Summary
In Walker v. American Cent. Ins. Co., 143 N.Y. 167, 169, Judge Finch defines a counterclaim as distinguished from a defense: "Facts pleaded which controvert the plaintiff's claim and serve merely to defeat it as a cause of action are inconsistent with the legal idea of a counterclaim, which is a separate and distinct cause of action, balancing in whole or in part that proved by the plaintiff.
Summary of this case from Rogers v. MortonOpinion
Argued June 12, 1894
Decided October 9, 1894
Edward A. Washburn for appellant. E.A. Nash for respondent.
What is pleaded in the defendant's answer as a counterclaim, and asserted to have become conclusive because no reply was served, is, in our judgment, simply and only a defense. Facts pleaded which controvert the plaintiff's claim and serve merely to defeat it as a cause of action are inconsistent with the legal idea of a counterclaim, which is a separate and distinct cause of action, balancing in whole or in part that proved by the plaintiff. ( Prouty v. Eaton, 41 Barb. 409.) It meets the latter, not only by a denial of it, or an attack upon its existence, but by opposing to it an equal or over-balancing demand on the part of the defendant. In this case what is averred to be an equitable counterclaim is in its legal effect an allegation that plaintiff's cause of action never in fact existed; that the seeming evidence of it was the product of a mistake and not the true record of the contract; and that the risk of a second insurance for one thousand dollars for which the action was brought was never in fact taken or assumed by the defendant company. In brief, the answer denied the making of the contract alleged, or any liability upon it. Of course, if true, that was a complete defense, and nothing but a defense, and could not be turned into an equitable counterclaim by asking a reformation of the writing. Any such relief was needless and of no possible consequence. When the facts pleaded should be proved their inevitable first effect would be to disprove and defeat the plaintiff's claim, and that result would furnish a remedy complete and perfect, and leave the defendant in a position of entire safety and needing for the protection of its rights no further or other judgment or relief. For the reformation sought would turn the policy sued upon only into an agreed renewal of a policy already matured and settled. There was nothing left upon which such a renewal could operate. The property had been burned: the loss had been paid: and the policy which covered it was dead. It could not be effectively renewed, and if renewed in form would be lifeless and worthless in fact. So that, beyond defeating the plaintiff's claim, the defendant had no right which at all needed a further affirmative judgment and no such judgment could be ever a practical possibility.
That fact is an insuperable difficulty in the way of regarding this plea as a counterclaim. To be such it must amount to an independent cause of action which the defendant company, if it had not been sued, might have enforced as plaintiff. Assume, therefore, that this suit had not been brought, but that the company had sued in equity upon the pleaded facts to reform the policy. There would have been no equitable cause of action because the remedy at law would be adequate and no necessity or ground for equitable interference would be disclosed. The company could show no right dependent upon an affirmative renewal of the old policy, for that was already paid and canceled and could not be renewed, and would be wholly nugatory and worthless if its formal existence should be prolonged. The only possible relief would be to cancel and extinguish the second policy issued by mistake. But a defense against that at law as never having been a contract made, as having no legal existence, would be always available against any possible claimant, and no ground for the intervention of equity would appear. The case would be like Geer v. Kissam (3 Edw. Ch. 129), in which the equitable relief sought was the cancellation of an over-due note, and in which it was held that the action could not be maintained. The defense at law was perfect and fully adequate. Equally so it would be perfect in the case I am supposing, and not only so but the equitable remedy of a reformation would be both superfluous and impossible; superfluous because needless for any purpose, and impossible since the contract as reformed had already been finally executed. The policy existing by mistake could not be valid in any hands: by the fire it had matured and ceased to be a continuing liability under which new rights could accrue: it represented only an existing right of action at law: and was altogether open to the defense that the policy was a mistake and not a contract for the added insurance claimed.
The defense, therefore, was not a counterclaim and no reply was needed, but the objection to the plea in the aspect asserted could be taken at the trial. It was so taken, and the court ruled in accordance with the contention. Nevertheless, the facts pleaded constituted a legal defense, and put in issue the very existence of the contract sued upon. Whether or not there was an actual agreement for the new and added insurance became a question for the jury, which was fought out at the trial and submitted for decision. There was no error in the ruling made.
The judgment should be affirmed, with costs.
All concur, except ANDREWS, Ch. J., not sitting.
Judgment affirmed.