Summary
holding court did not abuse its discretion in rejecting counterclaim where defendant failed to file plea within requisite period
Summary of this case from Bezanson v. Hampshire Meadows Dev. Corp.Opinion
Decided February 1, 1938.
A plea of set-off, filed three years after the entry of the plaintiff's action and not until more than six years after some of the counter-indebtedness had accrued, was rightly rejected by the trial court in accordance with the discretion conferred by Rule 22 of the Superior Court. Where no basis exists for equitable set-off recoupment is available to a defendant only when the demands of both parties arise out of the same contract or transaction; and under the statute of set-off a claim for unliquidated damages cannot be maintained. A payment made on a note during the pendency of the action thereon is an admission that the action was brought for good cause. A discussion between a referee and counsel at which the parties themselves are present may constitute an informal hearing.
ACTION, at law, brought June 28, 1933, to recover the balance due on certain promissory notes, each dated March 20, 1933, payable to the plaintiff and signed by the defendant company. Trial by a referee. It was stated during oral argument in this court that there are two other defendants (co-makers of the notes) who are not named in the bill of exceptions. These defendants are understood to be Joseph Myers, treasurer of the defendant company, and Rebecca Myers. The Keene Coal Company is hereinafter referred to as the defendant.
The referee recommended that judgment be entered for the plaintiff for $540.97 in case the trial court should deny the defendant's "motion to file an offset," made July 8, 1936. The court, having construed the defendant's answer of that date "to be in the form and nature of a set-off and recoupment," ruled that "the claim was filed too late" and ordered judgment on the report, subject to the defendant's exception. The defendant then moved that the judgment be vacated "on the ground that no opportunity was given for hearing upon the acceptance of the Master's report" or upon the question of the defendant's right to file the answer. This motion was denied and the defendant excepted. The answer follows.
"The defendants say that they are not indebted to the plaintiff in manner and form stated or in any other way.
"And the defendants say that the plaintiff is indebted to them because of the following items: —
Freight paid . . . on car of defective coal shipped May 16, 1929, . . . $227.76 Interest on same . . . 95.66 Payment for same on Sept. 24, 1929 416.06 Interest on same 907.98 Cost of removing coal from cellars where delivered estimated 100.00 Loss of customers due to poor quality, estimated 500.00 Credit 565.07 Balance 942.91
"Which same the defendants seek to recover, together with their costs in this action."
The defendant made a payment or payments on the notes after suit was brought. The consideration for the notes is not stated. Other facts appear in the opinion. The defendant's bill of exceptions was allowed by Burque, J.
J. Edward Flynn and Roy M. Pickard (Mr. Pickard orally), for the plaintiff.
Chester B. Jordan (by brief and orally), for the defendant.
"All special pleas and brief statements shall be filed within sixty days from the commencement of the term when the action is entered. . . ." (Rule 17 of the Superior Court), and "No setoff shall be filed after ninety days from the entry of the action, except by leave of court and upon payment of costs. . . ." (Rule 22 of the Superior Court). 78 N.H. 691, 692. These rules are "consistent with the laws" (P.L., c. 316, s. 7; Carr v. Adams, 70 N.H. 622), and their enforcement rests in the sound discretion of the trial court. Corbett v. Norcross, 20 N.H. 366, 369; Noyes v. Edgerly, 71 N.H. 500, 502; Hutchinson v. Railway, 73 N.H. 271, 283; 2 Hening's Digest, 1402.
Since the defendant did not ask leave to file its special plea until three years after the entry of the plaintiff's action and until more than six years after some, if not all, of the alleged counter-indebtedness had accrued (see 37 C.J. 805), it can scarcely be said that the Presiding Justice exceeded the limits of his discretion in rejecting the answer. Moreover, it is doubtful if the defendant would have been entitled to prove as a counterclaim certain of the items included therein even if the answer had been seasonably filed.
A counterclaim "other than a debt or demand which is the subject of set-off or recoupment is not known to the common law and does not here obtain by statute." Derry Loan c. Co. v. Falconer, 84 N.H. 450, 454. Recoupment is available to a defendant only when the demands of both parties arise out of the same contract or transaction, and under the statute of set-off (P.L., c. 335, ss. 7-13), a claim for unliquidated damages cannot be maintained. Arcadia c. Mills v. Company, ante, 188. The non-residence of the plaintiff is not alleged, and no equitable ground for the allowance of a set-off is claimed.
It is suggested, however, that the first paragraph of the answer is a plea of the general issue and that, under that plea, the defendant should have been permitted to show a failure of consideration for the notes in question. So far as the record discloses, no such claim was ever made before the referee or the trial court. Indeed, throughout the entire controversy, the notes seem to have been treated as valid independent obligations, and the only failure of consideration now asserted is the failure of the plaintiff to pay an alleged indebtedness which, according to the answer, antedates the notes by nearly four years. The validity of the notes is definitely recognized by a credit for the balance due thereon, which appears in the items of the answer. A payment was made by the defendant during the pendency of the action, and "such payment is an admission that the action was brought for good cause." Williams v. Tappan, 23 N.H. 385, 394.
The discussion between the referee and counsel, at which the parties themselves were present, constituted an informal hearing. Woodsville Fire District v. Cray, 88 N.H. 264, 266; Vidal v. Errol, 86 N.H. 585. The result of that hearing was the recommendation that judgment be entered for the plaintiff "in the event that the motion to file an offset" should be denied by the Superior Court. It is true that the court denied this motion and ordered judgment on the report as a matter of course. But defendant's counsel was fully heard on the motion to vacate the judgment, and the only offer of proof then made was an offer to show that the plaintiff was not surprised by the answer "for the reason that negotiations had been going on to try and effect a settlement of the claim since the suit was brought." The court correctly ruled that this evidence did not establish the defendant's right "to file the set-off over the plaintiff's objection."
Here, as in the case of Ela v. Goss, 20 N.H. 52, 57, the defendant "has not shown that substantial justice requires a new trial, or that any real injustice has been done" by the refusal of the court to receive the belated plea. It follows that the motion to vacate the judgment was properly denied.
Exceptions overruled.
All concurred.