Resch v. Senn , 31 Wis. 138 ( 1872 )

Lyon, J.

The only question to be determined on this appeal, is, Does the answer contain a counterclaim ? If it does, it would seem that the motion of the defendants for judgment for want of a reply should have been granted, although no notice of the motion was served as provided by the statute. R. S., ch. 125, sec. 16. But, however this may be, the failure to reply to a counterclaim is an admission by the plaintiff that the same is true, and a judgment in his favor entered on the trial, in the lace of an admission made by the pleadings that there ought to be no such judgment, is clearly erroneous, and should be reversed. Bridge v. Payson, 5 Sandf., 210. If the answer does not contain a counterclaim, the judgment should be affirmed, inasmuch as the execution of the note was admitted, as wrell as proved, and there was no testimony given or offered tending to show that it was not a valid note. •

It is the first essential of a counterclaim that it shall of itself be a distinct cause of action existing in favor of a defendant and against a plaintiff, between whom a several judgment might be had. R. S., ch. 125, sec. 11; Matteson v. Ellsworth, 28 Wis., 254.

In the present case, unless the defendants could have maintained an equitable action against the plaintiff to compel Mm to surrender tire note in suit for cancellation, the answer does not contain a counterclaim, but only a defense, to which no re ■ ply was necessary or allowable.

We are not aware that it has ever been held that an action in equity may be maintained by a party to an overdue promissory note, to compel a surrender thereof for cancellation, especially after a suit at law has been brought upon the note, in which, suit every objection to the validity of the note is available as a defense. Suppose, under the practice before the code, this action had been brought, and the defendants had filed their bill in equity to restrain proceedings therein, and to compel the plaintiff to surrender the note to be cancelled. Would not the chancellor have said to the complainants, the makers of the note, that they had an adequate and a complete remedy at law, by setting up in the action against them the alleged fraud and want of consideration as a defense ?

The doctrine, of the jurisdiction of courts of equity in such cases is very ably discussed by Chancellor Kent, in Hamilton v. Cummings, 1 Johns. Ch. R., 517; and, after reviewing the English authorities, he states his conclusions as follows:

“ Perhaps the cases may all be reconciled on the general principle that the exercise of this power is to be regulated by sound discretion, as the circumstances of the individual case may dictate; and that the resort to equity, to be sustained, must be expedient, either because the instrument is liable to abuse from its negotiable nature, or because the defense, not arising on its face, may be difficult or uncertain at law, or from some other special circumstances peculiar to the case, and rendering a resort here highly proper and clear of all suspicion of any design to promote expense and litigation.”

In the present case there is no such liability to abuse because of the negotiable character of the note, for it is overdue, and a transfer of it would not prejudice the defendants; neither is the defense to the note, if true, difficult or uncertain at law, but plain, easy and complete; neither are there any special circumstances, such as delay in prosecuting the note, which afford grounds for the interposition of a court of equity.

We are of the opinion, therefore, that the answer does not contain a counterclaim, because after the action was commenced the defendants could not have maintained an action against the plaintiff to compel him to surrender the note for cancellation. See Matteson v. Ellsworth, supra.

But, conceding that the facts stated in the answer constitute the proper subject matter of a counterclaim, yet they are not pleaded as such, but are expressly pleaded ás a “ defense.” Had the answer simply stated the facts, and demanded afñrma-five relief, it might be held to constitute a counterclaim under our decision in Gunn v. Madigan, 28 Wis., 158; but it is difficult to perceive on what principle the averments in an answer, which the pleading expressly says are interposed as a defense, can be held to constitute a counterclaim. In Burrall v. De Groot, 5 Duer, 379, an answer almost precisely like this was held not to amount to a counterclaim, and we think the ruling in that case was right.

By the Court. — The judgment of the circuit court is affirmed.