Section 25-4-403 - Counterclaim in action on contractA counterclaim on a contract is subject to the following rules:
(1) Except as otherwise provided by the Uniform Commercial Code, if the action is founded upon a contract that has been assigned by the party to the contract, a demand existing against the party to the contract or an assignee of the contract at the time of the assignment and belonging to the defendant, in good faith, before notice of the assignment must be allowed as a counterclaim to the amount of the plaintiff's demand if it might have been allowed against the party or the assignee while the contract belonged to the party or the assignee.(2) If the plaintiff is a trustee for another or if the action is in the name of the plaintiff who has no actual interest in the contract upon which it is founded, a demand against the plaintiff may not be allowed as a counterclaim, but so much of a demand existing against the person whom the plaintiff represents or for whose benefit the action is brought as will satisfy the plaintiff's demand must be allowed as a counterclaim if it might have been allowed in an action brought by the person beneficially interested.En. Sec. 692, C. Civ. Proc. 1895; re-en. Sec. 6542, Rev. C. 1907; re-en. Sec. 9139, R.C.M. 1921; Cal. C. Civ. Proc. Sec. 438; re-en. Sec. 9139, R.C.M. 1935; amd. Sec. 11-158, Ch. 264, L. 1963; R.C.M. 1947, 93-3403; amd. Sec. 395, Ch. 56, L. 2009.