Braithwaite v. Aiken

• Decision Date: 24 July 1893
• Citation: 3 N.D. 365,56 N.W. 133
• Parties: BRAITHWAITE v. AIKEN et al., (REA et al., Interveners.
• Court: North Dakota Supreme Court

3 N.D. 365

56 N.W. 133

BRAITHWAITE

v.AIKEN et al., (REA et al., Interveners.¹

Supreme Court of North Dakota.

July 24, 1893.

Syllabus by the Court.

1. Plaintiff and interveners having recovered judgment against the defendants, the interveners claimed the money under a written contract with plaintiff. (See the contract referred to in the opinion.). Such contract provided that the interveners and the plaintiff (defendant in intervention) should contribute certain sums to a common fund with which to purchase the steamboat Eclipse; that the title should be taken in the names of plaintiff and another; that they should operate the boat, and pay over her earnings to the interveners, until their advances and certain claims of theirs against the boat were paid. After that the interveners' interest in the contract was to cease, and the boat to belong absolutely to plaintiff and the other purchaser. The boat was purchased by plaintiff and the other person under the agreement, and it is for the earnings while plaintiff was operating her under the agreement that the plaintiff recovered judgment. The intervenersclaimed the money due under this judgment as money to which they were entitled under the agreement. Held, that the plaintiff (defendant in intervention) cannot set up as a counterclaim a cause of action for the conversion of his interest in the steamboat referred to in such contract; that the cause of action for the tort did not arise out of the contract or transaction set forth in the intervention complaint as the foundation of the interveners' claim, and is not connected with the subject of the action.

2. Nor could the cause of action for tort be sustained as an equitable set-off, independent of statute, there being no averment that the interveners are insolvent. The mere fact that they are not residents of the state does not warrant the application of the doctrine of equitable set-off.

3. Even if the interveners were insolvent, equity would not allow the set-off of a cause of action for an independent tort against a claim arising on contract.

4. One whose property has been converted may waive the tort and sue for the benefits received by the wrongdoer, although he has not disposed of the property converted; but the intent to waive the tort must appear on the face of the pleading.

5. One who intervenes in an action subjects himself as fully to the jurisdiction of the court as if he had brought an original action against the person against whom his complaint in intervention is filed, and the defendant in intervention may recover an affirmative judgment against the intervener either because of matters growing out of the intervener's claim or by establishing a counterclaim the same as a defendant in an ordinary action.

Appeal from district court, Burleigh county; W. H. Winchester, Judge.

Action by William Braithwaite against Alken and others. William Rea and George F. Robinson, partners as Robinson, Rea & Co., and others, intervened. To the complaint in intervention, plaintiff, Braithwaite, answered, setting up counterclaims. To this answer interveners demurred. From an order overruling their demurrer, interveners appeal. Reversed.

Louis Hanitch, F. H. Register, and E. W. Camp, for appellants. George W. Newton, for respondent.

CORLISS, J.

This case is no stranger in this court. In various forms it has already been before us several times. 1 N. D. 455, 475, 48 N. W. Rep. 354, 361;2 N. D. 57, 49 N. W. Rep. 419. On this appeal we have to deal with the rights of the interveners and the plaintiff. The defendants are no longer interested in the contests of the cause. Their liability to the plaintiff and the interveners has been finally established, and now the only strife is between the interveners and the plaintiff over the judgment they have recovered. By their complaint in intervention, the interveners have ingrafted upon the original suit another controversy. In that controversy they have become plaintiffs, and the plaintiff has become defendant. To their complaint in intervention, the plaintiff Braithwaite interposed an answer, which embodied two counterclaims. Other matters appear in the answer, but upon this appeal we have to decide only the question whether these counterclaims set forth in the answer are such counterclaims as the defendant Braithwaite had a right to interpose to the claim of the interveners. There is no contention that the first counterclaim does not contain facts sufficient to constitute a cause of action; but it is urged that this claim which the defendant Braithwaite seeks to set off against the interveners' claim to the judgment is not a legal counterclaim under the statute. The question was raised in the court below by demurrer to the answer to the complaint in intervention. From the order overruling the demurrer the interveners have appealed. The judgment in favor of the plaintiff and the interveners, over which this contest is pending, was recovered in an action for freight earned by the plaintiff Braithwaite in the transportation of army stores for the defendants from Bismarck to Ft. Buford, by the steamer Eclipse. The interveners' alleged interest in the judgment grows out of a written contract, which is fully set out in the opinion of this court in the case of Braithwaite v. Aikin, 1 N. D. 475, 48 N. W. Rep. 361. The substance of the agreement was that the interveners and the defendant Braithwaite were to contribute in cash certain sums of money with which to purchase the steamer Eclipse, which was about to be disposed of at judicial sale, the interveners being interested in making this purchase because of claims held by them against the steamer, which would be cut off and rendered valueless by the sale. So far as they were concerned, their sole purpose in entering into the arrangement was to save, if possible, the money which they had theretofore ventured on the security of the boat. With the fund so created, the defendant Braithwaite was to attend at the marshal's sale, and buy the boat, taking the title in the name of himself and the intervener Joseph McC. Biggert as trustee. Under this purchase the boat was to be run by Braithwaite as captain and Biggert as financial agent; and out of her earnings the claims of the interveners were to be paid in full, and also the sums contributed by them to the purchase fund; and thereafter the Eclipse was to be the absolute property of Braithwaite and Biggert. The interveners claim that they have not been paid in full, and that the judgment for freight earned by the steamer under this contract, or some part of the judgment, belongs to them, and they ask for an accounting. It is obvious that the interveners' cause of action against Braithwaite, set forth in the complaint in intervention, is upon contract. The counterclaim interposed is for the conversion of the steamboat Eclipse by the interveners. The defendant Braithwaite seeks to recover against these wrongdoers the value of his half interest on account of such conversion.

The right to set up a counterclaim rests upon statute, except in those cases which are peculiar in their nature. In those cases, equity, to prevent injustice, will allow counterclaims which the law ignores. Our first inquiry is whether the defendant Braithwaite has a right to set up this tort as a counterclaim under the statute? This brings us to the statute itself. It provides: “The counterclaim mentioned in the last section must be one existing in favor of a defendant and against a plaintiff, between whom a several judgment might be had in the action, and arising out of one of the following causes of action: (1) A cause of action arising out of the contract or transaction set forth in the complaint as the foundation of plaintiff's claim, or connected with the subject of the action. (2) In an action arising on contract, any other cause of action arising also on contract and existing at the commencement of the action.” Section 4915, Comp. Laws. Under the second subdivision, any other cause of action arising on contract would constitute a good counterclaim. It is contended that the defendant Braithwaite had a right to waive the tort involved in the conversion of his interest in the steamboat, and sue in assumpsit. The averments of the counterclaim would not bring him within the rule that a tort may be waived, as it is laid down in many of the cases. The doctrine that the injured party may waive the tort and sue in assumpsit is limited by these decisions to cases where the wrongdoer has sold the property, and received therefor money or money's worth. Jones v. Hoar, 5 Pick. 290;Mhoon v. Greenfield, 52 Miss. 434;Willet v. Willet, 3 Watts, 277;Stearns v. Dillingham, 22 Vt. 624;Watson v. Stever, 25 Mich. 387; Balch v. Pattee, 45 Me. 41; Kidney v. Persons, 41 Vt. 386; 1 Amer & Eng. Enc. Law, 888; cases in note to Webster v. Drinkwater, 17 Amer. Dec. 242; Tuttle v. Campbell, 74 Mich. 652, 42 N. W. Rep. 384;Moses v. Arnold, 43 Iowa, 187. There is no allegation in the answer that the interveners ever sold the steamboat, or in any manner received money or money's worth for her. But we are of opinion that this limitation of the doctrine that the tort may be waived is without foundation in reason or principle. The whole doctrine is built upon a fiction. It asserts that what was done in defiance of the owner's rights was in law done with the most perfect regard for his rights; that the wrongdoer has received the money for the owner, or that he has bought the property from the owner at its fair value. This fiction is indulged only in the interests of the owner, and it rests upon the receipt by the wrongdoer of benefits accruing to him from his wrongful acts. Where no benefits are received, the liability is only for the wrong. As this right in the injured party to turn the tort liability into a contract liability stands upon the receipt of benefits by the wrongdoer, is it not beneath the dignity of any tribunal to draw a...