cause of action in his favor against a plaintiff and other persons, arising out of a partnership relation existing between them, until an accounting has been had and a balance struck.40 In Oregon, an unliquidated demand triable before a jury, and bearing no relation to the subject of the suit, cannot be used as a set-off to a suit in equity; and in Oklahoma, an unadjudicated sum due on an open account cannot be set off against a judgment.42

45

43

§ 632. Equitable defenses and set-off. The defendant may set up an equitable defense in an action at law; but he relies on an equitable right of action as a defense, and must plead the same as fully as if he was bringing an action in equity. As already stated, equitable as well as legal demands may be set up as counterclaims. Thus a mistake in a contract and a claim to have it reformed may be set up as a counterclaim.* But even when an equitable defense is made to an action at law, jurisdiction. is to be determined by presuming everything to be of commonlaw cognizance until the necessity of making equity jurisdiction appears. In cases of an equitable nature, substantially the same. limitation is applied as in respect to filing cross-bills in chancery, which were allowed only as to matters in the original bill.* Thus matters of purely legal cognizance in no way connected with the suit, and not arising out of the transaction upon which the plaintiff bases his claim for relief, cannot be pleaded as counterclaims in a suit in equity.48

46

A court of equity will compel an equitable set-off when the parties have mutual demands against each other; and this, as between the real parties in interest, regardless of any nominal parties. But equity will not set off the claim of an individual creditor of one joint owner of a judgment against the judgment; and if the judgment be partnership assets, the individual creditor

50

40 Wood v. Brush, 72 Cal. 224, 13

Pac. 627.

41 Burrage v. Bonanza Gold Mining Co., 12 Or. 169, 6 Pac. 766.

42 Colcord v. Conger, 10 Okla. 458, 62 Pac. 276.

43 Carpentier v. City of Oakland, 30 Cal. 439; Bruck v. Tucker, 42 Cal. 346; Miller v. Fulton, 47 Cal. 147; Swasey v. Adair, 88 Cal 182, 25 Pac. 1119; Hatcher v. Briggs, 6 Or. 31; Dale v. Hunneman, 12 Neb. 224, 11 N. W. 711.

44 Currie v. Cowles, 6 Bosw. 452; Lemon v. Trull, 13 How. Pr. 248. 45 Wemple v. Stewart, 22 Barb. 154. 46 Brown v. Hazard, 2 Wash. T. 461, 8 Pac. 494.

47 Burns v. Nevins, 27 Barb. 493. 48 Sears v. Martin, 22 Or. 311, 29 Pac. 890.

49 Russell v. Conway, 11 Cal. 93; Hobbs v. Duff, 23 Cal. 627; Burton v. Willin, 6 Houst. 522, 22 Am. St. Rep. 363.

50 Hobbs v. Duff, 23 Cal. 627, 629.

can make no claim to any part of it until adjustment of the firm accounts.51

§ 633. "Same transaction."-The first class of demands contemplated by the codes as the subjects of counterclaim are those arising out of the same transaction as that set forth in the complaint as the foundation of the plaintiff's claim.52 "What constitutes the same transaction" is often the subject of much difficulty. The term, as employed in the statute, is broader than the term "contract," and authorizes matters to be counterclaimed which could not be counterclaimed as arising out of the contract sued upon by the plaintiff. This is obvious, for, while a contract

55

...

54

is a transaction, a transaction is not necessarily a contract. One of the definitions of the term "transaction" is, "a matter or affair either completed or in course of completion." Mr. Pomeroy defines the term as, "That combination of acts and events, circumstances and defaults which viewed in one aspect results in the plaintiff's right of action, and viewed in another aspect results in the defendant's right of action. . . . As these two opposing rights cannot be the same, it follows that there may be, and generally must be, acts, facts, events, and defaults in the transaction as a whole which do not enter into each cause of action." Every transaction is more or less complex, consisting of various facts and acts done by the respective parties, and it frequently happens that one or more of these acts, if viewed by itself, may be such a violation of duty as to give to the other a right of action; but the obligation thus created may be so counterbalanced by other matters growing out of the same transaction that no compensation ought to be made therefor. In such a case, the rights of the one are so dependent upon the rights of the other that simple equity requires that the respective causes of action in behalf of each be adjusted in a single suit.56

Undoubtedly the legislature, in drawing and adopting the code provision authorizing counterclaims on demands arising out of

51 Collins v. Butler, 14 Cal. 227. 52 Cal. Code Civ. Proc., § 438; Story etc. Commercial Co. v. Story, 100 Cal. 30, 34 Pac. 671; Warren v. Hall, 20 Colo. 508, 38 Pac. 767; Esbensen v. Hover, 3 Colo. App. 467, 33 Pac. 1008; Murphy v. Russell, 8 Idaho, 151, 67 Pac. 427.

53 Wyman v. Herard, 9 Okla. 64, 59 Pac. 1009; Loewenberg v. Rosenthal, 18 Or. 178, 22 Pac. 601.

54 Roberts v. Donovan, 70 Cal. 113, 9 Pac. 180, 11 Pac. 599.

55 Remedies and Remedial Rights, § 774.

56 Story etc. Commercial Co. V. Story, 100 Cal. 35, 34 Pac. 671.

the same transaction, had in mind the doctrine of recoupment and all others, legal and equitable.57 It follows that the transaction is not necessarily limited by the facts stated in the complaint. The defendant in his counterclaim may set up new facts, and show the entire transaction and counterclaim upon that state of facts as the transaction upon which the plaintiff's claim is really founded,58 the other facts in the transaction being so connected with those set forth as to defeat their legal effect. The defendant is not precluded from setting them up by reason of the form which the plaintiff may have chosen for presenting his own side of the case.59

60

§ 634. "Subject of the action." The code provision that causes of action connected with the subject of the action may be counterclaimed has not always been fully understood; a great deal of confusion has resulted from the failure of pleaders to comprehend the scope of the term "subject of the action." When once the meaning of this term is fixed, however, there should be little difficulty in determining whether a particular demand is a proper subject of counterclaim under this part of the statute. It has been said that the subject of the action is a claim asserted. by the plaintiff. But while this is strictly true in one sense, it limits rather too much the right of the defendant in determining the propriety of his counterclaim. Almost equally misleading is the definition of the subject of the action as the facts constituting the cause of action. The term "subject of action" is broader than the term "cause of action." 62 For this purpose, the term should be construed to refer to the origin and ground of the plaintiff's right to recover rather than to the thing itself about which the controversy has arisen.63 But even within this definition the subject may be the property which is sought to be re

61

57 Pomeroy's Remedies and Remedial Rights, § 802; Brosnan v. Kramer, 135 Cal. 40, 66 Pac. 979.

58 Xenia Branch Bank v. Lee, 7 Abb. Pr. 372; Ritchie v. Hayward, 71 Mo. 560; Judah v. Trustees, 16 Ind. 60.

59 Story etc. Commercial Co. v. Story, 100 Cal. 36, 34 Pac. 671; Gordon v. Bruner, 49 Mo. 570; Thompson v. Kessel, 30 N. Y. 383.

60 Hartzell v. Vigen, 6 N. Dak.

66

64

69

67

covered or alleged to be injured. Thus, in an action to set aside. a deed, the real property involved is the subject of the action;65 and in replevin the subject-matter of the action is the property described in the complaint; and in conversion the property alleged to be converted is the subject of the action. But in an action to enforce a vendor's lien, the debt, and not the lien, is the subject of the action;s and in ejectment the subject-matter of the action is the right of possession alleged. The subject of the action may be the right which is asserted or which is sought to be enforced in the plaintiff's complaint." Thus, in an action of trover to cover bills of exchange, the subject of the action is either the right to the possession of the bills or the bills themselves." In a suit against a contractor and the owner of a building to enforce a lien for materials, the subject of the action as between the plaintiff and the contractor is the material furnished, but as between the plaintiff and the owner it is the lien asserted against the building.72

The connection of the cause of action asserted in the counterelaim and the subject of the action must be immediate and direct, and such as may be assumed to have been contemplated by the parties in their dealings with each other.73 The fact that the parties are the same, or that the transactions were had approximately at the same time, is not sufficient." A counterclaim may properly embrace a violation of the same or reciprocal rights,75 or a distinct breach of the contract sued upon," 76 or of contract provisions collateral to but inseparably connected with the con

v. Bonanza Gold etc. Mining Co., 12 Or. 169, 6 Pac. 766.

64 Edgerton v. Page, 20 N. Y. 281; New York v. Parker Vein S. S. Co., 12 Abb. Pr. 300; Davis v. Davis, 9 Mont. 267, 23 Pac. 715; Wyman v. Herard, 9 Okla. 35, 59 Pac. 1009; First Nat. Bank v. Parker, 28 Wash. 234, 92 Am. St. Rep. 828, 68 Pac. 756. 65 Barnes v. Gilmore, 6 N. Y. Civ. Proc. Rep. 286.

66 Lovensohn v. Ward, 45 Cal. 8. 67 Carpenter v. Manhattan Life Ins. Co., 93 N. Y. 552.

68 Borst v. Corey, 15 N. Y. 505. 69 Dinan v. Coneys, 143 N. Y. 544, 38 N. E. 715.

70 Pomeroy's Remedies and Remedial Rights, § 775.

71 Xenia Branch Bank v. Lee, 7 Abb. Pr. 396.

72 McAdow v. Ross, 53 Mo. 204.

73 Pomeroy's Remedies and Remedial Rights, § 794; O'Brien v. Garniss, 25 Hun, 446; Braithwaite V. Akin, 3 N. Dak. 365, 56 N. W. 133; Blue v. Capital Nat. Bank, 145 Ind. 518, 43 N. E. 655; Lapham v. Osborne, 20 Nev. 168, 18 Pac. 881.

74 Burrage v. Bonanza etc. Mining Co., 12 Or. 169, 6 Pac. 766; Standley V. Northwestern Mutual Life Ins. Co., 95 Ind. 254.

75 Snow v. Holmes, 71 Cal. 142, 11 Pac. 856; Vose v. Galpen, 18 Abb. Pr. 96; Dale v. Hall, 64 Ark. 221, 41 S. W. 761.

76 Wheelock v. Pacific Pneumatic

78

tract set out in the plaintiff's complaint;" or it may embrace a claim to the same thing for which the plaintiff sues.' The connection between the defendant's cause of counterclaim and the plaintiff's cause of action must, however, be a legal connection, and where the causes exist independently of each other, and the only connection between them is that one caused the other," or where the demands arise out of transactions concerning the same property, but are had at different times and under different circumstances, there is no such legal connection between them as will furnish a basis for counterclaim.

§ 635. Tort as subject of counterclaim.-The fact that torts are so infrequently set out as the cause of counterclaim has doubtless led to the incorrect general statement that matters ex delicto cannot in general be pleaded to matters ex contractu, and vice versa.s 81 There is no reason why a cause of action in tort or upon contract may not be counterclaimed in a suit either upon tort or contract, if both causes of action arise out of the same transaction, or are connected with the subject of the action.82 In some cases it has been held that counterclaims involving torts are improper;83 and this is especially true in cases which seem to involve the assumption that contrary causes of action for tort cannot be said to arise out of the same transaction, or that a personal tort does not constitute a transaction.85 Of course, distinct torts cannot

Gas Co., 51 Cal. 223; Mills v. Rosenbaum, 103 Ind. 152, 2 N. E. 313.

77 Mullendore v. Scott, 45 Ind. 113; Howe Machine Co. v. Reber, 66 Ind. 498.

78 Gossard v. Ferguson, 54 Ind. 520; Hampson v. Fall, 64 Ind. 382; Allison v. Shinner, 7 Okla. 272, 54 Pac. 472; Driver v. Salt Lake etc. Co., 22 Utah, 143, 61 Pac. 733.

79 Wrege v. Jones, 13 N. Dak. 267, 112 Am. St. Rep. 679, 100 N. W. 705; Slayback v. Jones, 9 Ind. 470; Blue v. Capital Nat. Bank, 145 Ind. 518, 43 N. E. 655; Fellerman v. Dolan, 7 Abb. Pr. 395, note.

so Bradhurst v. Townsend, 11 Hun, 104; Meeks v. Berry, 51 Hun, 640, 3 N. Y. Supp. 840; Akerly v. Vilas, 21 Wis. 88.

81 Estee's Pl. & Pr., § 3367a;

84

Braithwaite v. Akin, 3 N. Dak. 365, 56 N. W. 133; Davis v. Frederick, 6 Mont. 301, 12 Pac. 664.

82 Le Clare v. Thibault, 41 Or. 604, 69 Pac. 552; Story etc. Commercial Co. v. Story, 100 Cal. 30, 34 Pac. 671.

83 Ebensen v. Hover, 3 Colo. App. 467, 33 Pac. 1008; Watts v. Gantt, 42 Neb. 869, 61 N. W. 104; Braithwaite v. Akin, 3 N. Dak. 365, 56 N. W. 133.

84 Macdougall v. Maguire, 35 Cal. 274, 95 Am. Dec. 98; Lapham v. Osborne, 20 Nev. 168, 18 Pac. 881; Loewenberg v. Rosenthal, 18 Or. 178, 22 Pac. 601.

85 Macdougall v. Maguire, 35 Cal. 274, 95 Am. Dec. 98; Waugenheim v. Graham, 39 Cal. 169; Marks v. Tompkins, 7 Utah, 421, 27 Pac. 6.