Farmers' Union Mercantile Co v. Anderson

• Decision Date: 05 September 1917
• Docket Number: (No. 9802.)
• Citation: 93 S.E. 422
• Parties: FARMERS' UNION MERCANTILE CO. v. ANDERSON.
• Court: South Carolina Supreme Court

93 S.E. 422

FARMERS' UNION MERCANTILE CO.

v.ANDERSON.

(No. 9802.)

Supreme Court of South Carolina.

Sept. 5, 1917.

Appeal from Common Pleas Circuit Court of Barnwell County: Frank B. Gary. Judge.

Action by the Farmers' Union Mercantile Company against F. H. Anderson. From a judgment sustaining a demurrer to defendant's counterclaim, he appeals. Reversed.

Jas. E. Davis, of Barnwell, for appellant.

Bates & Simms, of Barnwell, for respondent.

HYDRICK, J. Plaintiff sued on a note. Defendant set up a counterclaim, immaterial verbiage omitted, as follows:

"That the above-named plaintiff, together with the Home Bank of Barnwell, some time during the fall of 1914, organized an institution known as the 'Farmers' Union Warehouse, ' and induced the defendant to store therein eleven bales of lint cotton.

"That when defendant stored said cotton, the plaintiff contracted and agreed to hold said cotton for such time as the defendant would be able to obtain a fair price, and to insure said cotton, so in case of loss by fire to allow him the highest market price at the time of said loss.

"That said cotton, on account of the negligence and gross carelessness on the part of said plaintiff, was totally destroyed by fire, it having been stored under an open shed, in an open lot, without any protection from incendiaries or otherwise, and became a total loss to this defendant, save that said defendant was allowed the price of 6 cents per pound; whereas, cotton at that time was selling at 7 to 7 1/2 cents per pound, and by the action of said plaintiff he has lost the sum of $174, for which he is entitled to judgment by way of counterclaim."

Plaintiff demurred on the grounds:

"That the same does not constitute a defense, in that the Home Bank of Barnwell is not a party to this action, and that the matters and things set forth in the said defense and counterclaim are not a part of the contract sued upon, has no relation to the same, and, if said allegations are correct, constitutes a cause of action raising ex delicto, and not ex contractu, and not subject of defense or counterclaim in this action."

The court below sustained the demurrer, holding:

"That the counterclaims set forth in the answer do not set up any defense to the complaint, in that they are not responsive to the allegations of the complaint and do not come within the provisions of the Code, allowing defense by way of counterclaim."

In the first paragraph of his answer defendant alleges that plaintiff and the Home Bank of Barnwell organized the Farmers' Union Warehouse and induced him to store his cotton therein. That states no cause of action against the bank, or against the bank and plaintiff jointly. It makes no difference who organized the warehouse; nor is it of any consequence that plaintiff and the bank induced defendant to store his cotton in it, in the absence of any allegation of fraud in the inducement. No legal liability for the consequences results from merely inducing or persuading another to do a lawful act, or enter into a lawful contract. The bank was not a necessary or proper party.

Section 200 of the Code of Civil Procedure provides for two classes of counterclaims. Subdivision 1 provides that a counterclaim may be set up if it arises "out of the contract or transaction set forth in the complaint as the foundation of the plaintiff's claim, or [is] connected with the subject of the action." Subdivision 2 provides for another distinct class, "in an action arising on contract, any other cause of action arising also on contract, and existing at the com-mencement of the action." So that it is not necessary that defendant's counterclaim arise out of or be connected with the contract sued on. It is only necessary that it arise on contract to bring it under subdivision 2.

In the second paragraph of his answer defendant alleges that plaintiff (not plaintiff and the bank) "contracted and agreed" to hold his cotton and insure it against loss by fire; and in the third paragraph he alleges the breach of that contract, and the damages resulting to him therefrom. It is too plain for argument that the counterclaim is based upon an express contract.

True, the allegation of negligence in storing the cotton is appropriate to an action of tort; but it is not inappropriate to an action on the contract of bailment, because, being for the benefit of both parties, the bailee impliedly agreed to exercise reasonable care and diligence. Lyles v. McFie, 1 McMul. 21.

Moreover, in an action on contract., allegations of negligence cannot have the effect of...