Quick v. Lemon

Mr. Justice Craig delivered the opinion of the Court: Did the court err in refusing the motion of the defendant corporation to -file the cross-bill? Section 30, chapter 22, Revised Statutes of 1874, provides: “Any defendant may, after filing his answer, exhibit and file his cross-bill, and call upon the complainant to file his answer thereto, in such time as may be prescribed by the court.” In Jones v. Smith, 14 Ill. 229, it was held that a cross-bill was proper whenever the defendants, or any of them, have equities arising out of the subject matter of the original suit which entitle them to affirmative relief, which they can not obtain in that suit. In the case cited the decree was reversed, on the ground, alone, that the court struck the cross-bill from the files, and refused to require the defendants to answer it. In Beauchamp v. Putnam, 34 Ill. 378, it was held that the filing of a cross-bill was a matter of right, and requires no leave; but it does not necessarily stay the original cause. The same doctrine was declared in Davis v. American and Foreign Christian Union, 100 Ill. 313. The doctrine may, therefore, be regarded as well settled, that where a defendant has equities arising out of the subject matter of the original suit which entitle him to affirmative relief, it would be error for the circuit court to refuse to permit a cross-bill to be filed. Did the defendant corporation, by the averments in the cross-bill, bring itself within this rule ? There may be matters alleged which are not .material, or upon which relief could not be granted; but it is alleged that Lemon, the complainant in the original bill, in case he was elected secretary of the association, agreed to take fifty shares of the capital stock of the company, and pay therefor the sum of $5000; that he was elected secretary, but failed and refused to take the stock which he had agreed to do. If Lemon made a valid contract with the corporation, upon a sufficient consideration, to take stock in the corporation, and failed and refused to comply with that contract without fault on the part of the corporation, the latter may recover such damages for a breach of the contract as it may have sustained. Thrasher v. Pike County R. R. Co. 25 Ill. 404, is a case in point as to the liability of a person to a corporation on a similar promise. It may, however, be said this defence might have been set up in the action at law in which the judgment was rendered, and the corporation is concluded by- the judgment. In an action before a justice of the peace our statute requires a defendant to bring in all his demands against a plaintiff, unless they exceed the jurisdiction of the justice, and a failure to do so will bar an action brought after the rendition of the judgment. But this statute has no reference to actions brought in the circuit court. The statute allows a set-off to he pleaded in the circuit court, but it is not compulsory. A defendant may decline to plead and prove his set-off, and after judgment sue the plaintiff for his demand, if he desires to do so. Morton v. Bailey, 1 Scam. 213; Chicago, Danville and Vincennes R. R. Co. v. Field, 86 Ill. 270. The ease then stands in this position: The complainant has recovered a judgment at law against defendant, which he carries into a court of equity to enforce. The defendant has a demand against complainant, which grew out of the same transaction, which has not been reduced to judgment, and which was not pleaded in the action at law wherein complainant obtained judgment. Can this demand be set off in equity when the plaintiff in the judgment comes into a court of equity to collect his judgment? If the judgment had been paid after it was rendered, the defendant might defeat the bill by showing that fact. If it has a legal demand against complainant large enough to liquidate the judgment, although it existed when the judgment was rendered, as it was not bound in law to plead that demand in the action at law, when sued in equity we perceive no reason why the demand may not be relied upon as a set-off to the judgment, if the corporation can show equitable ground for relief. It is true where a bill is filed to enjoin the collection of a judgment, on the ground that the complainant in the bill has a set-off in equity, courts of equity will not allow such a set-off unless the party seeking it can show some equitable ground for relief against the judgment. (Raleigh v. Raleigh, 35 Ill. 512.) Indeed, a set-off is ordinarily allowed in equity only when the party seeking the benefit of it can show some equitable ground for being protected against the adversary’s demand,—the mere existence of cross-demands is not sufficient. (2 Story, sec. 1436.) But it is a natural equity that cross-demands should be off-set against each other, and that the balance only should be recovered, and where the law -can not give a remedy in a separate action, courts of chancery may grant relief. (Lindsey v. Jackson, 2 Paige, 581.) The insolvency of the party against whom the equitable set-off is claimed, has been held sufficient ground for the exercise of equitable jurisdiction. In this case, insolvency of the complainant was not shown by the allegations of the cross-bill, but it was averred that the complainant was beyond the jurisdiction of the court; that he had moved to the State of Iowa; that he could not be sued and the demand be collected by a judgment in an action at law. Non-residence has been held to be equivalent to insolvency. This was announced in Robbins v. Hawley, 1 Monroe, 194, where the court said: “Bobbins is admitted to be insolvent, and Dodge must be understood, from the proceedings, to be out of the country; and it will not be denied that these facts are sufficient, in general, to warrant a court of equity in taking cognizance of a cause, for the purpose of setting off demands which, from a lack of connection, could not otherwise be decreed in a court of equity. ” It would seem to be inequitable to require the corporation to go to another State to collect its demand in an action at law, and we are inclined to hold that the non-residence of the complainant, in connection with the fact he calls upon a court of equity to enforce his judgment, is sufficient to allow the defendant corporation to prove and set off its demand set up in the cross-bill against the judgment of the complainant. Other questions have been discussed in the argument, but it will not be necessary to consider them here. In our opinion the court erred in denying the motion of the defendant corporation to file the cross-bill. For this error the judgment of the Appellate Court will be reversed, and the cause remanded for further proceedings consistent with this opinion. Judgment reversed.