Xenia Branch Bank v. Lee

7 Abb. Pr. 372

• Court: The Superior Court of New York City
• Decided: October 15, 1858
• Status: Published

Opinion

Br the Court.

*—"Woodruff, J.

—The plaintiffs herein, by their complaint, alleged the drawing of sundry bills of exchange, in the State of Ohio, by various drawers : the discounting of such bills by the plaintiffs in regular course of business, whereby they became the lawful holders and owners thereof: the indorsement of the said bills by them to the Ohio Life and Trust Company for collection, and the transmission thereof to the said company at Hew York for that purpose only : the transfer and delivery of the bills to the defendants in this suit by the said company, unlawfully, without authority, and in violation of its duty; and as collateral security for a precedent usurious indebtedness, owing by the company to the defendants : that the Trust Company had no authority to transfer the bills : that the defendants took them, chargeable with knowledge that the same were the property of the plaintiffs, and that the Trust Company had no authority so to transfer or deliver the same : the retention of the bills by the defendants : a demand of the same from the defendants by the plaintiffs, and a refusal to ‘deliver them. And the plaintiffs thereupon demand judgment for the value of the bills, with interest from the maturity thereof respectively.

That portion of the defendant’s answer which is demurred to, and which is stated fifthly as a “separate defence,” sets forth with greater particularity the drawing of the bills; the terms thereof, and their delivery to the plaintiff;, the indorsement and delivery thereof by the plaintiffs to the Ohio Life Insurance and Trust Company; and the indorsement and delivery thereof by that company, for value, to the defendants, averring that the defendants then became, and now are, the legal owners and holders thereof.

The answer then avers a demand of payment—refusal, protest, and notice to the plaintiffs as indorsers—and claims, thereupon, to have judgment against the plaintiffs for the amount thereof.

The plaintiff’s demurrer assigns for cause, that this part of the answer does not state facts sufficient to constitute either a defence or a counter-claim.

If we are to consider this fifth and separate defence as it is pleaded, viz., a separate defence to the action, and judge of its sufficiency as an answer to the complaint, it is material to notice that it does not contain any denial that the transfer by the Ohio Life and Trust Company to the defendants was without authority; that the bills were held by that company for collection only; that the transfer was in violation of the duty of that company to the plaintiffs; that the defendants took them chargeable with knowledge that the same were the property of the plaintiffs, and that the company had no authority so to transfer them; and, especially, that the bills were transferred to the defendants by the company as a collateral security for a precedent usurious indebtedness.

It is quite obvious that if these bills were transferred to the defendants in fraud of the rights of the true owners (the plaintiffs), and only to secure an antecedent debt, the defendants are not entitled to retain them as against the plaintiffs; nor can they make a title so acquired the foundation of any claim to recover the amount thereof from the plaintiffs under the indorsement by the latter.

And it is equally clear that if the bills were so transferred in fraud of the plaintiff’s rights, but to secure to the defendants a usurious demand claimed by them of the Trust Company, the defendants have no title to retain them from the plaintiffs nor found a counter-claim thereon.

And so, if the averment that they took them- chargeable with knowledge that the same were the property of the plaintiffs, and that the Trust Company had no authority to transfer them, may be regarded as a statement of a fact, then their title to retain the bills, and their title to set them up as a counter-claim, equally fail.

The answer in this case contains, it is true, a denial of the allegations of the said complaint, and each and every of the said allegations. This is the “ first” defence set up in the answer. If this may be referred to, and be made to spell out the fifth defence, then it is not true that the allegations above referred to are not denied. But it is equally true that if in determining the sufficiency of the fifth defence we are to take the first defence to be true, then the defendants have no title, for the counter-claim rests upon the very same transfer to the defendant which the complaint' alleges, and which this first defence denies; and if no such transfers were made,<er if no such bills were drawn as the complaint alleges, then, whether the plaintiffs have any title to recover or not, it is clear that the defendants have no counter-claim.

This palpable conflict of allegations, if it shows nothing else, illustrates the impropriety and inconsistency of attempting to sustain one defence, pleaded separately, by incorporating therein another distinct defence containing averments partly consistent and partly inconsistent therewith, and which, if taken to be wholly true, would destroy the defence sought to be aided.

Other considerations, however, which seem to us to be quite conclusive, forbid the attempt thus to bolster up a defence separately pleaded, and affirm the true rule to be, that each defence so separately pleaded must be in itself complete, and must contain all that is necessary to answer the whole cause of action, or to answer that part thereof which it purports to answer.

Section 150 of the Code permits a defendant to set forth by answer as many defences and counter-claims as he may have, whether legal or equitable, or both. They must each be separately stated, and refer to the causes of action which they are intended to answer in such manner that they may be intelligibly distinguished.

This language of itself imports, that when more than one defence or counter-claim is interposed, each must be a sufficient defence or counter-claim to answer that cause of action to which it is addressed; or where the cause of action can be divided, then to answer a part thereof. The provision in this respect is even more explicit and guarded than the similar language in the Revised Statutes, which permitted “ the defendant in any action to plead as many several matters as he shall think necessary for his defence.” (2 Rev. Stats., 352, § 9, 27.)

The requirement to state them separately imports that these separate statements are not to be parts of a defence. Unless they are legally complete and sufficient, they are not defences; and if it is necessary to their completeness to refer to and include part of what is alleged as another distinct defence, then they are not separately stated.

This is made still more clear by section 153, which permits the plaintiff to “ demur to one or more of such defences or counter-claims, and reply to the residue of the counter-claims.” The reason for requiring a separate statement of each defence or counter-claim here becomes apparent. It is not merely that the pleading may be thereby presented in an orderly form and be more intelligible, but that the plaintiff may address his demurrer specifically to any one of the separate statements set up as such defence or counter-claim, and allege its insufficiency.

It is unnecessary to do more than refer to the familiar rule under our former system, that required eachyfez to be complete in itself, and to constitute a complete defence to the allegations to which it was addressed. (2 Chitty, Pl., 511; Narius a. Keelen, 2 Johns. R., 63; Spencer a. Southwick, 18 Ib., 593; Hallett a. Holmes, 18 Ib., 28 ; Van Ness a. Hamilton, 19 Ib., 349.)

The same reason now exists, and there is nothing in the language of the Code indicating that the rule is now relaxed; but, as already intimated, the contrary is plainly involved in the provisions of the Code itself.

How far it may be competent for a defendant, for the purpose of avoiding repetition, to aver, once for all, certain facts alike applicable to each of several defences or counter-claims, and, having averred them either in one of his distinct and separate statements of a defence, &c., or, by way of introduction to all, to refer thereafter, in his subsequent separate statements, intelligibly and distinctly to them, so as by reference to clearly include them in each, it is unnecessary to consider. Ho such attempt is made in the present case.

These views inevitably lead to the conclusion that the fifth “ separate defence” here demurred to is insufficient. It contains no denials of the allegations in the complaint above enumerated, nor any averments inconsistent therewith. These allegations must, therefore, for the purposes of this demurrer, be taken as admitted.

We are not unmindful of the circumstance that the arguments addressed to us, in support of the demurrer upon this appeal, did not embrace the objections to the answer which have thus far been considered; and the suggestion may naturally arise, that the court are not called upon to seek out defects in the answer to which counsel have not called their attention. This may sometimes be so where the objections relate to matters which are formal merely, or which would be cured by a trial and verdict upon the very right of the matter. But we are not willing in this case to enter a deliberate judgment, which on the record pronounces this defence a sufficient defence, when we are clear that it is wholly defective and insufficient. Indeed, it is very far from clear that, by so doing, we should not injure the very party in whose favor we should so pronounce judgment ; for should that judgment become the subject of review in the court of last resort, it must, we think, be pronounced erroneous, and be reversed. And we do not see how that court could be informed what arguments were urged here, or that we did not decide on all grounds that the defence was sufficiently jfieaded.

The reasons given are therefore decisive of the present appeal, and we might dismiss the subject without disposing of the question actually argued. But the parties have come to the discussion of this appeal for the purpose of testing the defendants’ right to set up the matters contained in this answer as a counterclaim. There is little doubt that the defendants will amend their answer, by inserting in the fifth defence the matters of denial which are already contained in other parts of the answer, and which, if inserted in the fifth defence, would relieve it from the objections which have been noticed. And if we refrain from the expression of an opinion upon the main question, we probably only put the parties to the expense and delay of coming here again upon a fresh demurrer and new appeal, to argue again the very question already fully and ably argued on this occasion. Under these circumstances, we think they are now entitled to our views upon that question.

Indeed, if we have considered that question, and are of opinion that such a counter-claim is not to be allowed, it may be.pertinently asked, why should the court consider at all the defects in the answer which have above been pointed out ?

The great question in controversy then is—In an action in the nature of trover by a plaintiff who has indorsed notes or bills of exchange, brought to recover the value thereof from a defendant in whose possession they are, and who claims title thereto through the plaintiff’s indorsement, can the defendant set up title in himself, demand.of payment, protest, and notice, and ask, by way of counter-claim, a judgment against the plaintiff as indorser?

By section 150, subdivision 1,2, of the Code, the counter-claim which the defendant may set up in his answer may be, 1st, “ 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 and, 2d, “In an action arising on contract, any other cause of action arising also on contract, and existing at the commencement of the action.”

This division of the section shows that there may be a counterclaim when the action itself does not a/rise on contract: for the second clause is expressly confined to actions arising upon contract, and allows counter-claims, in such cases, of any other cause of action also arising on contract; and this may embrace probably all cases heretofore denominated “ set-off,” legal or equitable—and any other legal or equitable demand, liquidated or unliquidated, whether within the proper definition of set-off or not, if it arise on contract. (Gleason a. Moer, 2 Duer, 612.)

The first subdivision would therefore be unmeaning as a separate definition, if it neither contemplated cases in which the action was not brought on the contract itself in the sense in which these words are ordinarily used, nor counter-claims which did not themselves arise on contract.

This first subdivision by its terms assumes that the plaintiff’s complaint may set forth, as the foundation of the action, a “ contract” or a “ transaction.”

The Legislature, in using both words, must be assumed to have designed that each should have a meaning; and, in our judgment, their construction should be according to the natural and ordinary signification of the terms.

In this sense every contract may be said to be a transaction; but every transaction is not a contract.

Again: the second subdivision having provided for all counterclaims arising on contract—in all actions arising on contract— no cases can be supposed to which the first subdivision can be applied, unless it be one of three classes-, viz.:

1st. In actions in which a contract is stated as the foundation of the plaintiff’s claim—counter-claims which arise out of the same contract; or,

2d. In actions in which some transaction, not being a contract, is set forth as the foundation of the plaintiff’s claim— counter-claims which arise out of the same transaction; or,

3d. In actions in which either a contract, or a transaction which is not a contract, is set forth as the foundation of the plaintiff’s claim—counter-claims which neither arise out of the same contract, nor out of the same transaction, but which are connected with the subject of the action.

Whether this analysis of the first subdivision makes its import more clear, or will aid it in its application to particular cases, we will not affirm; but we think it is plainly a true distribution of the language of the section, and a necessary reading of the subdivision, if all its terms are to have a/ny meaning.

What, then, is meant by the clause which, “ in actions in which a contract is set forth in the complaint as the foundation of the plaintiff’s claim, permits the defendant to counter-claim a cause of action arising out of the same contract ?”

At the first view, this would seem to provide for a case also covered by the second subdivision. But a moment’s reflection suggests that we had, when the Code was enacted, been familiar with a class of actions in which, though a contract was the substantial foundation of the plaintiff’s claim, the action was not brought on the contract, but on the duty which the law created. Actions which formerly were called ex delicto quasi ex contractu,, were of this class; e. g., actions on the case against common carriers, or against innkeepers, in which the plaintiff might declare on the contract in the form of assumpsit, or on the duty in the form of case ex delicto.

And other actions on the case may perhaps furnish examples that would illustrate what is meant by the clause above recited; e. g., an action on the case for a false warranty—a form of action formerly used—instead of declaring on the warranty as a contract.

In these and similar cases, it may not be altogether inaccurate to say that a contract may be the foundation of the plaintiff’s claim, although the action does not arise on the contract.

And in all such cases, a counter-claim, whether it be a cause of action, legal or equitable, arising out of the same contract, may be set up by the defendant.

But secondly, the "subdivision authorizes, in actions in which a transaction, not being a contract, is set forth as the foundation of the plaintiff’s claim, counter-claims which arise out of the same transaction.

This, we think, includes the case before us. What other legal or equitable counter-claims it also includes, it is unnecessary now to inquire.

The “ transaction” here in question may either include the history of the bills of exchange in question, so far as the title of the plaintiffs or defendants depends upon that history; or, the “ transaction” may perhaps be confined to the manner and circumstances of the transfer to the defendants.

In the first view of the meaning of that word, “ the transaction set forth in this complaint as the foundation of the plaintiff’s claim” consists of those facts which are alleged as showing the plaintiffs’ title to the bills, their delivery by the plaintiffs for a special purpose to the Trust Company, the transfer by the Trust Company to the defendants, and their assertion of right to detain, or their actual detention thereof.

All these concur to establish the defendants’ counter-claim, and are an essential part thereof. In a just sense, the counterclaim arises out of them.

The difference between the parties consists not in a denial by the defendants that the transaction relied upon by the plaintiffs took place, but both admit, and in fact assert, that it occurred. One of the parties connects with it certain particulars, which, if established, establish the plaintiffs’ right to recover the bills, or their value. The other, connects with the transaction certain other particulars, which, if established, not only refute the plaintiffs’ claim, but establish the defendants’ right to recover from the plaintiff the amount of the bills.

The parties differ about the accessory facts only; and when, upon the trial, the very truth of the matter is ascertained, the actual transaction (which the plaintiffs set forth as the foundation of their claim, and which the defendants set forth as that out of which their claim arises) will be developed, and one or the other will be seen to be, by reason of that transaction, entitled.

The transaction is, then, single and entire; and it is either a just foundation of the plaintiffs’ claim, or it entitles the defendants to what they claim from the plaintiffs.

The particulars about which the parties now differ modify the legal effect which the leading facts will have upon the rights of the parties, and point the transaction favorably to the one or the other. Some facts enter into the plaintiffs’ case which, of course, do not enter into the defendants’ case, and vice versa. But, from the nature of the subject, this must always be so. The Legislature were not so absurd as to mean that the defendant might counter-claim, when the very facts alleged by him, with all their particulars, were identical with those alleged by the plaintiff. For, if to constitute his counter-claim no other facts or particulars were necessary than the plaintiff had himself stated, there would be no occasion for the defendant to answer at all. He should go to trial on the complaint itself.

If, therefore, the transaction set forth in the complaint of the plaintiff as the foundation of the plaintiffs’ claim be here regarded as embracing the history of the bills—their drawing— transfer to the plaintiffs—their indorsement to the Trust Company, and the transfer by the latter to the defendants—then the defendants’ counter-claim arises out of the same transaction: each party, however, insisting upon certain accessory facts or particulars which make the transaction create a right in the one or the other, as the case may be. And when tire actual transaction finally appears, then it will be certain that this same transaction is either a legal foundation for the plaintiffs’ claim, or out of it arises a cause of action in favor of the defendants against .the plaintiffs.

So, if the transaction set forth as the foundation of the plaintiffs’ .claim be regarded as more narrow, and as being the transfer of the bills by the Trust Company to the defendants, then, as before, the defendants’ counter-claim arises out of the same transaction—to wit, that transfer.*

The circumstance that the defendant has to superadd an allegation of demand, protest, and notice to the plaintiffs as indorsers, does not alter the case. This added fact is only a means of showing how the defendant’s cause of action arises out of the transaction relied upon, and is made complete or consummate. If it were more doubtful than it seems to us to be, that the counter-claim, in this case arises out of the same transaction on which the plaintiff’s claim is founded, we should still think it clear that the defendant’s counter-claim might be set up. The third clause in the analysis above made of the first subdivision of section ISO of the Code clearly allows it.

The present is a case in which the counter-claim is directly and immediately “ connected with the subject of the actionP

The subject of the action is either the right to the possession _ of the bills of exchange in controversy, or it is the bills of exchange themselves. The defendant’s counter-claim is not only connected with, but inseparable from, either or both.

The object of the action is damages, but the subject is the bills. of exchange, or the right to their possession. If the plaintiffs show themselves entitled to these bills, they must recover damages. If the defendants show themselves entitled, then they are in a condition to assert their right to have the amount thereof from the plaintiffs. The plaintiffs’ claim, and the defendants’ counter-claim, are then connected with the subject-matter which is to be inquired into in this action; and the investigation of the subject will determine whether the plaintiffs are entitled to the bills or to their value as damages, or the defendants are entitled to hold them, with recourse to the plaintiffs as indorsers.

And this suggests the propriety and wisdom of the provision of the Code under consideration, and the reason which induced its enactment. After the question upon which the right of the plaintiffs to have these bills of exchange has been fully investigated and determined in favor of the defendants, there would seem no sensible reason for turning the defendants over to a new suit to recover against these plaintiffs as indorsers, with all the additional expense and delay which such new action might involve, and in which also the title of these defendants might be again put in issue.

It is plausibly argued that the counter-claim provided for in the first subdivision of § 150 embraces only what was formerly called recoupment, and that recoupment implied an admission of the plaintiff’s claim, and sought an abatement therefrom, either to the extinguishment of a part or the whole thereof. Such was, no doubt, the character of recoupment. It implied that the plaintiff’s claim was to be allowed, but that another cause of action was to be satisfied out of it. (Nichols a. Dusenbury, 2 Comst., 286; Vassear a. Livingston, 3 Kern., 257; Batter-man a. Pierce, 3 Hill, 171.)

But now the definition of counter-claim must be considered in connection with section 174 of the Code, which authorizes the Court in the same action to grant to the defendant any affirmative relief to which he may be entitled.

This opens to the defendant the full right to assert his claim to any relief, legal or equitable, to which, upon the facts alleged in his answer, he would be entitled had he prosecuted his cross-action. '

It permits a defendant, therefore, to set up, in answer to an action on a note or bond, facts which show not only that he ought not to be required to pay the note or bond sued upon, but that the note or bond ought to be given up to be cancelled; or, in the language of Mr. Justice Bosworth, in Gleason a. Moer (2 Kuer, 642), it permits the defendant to ask “ any equitable relief to which he is entitled against a legal demand—which formerly could only be had by filing a bill in chancery—and also the affirmative relief, which in equity suits could be had only by a cross-billand for the same reason it must be held to permit the defendant to have relief in its nature strictly legal, if it arises out of the very matter or subject which the plaintiff’s claim brings under investigation. ' (Ogden a. Coddington, 2 K. D. Smith’s G. P. P., 326, 327.)

Again: the right of the plaintiff to claim, and the right of the defendant to counter-claim, upon any given or supposed facts in controversy, must, we think, be reciprocal.

¡Now, suppose the defendants were plaintiffs setting up their title to the bills of exchange in question, and claiming to recover the amount of these bills from the'Xenia Bank (the present plaintiffs) as indorsers, it could not for a moment be doubted that the then defendants (the present plaintiffs) could, under this same first subdivision of section 150, set up in answer the very facts which they have in this complaint alleged, and pray, as a counter-claim, that these bills be delivered up to them as their own property. Their claim would arise out of the same transaction, and would he connected with the subject of the action.

It seems to us to follow inevitably, that the principle is the same when, as now, the Xenia Bank are prosecuting the defendants. In either case, thei;e is one controversy involving the same transaction, and the rights which arise out of that transaction— one contest relating to and connected with the same subject, and it may properly determine the whole right of the parties reciprocally ; and we think it was the intention of the Legislature to permit such settlement of the whole matter in dispute in one action.

We are, therefore, constrained to say, that whatever doubts have been heretofore expressed upon the question, whether a defendant could set up as a counter-claim a cause of action at law which could not before the Code have been set up in his plea by way of recoupment, those doubts are not warranted.

Our conclusion is, therefore, upon the question which alone was argued upon this appeal, that the defendants were at liberty to set up as a counter-.elaim the liability of these plaintiffs as indorsers of the bills of exchange in question, and their title to recover against them as such indorsers.

But, for the reasons first above stated, the defence herein de•murred to is defective and insufficient, and upon that ground the order appealed from must be reversed, and the demurrer be sustained with costs of the demurrer at special term to the plaintiffs to abide the event of the suit, but with leave to the defendants to amend within twenty days, and without costs, on this appeal, to either party.

Present, Boswobth, Oh, J., Hoffman, Slosson, and Woodbukf, 33,

The following cases at special term, in the Supreme Court and Hew York Common Pleas, illustrate the principles discussed by the court.

Goteler a. Babcock (New York Gammon Fleas, Special Term, 1858) was an action for chattels. The answer alleged that the plaintiff was indebted to the defendant for services, and that the property in question was held by the defendant by virtue of a lien for the amount of such indebtedness ; and the defendants claimed judgment for the amount due him. The plaintiff moved to strike out this defence.

Brady, J.—The answer in this action is, substantially, that the defendant has a lien upon the property, to recover which the action is brought, for services as a factor or attorney at law, or both. The action is one of those denominated, under the system which prevailed prior to the Code, as an action of tort; in which set-offs were not allowed, and are not now allowed by the Code. (Pattison a. Bicharás, 22 Barb., 143), although the defendant may recoup his damages, or set up a counter-claim on 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, subdv. 1.)

The defence interposed, though good as a lien, and therefore a justification for withholding the things claimed, is not good as a counter-claim upon which the defendant is entitled to affirmative relief. His remedy is to foreclose his lien in the manner provided by law. That portion of the answer objected to, therefore, will not be stricken out because it is good as a defence ; but in so far as it is alleged or asserted to be a counter-claim, it must be disregarded. If the lien be established the plaintiff must fail, and judgment be rendered against him on the question of the right to possession, but nothing more. The motion to strike out will, for the reasons assigned, be denied, with $5 costs to abide the event.

Bobinson a. Flint (Supreme Court, First District, Special Term, 1858).—This was an action for damages, for false representations in inducing the plaintiffs to enter into a contract, and for a breach of the contract. The two grounds on which damages were claimed were separately stated in the complaint as separate causes of action. The defendants demurred on the ground, 1. That the first statement did not state facts sufficient to constitute a good cause of action; and, 2. That the two causes of action were improperly united.

Mr. Hudson, for the plaintiffs.

Foster Thompson, for the defendants.

Ingbaham, J.—The complaint avers sundry contracts made by different persons for furnishing iron to the Sacramento Valley Bailroad Company, by which a certain quality of iron was to be furnished at a certain price. The plaintiffs after-wards assumed the contract from the company, provided it could be carried out as originally contemplated. They then applied to the defendants to ascertain if the iron originally purchased by the company was still on hand in Boston, and whether the defendants would carry out the contract as originally contemplated. It then avers that the defendants, intending to defraud the plaintiffs, represented to them that the iron was still on hand, kept for the company, and that they were in a condition to carry out the contract, when such representations were known to the defendants to be untrue ; that in consequence of such false representations they made a contract with the defendants to deliver the said iron; that the defendants delivered other iron of an inferior quality, and that the plaintiffs were damaged thereby.

These facts show a cause of action for a fraudulent representation. What the damages may be, or whether the plaintiffs claim in their complaint damages such as can be recovered in the action, is not a question to arise on demurrer. The demurrer admits all the facts, and the only question is, whether a good cause of action is made out by them. Of this there can be no doubt. The complaint shows a false representation, known to be false, made on the foundation of a contract with a person deceived thereby, and damages in consequence of such deception. I know no other requisite to make out a sufficient cause of action for a false representation.

The second cause of demurrer is the improper joinder of actions. In addition to the first cause for the tort, the complaint contains a second cause of action, founded on the same contract, which, after referring to the contract, and averring that the defendants by it agreed to send the iron to San Francisco, states that they did not send the iron before mentioned, but delivered iron of inferior quality of much less value, and that they sustained great damage thereby.

It is contended that this claim arises on the contract, and that the other being in tort, the two causes are improperly joined together.

It must be conceded that causes of action arising out of different transactions must be of one of the classes enumerated in section 167, and that one cause for contract and one for tort cannot under such circumstances be united. The latter cause of action is evidently intended to be a claim on contract for not delivering the iron as agreed to by the defendants. It avers no fraud or false representation upon which a tort could he charged, and without that it cannot be said to belong to the same class, as a cause of action, with the first; unless it can be brought within the provisions of the first subdivision—viz., “Where the several causes of action all arise out of the same transaction, or transactions connected with the same subject of action.”

It has been held that causes of action, although arising out of the same transaction, cannot be joined if they are inconsistent with each other. (Smith a. Hal-lock, How. Pr. R., 73 ; Sweet a. Ingram, 12 lb., 331.)

But I have not been referred to any case where the court have held that two causes of action arising out of the same transaction, and upon both of which a recovery may be had, may not be united, even if they differ in their nature, and could not therefore be united if they arose out of different transactions.

Section 167 of the Code provides that the plaintiff may unite several causes of action, whether they be such as were denominated legal, or equitable, or both, where they all arize out of the same transaction, or transactions connected with the same subject of action.

The plain reading of this section is, that the plaintiff may unite, first, as many legal causes of action as'he pleases, arising out of the same transaction : second, as many equitable causes of action as he pleases, arising out of the same transaction : third, as many legal and equitable causes of action as he pleases, arising out of the same transaction: fourth, as many causes of action as he pleases, arising out of different transactions connected with the subject of the action.

In Smith a. Halloek (8 How. Pr. R., 73), Justice Strong says that this section refers to cases which are consistent with each other—not to those which are contradictory.

In Dorman a. Kellam (4 Abbotts’ Pr. R., 202), the court held such causes to be improperly united, but those causes did not arise out of the same transaction.

In Badger a. Benedict (4 Abbotts’ Pr. R., 176), the point was distinctly held that such causes might be united—viz., one in tort and one in contract, both of which arose out of the same transaction.

By transaction, I understand the whole proceedings, commencing with the negotiation and ending with the performance of the contract, where the matter in controversy arises out of a contract; and I see no difficulty in carrying out, under the present system of pleading, what is the fair meaning of the words used in section 167. The answer is only to be a statement of facts showing that upon each count the plaintiff has no right to recover. The judgment, if on both claims, would only be for so much money; and there is no difficulty now in en ■ tering up judgment as formerly, even if the causes are in tort and contract. The only point upon which there would be doubt as to the proper proceeding, might be as to the execution. In one case (tort) it might be against the person—in the other, against the property. The answer to this is, if the plaintiff thus unites claims, he loses his right to proceed against the body, and must be content with the other execution.

My conclusion is, that the demurrer is not well taken, and that plaintiffs must have judgment.

Judgment for plaintiffs on demurrer, with leave to defendants to answer on payment of costs.

Felleeman a. Dolan (New York Common Pleas, Special Term, 1858).—This was an actioff for slander, in which the answers set up : 1. A denial; and, 2. A counterclaim for a slander uttered by the plaintiff against the defendant.

Daly, J.—Without passing upon the question whether, in an action of slander, slanders by the plaintiff against the defendant may be set up by way of counterclaim, it is sufficient for the decision of this motion to say, that it does not appear from the answer that the defamatory words alleged to have been uttered by the plaintiff against the defendant, had any connection with the subject-matter of this action, except an averment at the end of the answer, that they had stated by way of conclusion. If slander of the defendant by the plaintiff could be the subject of a counter-claim, where the plaintiff brings an action of slander, which I very much doubt, it would have to appear upon the face of the pleadings that it arose out of the transaction which was the foundation of the plaintiff’s claim, or was connected with the subject of the action. In this case no connection is shown between the two causes of action. It does not appear that the words uttered by the defendant were uttered by way of recrimination, after the uttering of the words attributed to the plaintiff at the same interview, and in the presence of the same hearers or bystanders; but, on the contrary, the defendant denies absolutely each and every allegation in the complaint.

He first denies that he uttered the words attributed to him in the complaint, and which constitute the plaintiff's cause of action, and then sets up that he has a cause of action against the plaintiff for words spoken by the plaintiff respecting him, shortly before the day when, it is alleged in the complaint, that he uttered the words attributed to him against the plaintiff. This is, therefore, a distinct cause of action, in no way connected with the other action, or forming any part of the transaction on which the plaintiff’s claim is founded. The defendant does not set up that what the plaintiff said respecting him induced him to speak of the plaintiff as alleged, in retaliation. On the contrary, he does not admit, but expressly denies, that he said any thing about the plaintiff. By his own showing, then, there is no connection between the two. One did not arise or grow out of the other ; and without something of the kind they cannot be said to arise out of the same transaction, or to be connected together at all.

They are distinct causes of action of the same genus or kind, and that is all. The allegation of the defendant at the close of the answer, that all the matters set up in the answer are connected with the subject of the plaintiff’s action, does not make it so. We look to the substantive facts on which he rests his counter-claim, to determine whether the claim is connected with the subject of the action or not. The motion must be granted.