Hecht v. P.H. Snook & Austin Furniture Co.
| Decision Date | 12 March 1902 |
| Citation | 41 S.E. 74,114 Ga. 921 |
| Parties | HECHT et al. v. P. H. SNOOK & AUSTIN FURNITURE CO. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
1. The right of a defendant sued at law upon a cause of action ex contractu to set off against the plaintiff's demand damages arising ex delicto, on the ground that the plaintiff is insolvent or a nonresident, is a purely equitable right in the enforcement of which is involved the granting of affirmative relief, and cannot be recognized in a court in which the authority to entertain equitable defenses does not extend to any case where the defense is of a nature which not only requires the recognition of an equitable right, but, in order to enforce the same, the granting of affirmative relief; and this is so though the defense be based upon a right or demand purely legal.
2. It follows from the above that the city court of Atlanta has no jurisdiction to entertain a plea seeking to set off a claim for damages arising ex delicto against a suit on a cause of action arising ex contractu, although the plaintiff may be a nonresident of this state.
Error from city court of Atlanta; H. M. Reid, Judge.
Action by Samuel Hecht, Jr., & Sons against the P. H. Snook & Austin Furniture Company. Judgment for defendant, and plaintiffs bring error. Reyersed.
Hammond & Skeen and Spencer R. Atkinson, for plaintiffs in error.
Rosser & Carter and J. L. Hopkins & Sons, for defendant in error.
Samuel Hecht, Jr., & Sons brought suit in the city court of Atlanta against the P. H. Snook & Austin Furniture Company upon an open account. To this action the defendant filed a plea "by way of counterclaim," alleging that the plaintiffs had damaged it in the sum of $15,000 by reason of an equitable petition which the plaintiffs and other creditors of the defendant had caused to be filed against it seeking to place the management of the business of the defendant in the hands of a receiver for the benefit of its creditors, and that under this petition so filed the defendant was temporarily enjoined by the court from transacting its business, except in a designated way prescribed by the court. It was alleged that the averments in the petition were false, and that when the same came on for a hearing the restraining order was dissolved without a trial and the property of the defendant restored to it. It was also alleged that this equitable petition was filed with malice, and without probable cause, and that the same was a deliberate and malicious abuse of process. It was further alleged that the plaintiffs in the present case were nonresidents of the state, and had no property in the state which could be reached by attachment. By an amendment to the plea the specific damages which were alleged to have been sustained by reason of the filing of the equitable petition are set forth, and the prayer of the plea was that the defendant have judgment against the plaintiffs for the sum above mentioned. The plaintiffs demurred to this plea, and, among other grounds of demurrer, insisted that the same constituted no sufficient defense to the present suit, for the reason that "the plaintiffs' demand is one arising ex contractu and the defendant's proposed set-off, as appears of record, consists of unliquidated damages arising ex delicto, and the said city court of Atlanta being a court of law only, without equitable powers, has no jurisdiction to entertain or allow the said alleged set-off as claimed by the defendants." The court overruled the demurrer, and the plaintiffs filed exceptions pendente lite to this judgment. The case proceeded to trial, and resulted in a verdict in favor of the defendant against the plaintiffs for $5,500. The case is here upon a bill of exceptions assigning error upon the judgment overruling the demurrer to the plea, as well as upon the judgment overruling a motion for a new trial.
Under the view we have taken of the case the court erred in overruling the demurrer to the plea, and, this being so, everything that was done thereafter was invalid, and no further reference will be made to the motion for a new trial. It is unnecessary also for us to determine whether the plea set forth a cause of action, or whether, if it did, the cause of action was for the malicious prosecution of a civil suit, or for malicious abuse of process. Even if it be conceded that the plea set forth a cause of action, that cause of action was one arising ex delicto, whether it be one or the other of the causes of action just referred to. The cause of action therein contained being of this character, we do not think the city court of Atlanta had jurisdiction to entertain the same by way of set-off to an action ex contractu, even though the plaintiffs are nonresidents of this state. The right of a defendant to set off against the plaintiffs' claim an independent demand which he has against the plaintiffs, which is now so generally recognized, with certain qualifications, both by the statute law of England and by similar law in the various states of the Union, had its origin in the Roman law. See Hunter, Rom. Law (3d Ed.) 993 et seq., 1017 et seq.; Meriwether v. Bird, 9 Ga. 594. Set-off, in the sense above referred to, was unknown to the common law. Meriwether v. Bird, supra; Jordan v. Jordan, 12 Ga. 87 (2); 22 Am. & Eng. Enc. Law (1st Ed.) p. 211; Shumaker & L. Cycl. Dict. "Set-Off"; And. Law Dict. "Set-Off." In Meriwether v. Bird, Judge Lumpkin says: "By St. 2 Geo. II. c. 22, which has been generally adopted in this and all the other states of the Union, with some modifications, the defendant is allowed, in cases of mutual debt, to set off his claim against the plaintiff's by pleading it in bar." Before any statutes permitting set-offs were enacted in England, the court of chancery, following the equitable principles of the civil law, took jurisdiction in matters of set-off for the purpose of preventing circuity of actions. Mr. Bispham, in his work on the Principles of Equity (6th Ed., p. 439), says: "This right of set-off, although it did not originally exist at common law, was, nevertheless, so effectually introduced by statute that it now, perhaps, furnishes no ground for interference by a chancellor as an equitable right." See, also, 19 Enc. Pl. & Prac. p. 718. The author just above referred to says (page 28) "that the general field of the jurisdiction of courts of chancery is susceptible of three great divisions, viz., (1) Equitable Titles; (2) Equitable Rights or Equities; and (3) Equitable Remedies." It is to be noted that he classifies set-off as an equitable right. The right of set-off being purely an equitable right, the power of the common-law courts to entertain jurisdiction of this right now depends, and has always depended, upon the existence of a statute conferring jurisdiction upon them in such matters. The right of set-off is recognized and allowed under certain restrictions by the statutes of this state. See Civ. Code, § 3745 et seq. The defendant in any court, in any action, is permitted to set up as a defense all claims held by him at the time the suit is brought against the plaintiff of a similar nature to the plaintiff's demand. Id. § 4944. If there is an intervening equity not reached by the statute law, or if the set-off be of an equitable nature, courts of equity in this state take jurisdiction to enforce the set-off. Id. § 3996. There is nothing in the statute of this state which authorizes a defendant in a suit at law to set off as a matter of legal defense to a suit on a contract damages arising from a tort committed by the plaintiff, or to set off in a suit for damages arising from the commission of a tort by the defendant a claim growing out of a contract between the plaintiff and the defendant. Smith v. Printup, 59 Ga. 610; Green v. Combs, 81 Ga. 210, 6 S.E. 582; Mashburn v. Inman, 97 Ga. 396, 24 S.E. 39; Harden v. Lang, 110 Ga. 392, 36 S.E. 100. A court which has nothing more than common-law jurisdiction cannot in this state entertain a plea which attempts to set off damages arising ex delicto against an action on a contract, or damages arising ex contractu against an action for a tort. The statutory right of set-off in this state is confined to cases where it is sought to set off demands of a similar nature against each other. If any other right of set-off exists in this state than of the character just indicated, it is purely an equitable right, and in no sense a legal right, of the defendant. A court which has no equity jurisdiction cannot entertain such a plea, and the parties must be left to their remedy before a court having jurisdiction in such matters. In other words, the right of set-off, other than in cases of claims of a similar nature, stands upon the same footing in this state now that it did in England prior to the statute of 2 Geo. II., and is therefore cognizable only in a court of equity. It is immaterial whether the demands sought to be set off against each other are of an equitable character or are purely legal in their nature. The character of the demand does not determine the jurisdiction of the court to entertain the plea of set-off. The right to set off one legal demand against another, other than in cases covered by our statute, is itself an equitable right, which is not and has never been recognized by a court of law in this state, except in obedience to a statute, and therefore it can be asserted only in a court having jurisdiction in equity matters. The right of a court of equity in this state to take jurisdiction to enforce a set-off extends to cases where there is an intervening equity not reached by the law, or where the set-off is of an equitable nature.
See Civ. Code, § 3996. Insolvency has been recognized as a distinct equitable ground of set-off. Lee v. Lee, 31...
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