Northwestern Port Huron Co. v. Iverson

• Decision Date: 22 July 1908
• Parties: NORTHWESTERN PORT HURON COMPANY, Plaintiff and appellant, v. OLAF IVERSON, and Bjorn Iverson, Defendants and respondents.
• Court: South Dakota Supreme Court

22 S.D. 314

117 N.W. 372

NORTHWESTERN PORT HURON COMPANY, Plaintiff and appellant, v. OLAF IVERSON, and Bjorn Iverson,

Defendants and respondents.

South Dakota Supreme Court

Appeal from Circuit Court, Roberts County, SD

Hon. J. H. McCoy, Judge

Affirmed

W. E. Dodge, Wm. A. Tautges, J. J. Batterton

Attorneys for appellant.

Howard Babcock

Attorney for respondent.

Opinion filed July 22, 1908

CORSON, J.

This action was instituted by the plaintiff, a corporation, to recover from the defendants an indebtedness represented by certain promissory notes executed by the defendant Olaf Iverson, as maker, and Bjorn Iverson, as surety, aggregating $1,975 together with costs. It is alleged in the complaint

“that said notes and the debt thereof were secured by a chattel mortgage upon a certain threshing machine and engine, which said mortgage was foreclosed on the 28th day of January, 1905, and the proceeds of the sale thereof applied on the payment of the first of the above-described notes; that the mortgage on said machine, which was for the security of the notes above described, contained certain clauses and conditions, among others that if the said notes or any part thereof were not paid when due, or if the mortgagor abandoned said property or failed to care for it, and protect it from the weather, or if at any time the said mortgagee deemed himself insecure, he might himself or his duly appointed agent seize the said property, and might elect to declare the whole amount of said notes and debt secured by the mortgage to be due and payable at once.”

It is then alleged that there was a default on the part of the defendants, the machinery mortgaged was abandoned, and that the plaintiff elected to declare the whole amount of the mortgage debt due, aggregating $1,975, with interest as before stated. The defendants answered separately. Bjorn Iverson admits the incorporation of the defendant; admits that he executed the promissory notes described in plaintiff’s complaint, and alleges that he executed the same as surety, receiving no consideration therefor, and denies that he at any time made, executed, or delivered the chattel mortgage described in the complaint or any chattel mortgage whatever to secure the payment of said note. Olaf Iverson in a separate answer admits the incorporation of the plaintiff, the execution and delivery of the promissory notes, and the execution of the chattel mortgage, but denies that the chattel mortgage or any copy thereof was ever at any time filed for record in the office of the register of deeds in and for Roberts county, and denies that on the 29th day of January, 1905, or at any other time, said plaintiff foreclosed said chattel mortgage as alleged in the complaint and for a counterclaim alleges as follows:

“Further answering said complaint, and for a counterclaim herein, this defendant alleges that on or about the 1st day of January, 1905, said plaintiff wrongfully and unlawfully, without the consent of this defendant, took from this defendant’s possession the threshing machine and engine which was covered by said mortgage, and which was then the property of the defendant, and removed the same from the county of Marshall, and wrongfully and unlawfully secreted and disposed of the same and converted the same to its own use; that the actual value of said threshing machine and engine at that time and now was and is the sum of $3,500.”

The defendant further alleged that, by reason of said conversion, he had sustained damages in the sum of $1,000 and demanded judgment for $4,500. Before the commencement of the trial the plaintiff moved to dismiss the action, which motion was granted as to the defendant Bjorn Iverson, but denied as to the defendant Olaf Iverson, to which ruling the plaintiff duly excepted,

It is contended by appellant that “the so-called counterclaim is interposed in an action predicated on contract for the recovery of money only. It does not arise out of the same transaction, and, since it sounds in tort, cannot be interposed under the statute in an action of this character.” It is the contention of the respondent Olaf Iverson that the counterclaim set out in his answer states a cause of action which arose out of the “transaction set forth in the complaint as the foundation of plaintiff’s claim,” and is also “connected with’ the subject of the action.” We are inclined to the opinion that the respondent is right in his contention, and that the counterclaim did arise out of the transaction set forth in plaintiff’s complaint as the foundation of the plaintiff’s claim, and is connected with the subject of the action. Section 127 of the Revised Code of Civil Procedure provides:

“The counterclaim mentioned in the last section 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, or connected with the subject of the action.

(2) In an action arising on contract, any other cause of action arising also on contract and existing at the commencement of the action.”

It will be observed from the reading of the foregoing section that three cases are provided for in which a counterclaim is permissible: First, in a case where the cause of action is set out in the counterclaim arises out of the contract or transaction set up in the complaint second, a cause of action connected with the subject of the action; and, third, in an action on a contract, a cause of action arising on contract and existing at the commencement of the action may also be counterclaimed. Where the cause of action sought to be counterclaimed arises out of the contract or transaction or is connected with the subject of the action set out in the complaint, it is not material whether the cause of action be one arising on contract or by reason of a tort. When the cause of action arises out of the transaction or is connected with the subject of the action, it may be pleaded as a counterclaim without regard to its character, and it is only where the cause of action sought to be counterclaimed arises upon an independent contract that it becomes material that the cause of action so sought to be counterclaimed should be one on contract and existing at the time of the commencement of the action.

In McHard v. Williams,(1896), this court said:

“One of the more important purposes of the adoption of the Code system of pleading was to avoid, as far as possible, a multiplicity of suits, and to enable parties to determine their differences in one action. And to this end counterclaims were designed, not only to include recoupment and set-offs at common law, but to enlarge their scope, so that but few cases could arise in which all litigation between the parties to...