Court Opinion

ID: 6737763
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:19:52.539619+00
Date Added: 2024-06-11T16:01:51.442371
License: Public Domain

On Petition for Rehearing filed October 12, 1916.
Bruce, J.
A petition for rehearing has been filed in which, among other things, it is claimed that the decision of the court is based upon “the fact wrongly assumed, that the matter set forth in the answer constitutes what is known as a recoupment.” It is claimed that there is no allegation in the answer that any of the transactions mentioned in the answer formed the consideration of the note, and that the record also negatives this fact.
We think, however, counsel is in error in so far at least as the record is concerned. This seems to disclose that Brennan had purchased from Madeford the W.-| of section 32, twp. 163, B. 66, and had given him in part payment a deed to a brick building in Devils Lake. There was then some question raised by Madeford about some back payments due on this building to a certain building and loan association. ■ Brennan then took back the brick building, and in its place gave Madeford the $700 note and a deed to another house. It is clear to us that this evidence can only be construed in one way, and that is that the consideration of the giving of the note and the transfer of the new building was the .transfer of the W. \ of section 32, and the promise of agency mentioned.
There is merit, however, in plaintiff and respondents’ contention that these facts were not pleaded, and that the counterclaim or further defense (for the counterclaim was both pleaded as a counterclaim and as a further defense) nowhere stated that the promise of agency was in any way a consideration for the note, and that therefore the counterclaim was demurrable if intended to be pleaded for the purposes of recoupment. If this were all there were to the matter, we would be *104inclined to think that the verdict was properly directed for the plaintiff, as the answer had elsewhere admitted that the note was given for a valid consideration.
It is, however, claimed, and we think with merit, that the plea conld properly be considered as an independent cross demand or set-off, and, such being the case and even though no affirmative judgment was prayed for, yet if the same was pleaded both as a set-off and as a defense, we believe that the defendant would be entitled to a set-off to at least the amount of the claim against him, if damages to that amount were shown, that is to say, if the matter was one of set-off at all, and if it was otherwise properly pleaded.
The controversy before us arises not between the original parties, but between the original maker of the note and the assignee thereof. The question is, If I buy from B a non-negotiable note which is made by A to B, can A counterclaim (not recoup) against me an unliquidated claim arising out of another transaction, but prior to any notice of the assignment in question?.
We think he may. Section 7396 of the Compiled Laws of 1913 provides that “in the case of an assignment of a thing in action the action by the assignee shall be without prejudice to any set-off or other defense existing at the time or before notice of the assignment.” It will be noticed that in this section the technical word “set-off,” and not recoupment, or even counterclaim, is used, and we think that the word is used advisedly.
The term set-off includes any right of action arising out of contract or ascertained by the decision of the court and existing at the commencement of the action. Phillips, Code Pl. § 254; 7 Words & Phrases 6444; Abbott’s Law Dict.
The reason indeed for recoupment or set-off at all is the avoidance of a multiplicity of actions, and the theory on which an off-set is allowed against the assignee of a chose in action is that he has merely purchased an obligation or a promise, and that, if outstanding against that promise is still another, the two should in all justice be counterbalanced.
There is yet another question to determine, and that is whether the claim must have been liquidated. On this there is some conflict among the authorities. “Some courts,” says Mr. Phillips, “have held that unliquidated damages arising out of contract may be the subject of *105set-off, while others hold that set-off must be restricted to liquidated demands. Perhaps the weight of authority, and the better reason, are in favor of allowing unliquidated damages to be made the subject of set-off in the absence of statutory provision to the contrary.” See Phillips, Code Pl. § 254.
Again in Bliss on Code Pleading, we find the following: “It is an interpolation to add to the express authority to counterclaim ‘any other cause of action arising also on contract’ the proviso that the action or the counterclaim shall be for the recovery or counter-recovery of liquidated damages.” Bliss, Code Pl. §§ 378, 379.
We agree with the conclusion of the last writer that for us to insert in § 7449, and before the word “contract,” the word “liquidated” (and this we must do in order to sustain the contention of the plaintiff), would be for us to legislate upon the subject, and this we can hardly do.
We must bear in mind that we are construing the provisions of the new Code of Civil Procedure, and not the common law. We cannot help but believe that in making that revision the unqualified word set-off was used advisedly, and that if the legislature had intended that the demands should have heen liquidated they would have said so. Pom. Code Pem. 3d ed. §§ 737, 742.
In saying this we are not unmindful of the dicta of Chief Justice Spalding in the case of Christofferson v. Wee, 24 N. D. 506, 139 N. W. 689, in which he may seem to have intimated that a set-off must be liquidated. In the case, however, the chief justice was not construing the word “set-off” as used in our present statute, but was merely stating what the common law was upon the subject.
But was the plea sufficiently definite in its allegation of damages ? In other words was it vulnerable to the objection that “there is nothing in the answer as a basis for determining any damages, it not being alleged on what terms the said Madeford was to act as agent for the defendant — on what terms he was to purchase the property referred to, the value of the property at the time of its purchase, the value at the time of its sale, the compensation to he paid the said Madeford, or any other of the necessary elements of damages to be alleged in order to leave the defendant open to proof of any damages.”
We think it was not, and though the plea refers to some matters outside of itself, these references are not necessary and may be looked *106upon as surplusage. It certainly shows a contract to purchase and a purchase from Madeford by the defendant Brennan of the N. W. -J of section 32, and as a part consideration of such purchase, the promise of Madeford to act as defendant Brennan’s agent in the purchase of the N. W. ^ of section 5, and to procure the title thereto.
It also clearly alleges a breach of this agreement on the part of Madeford, and alleges that the defendant’s damages arising therefrom amounted to the sum of $1,000. This we believe to be sufficient, and the reference to section 32 may be considered as surplusage'except in so far as the purchase of the land in section 32 served as a consideration for the promise in regard to the land in section 36.
The allegation of damages, too, we deem to be sufficient. No special damages indeed are required to be pleaded, as in such a ease as this the statute fixes the measure. That statute is as follows:
Comp. Laws 1913, §7151. “The detriment caused by the breach of an agreement to convey an estate in real property is the difference between the price agreed to be paid and the value of the estate agreed to be conveyed at the time of.the breach and the expenses properly incurred in examining the title with interest thereon, and in preparing to enter upon the land and the amount paid on the purchase price, if any, with interest thereon from the time of the breach.”
Not only is this so, but general damages are nowhere required to be specially pleaded, and the damages which can be recovered in this case and which are the difference between the value of the land and the amount agreed to be paid therefor are certainly general damages. A bill of particulars might perhaps have been asked in the case, and the value agreed to be paid, and the worth of the land have been thus required to be given, but the agreement at least was sufficiently pleaded, and the general allegation of a damage of $1,000 was certainly sufficient as against the demurrer.
The petition for a rehearing is denied.