Court Opinion

ID: 6908276
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:04:14.893733+00
Date Added: 2024-06-11T16:06:27.217525
License: Public Domain

RAND, J.
Although it was not alleged in any of the pleadings that the sale was a conditional one, it appeared from the evidence offered upon the tidal by both plaintiffs and defendant, and it was admitted by both parties that the sale of the automobile was made under a written contract, which contract was introduced as an exhibit, and provides that the title to the automobile should not pass to the defendant until the whole purchase price was paid. It also appears from the allegations of the answer that, with one exception, the stipulated payments were not made at the times specified, nor made at all, and that by reason thereof the defendant was in default at the time plaintiffs demanded from defendant the possession of the automobile.
Where goods or chattels are sold on condition that the title thereto shall not vest in the vendee un*220til payment of the purchase price, the legal title. to the property remains in the vendor until the payment is made, and if the vendee fails to make the payment at the specified time the vendor is entitled to the possession of the property. As said by this court in Maxson v. Ashland Iron Works, 85 Or. 345, 355 (166 Pac. 37), upon the default of the vendee in the payment of the purchase price under a contract of this character, the vendor “may upon a breach of the conditions treat the sale either as absolute and sue for the consideration agreed to be paid or he may regard the sale as canceled and recover the property.” Where the vendors, as in this case, elected to recover the possession of the property, it was the duty of the vendee, upon demand, after default, to surrender the possession of the property to the vendors, and upon his refusal the plaintiffs, as vendors, were entitled to maintain an action to recover the possession of the property from the defendant vendee.
The issue to be litigated in an action in replevin is the present right to the possession of the property in controversy. Under this contract no title whatever to the automobile had vested in the defendant at the time when sued for the recovery thereof, and hence the defendant had no defense to this action: Roach v. Curtis, 191 N. Y. 387 (84 N. E. 283).
The defendant contends that the facts stated in the answer constitute a counterclaim within the meaning of the Code. These facts are that the defendant sustained damages by reason of false representations which induced him to purchase the automobile and the breach of a warranty as to the condition and quality of the automobile. So far as applicable to the question of whether these facts constitute a counterclaim within the meaning of the Code, Section 74, Or. L., provides as follows: “The *221counterclaim # # 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 complaint as the foundation of plaintiff’s claim,” and “in an action arising on contract, any other cause of action arising also on contract and existing at the commencement of the action.” In addition to these provisions the statutes of most states, defining what constitutes a counterclaim, included the provision “or connected with the subject of the action.” These words, however, are omitted from our statute, and hence in this state a counterclaim, which is merely “connected with the subject of the action” and which might be permissible under other statutes, cannot be interposed as a counterclaim. Under our statute a counterclaim is not sufficient if it be only connected with the subject of the action: Krausse v. Greenfield, 61 Or. 502, 506 (123 Pac. 392); Wait v. Wheeler S Wilson Co., 23 Or. 297, 301 (31 Pac. 661); Loewenberg v. Rosenthal, 18 Or. 178, 184 (22 Pac. 601); Chance v. Carter, 81 Or. 229, 234 (158 Pac. 947).
To constitute a valid counterclaim under our statute the facts stated in the counterclaim must be sufficient to constitute a cause of action in favor of the defendant and against the plaintiff, between whom a several judgment might be had in the action, and the cause of action set forth in the counterclaim must be one of the following: (1) A cause of action arising out of the contract set forth in the complaint as the foundation of the plaintiff’s claim; (2) A cause of action arising out of the transaction set forth in the complaint as the foundation of the plaintiff’s claim, or (3) If plaintiff’s action is one arising' on contract, then any other cause of action arising also *222on contract and existing at the commencement of the action.
While the proper mode of raising and presenting the question of whether the facts stated are sufficient to constitute a counterclaim under the statute is by demurrer (Pomeroy’s Code Remedies (4 ed.), § 487), and while in the instant case the objection to the sufficiency of the counterclaim was not raised by demurrer, that is not the only manner in which the question can be presented to the court for decision. If the facts alleged do not constitute a counterclaim within the meaning of the statute and the matters alleged constitute no defense, the question of the sufficiency of the counterclaim may be raised by an objection to the introduction of any testimony offered to sustain it, as in Chamberlain v. Townsend, 72 Or. 207, 213 (142 Pac. 782), or by a motion for a directed verdict, and, if the matters alleged in the counterclaim are sham, frivolous and irrelevant, the objection may be raised by a motion to strike. The objection was raised here by a motion to strike and also by a motion for a directed verdict. The objection, therefore, if the matter alleged did not constitute a counterclaim or defense to the cause of action set forth in the complaint, was sufficiently raised and was not waived by failure to demur (see Kondo v. Aylsworth, 81 Or. 225, 158 Pac. 946), nor was it waived or cured by the reply: Smith v. Hall, 67 N. Y. 48.
As the defendant, until his default in payment, was rightfully in possession of the automobile, it was necessary for the plaintiffs to demand possession of it in order to render his subsequent possession unlawful. After demand and refusal by the defendant to surrender possession of it plaintiffs became entitled to maintain an action in replevin to recover the possession of the automobile. The cause of action *223alleged in. the complaint as the foundation of plaintiffs’ claim was defendant’s wrongful refusal, upon demand, to surrender the possession of the automobile to the plaintiffs and his subsequent wrongful detention of it. This refusal by defendant and his subsequent detention of the automobile was a clear violation of the legal right of the plaintiffs to the possession of the automobile, and gave to the plaintiffs the clear right to bring an action to recover the possession of it.
Assuming that the facts alleged in defendant’s counterclaim are sufficient to constitute a cause of action in favor of the defendant and against the plaintiff and that if sustained by proof these allegations would entitle the defendant to recover therefor, the question is, is he entitled to plead these matters, either as a defense or as a counterclaim to the cause of action alleged in the complaint, or must he seek his remedy by an independent action? It must be obvious that the cause of action for the wrong complained of by the plaintiffs, namely, defendant’s wrongful detention of their automobile, is not one arising on contract, but is based on tort, and therefore the defendant is not entitled to allege as a counterclaim in an action brought to recover the possession of.the automobile a cause of action arising on contract under either subdivisions 1 or 2 of Section 74. Hence, if entitled to set forth these matters as a counterclaim it can only be for the reason that the cause of action set forth in the counterclaim is one arising out of the transaction set forth in the complaint as the foundation of plaintiffs ’ claim. The transaction set forth in the complaint as the foundation of plaintiffs’ claim is the wrong, committed by the defendant in the detention, without legal right, justification or excuse, of plaintiffs automobile. The *224transaction set forth in the counterclaim is the alleged wrong committed by the plaintiffs in making false representations and in the breach of a warranty, resulting in damages to the defendant. Between the transaction set forth in the complaint and the transaction set forth in the counterclaim there is no legal connection whatsoever. They are entirely separate and distinct from each other and the wrongs complained of in the counterclaim do not arise from the transaction alleged in the complaint. They preceded the transaction alleged in the complaint and are wholly unrelated to it, and hence the matters alleged in the counterclaim do not constitute a counterclaim within the meaning of the Code.
The matters alleged in the counterclaim are not sufficient to constitute any lien or charge against the automobile or any special interest or property in it or right to the possession .of it. Plaintiffs’ right to the present possession of the automobile arises from their absolute ownership of it, while defendant’s right to recover damages depends upon and grows out of fraud and breach of contract. Defendant’s right to recover for the fraud and breach of contract in no way affects plaintiffs’ ownership or right to the possession of the automobile, and if defendant’s counterclaim should be sustained it could not defeat or impair plaintiffs’ right to the possession of the automobile. It is therefore clear that the matters alleged in the counterclaim do not constitute any defense to plaintiffs’ right to recover the automobile.
The purpose of the statute permitting a defendant, in his answer, to set up a counterclaim was to prevent circuity of action, multiplicity of suits, unnecessary delay and expense to litigants. To effectuate that purpose the statute should be liberally construed but it should not be construed so as to include *225a counterclaim which does not fairly come within its terms: Wait v. Wheeler & Wilson Co., supra. As it is clear that the counterclaim alleged in the answer does not come within the terms of the statute, it follows that the matters alleged do not constitute a counterclaim within the meaning of the statute.
In a replevin action any defense which controverts plaintiff’s right of possession at the time the suit was commenced is allowable: Cobbey on Replevin (2 ed.), § 783. A judgment for the damages alleged in defendant’s answer, whether recovered in this action or in a separate action brought by the defendant against the plaintiffs, would have no more effect upon plaintiffs’ right to the possession of the automobile at the time this action was commenced than would the recovery against the plaintiffs of a judgment by a third person on any other claim or demand. Upon establishing their cause of action the plaintiffs were clearly entitled to a judgment for the possession of the automobile and for the costs of the action. Their right to costs could be defeated only by their failure to sustain the allegations of the complaint. These allegations were established and no defense was offered except the matters alleged in the counterclaim upon which the defendant secured a money judgment and a judgment for the costs of the action. This result illustrates the vice of upholding a counterclaim in clear contravention of the provisions of the statute.
If, instead of having commenced this action to recover the possession of the automobile, the plaintiffs had commenced an action to recover the balance of the unpaid purchase price, then, as plaintiffs’ cause of action would have been one arising on con-bract, so far as the alleged breach of warranty is con*226cerned, the defendant, under Section 74, Or. L., would have been entitled to plead as a counterclaim the matters alleged in his answer as those matters arose, if not out of the contract or transaction set forth in the complaint, at least out of some other contract. In such an action the allowance in favor of the defendant of any sum for damages would either entirely defeat plaintiffs’ right to recover 'or else reduce the amount which plaintiffs would be entitled to recover.
In Gary Coast Agency, Inc., v. Lawrey, 101 Or. 623 (201 Pac. 214), which was an action to collect a note given in part payment of the purchase price of a truck sold under a conditional sales contract, this court properly affirmed a judgment in favor of the defendant upon a counterclaim for damages arising from a breach of warranty and fraud in the sale of the truck, and held that because of plaintiff’s failure to demur to the counterclaim, which combined a claim for damages for tort with a claim for damages for breach of contract, the error of not separately stating a cause of action arising on tort and one arising on contract was waived. In that case the counterclaim, if sustained in whole or in part, would have operated either to entirely defeat or to reduce the amount of plaintiff’s recovery, while in this case no such result could follow.
Defendant relies upon the decision of this court in Zimmerman v. Sunset Lumber Co., 57 Or. 309 (111 Pac. 690, Ann. Cas. 1913A, 103, 32 L. R. A. (N. S.) 123), which was an action to recover possession of two engines that had been sold by the plaintiff to the defendant under a contract which provided that the title to the engines should not vest in the defendant until the purchase price had been paid, as in the instant case the plaintiffs alleged ownership and right *227of possession, but unlike the instant case the complaint set forth the provisions of the contract under which the sale had been had. The defendant answered alleging three counterclaims for damages, one arising from an overpayment of freight because of the negligent shipment of the engines by plaintiff to a wrong destination, one arising from the loss of the use of the engines through plaintiff’s delay in shipping them to defendant, and the third for damages resulting in the defective construction of one of the engines, for the replacement of which the defendant was compelled to pay. A demurrer to these counterclaims was sustained in the lower court. This ruling of the lower court was upheld upon appeal upon the ground that the aggregate of the damages alleged did not equal or exceed the balance of the unpaid purchase price which the defendant admitted was then due upon the engines. In that case this court, speaking through Mr. Justice Eakin, said: “The defendant is entitled to allege and prove any facts that will defeat plaintiff’s right to possession, such as payment of the debt or a counterclaim equal to it, provided it is such as may be pleaded under Section 74, B. & C. Comp.; but any set-off less than the whole amount due will be unavailing for that purpose, as plaintiff is entitled to possession if any part of the price is unpaid.” Again the court said: “If the action is to recover possession of property, the right to which arises upon contract, such as, upon chattel mortgage, which in terms authorizes the mortgagee to take possession upon default in payment of the debt secured, any matter tending to defeat plaintiff’s right of possession may be pleaded as a setoff, as plaintiff’s right, in such a case, being for the purpose of foreclosure, is not based on title, but right of posses*228sion; and if there is no debt there is no right of possession in the mortgagee.”
From that decision the following rule may be deduced. In an action of replevin where plaintiff’s right to the possession of the property arises, not from absolute ownership in the plaintiff, as in the instant case, but from defendant’s default in the payment of a debt under a contract which gives to the plaintiff, if the debt is not paid, the right to the possession of the property for the purpose of subjecting it to the payment of the debt, no set-off is available to defeat plaintiff’s right to possession unless the amount of the set-off equals or exceeds the debt due, and if in such case the set-off pleaded exceeds the debt due, nevertheless the defendant cannot recover judgment for the excess unless, if such a thing be possible, the particular facts pleaded as a set-off constitute a counterclaim which comes fairly within the terms of the statute: Section 74, Or. L.
Defendant cites numerous other cases holding to the effect that when an action is brought by a mortgagee of a chattel mortgage to recover possession of the mortgaged chattels for the purpose of foreclosure, the mortgagor may defeat the action by showing that the mortgage debt has been paid. Upon the default of a mortgagor in a chattel mortgage to pay the mortgage debt the mortgagee is entitled to the possession of the mortgaged chattels in order to enable him to foreclose his mortgage: J. C. Corbin Co. v. Preston, 109 Or. 230, 252 (212 Pac. 541, 218 Pac. 917). In such case the mortgagee would have a special interest in the mortgaged property sufficient to entitle him to recover the possession of the mortgaged property by an action in replevin. Where an action is brought by a mortgagee for that purpose the defendant may, of course, defeat the action by alleging and *229proving that the mortgage debt has been paid. If the debt has been paid all rights of the mortgagee under the mortgage are terminated. The payment of the mortgage debt extinguished the debt and thereafter in legal effect the mortgage was a mere nullity and no rights could subsist in the mortgagee under said mortgage. Where an action is brought by the mortgagee to recover the possession of mortgaged chattels in order to enable him to foreclose the mortgage and the answer alleges that the mortgage has been paid in full, the plea of payment is in bar of plaintiff’s right to maintain the action. This, if sustained, would be a complete defense to the action, but such a plea possesses none of the elements of a counterclaim. Evidence in support of the plea would be admissible, not for the purpose of establishing the counterclaim but for the purpose of defeating plaintiff’s demand for the possession of the property. In order to defeat the demand of a mortgagee for the possession of the mortgaged property it is necessary to allege and prove that the mortgage debt has all been paid, for if any part thereof is unpaid the mortgagee would be entitled to_ recover the possession of the property so as to subject it to the payment of the debt for which it had been given as security. These authorities cited by defendant and the principles they announce have no application to the facts involved here.
If, as stated, the plaintiffs in the instant case had treated the sale as absolute and sued for the consideration agreed to be paid for the automobile, defendant’s counterclaim would have been permissible, but instead of doing that plaintiffs in this case treated the sale as canceled and sued to recover the possession of the property. As against their clear legal right to recover the possession of the property, the *230defendant, not for the purpose of defeating the recovery, hut for the purpose of obtaining a judgment against the plaintiffs, sought to recover upon an alleged counterclaim. “It would seem,” says Mir. Pomeroy, “that in an action to recover the possession of specific chattels, no counterclaim is possible, unless, perhaps, equitable relief may be awarded under some very exceptional circumstances.” Pomeroy’s Code Remedies (4 ed.), § 643.
The author of Wells on Replevin, Section 630, says: “The nature of actions for tort does not allow an examination into counterclaims of indebtedness or damages. This is especially the case in replevin. The plaintiffs sued for specific articles, and damages for their wrongful detention, and it is contrary to the spirit of the law to allow an offset to be investigated in cases of a suit for the recovery of chattels wrongfully withheld.” In the two sections following the author points out certain exceptions to the general rule, such as when property has been distrained for rent the right of the tenant, in an action to recover the property distrained, to offset, as against the rent, damages arising from the landlord’s breach of a covenant in his lease to an amount equal to the claim for rent and thereby defeat the distress; or the right of a carrier, when sued in trover for goods lost, to recoup upon its lien for freight; or, when the defendant justified the detention of the property sought to be recovered in a replevin action upon the ground that he had a lien upon the property, the right of the plaintiff to show that the lien had been discharged or extinguished by the payment of money or by damages to the property while in defendant’s possession and caused by the negligence of the defendant.
However, the facts alleged do not bring this case within any of the exceptions to the general rule. In *231the case at bar plaintiffs, under the admitted facts, were entitled to a judgment for the possession of the automobile and for the costs of the action. Under the procedure adopted by the lower court the case proceeded upon the theory that the counterclaim was the only matter in issue. A recovery by the defendant upon his alleged counterclaim could not have the effect of defeating plaintiffs’ right to a judgment for the possession of the automobile, and if the procedure adopted in this case could be upheld, it would follow that both the plaintiffs and the defendant would be entitled to obtain a separate judgment in their favor in one and the same action. For such procedure no support can be found in the statute.
By the complaint the plaintiffs claim to be the owners of the automobile in controversy, as well as to be entitled to its possession. The verdict is silent, both as to the ownership' of the property and as to the right of possession, and both of those issues remain undetermined. The issue to be litigated in an action of replevin is the present right to the possession of the property in controversy: Roach v. Curtis, 191 N. Y. 387 (84 N. E. 283). As said by this court: “In an action for the recovery of specific personal property the question in issue is the right of possession, and, if the effect of the verdict is to change the possession from one party to the other, the jury must find the value of the property as a basis for an alternative judgment, in case delivery of the possession of such property cannot be had.” Nunn v. Bird, 36 Or. 515, 522 (59 Pac. 808).
By the denials in the answer the defendant put in issue both plaintiffs’ ownership and right to the possession of the automobile in controversy. “In replevin,” as said by Mr. Justice Lord in Kee v. Dunbar, 20 Or. 416, 418 (26 Pac. 275), “the rule is that *232the verdict should he responsive to and dispose of all the material matters put in issue by the pleadings. A verdict that fails in this respect does not respond to the issues raised and is defective in substance.” In the instant case the verdict settles none of these issues and leaves them wholly undetermined. No reference to the automobile or to the possessory right thereof is to be found,- either in the verdict or the judgment. In the preliminary proceedings the automobile was delivered to the plaintiffs, but there is no allegation of this fact in the pleadings. Whether the taking of the automobile- from defendant by the sheriff and its delivery to the plaintiffs was rightful or wrongful is not settled either by the verdict or the judgment. It is true that the answer malíes no demand for its return and it is possible that defendant’s failure to demand a return amounts to an estoppel of his right to later insist upon the possession of. the automobile, but this estoppel, if any, arises from the conduct of the parties and not from any issue raised by the pleadings or anything said in the judgment itself. As the automobile was delivered to plaintiffs during the progress of the action, the plaintiffs were not entitled to a judgment in the alternative or to have the value assessed or for the return of the property, but they were entitled, upon a finding in their favor, to- a judgment for the recovery of the automobile: See Prescott v. Heilner, 13 Or. 200 (9 Pac. 403); Phipps v. Taylor, 15 Or. 484 (16 Pac. 171). The verdict does not conform to the statute and the judgment given in the action does not comply with the requirements of the statute prescribing the form of the judgment to be entered in a replevin action.
The statute, Section 153, Or. L., prescribes that “In an action for the recovery of specific personal *233property, if the property have not been delivered to the plaintiff, or the defendant by his answer claim a return thereof, the jury shall assess the value of the property, if their verdict be in favor of the plaintiff, or if they find in favor of the defendant, and that he is entitled to a return thereof, and may at the same time assess the damages, if any are .claimed in the complaint or answer, which the prevailing party has sustained by reason of the detention or taking and withholding such property.” Section 198, Or. L., provides: “In an action to recover the possession of personal property, judgment for the plaintiff may be for the possession, or the value thereof, in case a delivery cannot be had, and damages for the detention thereof. If the property have been delivered to the plaintiff, and the defendant claim a return thereof, judgment for the defendant may be for a return of the property, or the value thereof, in case a return cannot be had, and damages for taking and withholding the same.”
Under these provisions of the statute an action to recover the possession of personal property, although possessing the elements of the common-lavs action in replevin, is no longer a common-law action but is statutory, and parties to the action must conform to the requirements of the statute. By these two sections the statute prescribes the requirements of the verdict and judgment in an action for the recovery of personal property. A verdict or judgment in entire disregard of these requirements is not authorized in a replevin action. As neither the verdict nor the judgment conformed to any of the requirements of the statute it was error for the court to receive the verdict or to enter judgment thereon.
A question in some respects similar to that presented here arose in the case of Maxson v. Ashland *234Iron Works, supra. In that case the plaintiff had sued the Ashland Iron Works to recover possession of certain mill machinery. The answer alleged that the property in controversy had been mortgaged to the defendant by one Johnson while in possession of it, and that defendant had become the owner of it through foreclosure and sale. Upon the trial the evidence showed that the plaintiff had entered into a contract with Johnson, by the terms of which the plaintiff was to retain the possession of the property until the full purchase price was paid; that Johnson had paid thereon the sum of $300, leaving but $200 due to plaintiff under the contract. Plaintiff had judgment adjudging him to be the owner of the property and entitled to the immediate possession thereof and that its value was the sum of $500. Subsequent to the entry of the judgment the lower court entered an order to the effect that unless plaintiff would remit from the judgment $300 of the value the judgment would be set aside and a new trial granted. This order not being complied with the judgment was set aside. Upon appeal it was held that the word “possession” had been inadvertently used for the term “title.” In reversing the case this court quoted with approval the headnote in Thirlby v. Rainbow, 93 Mich. 164 (53 N. W. 159), which reads as follows: ‘ ‘ The question of the right of a vendee of personal property, the title to which was retained in the vendor until the payment of the purchase price, with the right to reduce it to possession in case of nonpayment, to recover the amount paid thereon in excess of what the vendor had a right to retain, cannot be tried in a replevin suit brought by the vendor after default in payment and refusal to surrender the property on demand.” This court then said: “To the same purport is the case of Ryan v. Wayson, 108 *235Mich. 519 (66 N. W. 370), where it was held that upon the failure of a vendee to comply with the terms of a conditional sale the vendor was entitled to the possession of the property, although there was no express provision to that effect, and that in an action of replevin by the vendor under such a contract a judgment in favor of the vendee for the excess of the value of the goods over the unpaid purchase price was unauthorized, since the vendee had no special in-terest in the goods, even if entitled to treat the contract as rescinded, but at most he had only a personal claim against the vendor.”
In an action to recover the purchase price of property sold, breach of warranty or fraud is a valid counterclaim. Hence, if this action had been brought to recover the purchase price of this automobile and not to recover possession of it, the facts alleged would have constituted a valid counterclaim to the cause of action thus sued on, for if found to be true in an action to recover the purchase price, the damages recovered on the counterclaim would either defeat a recovery by plaintiffs or else reduce the amount of the recovery, and if the damages arising from the fraud were found to be in excess of the amount due to the plaintiffs, it would entitle the defendant to a judgment over in his favor for such amount.
In this action, which was brought to recover the possession of the automobile in controversy and not the balance of the purchase price, a counterclaim to recover damages for breach of contract or for fraud growing out of the sale of the automobile by plaintiffs to defendant will not lie for the reasons above stated, and also because the law affords no such remedy to the defendant.
“If one is induced by fraud to enter into a contract for the purchase of an article, on discovery of the *236fraud there are two methods of procedure open to him: (1) he may promptly return the property on such discovery, rescind the contract and sue for what he has paid; or (2) he may keep the property and recoup for the damages he has sustained, when sued for the purchase price: Scott v. Walton, 32 Or. 460 (52 Pac. 180).” Gary Coast Agency, Inc., v. Lawrey, supra. In such case the defrauded party, upon discovery of the fraud, has an election of remedies. “He may either affirm the contract and sue for damages or disaffirm it and be reinstated in the position in which he was before it was consummated. These remedies, however, are not concurrent but wholly inconsistent. The adoption of one is the exclusion of the other.” Scott v. Walton, supra.
The statute (§ 8230, Or. L.) provides:
“Where there is a breach of warranty by the seller, the buyer may, at his election: (a) Accept or keep the goods and set up against the seller the breach of warranty by way of recoupment in diminution or extinction of the price; (b) Accept or keep the goods and maintain an action against the seller for damages for the breach of warranty; (c) Refuse to accept the goods, if the property therein has not passed, and maintain an action against the seller for damages for the breach of warranty; (d) Rescind the contract to sell or the sale and refuse to receive the goods, or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid. * *
(3) Where the goods have been delivered to the buyer, he cannot rescind the sale, * * if he fails to return or offer to return the goods to the seller, * *
(4) Where the buyer is entitled to rescind the sale and elects to do so, * * If the price or any part thereof has already been paid the seller shall be liable to repay so much thereof as has been paid, concurrently with the return of the goods, or imme*237diately after an offer to return the goods in exchange for re-payment of the price.”
Where the buyer proceeds under the subheads (a), (b) or (c) he affirms the contract. The remedy to which he will become entitled for a breach of warranty depends upon his choice of the remedies provided by the statute. These remedies are not cumulative. For a breach of warranty he can have any one of them, but he cannot, under the statute, have more than one remedy upon any one contract for the same breach. Before the buyer can rescind the contract and recover back the money he has paid, the statute requires that he shall return or offer to return the goods he has received.
In the instant case the defendant failed to return the automobile or to offer to return it to the plaintiffs. On the contrary he refused to deliver the automobile to plaintiffs when demanded. His failure to return the automobile and his refusal to deliver it upon demand, while a violation of the contract, was an affirmance, upon his part, of the contract, for he could have no right to the automobile unless it arose under the contract. In his counterclaim he demands damages for breach of warranty and for fraud. Both by demanding damages for breach of warranty and by demanding damages for fraud he affirmed the contract. Under the statute, upon affirming the contract he is given his choice of three remedies. If sued by the seller for the balance due under the contract “he may set up against the seller the breach of warranty by way of recoupment in diminution or extinction of the price.” This, it will be noted, is not by way of an independent suit but is by way of answer, and contemplates that the buyer shall both keep the property and be sued for the purchase price, for it is only where he accepts or *238keeps the goods that this remedy becomes available, and it is only when be is sued for the price that be can so recoup. If, instead of relying upon breach of warranty, he relies upon fraud, “he may keep the property and recoup for the damages he has sustained when sued for the purchase price.” Gary Coast Agency, Inc., v. Lawrey, supra. Hence, the remedy provided by statute to the buyer for breach of warranty and the remedy recognized by the law for fraud are, in two respects, identical. In each case the buyer keeps the property and in each case he is sued for the purchase price. The only difference between the two is that when the buyer sets up the breach of warranty when sued for the purchase price he cannot recover an independent judgment against the plaintiff. He can only set up the damages in diminution or extinction of the price, while, when the buyer sets up fraud he may recover an independent judgment if the damages exceed the balance due on the purchase price. But in neither case can the defendant set up a counterclaim unless he is sued for the purchase price. The other two remedies provided by statute, where there is a breach of warranty by the seller and the buyer affirms the contract, are: the buyer may accept or keep the goods and maintain an action against the seller for damages for the breach of warranty or he may refuse to accept the goods if the property therein has not passed and maintain an -action against the seller for damages for the breach’ of warranty. In pursuing either of these two remedies the buyer commences an independent action .against the seller to recover these damages, and in-neither case can they be set up under the statute as a counterclaim. Although the amount paid upon the purchase price may become an element in some cases, which should be considered by the jury in determin*239ing the amount of the damages to which the buyer is entitled, the buyer is not permitted, under any of these remedies, to recover back what he has paid upon the purchase price.
In this case the defendant, by his counterclaim, seeks to rescind the contract and recover back what he has paid to the plaintiffs on the purchase price without returning or offering to return the automobile. This he cannot do under the statute. To recover back what he has paid he must rescind the contract and return the property which he has received. The same rule applies if the defendant seeks to rescind the contract for fraud. “He may promptly return the property on such discovery, rescind the contract and sue for what he has paid.” Gary Coast Agency, Inc., v. Lawrey, supra. Hence, this counterclaim cannot be sustained under either aspect of the act, whether based upon fraud or based upon breach of warranty, for in neither event can the counterclaim be sustained unless the buyer is sued for the purchase price.
For these reasons the judgment of the lower court must be reversed. Reversed.
Burnett and Brown, JJ., concur. Coshow, J., concurs in the result.
McBride, C. J., and Bean, J., dissent.