Turner v. Eubanks, CA

• Decision Date: 26 October 1988
• Docket Number: No. CA,CA
• Citation: Turner v. Eubanks, 759 S.W.2d 37, 26 Ark.App. 22 (Ark. App. 1988)
• Parties: Richard C. TURNER and Jane A. Turner, Appellants, v. James EUBANKS and Charlotte Eubanks, Appellees. 88-22.
• Court: Arkansas Court of Appeals

Page 37

759 S.W.2d 37

26 Ark.App. 22

Richard C. TURNER and Jane A. Turner, Appellants, v. James EUBANKS and Charlotte Eubanks, Appellees.

No. CA 88-22.

Court of Appeals of Arkansas Division II.

Oct. 26, 1988.

Greg Stephens, No. Little Rock, for appellants.

Dan Stripling, Clinton, for appellees.

MAYFIELD, Judge.

Appellants, Richard and Jane Turner, appeal a decision of the Van Buren Chancery Court holding them liable for an amount found due on the purchase price for land deeded to them by the appellees.

On July 16, 1979, the appellants purchased 229.78 acres from the appellees, James and Charlotte Eubanks, for $151,703.00. In December 1983, James Canady won an adverse possession action for 0.94 acres of this land. In July 1984 appellants paid appellees the balance due on their mortgage but withheld $1,703.00 as reimbursement for the fraction of an acre lost to Canady. The appellees refused to release the mortgage, and on July 3, 1986, the appellants filed this suit seeking damages for breach of the warranty contained in their warranty deed.

Appellees answered denying the allegations in the complaint and affirmatively pleading the defense of laches. In addition, they filed a counterclaim for foreclosure. In defense to the counterclaim, the appellants pleaded the affirmative defenses of estoppel, fraud, unclean hands, adequate remedy at law and unjust enrichment. Shortly before trial, appellants filed a pre-trial brief in which they stated that absent fraud, which they admitted they could not prove, the statute of limitations had run on their breach of warranty claim. They alleged, however, that their right of action on that claim could still serve as a recoupment or setoff to the counterclaim. This assertion was brought to the attention of the judge prior to trial; later, an order was filed amending the pleadings to conform to the proof. Appellees' counsel argued to the trial court that the affirmative defense of setoff or recoupment was not available to appellants because they were the moving parties, i.e., plaintiffs, in the action and setoff or recoupment could not be utilized as a defense to a counterclaim. The trial court agreed, and judgment was entered against appellants for $1,703.00 plus interest, and foreclosure was granted.

On appeal, appellants argue the trial court erred in ruling that setoff applied only to defendants and not to counterdefendants. They contend there should be no distinction between a defendant and a counterdefendant because there is no substantive difference between a cause of action brought by a plaintiff as opposed to one brought by a counterplaintiff. It is appellants' argument that both are governed by the Arkansas Rules of Civil Procedure; that Rule 8(a) treats all claims for relief in an identical manner and states that a "pleading which sets forth a claim for relief, whether a complaint, counterclaim, crossclaim or third party claim, shall contain...." (Emphasis added.) Furthermore, they point to Ark.R.Civ.P. 12(b), which deals with defenses and objections and provides: "Every defense, in law or in fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim or third party claim, shall be asserted...." Appellants contend the only distinction to be found between a defendant and a counterdefendant is the manner in which the party must be served with summons.

The usual covenants of title in a general warranty deed are the covenants of seisen, good right to convey, against incumbrances, for quiet enjoyment and general warranty. Logan v. Moulder, 1 Ark. 313, 320 (1839); see also Proffitt v. Isley, 13 Ark.App. 281, 283, 683 S.W.2d 243 (1985). Our research has convinced us that while the parties stipulated that the statute of limitations had run on the covenants contained in the warranty deed, it had actually run only on the covenants of seisin, right to convey and incumbrances. We believe the five-year statute of limitations on quiet enjoyment and general warranty did not begin to run until appellants were evicted, and this occurred on January 13, 1984, when the decree in Canady's suit against appellants for adverse possession was entered. However, we are bound by the stipulation of the parties and it would serve no purpose to discuss our research with regard to the covenants in the deed and the periods of limitations applicable to each. Therefore, we return to the appellants' argument that even though the statute of limitations had run on their breach-of-warranty claim, that claim can still serve as an affirmative defense of setoff or recoupment in response to appellees' counterclaim.

Arkansas Code Annotated § 16-56-102 (1987) (formerly Ark.Stat.Ann. § 37-233 (Repl.1962)) provides:

Applications of limitations--Setoffs.

The provisions of this act shall be deemed and taken to apply to the case of any demand alleged by way of setoff on the part of any defendant, either by plea, notice, or otherwise. However, any demand, right, or cause of action, regardless of how it may have arisen, may be asserted by way of setoff in any action to the extent of the plaintiff's demand. [Emphasis added.]

In Little Rock Crate & Basket Co. v. Young, 284 Ark. 295, 681 S.W.2d 388 (1984), the court reviewed the history of this statute, as follows:

First, the setoff. In our view, the answer to the question posed in our first paragraph [When a plaintiff brings suit upon a claim arising from a certain transaction, may the defendant successfully assert a setoff that arose from a different transaction and was barred by limitations when the plaintiff's cause of action accrued?] is discoverable from the language and legislative history of the statute, now compiled as Ark.Stat.Ann. § 37-233 (Repl.1962). The original statute was enacted in 1838 as Section 33 of Chapter 91 of the Revised Statutes. The preceding 32 sections of that chapter had covered most aspects of the law of limitations, but had not mentioned setoffs. Section 33 treated that subject, as follows:

The provision of this act shall be deemed and taken to apply to the case of any debt or simple contract alleged by way of set-off, on the part of any defendant, either by plea, notice, or otherwise.

284 Ark. at 296, 681 S.W.2d 388. See also Stewart v. Simon, 111 Ark. 358, 163 S.W. 1135 (1914), and Soudan Planting Co. v. Stevenson, 94 Ark. 599, 128 S.W. 574 (1910). Through the years the legislature has revised the statute in response to judicial decisions. No longer is a setoff allowed only when the case involves a contractual debt or arises out of the same transaction. Currently, "any demand, right, or cause of action, regardless of how it may have arisen, may be asserted by way of setoff in any action to the extent of the plaintiff's demand." Ark.Code Ann. § 16-56-102 (1987) (emphasis added). See also Jones v. Jones, 22 Ark.App. 179, 737 S.W.2d 654 (1987). We perceive no logical reason why a setoff should not serve as an affirmative defense to a counterclaim as well as to an original complaint, a crossclaim or a third-party claim. Setoff is specifically listed among the affirmative defenses enumerated in Ark.R.Civ.P. 8(c), which provides, in pertinent part:

In responding to a complaint, counterclaim, cross-claim or third party claim, a party shall set forth affirmatively ... set-off ... and any other matter constituting an avoidance or affirmative defense. [Emphasis added.]

Appellees argue, however, that even if the appellants' claim could otherwise be used as a setoff to the appellees' claim, it cannot be used for that purpose in this case because of laches. Appellees rely on the principles summarized in Briarwood Apartments v. Lieblong, 12 Ark.App. 94, 671 S.W.2d 207 (1984), as follows:

The doctrine of laches is based on a number of equitable principles, and here it is based on the assumptions that the party to whom laches is imputed has knowledge of his rights and an opportunity to assert them, that by reason of his delay the adverse party has good reason to believe those rights are worthless [or] have been abandoned, and that because of a change of conditions or relations during this delay it would be unjust to the latter to permit him to assert them. Rhodes v. Cissell, 82 Ark. 367, 101 S.W. 758 (1907). Laches is a species of estoppel and rests upon the principle that if one maintains silence when in conscience he ought to speak, equity will bar him from speaking when in conscience he ought to remain silent. Page v. Woodson, 211 Ark. 289, 200 S.W.2d 768 (1947). It is the unreasonable delay of the party seeking relief under such circumstances as to make it unjust or inequitable for him to seek it now. Langston v. Langston, 3 Ark.App. 286, 625 S.W.2d 554 (1981). These equitable principles are premised on some detrimental change in position made in reliance upon the action or inaction of the other party. The length of time after which inaction constitutes laches is a question to be answered in the light of the facts presented in each individual case.

12 Ark.App. at 99-100, 671 S.W.2d 207.

Applying these principles to the facts of the case at bar, we cannot agree with appellees' assertion that appellants were guilty of laches. Appellees argue that when appellants built a fence on the surveyed boundary line between their property and the Canadys' property they did not advise appellees that the fence was being constructed beyond a fence built by Canady. They also contend that in 1981, when Canady filed his adverse possession suit, appellants filed an answer but failed to file a third-p...