Hammond v. Terry

By the Court — Miller, P. J. The main question to be determined in this case is in regard to the construction to be put upon section one hundred and fifty of the Code of Procedure, which provides “ that the defendant may set forth by answer as many defences and counter-claims as he may have, whether they be such as have been heretofore denominated legal or equitable, or both.” This enactment has repeatedly been the subject of judicial interpretation, and, whatever opinion might be entertained, if the question now raised was an original one, and presented for the first time, in accordance with a well settled rule it must be considered as res adjudieata, if the same has been decided by a tribunal of co-ordinate jurisdiction. This, I think, has been done in Ives v. Miller (19 Barb., 196). In that case an action was brought upon a promissory note, and the defendant alleged in his answer that the parties had been members of a copartnership firm, which was dissolved prior to the giving of the note; that the accounts of the firm had never been settled and adjusted between the parties; that the [188] firm owed the defendant the sum of $1,000, one-lialf of which the plaintiff was liable to pay the defendant, and demanded an account; and that, whatever was found due the defendant, should be allowed him .as a set-off. Upon demurrer it was held, that, whatever claim the defendant might have against the firm was not a counter-claim against the plaintiff nor the subject of set-off. The ease of Gage v. Angell (8 How. Pr. R., 335), which is cited and relied upon by the defendant, is commented upon in the opinion of the court and disapproved, and as that case was a Special Term decision, it must be considered as overruled by the General Term in Ives v. Miller. A distinction is sought to be made between the two cases, upon the ground that the answer in Ives v. Miller did not allege, as it did in Gage v. Angel, that plaintiff owed the firm, or that anything would be found due from the plaintiff to the defendant on a final settlement. The answer to this position is, that the opinion of the court discusses and covers this point fully, and settles the principle which is involved here adversely to the defendant’s views. Although the opinion holds that in cases of natural "equity, where the party is insolvent and the defendant therefore in danger of losing what may be found due him on a final settlement, he would be entitled to relief by a cross-action, it does not maintain the position that this relief could be had in the same action by setting up the alleged defence by way of answer. It appears to me that there would be obvious injustice in such a proceeding, as the plaintiff only asks for judgment for the amount of the note, and, upon an accounting, if a balance was found in his favor in the partnership transactions, it may be questionable whether a judgment could properly be had in favor of the plaintiff beyond the amount claimed in his complaint. It is insisted by the defendant’s counsel that this defence having been pleaded, and the plaintiff not having demurred to the answer, and having taken issue thereon by replying thereto, has thereby recognized its regularity, and agreed to try said issue in this case. In Ayers v. O'Farrell (10 Bosw., [189] 143) it was held, that, a plaintiff in an action who does not demur to the answer therein, which sets up as a counter-claim a demand not properly admissible as such in said action, but takes- issue upon it by replying thereto, thereby agrees to "try in such action the merits of the demand, and to leave the result of such trial avail therein as though such demand was the proper subject of a counter-claim therein, and thus waives any right to object in such trial to the admission of evidence to sustain it. The opinion of the court in the case is well reasoned, and I am at loss to see how it can be overcome. It is- decisive of the point discussed, and, I think, disposes of the question. Although not entirely binding upon this court, yet as the authority of a tribunal possessing co-ordinate jurisdiction within a limited sphere, it is entitled to great weight, and, as I can see, no sufficient and satisfactory answer to the positions thus assumed. I think it must be controlling in the case at bar. It follows that the referee erred, and the judgment entered upon his report must be reversed and a new trial ordered, with costs to abide the event. The order of reference should also be vacated. Judgment reversed.