J. C. Felthouse & Co. v. Bresnahan

Plaintiff brought this action to recover approximately seven thousand nine hundred dollars, with interest, alleged to be due on two notes given by defendants. Answering the complaint, execution of the notes was admitted; but by way of cross-complaint, it was alleged that the notes were renewal notes given as part of the purchase price of certain real estate; that the purchase of the real estate was made because of certain representations as to the character of the property which were false and untrue, and that knowledge of the fraud had come to defendants within three years last past. Then followed a prayer that the plaintiff's cause of action on the notes be dismissed, and also that the defendants recover damages in the sum of thirty thousand dollars.

The answer to the cross-complaint put the matters alleged therein in issue, and further set up that the action laid in the cross-complaint had not been begun within the time limited by law.

Upon trial of the action, after plaintiff had introduced its evidence, the defendants sought to offer evidence conforming to its cross complaint, whereupon the plaintiff objected on the ground that no excusatory facts were pleaded to show a reason for failure to learn the facts concerning the fraud sooner. The court sustained the objection. No motion was made to amend the pleadings, and the jury were directed to return a verdict for the plaintiff. This appeal resulted.

[1] It is urged that the court erred in sustaining the objection to the evidence under the cross-complaint. In part, the ruling of the trial court was correct. No excusatory facts being set out in the complaint, and no request being made to amend, it is clear that appellants were not entitled to recover against the respondent on a cause of action for fraud. Noyes v. Parsons,104 Wn. 594, 177 P. 651; Davis v. Rogers, 128 Wn. 231,222 P. 499.

[2] But this could not affect the right of appellants to offer evidence as to the fraud in defense against the notes; the rule being that the statute of limitations never runs against a defense arising out of the transaction sued upon by the plaintiff. The defendant in such an action may be barred by the statute from securing damages by reason of the fraud, but he can always offset the damages to the extent of the claim of the plaintiff. Fruit v.Fancher, 137 Wn. 311, 242 P. 11.

[3] Respondent admits the rule of Fruit v. Fancher, supra, but contends that, because the appellants did not in their answer ask for recoupment to the extent of respondent's claim, but prayed for damages far in excess of that sum, they cannot recover. However, it must be borne in mind that the prayer was two-fold; the first part being that respondent's cause of action be dismissed. If respondent had demurred to the cross-complaint the court would, no doubt, upon hearing, have stricken the prayer for damages in the sum of thirty thousand dollars, but allowed the claim of fraud to stand as a defense to the notes. This was the procedure followed in Fruit v. Fancher, supra.

The judgment is reversed, with instructions to grant a new trial.

MACKINTOSH, C.J., FRENCH, FULLERTON, and MAIN, JJ., concur.