The action was brought to recover against the defendant for the wrongful conversion, on the 23d day of January, 1879, of a quantity of cord wood. The answer admitted the possession of the wood by the plaintiff, and that the defendant took the same, but denied that the plaintiff owned the wood; and then for a counter-claim, it was alleged that on the 28th day of September, 1871, one Markham, then the owner in fee of the land mentioned in the complaint, executed to the defendant a bond, and a mortgage as collateral thereto on the land, to secure the payment to the defendant of the sum of $45000, with interest; that thereafter, on default of payment of the sum thus secured, the defendant foreclosed the mortgage and became the purchaser at the foreclosure sale, for a sum which left a deficiency of over $17,000, for which judgment was entered against Markham, who was then, and for three years had been, to the knowledge of the plaintiff, wholly insolvent; *Page 556 that the land was, to the knowledge of the plaintiff, insufficient security for the amount of the bond and mortgage, and he being a second mortgagee with such knowledge, and in possession of the land, between November 7, 1877, and January 23, 1879, wrongfully, fraudulently and with intent to cheat and defraud the defendant, and with the intent to reduce its security and deprive it of such security, cut or caused to be cut from the land the wood mentioned in the complaint, thereby wasting the land, and lessening and reducing defendant's security to its damage $500.
Upon the trial, after the plaintiff had proved his title to the wood, its quantity and value, and the conversion thereof by the defendant, and had rested his case, the defendant then offered to prove the facts alleged in the answer by way of counter-claim, and the plaintiff objected to such proof and the court sustained the objection. From the judgment entered in favor of the plaintiff, the defendant appealed to the General Term, and there the judgment was reversed, and then the plaintiff appealed to this court.
It is admitted by the plaintiff, as claimed on the part of the defendant, that the facts alleged in the answer show a cause of action against the plaintiff. But the plaintiff's claim is, and so it was held at the trial term, that the cause of action did not arise out of the transaction set forth in the complaint, and was not connected with the subject of the action, and hence was not a proper counter-claim under section 501 of the Code.
The transaction set forth in the complaint was the conversion of the wood, and hence it cannot be said that the counter-claim arose out of that transaction. But, was it not connected with the subject of the action? The word "connected" may have a broad signification. The connection may be slight or intimate, remote or near, and where the line shall be drawn it may be difficult sometimes to determine.
The counter-claim must have such a relation to, and connection with, the subject of the action, that it will be just and equitable that the controversy between the parties as to the matters alleged in the complaint and in the counter-claim should *Page 557 be settled in one action by one litigation; and that the claim of the one should be offset against, or applied upon, the claim of the other. Here it is sufficiently accurate to say that the subject of the action was the wood wrongfully taken by the defendant, and the counter-claim was for damages sustained by the defendant, in the wrongful impairment of its security, by the severance of the same wood from the land, and thus diminishing the value of the land by the value of the wood. In such case it is certainly just that the defendant should counter-claim its damage for the severance of the wood against the plaintiff's claim for the conversion thereof. In the forum of conscience, the plaintiff was under obligation to restore the wood to the defendant as a portion of its security for its claim against the mortgagor. Thus it can with great propriety be said that defendant's claim had some connection with the subject of the action.
The order of General Term should be affirmed, and judgment absolute ordered against the plaintiff, with costs.
All concur.
Order affirmed and judgment accordingly.