Opinion
No. 32112.
February 24, 1936.
1. SET-OFF AND COUNTERCLAIM.
In action on note, defendant held not entitled to recoup amount of damages arising from use of actionable words by plaintiff because of defendant's failure to pay note, since plea of recoupment was an independent tort (Code 1930, section 11).
2. SET-OFF AND COUNTERCLAIM.
In recoupment, defendant's claim must arise out of same contract or transaction as that on which plaintiff's cause of action is founded, or be connected with subject of action.
APPEAL from the circuit court of Covington county. HON. EDG. M. LANE, Judge.
E.L. Dent, W.W. Dent, and R.L. Calhoun, all of Collins, for appellant.
Recoupment is available in certain actions which are in form ex delicto, but in which the transaction out of which the tort arises is contractual in its nature. In such cases defendant may recoup damages for a tort which arises out of the same transaction.
23 Standard Proc., page 685; Carey v. Guillow, 105 Mass. 18, 7 Am. Rep. 494; Ewing v. Shaw, 83 Ala. 333, 3 So. 692.
A claim in tort may be recouped against one founded on contract if the two claims arise out of the same transaction.
23 Standard Proc. 693; Raymond v. State, 54 Miss. 562; Myers v. Estell, 47 Miss. 4; Hayes v. Slidell Liquor Co., 99 Miss. 583, 55 So. 356.
While we have been unable to find any Mississippi authority directly in point as to filing a counterclaim in tort in actions on contract, from the definition of recoupment found in the above authorities, if the unlawful assault as set out in the plea arose out of matters connected with the transaction of loaning the money, or the promissory note which was but the evidence of the transaction, on which appellee's cause of action was founded, the plea of recoupment was proper and the demurrer should have been overruled. It appears that collecting the money due appellee, of which the note was but the evidence, was a part of and connected with the transaction.
Scott v. Waggoner, 48 Mont. 536, L.R.A. 1916C, 491; Colla v. Carmichael U-Drive Autos, 111 Cal.App. 378, 294 P. 378.
Whatever may be done by one person which affects another's rights and out of which a cause of action may arise is a "transaction."
Fraley v. Fraley, 64 S.E. 381, 150 N.C. 501; U.S. v. Pan-American Petroleum Co., 55 F.2d 753, 776; Guy Harris Buick Co. v. Bryant, 233 P. 752, 108 Okla. 117; Haut v. Dunderson, 211 N.W. 982, 54 N.D. 826; 63 C.J. 770-773; Andre v. Morrow, 65 Miss. 315, 3 So. 659; Amory Independent Tel. Co. v. Cox, 103 Miss. 541, 60 So. 641; Bigby v. Parsons, 49 Conn. 483, 44 Am. Rep. 246; 24 R.C.L. 826, par. 33, and 844, sec. 49; 57 C.J. 405; Pack v. Brewer, 48 Ill. 54.
If there had been no loan of money, there would have been no assault. The loaning of the money and repayment of same was the transaction.
A.W. McRaney, of Magee, and H.M. McIntosh, of Collins, for appellee.
It has been almost universally held that a cross demand may be recouped even though it sound in tort, if it is connected with, and a part of, the contract or transaction upon which plaintiff's cause of action is based, provided both claims are of such a nature as to be susceptible of adjustment in one action. But defendant cannot recoup for torts not connected with plaintiff's cause of action.
34 Cyc. page 703.
It is an indispensable requisite to the allowance of the remedy of recoupment that the damages to be recouped should grow out of the very transaction upon which the plaintiff's claim is founded.
24 R.C.L. 851, par. 55.
The contract set forth in plaintiff's declaration as the foundation of his claim is a note dated May 25, 1929, which came due November 25, 1929, and the tort sought to be set up by the appellant in recoupment and the damages accruing as claimed by the plea was after the note came due and default was made in payment and a controversy arose between the parties litigant.
Columbia National Bank v. Rizer, 153 S.C. 43, 150 S.E. 316.
A counterclaim to be "connected with the subject of the action," must be directly connected, so that the parties could be supposed to have foreseen and contemplated it in their mutual acts.
68 A.L.R. 448 and 450; 7 Words and Phrases, page 315; 34 Cyc. 703; 24 R.C.L. 851, par. 55; 150 S.E. 316; 16 A.L.R. 315; 47 Miss. 4; 55 So. 356; 10 L.R.A. 378; 43 Am. R. 170; 60 L.R.A. 585; 3 N.E. 189; 48 P. 22; 15 S.E. 4; 200 N.W. 473; 58 L.R.A. 744.
Argued orally by R.L. Calhoun, for appellant.
P.F. McNair brought suit against C.C. Calhoun and another in the circuit court of Covington county upon a promissory note for two hundred dollars dated May 25, 1929, due November 25, 1929, and bearing eight per cent. interest from date until the filing of this suit on April 25, 1934.
The defendants filed a plea of the general issue, and thereafter made a motion to withdraw same and file a special plea, which motion was allowed. The defendants thereupon filed a plea of recoupment seeking to diminish or discharge the note because of certain insulting language used by McNair to the defendants uttered in the presence of two or more persons, in a rude, angry and threatening manner, and the exhibition of a knife and the threat to kill defendants because of their failure to pay the note. It will not be necessary to set out the language specifically, but it was such as to give rise to an action of slander or insult leading to a breach of the peace under our "Actionable Words" statute, section 11, Code of 1930.
There was a demurrer to the plea of recoupment which was sustained by the court below. This demurrer set forth that said plea of recoupment was not sufficient in law as a cross-demand because it was not a part of, or damages for a breach of the original contract, and that the same was for unliquidated damages and was not, therefore, maintainable as a set off to the plaintiff's cause of action. We think the court properly sustained this demurrer, not because the matter set up in the plea of recoupment did not state a cause of action, but because the action there set up to be recouped did not spring out of the plaintiff's cause of action. It is true the insulting language was used because the defendants failed to pay the note on demand after same was due, and it may be said that the note was the occasion or thing about which the plaintiff used the violent and denunciatory language, but it did not spring out of the subject-matter, and was not rooted in the plaintiff's cause of action, but was an independent tort.
In 24 R.C.L., p. 851, sec. 55, it is said that "It is an indispensable requisite to the allowance of the remedy of recoupment that the damages to be recouped should grow out of the very transaction upon which the plaintiff's claim is founded. If they arise from the breach of an independent contract, or from an independent wrong, unconnected with the plaintiff's cause of action, there can be no recoupment. It is essential that the wrong of which the defendant complains should, in some way, impair the consideration of his contract." In section 56, page 852, of this same volume, it is said that, "But, under a statute which does not permit a counterclaim unless it exists in favor of the defendant against the plaintiff, it has been held that the maker of a note cannot set up against an indorsee after maturity, or with notice, a counterclaim for damages for a breach, by the payee, of the contract which formed the consideration of the note, though he may show failure of consideration as an equitable defense to the action."
In 57 C.J., p. 396, sec. 49, it is said: "In recoupment defendant's claim must arise out of the same contract or transaction as that on which the plaintiff's cause of action is founded, or to be connected with the subject of the action. Thus, if defendant's claim springs out of the contract or transaction on which the plaintiff seeks recovery, it may be recouped, but defendant cannot recoup for matters not connected with the subject matter of plaintiff's claim, and which are founded upon an independent an distinct contract or transaction."
It is argued in the case at bar that as the insulting language was used in connection with the demand for payment of the note, it was a wrong growing out of the same transaction. We do not think this contention can be maintained. The language used did not affect, nor was it any part of the consideration of the original contract. The tort is not founded upon the note, but is disconnected from it, and was the result of an independent wrong, and is not a part of, or involved in, the note.
The authorities cited supra are sufficient to show the application of the principle. We think the demurrer was correctly sustained to the plea of recoupment, and the judgment of the court below will be affirmed.
Affirmed.