Boucher v. Powers , 29 Mont. 342 ( 1904 )

MR. COMMISSIONER POORMAN

prepared the opinion for the court.

This is an ajipeal from a judgment of dismissal of plaintiff’s case. The facts appearing from the pleadings, so- far as necessary to be considered in determining the questions raised on this appeal, are: Defendants contracted with one Dayton for the removal of certain buildings. Dayton hired men to assist him in performing the work, and .after the completion thereof gave orders on the defendants for the payment of the workmen. The defendants did not honor these orders, and did not pay either Dayton or the workmen, except a small payment made to Dayton. Both Dayton and the workmen then filed liens against the property. Afterwards Dayton assigned his claim to- the plaintiff and the workmen assigned their claims to Ernest Clark. Both assignees instituted action on February 21, 1890, for the foreclosure of the liens. A decree of foreclosure in the Clark suit was entered April 11, 1896. Nothing further appears to have been done in the case at bar until February 25, 1899, when an amended- complaint was filed. The defendants in the meantime had paid the Clark judgment, and in their answer to the amended complaint, after denying most of the allegations therein, alleged as a counterclaim damages arising from the delay and careless manner in which the work was performed, pleaded the separate amounts due the several workmen, entry of the Clark judgment, and decree of foreclosure, and alleged the payment thereof by defendants in May, 1897, to protect 'their property from forced sale, and that this was “money paid, laid out and expended for Dayton.” Plaintiff admits the payment of this judgment, but alleges that only $200 thereof was expended by the defendants in satisfaction of the labor liens, and that the balance of said judgment was caused by the wrongful acts of the defendants in not honoring the orders given the workmen and in not paying Dayton. Plaintiff also admits that defendants' are entitled to a credit of this $200 in addition to the payment theretofore made to Dayton.

It is claimed by appellant that the Clark judgment is' not a proper counterclaim or setoff to plaintiff’s demand, and that it was the duty of defendants to honor the orders given by Dayton to the workmen. Respondents contend that they were not obliged to recognize the order for a part of Dayton’s demand. The trial court appears to- have proceeded upon the theory that no duty rested upon 'the defendants to recognize the claims of the workmen until the same were merged in a judgment of foreclosure against defendants’ property, and that this entire judgment then became a proper setoff.

These proceedings axe in equity, and under a special statute (Section 2130 et seq., Code of Civil Procedure) and the law relating to “setoff,” “counterclaim,” “defense,” and “splitting of demands” must be applied with reference to the terms of that statute. This Clark judgment, if regarded merely as “money paid, laid out and expended” by the defendants for the benefit of plaintiff’s assignor, does not constitute any defense or setoff, for it was not “existing and matured for action in favor of tbe party asserting tbe same at tbe time” tbis action was commenced. (McGuire v. Edsall, 14 Mont. 359, 36 Pac. 453.)

Section 691 of tbe Code of Civil Procedure defines, a counterclaim as (1) “a cause of action arising out of tbe contract or transaction, set forth in tbe complaint, as tbe foundation of tbe plaintiff’s claim, or connected witli tbe subject of tbe action;” (2) “in an action on contract, any other cause of action on contract, existing at tbe commencement of tbe action.”

It is only by treating this Clark judgment and tbe claims merged therein as coming within tbe terms and meaning of tbe first subdivision of tbe section quoted that they or it can be considered as any defense or setoff whatsoever. Tbe various claims merged in that judgment are separately specified and pleaded, and tbe judgment itself is also pleaded. Tbe defendants, in tbe absence of contract relations, were not personally liable to tbe workmen, but their property was. bable. Tbe labor claims in tbe Clark case were for assistance rendered in performing tbe very work which is tbe basis of plaintiff’s action, and properly comes within tbis first subdivision. They are for labor done, and were liens against tbe property of defendants, and, whether paid by defendants or not, were proper to be pleaded as an equitable defense in an action by tbe contractor or bis assignee for tbe contract price; and tbis defense continues so long as these claims remain a lien against defendants’ property. It would be inequitable to maintain that a contractor could force tbe owner to pay him tbe full amount of tbe contract price when there was at tbe same time an outstanding claim created by tbe contractor, and with reference to tbe very thing constituting bis cause of action, and for which tbe property of tbe defendants was subject to forced sale. A duty also rests on tbe owner — that of paying tbe amount be agreed to pay for the work dbne; and when be wrongfully refuses to pay tbe contractor, or to honor bis orders for tbe payment of tbe workmen, thereby causing liens to be filed, or wrongfully contests tbe actions brought for tbe foreclosure of tbe liens, be cannot set off tbe costs thus caused by bis own wrongful act against tbe claim of tbe contractor or bis assignee. Whether it was tbe duty of tbe defendants, as a matter of law, to honor these orders, is immaterial. Tbe orders served to give them notice of these outstanding claims against their property. They were also an acknowledgment by tbe contractor that tbe amounts were correct. Tbe danger of paying spurious claims or of making volunteer payment was thus avoided. Their payment would have been a proper charge or counterclaim against tbe contractor, and a proper setoff against tbe demand of bis assignee. Tbe inhibition against “splitting demands” does not apply. Tbe law splits the demand when it authorizes tbe workman to file a lien for tbe amount due him, irrespective of whether this amount corresponds with tbe original contract j>rice. If tbe owner chooses at bis own instance to contest these labor claims after they are acknowledged by tbe party personally liable, and is defeated, be cannot set off tbe cost of bis own contest against tbe demand of tbe contractor. Tbe replication to tbe answer by alleging 'that tbe costs, attorneys’ fees and accumulated interest on this Clark judgment were occasioned by tbe wrongful acts of tbe defendants., presented an issue of fact which, together with tbe other questions of fact appearing in tbe pleadings, should have been tried.

Tbe paragraphs of defendants.’ answer are not numbered, but certain divisions appear therein. In that part of tbe answer designated as “fourth” tbe defendants say: “Prior to the commencement of this action these defendants paid unto, tbe said Edgar Dayton upon said contract * • * * the sum of $24.25, making a total of $340.25, paid as aforesaid unto the said Dayton, and paid, laid out and expended for him for his use and benefit as hereinbefore stated.” This part of tbe answer, is not specifically denied by plaintiff, and defendants claim that it therefore stands admitted,.but this, division of tbe answer does not contain sufficient allegatiori, neither within itself nor by reference to other parts of tbe answer, to 'constitute a separate defense (Hefferlin v. Karlman, 29 Mont. 139, 74 Pac. 201), and cannot be treated as anything more than an affirmative statement inconsistent with the allegations of the complaint. It is merely a repetition of other parts of the answer which are denied by the replication. No specific denial of this division of the answer was therefore necessary.

We recommend that the judgment appealed from be reversed, and the cause remanded for a new trial. 1

Per Curiam.

Por the reasons stated in the foregoing opinion, the judgment is reversed, and the cause remanded.

Mr. Justice MilburN, not having heard the argument, takes no part in this decision.