Citation Numbers: 3 Hill & Den. 171
Judges: Bronson
Filed Date: 7/15/1842
Status: Precedential
Modified Date: 1/12/2023
The question is, whether the defendants must resort to a cross action on the plaintiff’s contract of indemnity against fire, or whether they may set up their damages in this action by way of defalcation or discount from the plaintiff’s demand. It is not a question of set-off, as the plaintiff’s counsel seems to suppose, but of recoupment of damages. When the demands of both parties spring out of the same contract or transaction, the defendant may recoupe, although the damages on both sides are unliquidated 5 but he can only set off where the demands of both parties are liquidated, or capable of being ascertained by calculation. It was formerly supposed that there could only be a recoupment where some fraud was imputable to the plaintiff in relation to the contract on which the action was founded; but it is now well settled that the doctrine is also applicable where the defendant imputes no fraud, and only complains that there has been a breach of the contract on the part of the plaintiff. For the purpose of avoiding circuity, or the multiplication of actions, and doing complete justice to both parties, they are allowed—and compelled, if the defendant so elect—to adjust all their claims growing out of the same contract in one action. It was well remarked by Chancellor Walworth, in Reab v. McAllister, (8 Wend. 109,) that “ there is a natural equity, especially as to claims arising out of the same transaction, that one claim should compensate the other, and that the balance only should be recovered.” The defendant has the election whether he will set oup his claim in answer to the plaintiff’s demand, or resort to a cross action: and whatever may be the amount of his damages, he can only set them up by way of abatement, either in whole or in part, of the plaintiff’s demand. He cannot, as in the case of a set-off, go beyond that, and have a balance certified in his favor,
But the objection still remains, and it has been strenuously urged against the defence, that the damages claimed by the defendants do not spring out of the contract of sale, but arise .under the collateral agreement of the plaintiff to indemnify against fire. It is undoubtedly true that there can be no recoupment by setting up the breach of an independent contract on the part of the plaintiff. But that is not this case. Here, there were mutual stipulations between the parties, all made at the same time, and relating to the same subject matter; and there can be no difference, in principle, whether the whole transaction is embodied in one written instrument setting forth the cross obligations of both parties, or whether it takes the form of a separate and distinct undertaking by each party. The plaintiff proposed to sell his wood at auction, and, as an inducement to obtain a better price, he stipulated with the bidders that they should have two winters and one summer to get away the wood, and that in the mean time he would insure them against the consequences of setting fire to his adjoining fallow grounds. Upon these terms the purchase was made by the defendants. If the whole transaction had been set forth in one written contract between the parties, as might very well have been the case, it would have have read substantially as follows : “ Batterman hereby sells to Pierce & Van Ness the standing wood or timber on such a piece of land, for the sum of three hundred and sixty-six dollars, payable in one year with inter-€st 5 and he agrees that the wood may remain on the land for
This question is settled upon authority. In Frisbee v. Hoffnagle, (11 John. R. 50,) the action was upon two promissory notes given by the defendant to secure the purchase money for a piece of land which the plaintiff had conveyed to the defendant with warranty. The defendant was allowed to defeat the action by showing that there had been a breach of the plaintiff’s covenant of warranty. So far as this case proceeds on the ground that any thing short of an eviction will amount to a breach of the covenant of warranty, it has been overruled. (Vibbard v. Johnson, 19 John. R. 77 ; Whitney v.
The principle of allowing the parties to adjust the whole controversy in one action has not been applied with entire uniformity. Two cases are mentioned by Cowen, J. in Ives v. Van Epps, (22 Wend. 155,) where the doctrine was lost sight of. And there may be other cases in the books where, although the decision was right, the reasoning of the court was not entirely consistent with the rule under consideration. The truth
There is clearly nothing in the objection that the defence set up contradicts the note.
I should have said less upon this case if the course of the argument had not proved, that we have been so unfortunate as not to make ourselves fully understood in relation to the principle involved in the discussion.
New trial granted.
See S. P., Britton v. Turner, (6 N. Hamp. Rep. 481.) Nor can he, after caving elected to recoupe, and thus procured the allowance of part of his claim, maintain a cross action for the remainder. (Id.)
See Cowen Hill’s Notes to Phil. Ev. p. 1473.