Case ID: ad_157/html/0674-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Maurice Deiches, as Receiver of The Ætna Indemnity Company, Appellant, v. Western Development Company, Respondent.
    (No. 1.)
    First Department,
    July 10, 1913.
    Practice — action at law —equitable counterclaim—when counterclaim should not be first tried at Special Term.
    Where, in an action at law, the defendant interposes an equitable counterclaim for the cancellation of an agreement made between the parties and a copartnership, the members of which are not parties to the action, but are necessary parties to any action for the cancellation of the agreement, the allegations as to the agreement can be of no avail to the defendant, except as a defense, and pleading them as an equitable counterclaim does not entitle the defendant to have a trial of the issues arising thereon at Special Term, in advance of the trial of the other issues.
    If the facts pleaded in the counterclaim constitute a defense, they may be proved at Trial Term when the plaintiff brings the action on for a hearing.
    Appeal by the plaintiff, Maurice Deiohes, as receiver, etc., from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 24th day of May, 1913, directing that the issues raised by the defendant’s counterclaim and the plaintiff’s reply thereto be first tried at Special Term.
    
      George M. Mackellar, for the appellant.
    
      Frank H. Platt [Robert H. Ewell with him on the brief], for the respondent.
   Laughlin, J.:

This is an action at law in which the defendant interposed . an equitable counterclaim, among other things, for the cancellation of an agreement made between the parties and the firm of Otto Heinze & Co., the members of which are not parties to this action. It is manifest that the members of said firm are necessary parties to any action for the cancellation of the agreement. While, therefore, the defendant has in form pleaded an equitable counterclaim for this and other relief, it is perfectly plain that the counterclaim is not good, and that the defendant was not entitled to any relief thereunder when the order was made, and if he were he would not be so entitled now for on an appeal from the order allowing an amendment to the answer and requiring the plaintiff to join the members of said firm as parties, which was argued and is to be decided herewith, we are reversing the order and denying the motion. (Deiches v. Western Development Co., No. 2,157 App. Div. 676.) The facts upon which the equitable counterclaim is based can, therefore, be of no avail to the defendant in this action except as a defense. Characterizing them as a counterclaim does not entitle the defendant to have a trial of the issues arising thereon at Special Term in advance of the trial , of the other issues. (Cohen v. Am. Surety Co., No. 1, 129 App. Div. 166, 171.) If the facts pleaded in the counterclaim constitute a defense they may be proved at Trial Term when the plaintiff brings the action on for a hearing; and since, for the reasons stated, he cannot have the equitable relief demanded, there is no occasion for a separate trial of the issues arising on the facts pleaded in form as a counterclaim for equitable relief and on the reply thereto. (White v. Shonts, 154 App. Div. 428.)

It follows that the order should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

Ingraham, P. J., Scott, Dowling and Hotchkiss, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.