Case Name: SELECTED INVESTMENTS CORP. v. INTERNATIONAL TRADING SYNDICATE
Court: Oklahoma Supreme Court
Jurisdiction: Oklahoma
Decision Date: 1952-12-09
Citations: 207 Okla. 523
Docket Number: No. 35227
Parties: SELECTED INVESTMENTS CORP. v. INTERNATIONAL TRADING SYNDICATE.
Judges: HALLEY, V. C. J., and WELCH, CORN, DAVISON, and JOHNSON, JJ., concur. O’NEAL, J., dissents.
Reporter: Oklahoma Reports
Volume: 207
Pages: 523–526

Head Matter:
SELECTED INVESTMENTS CORP. v. INTERNATIONAL TRADING SYNDICATE.
No. 35227.
Dec. 9, 1952.
251 P. 2d 502.
Fletcher Riley, Oklahoma City, for plaintiff in error.
Irvine Ungerman and Charles A. Whitebook, Tulsa, and Leslie L. Conner and Conner, Hilpirt & Britton, Oklahoma City, for defendant in error.

Opinion:
BINGAMAN, J.
The plaintiff recovered judgment against the defendant in the amount of $1,449.02, representing Oklahoma sales tax omitted from invoices covering numerous articles of merchandise sold by the plaintiff to the defendant. The defendant appeals, asserting as grounds for reversal the action of the trial court in striking its counterclaim based upon alleged defects constituting a breach of the warranty of fitness in the articles sold.
Merchandise to the amount of $72,451.27, admittedly subject to the Oklahoma sales tax, was purchased by the defendant from the plaintiff. The sales tax was omitted from the invoices. Liability for the sales tax was admitted by the defendant but by counterclaim it sought recovery for 22 sinks of the value of $339.90 and 24 bathtubs of the value of $1,711.30, all alleged to be defective and nonconforming to samples furnished, in that same were without overflow drains. Offset was tendered to the amount of plaintiff's claim and judgment was prayed for on the counterclaim for the difference. The motion of the plaintiff to strike the counterclaim on the ground that such counterclaim for alleged breach of warranty was not a proper counterclaim or setoff was sustained.
A counterclaim, under the requisites of 12 O.S. 1951 §273, "must be one existing in favor of a defendant and against a plaintiff, between whom a several judgment might be had in the action, and arising out of the contract or transaction set forth in the petition as the foundation of the plaintiff's claim, or connected with the subject of the action In Fort Worth Lead & Zinc Co. v. Robinson, 89 Okla. 221, 215 P. 205, we pointed out that although no satisfactory definition of the term "transaction" as used in the statute had been arrived at, yet it was generally agreed the term had a broader meaning than the word "contract" and even included torts.
In Watson v. American Creosote Works, Inc., 184 Okla. 13, 84 P. 2d 431, we held that a counterclaim, whatever its nature, might be maintained by the defendant if it arose out of or was connected with the cause of action of the plaintiff. Considering a counterclaim for a breach of warranty of fitness in Hales-Mullaly, Inc., v. Cannon, 189 Okla. 613, 119 P. 2d 46, we held that such a counterclaim might be asserted in a replevin action. As pointed out in Keenan v. Clark, 202 Okla. 143, 211 P. 2d 260, a counterclaim growing out of the transaction on which plaintiffs claim is founded may properly be maintained. To the same effect is Sanders v. Street's of Tulsa, 202 Okla. 427, 214 P. 2d 910.
Under the provisions of the Sales Tax Act, 68 O.S. 1951 §1251f, the seller is the taxpayer, although by 68 O.S. 1951 §1251i, the tax must be passed on to the consumer and paid by him. The omission of the seller to include this tax in the invoice would seem to be almost identical with a situation where the seller omitted to include one of the items of merchandise in the billing. If a charge for an item of merchandise had been omitted from one of the invoices it would not be seriously contended that a counterclaim for breach of warranty as to other items could not properly be litigated in a suit on the account.
Assuming that the situation were reversed and the alleged breach of warranty plead as a counterclaim here was a cause of action asserted by plaintiff, certainly the defendant, the seller of the goods, could plead as a counterclaim any unpaid sales tax on the invoices in question.
Every transaction is more or less complex consisting of various facts and acts to be performed by the respective parties. Viewed by itself any one of these acts may be such a violation of duty as to give rise to a right of action. However, neither party should be allowed to recover the damage sustained by him from any breach of duty by the other without at the same time satisfying any obligation arising against himself, growing out of the same affair.
The liability for this sales tax arises out of the transaction involved in the sale of the merchandise. We believe the California court has correctly stated the rule in the early case from that court of Story & Isham Commercial Co. v. Story, 100 Cal. 30, 34 P. 671:
"The plaintiff is not at liberty to select an isolated act or fact, which is only one of a series of acts or steps in the entire transaction, and insist upon a judgment on this fact alone, if the fact is so connected with others that it forms only a portion of the transaction."
Both the plaintiff's claim for the sales tax and the defendant's counterclaim for breach of warranty arise out of the contract or transaction which was the sale of the merchandise on which the sales tax is claimed and on which the breach of warranty is based. We conclude the trial court erred in striking the counterclaim.
Reversed.
HALLEY, V. C. J., and WELCH, CORN, DAVISON, and JOHNSON, JJ., concur. O'NEAL, J., dissents.