#### The Hoffman House of New York, Plaintiff, *v.*The Hoffman House Cafe, Defendant.

(Supreme Court, New York Trial Term,

December, 1900.)

Ueferee — Exceeds his authority where he tries counterclaims which have been ordered tried by a jury.

Where an action for goods and services, involving the examination of a long account, is referred to a referee to try and determine, but, on an appeal from the order of reference, a jury trial is awarded the defendant as td its counterclaims consisting of loans to the plaintiff alleged to bear interest, a report in favor of the plaintiff, giving the defendant credit for the face of the loans only, does not, upon the case coming on for the jury trial, entitle the plaintiff to judgment on the pleadings including the counterclaims, as the referee has exceeded his authority in trying them and the defendant is still entitled to have the jury decide whether it should be credited with interest on the loans as well as with the loans themselves.

Motion by plaintiff, on coming on of trial before jury, for judgment on counterclaims pleaded by defendant.

Turner, McClure & Rolston, for plaintiff.

Carter, Hughes & Dwight, for defendant.

McAdam, J.

An order was made at Special Term referring the issues raised by the pleadings to a referee to hear, try and determine the same. On appeal the Appellate Division decided that the order should be modified by providing for a trial of the issues raised by the complaint and the defenses set up in the answer thereto before the referee, and that the issue raised by the counterclaims and the reply thereto should be tried by a jury. As thus modified the order was affirmed. 36 App. Div. 176. A trial was had before the referee, whose report, in favor of plaintiff, has been filed. Thereafter, on the trial by a jury of the issue raised by the counterclaims and reply, the plaintiff moved for judgment on the pleadings and record on the ground that the said issue was included among the issues raised by the complaint and the defenses thereto, and had been determined in its favor. An examination of the *424record fails to justify plaintiff’s position. The complaint alleges the furnishing of certain supplies to and the performance of certain services for the defendant, at its request, between June 1, 1894, and January 14, 1898, which supplies and services were reasonably worth the sum of $20,472.27; that no part of this sum had been paid, except that during the period mentioned the defendant had paid the plaintiff the sum of $11,528.01 in cash and $4,482.71 by the delivery of goods of that value; and demands judgment for the balance alleged to be due as shown by a statement of the transactions of the parties annexed to the complaint. The answer, so far as material on this motion, admits the payment of $11,528.01 in cash and the delivery of certain goods, wares and merchandise; denies the correctness of the balance shown by plaintiff’s statement; as a further and separate defense sets up loans to the plaintiff of $5,000 and $2,500 in full payment of the plaintiff’s claim; alleges by way of counterclaim the making of the loans to the plaintiff of $5,000 and $2,500; that the plaintiff promised to pay the same, with interest from the date of the loan; and, to the extent that each principal sum, with interest thereon, has not been applied in discharge of the plaintiff’s claim, demands judgment for the amount not so- applied. The referee found that defendant had paid to the plaintiff $11,528.01 in cash, thus crediting the defendant with the payment of the two sums of $5,000 and $2,500 with others, without any allowance of interest, so that the jury trial is to pass on the right of the defendant to recover interest on these two sums on the theory that they were loaned to the plaintiff at interest. The defendant is not in this respect concluded by the referee’s finding. Earle v. Earle, 93 N. Y. 104; Springer v. Bien, 128 id. 99. The findings of a court or referee are final only as to facts litigated and decided, which relate to the issue before the court or referee for trial, and the determination of which was necessary to the determination of that particular issue. Reynolds v. Ætna L. Ins. Co., 160 N. Y. 651, 652. A referee derives his power from the statute under an appointment by the court, which in its order may prescribe or (as was done here) limit his duties, and any judgment rendered by him must not exceed but be strictly within the authority conferred. Edwards, in his work on Referees (at p. 17), says: “ Under chancery practice a master’s report was not to be respected which exceeded the terms of the reference, and so it must be with a referee ” appointed under the Oode. As the *425modified order specifically directed that the disputed • question whether the $5,000 and $2,500 were loans put out at interest should be passed upon by a jury as a distinct and separate issue; it was clearly intended that the referee should not pass upon such issue, and he could not, therefore, pass upon the same, and it is still open to determination in the manner prescribed. The fact that the referee gives the defendant credit for payments of $5,000 and $2,500, does not of itself establish that these sums were not loans to the plaintiff, and the question as to whether they were loans was by the Appellate Division directed to be tried by a jury and to be determined solely in that manner. Effect can be given to the direction of the Appellate Division only by holding that the jury must determine whether the $5,000 and $2,500 were loans that carried interest, to the end that the defendant may in some appropriate form get the benefit of such interest, if it be in this instance a proper subject of recovery. It must be assumed that the Appellate Division before malting its decision carefully considered the point urged by the plaintiff, that interest is a mere incident of the principal -—■ inseparable from it, even for the purpose of a separate trial, and that the appellate court directed such a trial notwithstanding. The Trial Term must not question this direction, but follow it literally. An examination of the plaintiff’s statement annexed to the complaint shows that when the plaintiff credited the defendant with the $5,000 the defendant’s indebtedness amounted to less than $500, and an additional liability of only about $100 was incurred by the defendant before the subsequent credit of $2,500 was given by the plaintiff. These circumstances give color to the defendant’s theory that these sums were loans and not payments. The defendant has not estopped itself by its conduct before the referee or otherwise from litigating the issues raised by the counterclaims and reply. The cases cited by the plaintiff on this point (Farmers’ L. & T. Co. v. Housatonic R. R. Co., 152 N. Y. 251, 254; Knapp v. Simon, 96 id. 284, 292; Baily v. Hornthal, 154 id. 648, 652; Embury v. Conner, 3 id. 511) are, therefore, inapplicable. The motion for judgment on the counterclaims must, therefore, be denied and the issues as to the loans ordered to be tried by a jury on the first Monday of January, 1901, in Part H, agreeably to the direction of the Appellate Division.

Motion denied.