Wulff v. Cilento, 28 Misc. 551. The tenant's damages may be offset by way of counterclaim to the extent of the claim of the landlord; and, if the damages are in excess of such claim, the excess may still be recovered in another action. Gordon v. Van Cott, 38 A.D. 564; Jefferson Real Estate Co. v. Hiller, 39 Misc. 786. A defendant, who, in the use of a set-off or counterclaim interposed by him, is necessarily confined to the defeat of the plaintiff's demand and is not permitted to obtain an affirmative judgment, is entitled to split said set-off or counterclaim, and his recovery only extinguishes his set-off or counterclaim to the amount of the plaintiff's demand.
Even if the enforcement of these counterclaims did involve a splitting of each of the five causes of action on the separate notes, such splitting could be justified in two ways. First, the record here at least suggests that the splitting was really done by the other two purported assignees who filed separate proofs of claim in bankruptcy before this suit was brought ( Gock v. Keneda, 29 Barb. 120; Jackson v. Moore, 94 App. Div. 504), and that plaintiff trustee, by acquiescence, probably waived the benefits of the rule against splitting. (See Carrington v. Crocker, 37 N.Y. 336.) Second, the rule against splitting does not forbid the use of part of a claim as a set-off, retaining the rest for later use. ( Gordon v. Van Cott, 38 App. Div. 564; Hett v. Lange, 139 App. Div. 743.) A fair application of that exception permits defendant to use as a set-off an amount which was equal to the claim in suit but less than his one third of the whole amount due on the notes. Having held that defendant had legal title to, and causes of action at law on his share of the notes, we necessarily conclude that he brings himself well within the Bankruptcy Act requirements as to set-offs, found in section 68 of that Act (U.S. Code, tit. 11, § 108): "(a) In all cases of mutual debts or mutual credits between the estate of a bankrupt and a creditor the account shall be stated and one debt shall be set off against the other, and the balance only shall be allowed or paid. (b) A set-off or counterclaim shall not be allowed in favor of any debtor of the bankrupt which [1] is not provable against the estate and allowable under subdivision g of section 93 of this title; or [2] was purchased by or transferred to him after the filing of the petition or
Bancroft's Code Pleading, Vol. 1, Sec. 374, and supporting authorities. The case of Gordon v. Van Cott, 38 App. Div, 564, 56 N.Y.S. 554, 560, dealing with the same question holds: "From an early period in the legislation of our state, assignments of choses in action have been permitted, and the assignee authorized to sue in his own name; but such assignments have been made subject to any counterclaim or defense existing against the assignor at the time of the assignment.
It is plain, however, that where a counterclaim is interposed to a cause of action in a court the jurisdiction of which is limited in amount, or in a proceeding in which no affirmative judgment can be granted in respect of the counterclaim ( Hett v. Lange, 139 A.D. 743), the defendant may avail of the excess or surplus of the counterclaim above the plaintiff's claim in the first action and interpose the same as a defense or counterclaim in the second. Gordon v. Van Cott, 38 A.D. 564. The order must, therefore, be reversed and a new trial granted, with thirty dollars costs to appellant to abide the event.
The tenant contends that because no affirmative money judgment can be awarded, therefore, it is improper to set up the damages by way of counterclaim, but that it is proper as a defense, but this inference cannot properly be indulged in. The damages should be offset by way of counterclaim to the extent of the claim of the landlord, and if the damages are in excess of such claim the excess may still be recovered in another action. Gordon v. Van Cott, 38 A.D. 564. It follows, therefore, that while the subject-matter of the answers was a proper consideration as a counterclaim to this action, still not being set up as such, the action of the Municipal Court in granting the final orders was proper, and the orders should be affirmed, with costs.