regard it as denoting the specific thing in regard to which the legal controversy is carried on. In this manner alone can we arrive at a general rule applicable to all possible cases, and the rule thus reached fully satisfies all the requirements of the legislative language, and can be invoked in all classes of actions. While I suggest and adopt this meaning of the term "subject," I freely concede that no decision, so far as I have discovered, pronounces this interpretation to be the only one admissible; many cases sanction it, none directly reject it; but none, on the other hand, have gone so far as to declare in its favor to the exclusion of all other meanings. The construction proposed, as it has been judicially approved in many instances, would remove all doubt and conflict of opinion, and would furnish a simple and practical rule of universal application.2 § 652. *776. The Phrase "Connected with." Connection must be Immediate and Direct. In respect to the phrase "connected with" the subject of the action, one rule may be regarded as settled by the decisions, and it is recommended by its good sense, and its convenience in practice. The connection must be immediate and direct. A remote, uncertain, partial connection is not enough to satisfy the requirements of the statute. The criterion proposed by the Supreme Court of Indiana in one of the cases cited is as certain and practical as the nature of the subject admits, and only needs to be known to be universally accepted. It is, that the connection must be such that the parties could be supposed to have foreseen and contemplated it in their mutual acts; in other words, that the parties must be assumed to have had this connection and its consequences in view when they dealt with each other. I now pass, according to the order already stated, to the three branches into which the subject-matter is naturally separated. I. Cases in which the Cause of Action alleged as a Counter-Claim arises out of the Contract Set forth in the Complaint or Petition as the Foundation of the Plaintiff's Claim. § 653. 777. First and Second Subdivisions of Statute overlap to a Certain Extent. Mr. Justice Woodruff, in the opinion last 1 Sharp v. Kinsman, 18 S. C. 108. 2 [Stolze v. Torrison (1903), 118 Wis. 315, 95 N. W. 114.] 8 [Watts v. Gantt (1894), 42 Neb. 869, 61 N. W. 104; Hays v. McLain (1899), 66 Ark. 400, 50 S. W. 1006; Gurske v. Kelpin (1901), 61 Neb. 517,85 N. W. 557; Walser r. Wear (1897), 141 Mo. 443, 42 S. W. 928.] quoted, declares that the second subdivision of the definition was intended to embrace all cases in which the plaintiff's cause of action arises on contract, and the defendant's counter-claim also arises on contract, either the same or another, and that the clause of the first subdivision above mentioned was designed to include only those cases in which the contract is set forth by the plaintiff as the foundation of his action, although the action itself is not on the contract. This is, I think, attributing too much nicety and precision of thought to the legislature, and assumes that it would never enact any duplicate provisions. The first subdivision no doubt covers the cases mentioned by Judge Woodruff, but it also embraces many others. Undoubtedly, the codifiers and the legislature in drawing and adopting the first subdivision had in mind the doctrine of recoupment, and so framed the language that it should include cases of recoupment and all others, legal and equitable, analogous to it, that is, all cases in which the right of action of the plaintiff and that of the defendant arise from the same contract. It describes, therefore, not only the special and infrequent classes of instances in which the plaintiff's claim is not technically on the contract, although a contract is set forth as its foundation, but also all other instances in which the plaintiff's action is strictly brought on the contract, while the defendant's counter-claim in both cases arises from the same contract. The central idea of this subdivision then is, that one and the same contract is the basis of both parties' demand for relief.1 Passing to the second subdivision, the central thought is equally plain, viz., that the plaintiff's cause of action, and that of the defendant, spring from different contracts; in other words, the codifiers and the legislature had in mind the familiar case of set-off, both legal and equitable. But, in framing the clause, the language was made broader than was necessary, and it actually covers all cases in which the plaintiff's cause of action is on contract, and the defendant's counter-claim is also on contract the same or another. The law-makers have thus in fact given us two provisions author 1 [Brosnan v. Kramer (1901), 135 Cal. 36, 66 Pac. 979: Where a lease is entered into between two parties, and on the same date the lessee loans money to the lessor secured by a mortgage on the leased premises, and an action of foreclosure is subsequently brought by the lessee, a demand for unpaid rent existing in favor of the lessor against the lessee at the time of the foreclosure suit is not a claim arising "out of the transaction set forth in the complaint as the foundation of the plaintiff's claim or connected with the subject of the action," which is barred by failure to set it up. Citing the text. Richardson v. Penny (1900), 10 Okla. 32, 61 Pac. 584.] izing a counter-claim arising from the same contract as that from which the plaintiff's cause of action results, but only one authorizing a counter-claim springing from another contract than the one upon which the plaintiff's demand is based. The same case may therefore be often referred to both of these subdivisions; but I shall, following what seems to be the plain design of the statute, consider under the first all those instances in which the demands of both parties arise from the same contract, and postpone to the second all those in which each demand arises from a separate contract. That this is the correct construction of the whole provision is made certain, when we turn to the form which it assumes in all the codes which constitute the second group according to the classification stated at the commencement of this section.1 § 654.778. General Proposition Stated. Illustrative Examples. It may be stated as a general proposition that in all actions to recover a money judgment, debt or damages, upon a contract, or where a contract is set forth as the foundation of the plaintiff's claim, a counter-claim of a money judgment against the plaintiff for his breach or non-performance of any stipulations of the same agreement, or for his fraud in procuring the same to be entered into, is admissible. The following examples will illustrate this proposition.2 In an action for rent brought by the lessor or by 1 The following recent decisions give examples and illustrations of counterclaims arising out of the contract, etc.: More v. Rand, 60 N. Y. 208, 214; King v. Knapp, 59 id. 460; Boyd v. Schlesinger, 59 id. 301, 305 (action to cancel a contract for the sale of land by plaintiff to defendant, as a cloud upon plaintiff's title, counter-claim for the specific performance of the contract); Howard v. Johnston, 82 id. 271; Nat. Bk. of Auburn v. Lewis, 81 id. 15; Cook v. Jenkins, 79 id. 575; Levy v. Loeb, 85 id. 365; Read v. Decker, 5 Ilun, 646; Morgan v. Smith, 5 id. 220; Elwell v. Skiddy, 8 id. 73; Nichols v. Townsend, 7 id. 375; Griffin v. Moore, 52 Ind. 295; McMahan v. Spinning, 51 id. 187; Hinkle v. Margerum, 50 id. 240; Black v. Elmer, 54 id. 544; Morrison v. Kramer, 58 id. 38; Howe Machine Co. v. Reber, 66 id. 489; Merrill v. Nightingale, 39 Wis. 247; Bonnell v. Jacobs, 36 id. 59; Croumger v. Parze, 48 id. 229; Caleb v. Morgan, 83 N. C. 211; Craig v. Heis, 30 Ohio St. 550; Hade v. McVay, 31 id. 231; 2 [Mack v. Snell (1893), 140 N. Y. 193, 35 N. E. 493; Rood v. Taft (1896), 94 Wis. 380, 69 N. W. 183; Smith v. Building Ass'n (1896), 119 N. C. 257, 26 S. E. 401; Kuhn v. Sol. Heavenrich Co. (1902), 115 Wis. 447, 91 N. W. 994. Where lessees enter into and retain possession of the rented premises under a covenant in the lease that the landlord will make improvements, which he fails to do, the lessees, when sued for the rent, may recoup the damages resulting from such breach of the covenant, or set up the resulting damages as a counter-claim. Such counter-claim arises out of the contract sued upon as the foundation of the landlord's claim, and is connected with the subject of the action: Pioneer Press Co. v. Hutchinson (1896), 63 Minn. 481, 65 N. W. 938. Matney v. Ferrill (1897), 100 Ky. 361, 38 S. W. 494: Where a wife, through her the grantee of the reversion against the lessee or an assignee of the term, where the lease contains a covenant to repair on the part of the landlord, damages sustained by the defendant from a breach of this covenant may be alleged, and recovered as a counter-claim. The damages in one such case, where the demised premises were a hotel, were held to be the sum paid by the defendant for making the necessary repairs, together with the amount of loss occasioned by the inability to use certain rooms in the hotel while they were out of repair. In an action by the buyer against the seller to recover damages for the non-delivery of goods bargained and sold, the latter may counter-claim the unpaid price of that part of the goods already delivered under the contract. When sued for the price of two articles sold under one agreement, the defendant may set up and recover damages resulting from the fraudulent representations of the plaintiff in respect to one of them, even though such damages exceed in amount the whole price agreed to be paid for both. A person having sold his business and good-will at a certain price, and having covenanted in the same agreement not to engage therein at the same place, and the damages for a breach of this covenant having been liquidated and fixed at a specified sum, in an action brought by the vendee to recover this amount of liquidated damhusband as agent, made false and fraudulent representations in the sale of a tract of land with reference to a vein of coal thereon, and its location, thickness and quality, which induced the purchaser to buy the land, and the wife caused such false representations to be made and knew they were untrue, in an action to enforce a vendor's lien for deferred payments, the defendant may set off the damage he has sustained by reason of such false representations against the purchase price. Driver v. Salt Lake Gas Co. (1900), 22 Utah, 143, 61 Pac. 733: The suing out and serving of an injunction prohibiting defendant from exercising a right under the contract sued on by plaintiff, is a breach of the contract by plaintiff sufficient to form a basis for a counter-claim by defendant, and a counter-claim setting up such facts states a cause of action.] 1 Myers v. Burns, 35 N. Y. 269; Cook v. Soule, 56 N. Y. 420; 1 N. Y. S. C. 116; Benkard v. Babcock, 2 Robt. 175. 51 Pac. 664: A tenant may set up a connter-claim for breach of the implied cov enant for quiet enjoyment, in an action brought by the landlord for rent, where the landlord has disturbed the tenant in his possession. See also Hunter v. Hathaway (1900), 108 Wis. 620, 84 N. W. 996; Illsly v. Grayson (1898), 105 Ia. 685, 75 N. W. 518; Frederick v. Daniels (1902), 74 Conn. 710, 52 Atl. 414.] 2 Leavenworth v. Packer, 52 Barb. 132, 136. 3 Rawley v. Woodruff, 2 Lans. 419, and see Hoffa v. Hoffman, 33 Ind. 172, where damages from fraud were counterclaimed in a foreclosure suit. When, in an action on a contract, the defendant set up a counter-claim of damages from the plaintiff's fraud, he cannot, at the trial, rely upon a mistake in making the agreement fraud and mistake are distinct grounds of recovery or defence; and proof of one cannot be given when the other alone is pleaded: Dudley v. Scranton, 57 [Hanley v. Banks (1897), 6 Okla. 79, N. Y. 424, 427. ages on the ground that the vendor had violated his agreement, the defendant was permitted to recover the unpaid portion of the purchase price as a counter-claim.1 § 655. 牵 779. Examples Continued. It is settled by numerous decisions, although there were at first some expressions of a contrary opinion, that in an action to recover the price of goods sold and delivered, or bargained and sold, the purchaser's demand of damages for the plaintiff's breach of his warranty of the quality of the goods may be pleaded as a counter-claim; in fact, there can be no simpler and plainer illustration of a counter-claim arising out of the very contract set up by the plaintiff as the basis of his recovery.2 When the plaintiff, who had been employed as a superintendent of the defendants' manufactory under a written agreement stipulating for his services in that capacity at a specified salary for a year, brought an action for his wages, alleging that he had been wrongfully discharged, a counter-claim of damages sustained by the defendants in their business, through the negligent and unskilful conduct of the plaintiff in violation of the provisions of the same contract, was pleaded, and 1 Baker v. Connell, 1 Daly, 469; and see Ainsworth r. Bowen, 9 Wis. 348; Snow v. Holmes, 71 Cal. 142. 2 Lemon v. Trull, 13 How. Pr. 248; Warren v. Van Pelt, 4 E. D. Smith, 202; Dounce v. Dow, 57 N. Y. 16; Love v. Oldham, 22 Ind. 51; French v. Saile, Stanton's Code (Ky.), 96; Morehead v. Halsell, id. 96; Earle v. Bull, 15 Cal. 421; Hoffa v. Hoffman, 33 Ind. 172. See contra, Nichols v. Boerum, 6 Abb. Pr. 290. This case has been expressly overruled. See also Nichols v. Townsend, 7 Hun, 375, citing Gurney v. Atlantic, etc. R. Co., 58 N. Y. 358; Dounce v. Dow, 57 id. 16; Day v. Pool, 52 id. 416; and see Merrill v. Nightingale, 39 Wis. 247; Bonnell v. Jacobs, 36 id. 59; Giffert v. West, 33 id. 617; Schurmeier v. English, 46 Minn. 306; Rugland v. Thompson, 48 Minn. 539; Mass. Loan & T. Co. v. Welch, 47 Minn. 183; Maders v. Lawrence, 49 Hun, 360. [Heebner v. Shepard (1895), 5 N. D. 56, 63 N. W. 892. Laney v. Ingalls (1894), 5 S. D. 183, 58 N. W. 572: Where an action is brought on a promissory note given for the purchase price of a warranted article of merchandise, the defendant may plead the was fully upheld by the court.3 damages resulting from a breach of warranty in recoupment. Haygood v. Boney (1894), 43 S. C. 63, 20 S. E. 803: Where suit is brought to recover wages for services rendered as a farm hand, the defendant may set up as a counter-claim the damages he has sustained by reason of plaintiff's careless and negligent use of a horse while working under said contract.] 8 Lancaster, etc. Man. Co. v. Colgate, 12 Ohio St. 344; Stoddard v. Treadwell, 26 Cal. 294. But see Barker v. Knickerbocker Life Ins. Co., 24 Wis. 630, in which, under exactly similar circumstances, the defendant's claim that the contract should be cancelled was refused, on the ground that the facts made out a perfect defence at law; but no counter-claim of damages was pleaded. It is the rule in Wisconsin that, in general, where the invalidity of the plaintiff's claim appears in an action at law, the court will not interfere upon a counter-claim to set it aside or enjoin it: S. L. Sheldon Co. v. Mayers, 81 Wis. 627; Commercial Bk. of Milw. v. Fire Ins. Co. of Phil. (Wis. 1893), 54 N. W. Rep. 109. Counter-claim of damages for negligence in carrying out the provisions of the contract sued upon: Whitelegge v. |