#### Marie Harrington, Respondent, *v.*Hugo F. Jaeckel et al., Appellants.

(Supreme Court, Appellate Term,

March, 1912.)

Conversion (tortious) — What constitutes — Retention of property.

A defendant, in an action for the conversion of some of the fur of a coat and damages for making unauthorized alterations thereto, may counterclaim the agreed price for altering the coat.

Appeal by the defendants from a judgment of the Municipal Court of the city of Hew York, borough of Manhattan, third district.

*654Theodore Jaeckel, for appellants.

Bemheim & Lowenthal, for respondent.

Pendleton, J.

Appeal by defendants from so much of a judgment as disallows the counterclaim. The pleadings were oral. The complaint was for the conversion and damage to personal property. The answer was a denial and a counterclaim for $120. The plaintiff in a bill of particulars and at the trial claimed that she delivered a fur coat to defendants for certain alterations'; that defendants disobeyed the directions ; took out some of the fur and made alterations not authorized. The defendants denied the charges of failure to make the alterations agreed upon and sought to recover as a counterclaim the agreed price for altering the coat, viz., $120. The court found for the defendants on the main issue, but dismissed the counterclaim as not allowable in this action. The only question involved is, was the cause of action sought to be interposed by the defendants the proper subject of a counterclaim ? If it was the court should have passed upon it. All issues properly presented must be determined one way or the other. Mun. Ct. Act, § 230; Morehouse v. Brooklyn Heights R. R. Co., 185 N. Y. 520. The question as to what constitutes a proper counterclaim in an action for tort has.been recently before the Appellate Division in this department. Adams v. Schwartz, 137 App. Div. 230. In that case the authorities are fully discussed. I think within the decision there approved the alleged counterclaim in tHe case at bar could properly be set up in this action, whether tested by the rule of Carpenter v. Manhattan Life Insurance Co., 93 N. Y. 552, that it must be connected with the subject of the action, or the rule of Deagan v. Weeks, 67 App. Div. 410, that the two causós of action be so connected that they must be determined .upon the same evidence. The transaction here was the agreement as to certain alterations to be made to a coat and the real controversy was as to what the arrangement was; what alterations had been agreed upon and what made. If as defendants claimed the agreement was carried out by them, plaintiff would be liable for the agreed price; if on the ■ *655contrary, as plaintiff claimed, defendants had disregarded the agreement and injured the coat or converted any part of the fur, the defendants would he liable.

In Heigle v. Willis, 50 Hun, 588, there were conflicting claims for damages growing out of a collision and one was. held a proper counterclaim to the other. In Xenia Branch Bank v. Lee, 7 Abb. Pr. 372, the two alleged causes of action ' involved a transaction as to notes in which one or the other party could not recover. One cause of action was held a proper counterclaim to the other. In Ter Kuile v. Marsland, 81 Hun, 420, a counterclaim for money due under a contract of agency was held proper in an action for conversion of the money collected. The court laid down the rule that, where the cause of action set out in the complaint and the cause of action set out in the answer as a counterclaim arose out of the alleged breach of the same contract, the cause of action set out in the answer was properly pleaded' as a counterclaim, although one cause of action was in tort and the other upon contract. These cases were approved by the Appellate Division in this department in the case of Adams v. Schwartz, *supra,*where "the court, in effect, held that where there has been a transaction of the nature of that set forth in the complaint and that transaction gives rise to a cause of action in favor of the other party and in some instances where it gives rise to alleged causes of action in favor of both, '1 but the parties differ with respect to attending and surrounding circumstances and the result and effect of :the transaction, the alleged causes of action may be set up as a counterclaim the one against the other'.

The case at bar is within the above rule and the judgment should be reversed and a new trial ordered, with costs to appellants to abide the event.

Gxegebioh and Lehman, JJ., concur.

Judgment reversed and new trial ordered, with costs to appellants to abide event.