At the outset, we note that recovery on both the counterclaim and the claim turn on Paragraphs C and B, respectively, of the March 15 contract. Where the claim and the counterclaim allege respective breaches of the same contract, the counterclaim is compulsory. Cooper v. Reaves, 365 So.2d 670, 671 (Ala. 1978); see also Ewing Gaines v. Shaw Co., 83 Ala. 333, 335, 3 So. 692, 693 (1888) (recoupment "authorizes the recovery of any damages sustained by the defendant, which grow out of, or are connected with, the matters set forth in the plaintiff's complaint, and in breach of the contract upon which his suit is founded, or in violation of any duty imposed by the contract"). In other words, the counterclaim "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim," and it is, therefore, a compulsory counterclaim.
The significance lies in the distinction between recoupment and set-off. And in Cooper v. Reaves, 365 So.2d 670, 671 (Ala. 1978), this Court stated: While counterclaims in the nature of a set-off may be barred by the applicable statute of limitations, counterclaims in the nature of recoupment are not. This rule prevailed under our former system of pleading, and has not been changed by the adoption of the Rules of Civil Procedure, where recoupment is treated as a compulsory counterclaim under Rule 13 (a). Campbell v. Regal Typewriter Co., Inc., 341 So.2d 120 (Ala. 1976).
The general rule is that statutes of limitations bar affirmative counterclaims, but do not affect claims offered in defense or recoupment, arising from the same transaction that forms the basis for the plaintiff's complaint. Cooper v. Reaves (Ala. 1978), 365 So.2d 670, 671; W.J. Kroeger Co. v. Travelers Indemnity Co. (1975), 112 Ariz. 285, 287, 541 P.2d 385, 387; Sears, Roebuck Co. v. Goudie (D.C.App. 1972), 290 A.2d 826, certiorari denied (1972), 409 U.S. 1049; Horace Mann Ins. Co. v. DeMirza (Fla.App. 1975), 312 So.2d 501, 502; H.R. Kaminsky Sons, Inc. v. Yarbrough (1981), 158 Ga. App. 523, 525, 281 S.E.2d 289, 291; Powers v. Sturgeon (1962), 190 Kan. 604, 608, 376 P.2d 904, 907; Hatfield v. Hatfield (Ky. 1967), 417 S.W.2d 218, 220; Diebert, Bancroft Ross Co., Ltd. v. Westinghouse Air Brake Co. (La.App. 1975), 323 So.2d 482, 486, writ denied (La. 1976), 325 So.2d 777. See, also, Annotation (1948), 1 A.L.R. 2d 630; Dixon v. Schoonover (1961), 226 Ore. 443, 454-455, 359 P.2d 115, 120; Household Consumer Discount Co. v. Vespaziani (1980), 490 Pa. 209, 219, 415 A.2d 689, 694; Bodovsky v. Texoma Natl. Bank of Sherman (Tex.Civ.App. 1979), 584 S.W.2d 868, 874; Ennis v. Ring (1960), 56 Wn.2d 465, 471, 353 P.2d 950, 953.
Regarding the Alabama law of setoff and recoupment, Campbell did not, contrary to defendant's assertion, make any substantial changes. See also Cooper v. Reaves, Ala., 365 So.2d 670 (1979). In fact, Campbell and Reaves expressly state that the traditional law in this area was not changed by the adoption of the Alabama Rules of Civil Procedure.