Gibbins v. Kosuga
| Decision Date | 02 November 1972 |
| Parties | Ronald E. GIBBINS and Harriet M. Gibbins, Plaintiffs, v. Vincent KOSUGA and Pauline Kosuga, Defendants. |
| Court | New Jersey Superior Court |
Lewis P. Dolan, Jr., Newton, for plaintiffs (Dolan & Dolan, Newton, attorneys).
Richard H. Hughes, Newton, for defendants (Silverman, Weber & Hughes, Newton, attorneys).
EGAN, J.C.C., Temporarily Assigned.
This action for breach of contract and misrepresentation, with a counterclaim on a note, presents the unusual picture of a suit instituted in March 1971 on a transaction occurring in May 1961, approximately ten years earlier. Needless to say, the statute of limitations was urged to defeat both the complaint and the counterclaim. The procedural context of the case gives it a somewhat distinctive twist.
The history of the dispute follows. Defendants were the owners of a tract of land in Frankford Township, Sussex County, New Jersey, where they built a dwelling which they conveyed to plaintiffs. Closing took place on May 11, 1961. The price was $16,500, of which $15,000 was paid by plaintiffs in cash and through the proceeds of a mortgage loan they obtained from a local bank. Defendants took back a promissory note for the $1,500 balance payable on September 1, 1961, approximately 3 1/2 months later.
The note was not paid when due, and still has not been paid, but defendant vendors never instituted suit thereon.
Plaintiffs lived uneventfully on the property for about seven years and then moved to another home, leasing these premises to tenants who vacated in September 1970. At about that time plaintiffs had contracted to sell the property to a third party. The prospective purchaser had a survey made, disclosing for the first time that the well supplying water to the dwelling was not located on the property but on that of a neighbor. An easement to continue using the well being unobtainable, plaintiffs were required to have a new well dug around October 1970 at a cost of $1,498.50 in order to consummate the sale of the property.
Plaintiffs' action for breach of contract and misrepresentation is based on their claim that prior to the 1961 sale to them, defendants had represented in effect that there was a well included as part of the deal. Defendants denied initially that any such representation was expressly articulated. The need to resolve such a fact issue was, however, eliminated at trial when the defendant Vincent Kosuga testified quite candidly that, although he had no recollection of what might have been discussed more than ten years ago, he certainly thought the well was located within the boundaries and he sold the house on the belief that it had its own water supply. The court therefore, as finder of the fact, has no problem with the conclusion that the agreement between the parties included a water supply.
In answer to plaintiffs' action for the $1,498.50 cost of the new well, defendants initially denied the allegations of the complaint and pleaded the affirmative defense that the complaint was barred by the statute of limitations. They later filed an amended answer, adding a counterclaim for the $1,500 which was never paid on plaintiffs' note of May 11, 1961. (The mere $1.50 difference between the complaint and the counterclaim is a curious, but apparently genuine, coincidence.)
The distinctive twist is that plaintiffs urge that their claim is not barred by the statute of limitations but that defendants' counterclaim is. The distinction, they assert, is that although both causes of action are governed by the six-year statute, N.J.S. 2A:14--1, it is not a bar to their own claim because, under the so called 'discovery' rule, the running of the statute against them was tolled for almost ten years until they first learned of the absence of the well.
On the theory that no such saving grace is available to defendants, plaintiffs made a motion for summary judgment dismissing the counterclaim solely on the grounds of the statutory bar. This motion was granted by Judge Gascoyne. Thereafter the matter was pretried but, with reference to legal issues, no mention was made in the pretrial order of the promissory note or, for that matter, defendants' own plea of the statute of limitations and plaintiffs' contention Re its tolling.
When the case came on for trial defendants argued that, even though their counterclaim had been dismissed as an affirmative claim, they still should be allowed to set it up by way of set-off or recoupment against plaintiffs' claim. Plaintiffs responded, first, that set-off or recoupment did not appear as an issue in the pretrial order. Secondly, they urged that, under the doctrine of Res judicata or collateral estoppel, Judge Gascoyne's dismissal of the counterclaim foreclosed defendants from attempting to revive the same issue by way of set-off or recoupment. Thirdly, they urged that N.J.S. 2A:14--27 prohibited defendants' use of the statute of limitations by way of set-off because defendants' claim on the note was for liquidated damages and the cited section very specifically states The limitations provided by this chapter shall apply to the case of any debt or demand for liquidated damages alleged by way of set-off.
Given this background, is there an inequity or anomaly in making the statute of limitations available to protect one party to a transaction while simultaneously denying its protection to the other party in precisely the same transaction? We must begin by accepting as a fact a very real discrepancy between the durability of the identical statute of limitations as applied to the two parties to this transaction. The nature of plaintiffs' cause of action is such that the statute does not begin to run until they discovered that they had suffered a legal wrong. New Market Poultry Farms, Inc. v. Fellows, 51 N.J. 419, 241 A.2d 633 (1968). They had no reason to know of the lack of their own water supply until 1970. They could not be charged, therefore, with sleeping on their rights until they had reason to know those rights had been violated. Plaintiffs' affirmative claim therefore was not barred ten years after consummation of the contract which gave rise to it.
What about defendants' counterclaim on the note? Clearly, they knew precisely when it was due. They let the due date pass, and well over six years beyond it without making any claim. Clearly, the statute of limitations was properly invoked to dismiss their counterclaim. Dismissal of the counterclaim, as such, was proper. But if defendants could not use plaintiffs' obligation as a sword, must it follow that they could not use it as a shield? The answer lies in an analysis of the use to which they sought to put the plaintiffs' debt. And this involves an understanding of the logical and historical distinctions in counterclaims, set-offs and recoupments. A counterclaim is an affirmative effort to enforce or collect upon an affirmative claim, and as already indicated, had been forever forfeited by defendants and foreclosed by Judge Gascoyne's order of dismissal.
Our attention must therefore first be directed to the difference between set-off and recoupment, and...
To continue reading
Request your trial