Opinion ID: 1660198
Heading Depth: 2
Heading Rank: 1

Heading: Set-Off/Permissive Counterclaim

Text: Pleas of set-off were purely statutory. Alabama Power Co. v. Kendrick, 219 Ala. 692, 695, 123 So. 215, 218 (1929); Merchants Bank v. Acme Lumber & Mfg. Co., 160 Ala. 435, 441, 49 So. 782, 784 (1909). T. Waterman, A Treatise on the Law of Set-Off, Recoupment, and Counter Claim § 10, at 11 (2d ed. 1872). Even so, set-off was characterized by a number of common features relevant to this case. First, set-off was a counter demand which the defendant [held] against the plaintiff arising out of a transaction extrinsic to the plaintiff's cause of action. Id. § 2, at 3 (emphasis added). Second, [t]he demand to be set off must have been a subsisting cause of action at the commencement of the plaintiff's suit ... and upon which an action might have been sustained. Id. § 66, at 78. Third, the amount recovered by the defendant under a plea of set-off could exceed the amount recovered by the plaintiff on the original claim. Id. § 469, at 483-84. These features of the plea of set-off were represented in Acts of the Legislative Council and House of Representatives of the Mississippi Territory of 1799. A Law Concerning Defalcation, February 28, 1799, Sargent's Code: A Collection of the Original Laws of the Mississippi Territory Enacted 1799-1800 by Governor Winthrop Sargent and the Territorial Judges 26-27 (1939). The substance of these provisions was codified in Ala.Code 1852, §§ 2240 and 2241. Specifically, those sections provided: [Section 2240]. Mutual debts, liquidated or unliquidated demands not sounding in damages merely, subsisting between the parties at the time of suit brought, may be set-off, one against the other, by the defendant or his personal representative, whether the legal title be in the defendant or not; and such set-off, if found for the defendant, extinguishes either in whole or in part, as the case may be, the plaintiff's demand. [Section 2241]. If the debt or demand so offered to be set-off, exceed the amount of the plaintiff's demand, the amount of such excess being found by the jury, judgment must be rendered against the plaintiff for costs, and in favor of the defendant for such excess.  (Emphasis added.) These sections passed unchanged in matters relevant to this case into the next seven Codes. For the recodification of § 2240, see Ala.Code 1867, § 2642; Ala.Code 1876, § 2991; Ala.Code 1887, § 2678; Ala.Code 1896, § 3728; Ala.Code 1907, § 5858; Ala.Code 1923, § 10172; Ala. Code 1940 (Recomp.1958), Tit. 7, § 350. For the recodification of § 2241, see Ala.Code 1867, § 2643; Ala.Code 1876, § 2992; Ala. Code 1887, § 2679; Ala.Code 1896, § 3729; Ala.Code 1907, § 5860; Ala.Code 1923, § 10174; Ala.Code 1940 (Recomp.1958), Tit. 7, § 352. In 1867, the legislature expanded the availability of pleas of set-off. Act No. 631, 1867 Ala. Acts 676 (first codified at Ala.Code 1867, § 2647) (the relation-back provision), provided [f]or the allowance of offsets in certain cases, where [the] statute of limitation is pleaded. More specifically, it provided: That in cases in the courts of this State where the defendant pleads a set-off to the plaintiff's demand, to which the plaintiff pleads the statute of limitation, the defendant, notwithstanding such plea, shall be entitled to have the benefit of his debt as a set-off, where such set-off was a legal subsisting claim at the time the right of action accrued to the plaintiff, on the claim sued on. (Emphasis added.) The primary purpose of this section was to toll periods prescribed by statutes of limitations during the time between the accrual of the plaintiff's cause of action and the commencement of the action thereon. Washington v. Timberlake, 74 Ala. 259, 264 (1883) (the precise object the legislature had in view was, that demands held by defendants when the adversary plaintiff's right of action accrued, if then free from the infirmity of age, should not afterwards lose their availability as a defense, by mere lapse of time). Thus, § 2647 operated as an exception or qualification to the efficacy of applicable statutes of limitations. Dunham Lumber Co. v. Holt, 124 Ala. 181, 185, 27 So. 556, 558 (1900). This section was recodified without relevant change in the next six Codes. See Ala.Code 1876, § 2996; Ala. Code 1887, § 2682; Ala.Code 1896, § 3732; Ala.Code 1907, § 5863; Ala.Code 1923, § 10177; Ala.Code 1940 (Recomp.1958), Tit. 7, § 355.