Scheiffelin v. Weatherred

Thayer, C. J., delivered the opinion of the court. The respondent’s counsel insisted at the hearing that the appeal herein would not lie; that the cross-complaint was merely auxilliary to the defense in the action at law, and that the decision upon the demurrer was only interlocutory ; but it will be observed from an inspection of the language of the Code upon the subject that the filing of a complaint in the nature of a cross-bill stays the proceedings at law and the case therefore proceeds as a suit in equity. The suit in such a case is really as independent of the action at law as though it were commenced by original summons. The object of the provisions of the Code regulating the proceding was to avoid the necessity of waiting until the action at law was determined before equity jurisdiction was invoked; and it saved the necessity of procuring the issuance of an injunction to restrain the execution of the judgment at law. But whether the complaint contains facts sufficient to entitle the appellants to the relief claimed is a much more difficult question to solve in their favor. The Code provides that in an action at law, where the de [175] fend ant is entitled to relief, arising out of facts requiring the interposition of a court of equity, and material for his defense, he may, upon filing his answer therein also as plaintiff file a complaint in equity, etc. Unless, therefore, the relief sought does arise out of facts requiring the interposition of a court of equity, and material to the defense, the defendant is not entitled to file such complaint. I was strongly impressed at the hearing with the belief that the appellants had not shown in their complaint such a state of facts as required the aid of. a court of equity to render them available as a defense to the action upon the notes, and a further consideration of the case has confirmed me in that belief. The matter of the alleged fraudulent representations claimed to have been made by the respondent to the appellants upon the sale by him to them of the drugs and other articles for the payment of which the notes were executed, and the matter of the alleged partial payments upon the said notes, are matters clearly cognizable at law, and the appellants are entitled to the benefit of them as a defense in said action. Partial payments upon a note may, under the Code, be pleaded as payment pro tanto thereof. And a fraud or warranty in the sale of goods could, before the Code, be set up as a recoupment of the plaintiff’s claim in an action to recover the consideration price of the goods; and since then may be interposed as a defense by way of counter-claim, notwithstanding a promissory note was given for such price, where it had not been transferred to an innocent holder. Nor do I see any difficulty in the appellants availing themselves of the matter of the alleged agreement of the respondent to collect the said accounts and notes belonging to him and said E. L. Scheiffelin and to apply one-half of the amounts collected as credits upon the notes sued upon, as a defense to the action upon said notes. The appellants’ counsel contended that it was necessary that the appellants have the aid of a court of equity in that matter in order to obtain a discovery; but that is no longer [176] an essential ground of equitable jurisdiction, although courts of equity may still retain jurisdiction for such purpose. The provisions of the Code are sufficiently broad to admit of as full a discovery at law in such a case as can be obtained in a court of equity. The appellants do not, in my opinion, show by their complaint a case requiring the interposition of a court of equity, and material for their defense in the action at law. The circuit court, therefore, properly sustained the demurrer, and the decree appealed from will be affirmed.