Caldwell v. Stevens

• Citation: 167 P. 610,64 Okla. 287,1917 OK 250
• Decision Date: 22 May 1917
• Docket Number: Case Number: 7255
• Parties: CALDWELL v. STEVENS.
• Court: Supreme Court of Oklahoma

1917 OK 250

167 P. 610

64 Okla. 287

CALDWELL v. STEVENS.

Case Number: 7255

Supreme Court of Oklahoma

Decided: May 22, 1917

Syllabus

¶0 1. Set-Off and Counterclaim -- Power of Court--Grounds. The power to allow a set-off of debts by a court of equity exists independent of the statute, where grounds of equitable interposition are shown, such as fraud, embarrassment in enforcing the demand at law, or special circumstances, such as insolvency or nonresidence, which render it probable that party will lose his demand and be compelled to pay the demand of the other.

2. Pleading--Set-Off--Sufficiency. Record examined, and held, that the fourth paragraph of defendant's answer states facts sufficient to afford occasion for the exercise of jurisdiction by a court of chancery to decree a set-off. Held, further, that the evidence adduced at the trial is sufficient to support the findings and decree of the trial court as herein modified.

J. W. Hocker, for plaintiff in error.

Dorset Carter, J. B. Dudley, and Vaught & Brewer, for defendant in error.

KANE, J.

¶1 This was a suit commenced by the plaintiff in error, plaintiff below, against the defendant in error, defendant below, in the Indian Territory, prior to statehood, for the purpose of recovering upon two promissory notes, for $ 1,500 each, and foreclosing a certain real estate mortgage executed for the purpose of securing their payment. Hereafter the parties will be called "plaintiff" and "defendant," respectively, as they appeared in the court below. The petition was in the usual form, and admittedly states a cause of action. The answer of the defendant admitted the execution of the notes and mortgage, but denied the right of the plaintiff to recover because of a certain oral agreement, made and entered into by and between said plaintiff and defendant, by the terms of which plaintiff obtained possession of the mortgaged premises and collected rents arising therefrom in an amount more than sufficient to discharge the indebtedness evidenced by the notes. The defendant, in the fourth paragraph of his answer, also alleged by way of set-off that at about the time the instruments described above were executed the defendant executed another note for $ 1,500, payable to the plaintiff, to secure the payment of which he executed a certain other mortgage on other lots situated in the city of Purcell, and that by the terms of another agreement resting in parol plaintiff took possession of said last-mentioned real estate and agreed to apply the rents received therefrom to the satisfaction of said last-mentioned note; that the plaintiff received large sums of money arising as rents from said property, the exact amount of which defendant does not know; that plaintiff, by some means, obtained title to said last-mentioned real estate, and sold the same without the consent of the defendant for the sum of $ 2,300; that the sums received on account of said transaction greatly exceed the amount of said $ 1,500 note--wherefore the defendant prayed an accounting and judgment over against the plaintiff for the excess. The plaintiff filed a reply to the defensive matter in the paragraph of the defendant's answer relating to the first two notes and mortgage, denying that he had possession of the first-mentioned premises, except for a part of the time alleged, and admitting that he had collected rents, but alleging he had from time to time paid the taxes and insurance and made repairs on the mortgaged premises by direction of the defendant, and that a full complete statement of such account had been from time to time rendered the defendant, and a final statement of account thereof rendered prior to bringing this suit showed that a balance of $ 1,722 remained due said plaintiff on the first notes and mortgage after deducting the net proceeds arising from the rents of said real estate. To the fourth paragraph of the answer the plaintiff filed a demurrer, suggesting that, inasmuch as the cause of action pleaded by way of set-off sounded in tort and was not connected with the matter sued upon, the same did not state facts sufficient to constitute a defense to plaintiff's cause of action, which demurrer was overruled by the court; whereupon the plaintiff filed a reply to the answer. The reply to the matter pleaded by way of set-off alleged in effect that said last note was wholly unpaid; that at the time defendant borrowed said money from the plaintiff and executed said last note and mortgage, he had no title to the land described therein, the same being in the United States in trust for the Chickasaw Tribe of Indians; that plaintiff purchased the right to take a patent thereto from the government, which he subsequently did, thereby acquiring title to said lot in his own name. Plaintiff also pleaded the statute of frauds and limitations. On the issues thus joined, the cause was tried to the court, after statehood, and resulted in a judgment in favor of the defendant, canceling all the notes and mortgages and rendering a money judgment against the plaintiff in the sum of $ 1,140.55, to reverse which this proceeding in error was commenced. It seems to be conceded by the parties that, inasmuch as this cause was pending upon the advent of statehood, the laws of Arkansas, in force in the Indian Territory, continue to govern the matter of the preparation of the record for appeal and the review of the questions raised; and it is upon this theory the record will be examined. Whilst the brief of counsel for plaintiff in error contains many formal specifications of errors, a careful examination thereof discloses that they all may be summarized for review under the following headings: (1) The trial court erred in overruling the demurrer of the plaintiff to the matter set up in defendant's answer by way of set-off, for the reason that unliquidated damages may not be the subject of set-off in a foreclosure proceeding; (2) the statutes of limitations and the statute of frauds constitute a complete bar to the cause of action attempted to be set forth in the paragraph of the defendant's answer wherein he attempts to plead a set-off; (3) the judgment rendered by the trial court is not supported by sufficient evidence. As we have seen from the foregoing statement and specifications of error, the demurrer to the fourth paragraph of defendant's answer is based upon the theory that inasmuch as the cause of action pleaded by way of set-off sounds in tort, and is not connected with and did not grow out of plaintiff's cause of action, it is not available as a set-off against the plaintiff in an action founded upon contract. In order to fully understand the nature of the transaction now under discussion, a brief statement of the relation existing between the plaintiff and defendant at the time these notes were executed is necessary: The plaintiff, William E. Caldwell, resided at Louisville, Ky., and was president of the Purcell Mill & Elevator Company, of Purcell, Okla.; the defendant, F. D. Stevens, lived at Wichita, Kan. Stevens and Caldwell seem to have been good friends for many years, and on several occasions had embarked in business ventures together at Wichita and elsewhere. Finally Caldwell engaged Stevens to move to Purcell and become manager of the Purcell Mill & Elevator Company, and while at Purcell Mr. Stevens purchased, or built, the Helena Hotel property, borrowing from Mr. Caldwell $ 3,000, and executing therefor the first two promissory notes and the mortgage upon which this suit was commenced. About the same time Stevens...