#### Robert C. Davidge and Ano., Resp’ts *v.*Wallace Mayo, App’lt.

*(Supreme Court, General Term, Second Department,*

*Filed May 13, 1889.)*

1. Counter-claim—When applied in legal action.

The policy of the law is that where parties have respectively claims-against each other arising out of contract, the person oweing the larger sum shall not be required to pay any greater amount than the difference, upon which the demands will be extinguished; this principle is of general application, and in most cases can be applied to legal actions.

2. Same—When availed of as set off against wife—Affirmative JUDGMENT WHEN TAKEN.

Where it appeared that the claim after being assigned was transferred back to the plaintiff jointly with his wife, *Held*that defendant’s claim can. be availed of as a set off against the wife, and if the claim established by defendant exceeds that of plaintiff, an affirmative judgment can be had against the plaintiff, as husband.

3. Equity—Costs.

Where the action is in equity, *costs are*in discretion.

This action was brought to obtain a judgment against defendant for any sum which might be found due from him upon certain business transactions in which he and the plaintiff, R. 0. Davidge, had been engaged.

As a part of his defense, defendant pleads as a counterclaim a cause of action against the plaintiff last named.

Plaintiffs demurred to this counterclaim upon various grounds, and from the judgment sustaining their demurrer defendant takes this appeal.

*Henry Sanger Snow,*for app’lt; *H C. Cantine,*for resp’ts.

Pratt, J.

The policy of the law is that where parties have respectively claims against each other arising out of contract, the person oweing the larger sum shall not be required to pay any greater amount than the difference upon which the demands will be extinguished.

The principle was first established by the courts of equity in cases where for special reasons injustice would otherT wise ensue.

But it is now regarded as of general application, is highly favored, and by the statutes relating to set-off and counterclaim can in most cases be applied in legal actions.

The present action is in equity for an accounting, and if insolvency on the part of the plaintiff or other hardship Avere shown, it is probable defendant would be protected without reference to the statute.

No such circumstance appears, but we are of opinion that the case falls within the statute.

*345Both demands are upon contract. Originally they were "between the same parties. Both were in existence before plaintiff assigned his claim.

Had the cause of action remained with and the suit been brought by the assignee, defendant’s only relief would have been to use his demand as a set off.

The claim being transferred back to the assignor, jointly with his wife, defendant’s claim can be availed of as a set-off against tile wife, and if the claim established by the defendant exceeds that of the plaintiff, an affirmative judgment can be had against the husband.

The action is in equity and costs will be in discretion. It follows that the judgment appealed from must be reversed, the demurrer overruled, and plaintiff may rely upon payment of the costs of the general term.

Barnard, P. J., concurs; Dvkman, J., not sitting.