Krausse v. Greenfield

• Decision Date: 30 April 1912
• Parties: KRAUSSE et al. v. GREENFIELD et al.
• Court: Oregon Supreme Court

123 P. 392

61 Or. 502

KRAUSSE et al. v. GREENFIELD et al.

Supreme Court of Oregon

April 30, 1912

Appeal from Circuit Court, Multnomah County; Henry E. McGinn, Judge.

Action by O.E. Krausse and another, partners as Krausse Brothers against George L. Greenfield and another. From a judgment for plaintiffs, defendants appeal. Affirmed.

This is an action by O.E. Krausse and J.R. Krausse against George L Greenfield and Laura Greenfield to recover money. It is stated in the complaint, in effect, that at all the times mentioned therein plaintiffs were partners, as Krausse Bros and engaged in the wholesale shoe business in Portland; that on October 26, 1909, a contract was entered into whereby plaintiffs stipulated to furnish to defendants, on certain conditions, a reasonable quantity of goods, in order to enable the latter to carry on in that city a retail trade in shoes, and in consideration thereof defendants agreed to pay plaintiffs 20 per cent. of the invoice price of any goods that should remain in their custody 90 days or longer, in case possession thereof should be taken by plaintiffs pursuant to the terms of the contract, which stipulation was an undertaking on defendant's part to pay plaintiffs the damages which the goods would necessarily sustain by their removal from plaintiffs' stock, and by their use for retail purposes for the time specified; that according to the terms of the contract plaintiffs furnished to defendants merchandise of the invoice price of $4,014.15, which stock on July 11, 1910, had been in their possession 90 days or more when the goods were returned to plaintiffs, but in the meantime such merchandise had deteriorated in value to an amount largely exceeding $1,000; that defendants have failed to pay plaintiffs 20 per cent. of the invoice price of the goods or any part thereof; and that by reason of the premises there is now due from the defendants to the plaintiffs $802.89, with interest from July 11, 1910, for which sum judgment was demanded. The answer denied the material averments of the complaint, and for a further defense alleged that on July 8, 1910, defendants were in possession of a quantity of shoes, theretofore delivered to them by plaintiffs under an agreement that, if such merchandise should remain for 90 days or more in the possession of the defendants, they would pay plaintiffs 20 per cent. of the invoice price of such goods, on account of deterioration in the value thereof, and that the contract here referred to is the same agreement specified in the complaint; that about July 8, 1910, plaintiffs took from defendants such shoes, and ever since have retained possession thereof; and at that time the shoes had not deteriorated in value. For a partial defense and by way of counterclaim, the answer sets forth the substance of the agreement between the parties, as hereinbefore stated, and avers that on July 8, 1910 plaintiffs entered the premises of defendants, against their will, and took possession of and removed the shoes mentioned, and in doing so unnecessarily, wrongfully, and maliciously interrupted defendants' business, thereby turning away numerous customers and patrons, whereby their trade was lost, to defendants' damage in the sum of $500. A demurrer to this last clause of the answer, on the ground that the facts stated did not constitute a defense to the action, was sustained. The remaining allegations of new matter in the answer were put in issue by a reply, whereupon the cause was tried without a jury, and findings of fact and of law were made in accordance with the averments of the complaint; and, a judgment having been rendered for plaintiffs for the sum demanded, the defendants appeal.

William A. Williams (H.C. King, on the brief), both of Portland, for appellants.

Wallace McCamant (Snow & McCamant, on the brief), all of Portland, for respondents.

MOORE J. (after stating the facts as above).

It is contended that the facts alleged as a partial defense constituted a valid counterclaim to the cause of action set forth in the complaint, and that in sustaining a demurrer to that part of the answer an error was committed.

The statute prescribes what an answer shall contain, and declares that it may include a counterclaim. L.O.L. § 73. "The counterclaim mentioned in section 73 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 the plaintiff's claim; (2) in an action arising on contract, any other cause of action arising also on contract, and existing at the commencement of the action. The defendant may set forth by answer as many defenses and counterclaims as he may have. They shall each be separately stated, and refer to the causes of action which they are intended to answer, in such manner that they may be intelligibly distinguished." Id. § 74. This enactment does not contain the provision found in the Codes of many other states, to wit, "or connected with the subject of the action." In equity, however, it is sufficient if the counterclaim be connected with the subject of the suit. L.O.L. § 401; Dove v. Hayden, 5 0r. 500; LeClare v. Thibault, 41 Or. 601, 69 P. 552; Merrill v. Hexter, 52 Or. 138, 94 P. 972, 96 P. 865. While the common-law forms of action have been abolished in this state (L.O.L. § 1), the distinction between actions at law and suits in equity has not been abrogated. Id. § 389; Fireman's Ins. Co. v. Oregon R. Co., 45 Or. 53, 76 P. 1075, 67 L.R.A. 161, 2 Ann.Cas. 360; Cohn v. Wemme, 47 Or. 146, 81 P. 981, 8 Ann.Cas. 508. At law a counterclaim is not sufficient if it be only connected with the subject of the action. Wait v. Wheeler & Wilson M. Co., 23 Or. 297, 301, 31 P. 661. The statute authorizing a counterclaim in an action at law to be interposed as a part of the first subdivision, to wit, "a cause of action arising out of the contract, *** as the foundation of the plaintiff's claim," was evidently designed as a substitute for "recoupment"; while the entire second subdivision was undoubtedly intended to take the place of "set-off."

A "set-off" is not technically a mere matter of defense; it does not sound in damages whether liquidated or unsettled, but is a money demand by the defendant against the plaintiff arising upon contract and constituting a debt independent of and unconnected with the cause of action set forth in the complaint. Waterman, Set-Off (2d Ed.) § 9; 25 Am. & Eng.Ency.Law (2d Ed.) 495; 34 Cyc. 625; 7 Words & Phrases, 6442; Ansley v. Bank of Piedmont, 113 Ala. 467, 21 So. 59, 59 Am.St.Rep. 122; Lawton v. Ricketts, 104 Ala. 430, 60 So. 59; St. Louis & T.R. Packet Co. v. McPeters, 124 Ala. 451, 27 So. 518.

"Recoupment" is defined to be "the keeping back and stopping something which is due." Waterman, Set(-Off (2d Ed.) § 457. Under the principles of the common law, "recoupment" could be invoked when the defendant sustained damages by reason of the plaintiff's nonperformance of his part of the contract sued on, in which case the damages to which the defendant was entitled could be abated from the plaintiff's claim. Id. § 458. "The defense of recoupment," say the court in Baltimore & Ohio R. Co. v. Jameson, 13 W.Va. 833, 31 Am.Rep. 775, 777, "differs from set-off in several important particulars: First, it is confined to matters arising out of, and connected with, the transaction or contract upon which the suit was brought; secondly, it has no regard to whether the claim be liquidated or unliquidated; thirdly, if the defendant's claim exceed the plaintiff's, he cannot in that action recover the balance due to him."

The counterclaim authorized by statute is an enlargement of the scope of set-off and recoupment. Waterman, Set-Off (2d Ed.) § 590; Wait v. Wheeler & Wilson M. Co., 23 Or. 297 300, 31 P. 661. A text-writer, discussing this expansion, and referring to a term used in the statute authorizing a counterclaim, says: "As the word 'transaction' seems to imply causes of action not necessarily upon contract, those arising from tort may perhaps, under proper circumstances, be the subject of counterclaim." Pomeroy, Code Rem. (4th Ed.) § 613. At section 618, of the work referred to, its author further observes: "If a 'transaction' is set forth as the foundation of the plaintiff's demand, the counterclaim must arise out of that 'transaction'; and, so far as 'transaction' is something different from or additional to 'contract,' this is a provision not identical in its effect with either 'set-off'...