the subject of the action" in a very liberal and broad An action was brought on an injunction bond given by T. and sureties. The plaintiff had originally commenced proceedings to obtain possession of a farm in the occupancy of T. T. had thereupon brought an equitable suit to restrain these proceedings, had obtained a preliminary injunction, and had given the bond in question. The suit being dismissed, this action was brought on the bond, the plaintiff therein claiming damages for being kept out of possession of the farm by means of the injunction during the continuance of the suit. The defendant T. pleaded a counter-claim, alleging that notwithstanding the injunction, and before it was dissolved, the plaintiff the defendant in the injunction suit wrongfully took possession of the land and seized the crops thereon, and converted the same to his own use, and demanding judgment for the damages thus caused. At the trial the defendant had a verdict which was sustained on appeal.2

1 Conner v. Winton, 7 Ind. 523. "The question is, What is the legal effect of the words arising out of' or 'connected with? Do they refer to those matters which have an immediate connection with the transaction? or do they include also those which have a remote relation with it by a chain of circumstances which were not had in view at its inception? Suppose C. [the defendant] had beaten. W. [the plaintiff] for uttering the slander, could W. have replied the damages occasioned by the battery to those resulting from the slander? and could the parties have settled all their quarrels in the action to recover the money? We do not think that the statute contemplates any such practice. A counter-claim is that which might have arisen out of, or could

$648. * 772. Cannot defeat Counter-Claim by Choice of Form of Action. Thompson v. Kessel. The New York Court of Appeals has passed upon the question, How far the form of the action chosen by the plaintiff, when he has an election to sue for a tort or on a contract, can affect the defendant's right to interpose a counter-claim, and has declared that it can produce no effect; if the defendant would have been able to plead a counter-claim to a cause of action upon an implied promise, growing out of a certain state of facts, the plaintiff cannot, by adopting an action in form for a tort under the same circumstances, cut off or abridge this substantial privilege; the chief design of the new procedure was to subordinate form to substance and not substance to form. action was brought to compel the delivery of certain bills of lading, the plaintiffs alleging that the shipment was on their account, and that the goods and the bills of lading thereof belonged to themselves, and were wrongfully detained by the defendants. The answer put these averments in issue, and also set up by way of counter-claim that, since the commencement of the action, the plaintiffs had wrongfully taken possession of the goods, and had converted the same to their own use, and prayed judgment for the value thereof. The court pronounced the defendants' demand to be a cause of action plainly arising out of the transaction set forth in the complaint, or at least connected with the subject of the action, being, as it was, for the value of the very goods which the plaintiffs sought to reach, and added the following: "I do not think it lies with the plaintiffs to allege that their taking was a mere tort for the purpose of defeating the counter-claim. And, even if an action sounding in tort might be maintained by the defendants for the taking, I am still of opinion that the cause of action for the value of the goods would constitute a good counterclaim in such a case as this." 1

the petition states the occupation of the land by Mrs. T. [the present defendant and the plaintiff in the equity suit] during the pendency of the injunction, and claims damages therefor, any interference by the plaintiff which rendered such occupation less profitable or less valuable to the occupant constituted a cause of action arising out of the transaction set forth in the petition, and is connected with the plaintiff's cause of action; and although it amount to a trespass or other tort, it may

constitute the ground of a counter-claim." In Wadley v. Davis, 63 Barb. 500, the same principle was approved and followed; and a demand arising from tort to property was held to be a proper counter-claim in an action on contract.

1 Thompson v. Kessel, 30 N. Y. 383, 389, per Johnson J. The same doctrine has been recently approved and enforced, after an exhaustive examination of the authorities, by the Supreme Court of Missouri, in Gordon v. Bruner, 49 Mo. 570,