Johnson J.
The substantial question, presented by the demurrer, is whether any counter-claim to the plaintiff’s cause of action is set up in the answer. Unless the facts there alleged constitute a counter-claim, the answer presents no defense whatever, and the plaintiff is entitled to judgment upon the pleadings.
This is not an action arising on contract, but is strictly one of equitable cognizance. The counter-claim, therefore, which the defendant is authorized to interpose, must be a cause of action arising out of the contract, or transaction, set forth in the complaint as the foundation of the plaintiff’s claim, or connected with the subject of the action. (Code, § 150, sub. 1.) The legal relation of the parties, as presented by the complaint, is that of owner and incumbrancer of the premises covered by the mortgage, and nothing else. The contract, or transaction, set forth in the complaint as the foundation of the plaintiff’s claim, is the mortgage upon the premises, and the attempt of the defendant to foreclose the mortgage, by proceedings under the statute, and thus divest the plaintiff of his title through the mortgage. The contract, which the defendant seeks to interpose, is one by which the plaintiff has agreed to sell the premises to the defendant and convey on certain conditions. This presents the parties in an entirely new relation, that of vendor and purchaser. And it is entirely clear that neither the contract, nor the cause of action arising upon it, if the defendant has any, arises in any respect out of the mortgage, or out of the proceedings of the defendant to foreclose such mortgage. It is an entirely separate and distinct transaction, and neither of the two causes of action has any dependence upon, or in any manner, that I can perceive, arises out of the other. The code, in allowing counter-claims in actions of this character, has adopted substantially, and almost literally, the rule [496] in regard to filing cross bills, under the former chancery practice. The cross bill could only relate to matter touching the matters in the original bill. (2 Barb. Ch. Pr. 127.) It could not embrace new and distinct matter, not embraced in the original bill; and if it did, no decree could be founded upon such new matter. (Galatian v. Erwin, Hopkins, 48; S. C. 8 Cowen, 361.) The entire subject of the plaintiff's action is this incumbrance, which, as the complaint alleges, the defendant is attempting to foreclose, and which the plaintiff seeks to cancel and remove. And how a cause of action for the specific performance of a contract to sell and convey the premises, is connected with the subject of the plaintiff’s action, it is impossible for me to see. It is true that this mortgage is mentioned in this contract. One of the conditions of the plaintiff’s obligation to convey the premises to the defendant is, that the defendant shall pay and indemnify the plaintiff against the principal and interest on the mortgage. This obligation to sell and convey is not a mutual undertaking between the parties. The plaintiff only is bound. The defendant is under no obligation to pay the moneys mentioned in the undertaking, or to indemnify against the mortgage, which the plaintiff can enforce. It is wholly at her election within a stipulated time. • It does not appear from the answer that the defendant has ever offered, or proposed, to indemnify the plaintiff against this mortgage; nor does she now propose - to do so, by her answer. The defendant haying become the assignee of the mortgage, was at liberty to offer to perform, according to the conditions of the plaintiff’s undertaking, and in case the plaintiff refused to accept such offer, and to perform on his part, bring her action to enforce a specific performance of the plaintiff’s obligation; or she might elect to abandon the contract on the plaintiff’s refusing to perform, and resort to her rights under the mortgage, and obtain title to the premises by means of a foreclosure. But it must be perfectly obvious that the defendant cannot do both. It is impossible for a party to occupy such a position in one action ¿ [497] on one hand resisting the plaintiff’s claim, as owner of the fee, to remove the incumbrance, and insisting upon the right to foreclose, and thus cut off and destroy the plaintiff’s title altogether; and on the other, insisting that the plaintiff shall be decreed to perform his obligation and convey the premises. If, under any circumstances, this contract might have been regarded as a counter-claim to the plaintiff’s action to remove or extinguish the incumbrance of the mortgage, the defendant’s proceeding to foreclose is so hostile to the contract that the court would be constrained to hold that the contract was rescinded by the defendant, and the plaintiff’s obligations under it at an end. The proceeding to foreclose is only consistent with a relinquishment or rescission of the contract to ponvey on the part of the defendant.
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Johnson J.
The substantial question, presented by the demurrer, is whether any counter-claim to the plaintiff’s cause of action is set up in the answer. Unless the facts there alleged constitute a counter-claim, the answer presents no defense whatever, and the plaintiff is entitled to judgment upon the pleadings.
This is not an action arising on contract, but is strictly one of equitable cognizance. The counter-claim, therefore, which the defendant is authorized to interpose, must be a cause of action arising out of the contract, or transaction, set forth in the complaint as the foundation of the plaintiff’s claim, or connected with the subject of the action. (Code, § 150, sub. 1.) The legal relation of the parties, as presented by the complaint, is that of owner and incumbrancer of the premises covered by the mortgage, and nothing else. The contract, or transaction, set forth in the complaint as the foundation of the plaintiff’s claim, is the mortgage upon the premises, and the attempt of the defendant to foreclose the mortgage, by proceedings under the statute, and thus divest the plaintiff of his title through the mortgage. The contract, which the defendant seeks to interpose, is one by which the plaintiff has agreed to sell the premises to the defendant and convey on certain conditions. This presents the parties in an entirely new relation, that of vendor and purchaser. And it is entirely clear that neither the contract, nor the cause of action arising upon it, if the defendant has any, arises in any respect out of the mortgage, or out of the proceedings of the defendant to foreclose such mortgage. It is an entirely separate and distinct transaction, and neither of the two causes of action has any dependence upon, or in any manner, that I can perceive, arises out of the other. The code, in allowing counter-claims in actions of this character, has adopted substantially, and almost literally, the rule [496] in regard to filing cross bills, under the former chancery practice. The cross bill could only relate to matter touching the matters in the original bill. (2 Barb. Ch. Pr. 127.) It could not embrace new and distinct matter, not embraced in the original bill; and if it did, no decree could be founded upon such new matter. (Galatian v. Erwin, Hopkins, 48; S. C. 8 Cowen, 361.) The entire subject of the plaintiff's action is this incumbrance, which, as the complaint alleges, the defendant is attempting to foreclose, and which the plaintiff seeks to cancel and remove. And how a cause of action for the specific performance of a contract to sell and convey the premises, is connected with the subject of the plaintiff’s action, it is impossible for me to see. It is true that this mortgage is mentioned in this contract. One of the conditions of the plaintiff’s obligation to convey the premises to the defendant is, that the defendant shall pay and indemnify the plaintiff against the principal and interest on the mortgage. This obligation to sell and convey is not a mutual undertaking between the parties. The plaintiff only is bound. The defendant is under no obligation to pay the moneys mentioned in the undertaking, or to indemnify against the mortgage, which the plaintiff can enforce. It is wholly at her election within a stipulated time. • It does not appear from the answer that the defendant has ever offered, or proposed, to indemnify the plaintiff against this mortgage; nor does she now propose - to do so, by her answer. The defendant haying become the assignee of the mortgage, was at liberty to offer to perform, according to the conditions of the plaintiff’s undertaking, and in case the plaintiff refused to accept such offer, and to perform on his part, bring her action to enforce a specific performance of the plaintiff’s obligation; or she might elect to abandon the contract on the plaintiff’s refusing to perform, and resort to her rights under the mortgage, and obtain title to the premises by means of a foreclosure. But it must be perfectly obvious that the defendant cannot do both. It is impossible for a party to occupy such a position in one action ¿ [497] on one hand resisting the plaintiff’s claim, as owner of the fee, to remove the incumbrance, and insisting upon the right to foreclose, and thus cut off and destroy the plaintiff’s title altogether; and on the other, insisting that the plaintiff shall be decreed to perform his obligation and convey the premises. If, under any circumstances, this contract might have been regarded as a counter-claim to the plaintiff’s action to remove or extinguish the incumbrance of the mortgage, the defendant’s proceeding to foreclose is so hostile to the contract that the court would be constrained to hold that the contract was rescinded by the defendant, and the plaintiff’s obligations under it at an end. The proceeding to foreclose is only consistent with a relinquishment or rescission of the contract to ponvey on the part of the defendant.
The answer does not deny that the defendant is proceeding to foreclose the mortgage upon the premises, and that allegation in the complaint, therefore, stands admitted. The reason for that proceeding, it is to be inferred from the answer, is, that the plaintiff refused, on being requested, to perform the agreement to sell and convey on his part. The demurrer admits the answer to be true, and the fact is consequently established, for all the purposes of the issue of law now before us, that the defendant offered to perform on her part, at least so far as payment is concerned, and the plaintiff refused to perform on his part. This gave her a right of action for a specific performance, which she might have enforced; instead of which, however, she has resorted to her mortgage to obtain title. We cannot fail to see that her agreement to purchase, in which she was to indemnify the plaintiff against this mortgage, was in substance and effect, an agreement on her part to take a title from the plaintiff subject to the mortgage, and that this proceeding to foreclose is utterly subversive of that agreement, and a decisive step in abandonment of it. Having availed herself of the plaintiff’s refusal to perform, as a reason or occasion for foreclosing the mortgage,.and thus compelled him to come into court by action to protect his title against [498] it as a hostile claim, I do not see how she can now insist that the agreement to sell and convey is still obligatory upon him, so that it can be enforced specifically. In this aspect the contract is neither a legal claim nor a counter-claim against the plaintiff, now subsisting. To my mind this is very clear. But it is unnecessary to go this length in this case, and I prefer placing the decision upon the distinct ground that the defendant’s cause of action, offered as a counter-claim, did not arise out of the contract, or transaction, set forth in the complaint, as the foundation of the plaintiff’s claim, and is not connected with the subject of the action. The substantial ends of justice can never, in my judgment, be promoted by the attempt to try one cause of action in favor of the plaintiff, and another in favor of the defendant, in a single action, where such causes of action have no natural or legal connection with, or relation to, each other. On the contrary I should be led to apprehend a confusion of principles, and serious detriment to the just rights of both. The experiment of cheapening and speeding the administration of justice, by such means, will be likely to end only in confounding rights, and subverting justice • and courts ought never to encourage it, unless constrained to do so, by some explicit requirement of the statute.
The judgment of the special term must therefore be reversed, and judgment ordered for the plaintiff as demanded in the complaint, with leave to the defendant to amend the answer on payment of costs.
Strong J., concurred.