Benton v. Moore

The plaintiff is a manufacturer of paints and oils, doing business at Cleveland, Ohio, and the defendant from January or February, 1902, until November, 1902, was his agent and. salesman, residing at Canton, N. Y., and operating in St. Lawrence county and adjoining territory. Prior to September 1, 1902, the defendant received a salary, but after that time was paid by a commission. The service rendered by defendant to plaintiff seems to have been the same after September 1st as before. This action was brought by the plaintiff to recover $45.98, the price of certain goods sold to one McGary, of Potsdam,, in July, 1902, and paid for by McGary to defendant August 2, 1902. The plaintiff alleges that defendant had no interest in the money, but that he unlawfully converted it. The defendant, in his answer, admits the collection and application of the money to his own use, but says the plaintiff was owing him for commissions at the time; that by the course of dealing between the parties the defendant was authorized to pay his own commissions; and that on account of services rendered after 'September 1, 1902, the plaintiff was indebted to him, over and above the moneys collected from McGary, $95.83. Defendant’s answer includes a' counterclaim, in which the foregoing allegations in regard to defendant’s commissions and authority to retain the McGary money are set forth. The plaintiff interposed a demurrer to this counterclaim upon the ground that it appears upon its face that it is not a cause of action arising out of the transaction set forth in the complaint as the foundation of the plaintiff’s claim, or connected with the subject of the action. This demurrer was sustained by the justice, and the correctness of .that ruling-is the principal question on this appeal.

It would seem desirable, in a controversy of this kind, that the

. If the counterclaim “arises out of the transaction set forth in the complaint as the foundation of the plaintiff’s, claim,” or if it is “connected with the subject of the action,” then, by section 501 of the Code of Civil Procedure, it is not only proper, but necessary, that the court consider the matters therein set forth. If the “transaction set forth in the complaint as the foundation of the plaintiff’s claim” is taken to be the employment of the defendant by the plaintiff, and the duties of the former under such employment—in other words, the relation of principal and agent between the parties and the rights and obligations flowing therefrom, including the particular right in regard to the McGary money—then, clearly, the counterclaim should be held to arise out of it, because it consists merely of details, as the plaintiff’s claim is a detail of the whole transaction.

But if the narrower view be taken that the transaction set forth in the plaintiff’s complaint was complete at the time of the alleged conversion of the McGary money, then it is equally clear that the counterclaim is “connected with the subject of the action.” There can be no controversy that the subject of the action is the money paid by McGary to Moore. The plaintiff brings this action, having the recovery of that money for its sole object.' It is unmixed with any other object. The action is calculated to vindicate, as between the plaintiff and the defendant, this alleged right of the plaintiff, and to exclude the defendant from all claim thereto. On the other hand, the defendant makes a counterclaim to this very money, and goes into the.requisite details to inform plaintiff how it is that he claims the right to retain it. In addition to his counterclaim to this money, he seeks to recover for services alleged to have been rendered in the same general employment, which he alleges have not been paid by plaintiff to him. Of course, the merits of the action on either side cannot be determined upon demurrer, but, for the purpose of considering whether the counterclaim is well pleaded, all the facts therein alleged are admitted; and, if those facts be admitted, it seems to me the defendant had unquestionably a right to retain the McGary moneys. I believe the authorities will be found to support this' view.

It is claimed by plaintiff’s counsel that his cause of action is in tort, and that consequently a counterclaim arising on contract cannot be interposed. I do not understand that the distinction between tort and contract can operate to deprive the defendant of his counterclaim, if it arises out of the transaction set forth in the complaint as the foundation of the plaintiff’s claim, or is connected with the subject of the action. The earlier decisions commonly held that there could be no connection between a counterclaim arising on contract and a cause of action for a tort, but later decisions have settled that' contention to the contrary. In this action the plaintiff, had he so-chosen, could have waived the tort and sued upon the implied contract; and, if he had done so, clearly, the counterclaim would be without criticism. The- plaintiff cannot deprive the defendant of his right to interpose the counterclaim by his choice of the form of action in which he elects to sue. Pom. Rem. (2d Ed.) §§ 772, 773, 788, 789, and cases cited above.

It seems unnecessary to consider appellant’s contention that plaintiff's action is really on contract. I have preferred in the above discussion to treat it as for conversion. It is also unnecessary to consider the aileged error of the justice in permitting the plaintiff to swear, in answer to the seyenteenth interrogatory attached to the commission, that the defendant had no interest in the McGary money, nor any authority to collect it, inasmuch as the judgment must be reversed for the reasons already given.

Judgment reversed, with costs.