Carpenter v. Manhattan Life Insurance

Gilbert, J. : In Hammond v. Terry (3 Lans., 188), this court held, adopting the decision in Ayres v. O'Farrell (10 Bosw., 147), that a reply to a counter-claim operated as a waiver of an objection, that the same was not allowable. But the Court of Appeals have since expressed a contrary opinion, without, however, referring to these cases. (Smith v. Hall, 67 N. Y., 51.) Assuming that the plaintiff’s reply was not a waiver, the question remains whether the facts alleged constituted a proper subject •of a counter-claim. The action is one to recover damages for the conversion of sixty-ñve cords of wood. The defendant alleged, as a counter-claim, that it held a mortgage on certain lands, that the wood in controversy was the product of trees grown upon the said lands, and that the plaintiff, being a junior mortgagee in possession, knowing that the said lands were an insufficient ¡security for the payment of the defendant’s mortgage, and that the mortgagor was insolvent, wrongfully, fraudulently and with intent to cheat the defendant, and to impair the security of the said mortgage, committed waste on the said premises, by cutting the wood in controversy therefrom, to the defendant’s damage of $500. It is not disputed that such facts are a good cause of action against the plaintiff. (Gardner v. Heartt, 3 Den., 232; Van Pelt v. McGraw, 4 N. Y., 110.) But in an action brought to recover damages for a tort, a tort committed by the plaintiff cannot ordinarily be pleaded as a counter-claim. It must be “ connected with the subject of the action.” (Code Civ. Pro., § 501.) We think the defendant’s cause of action is so connected. The subject of the action is the wood converted. Assuming that the plaintiff .acquired title to- the wood, he did so by acts which rendered him [53] liable to the defendant for the damages • occasioned by such acts. In other words, the plaintiff’s property in the wood was the result of the waste committed by him. If he had not committed the waste, the trees would have remained and formed a part of the mortgaged premises. Thus the waste is, we think, inseparably connected with the conversion of the wood, which is the subject 'of the action. (G. & H. Manuf. Co. v. Hall, 61 N. Y., 236.) It is not easy to define what was intended by such a general phrase as “ connected with the subject of the action.” Such language does, however, plainly indicate a design to enlarge the scope of the old rule relating to set-off and recoupment', and to authorize an application of the equitable principle, that cross claims growing out of ■ the same matter or controversy should be determined in one action, and that the balance, only, found to be due* should be recovered. To that end the provision cited should receive a liberal interpretation. (See Thompson v. Kessel, 30 N. Y., 389; Fettretch v. McKay, 47 Id., 427; Isham v. Davidson, 52 Id., 240.) The judgment must be reversed, and a new trial granted, with costs to abide the event. Present — Barnard, P. J., Gilbert and Dykman, JJ. Judgment and order denying new trial reversed, and new trial granted, costs to abide event.