Sewing Machine Co. v. . Burger , 181 N.C. 241 ( 1921 )

Civil action commenced in the Superior Court to recover a horse, plaintiff claiming under what is in substance a mortgage, executed by the defendant to secure the purchase price, on which there was a balance due of $37.

The defendant denied the right to recover, pleaded payment, and alleged that the plaintiff was indebted to him in the sum of $193 due by contract for feed of another horse, and commissions for services while acting as plaintiff's agent.

The plaintiff demurred to the allegations of indebtedness in the answer upon the ground that the Superior Court had no jurisdiction thereof, the sum demanded being less that $200, which was overruled, and the plaintiff excepted.

The plaintiff also filed a reply denying indebtedness to the defendant, and pleading the three-year statute of limitations.

The jury returned the following verdict:

"1. Is the defendant, I. P. Burger, indebted to the plaintiff, as alleged in the complaint; and if so, in what amount? `Yes: $37.'

"2. Is the plaintiff indebted to the defendant, I. P. Burger, as alleged in the answer and counterclaim for commissions; and if so, in what amount? `Yes; $63.'

"3. Is the plaintiff indebted to I. P. Burger for feed and keep of horse, as alleged in the answer and counterclaim; and if so, in what amount? `Yes; $45.'"

His Honor then rendered judgment in favor of the defendant for $71, and the plaintiff excepted and appealed. In actions to recover personal property the jurisdiction of the Superior Court is concurrent with that of a justice of the peace when the value of the property does not exceed $50 (C. S., 1474), and exclusive when the property in controversy is worth more than that sum. Houser v. Bonsal,149 N.C. 51; Noville v. Dew, 94 N.C. 44.

The Superior Court also has jurisdiction of action to foreclose a mortgage, although the debt secured is less than $200, because "the action is not founded on the contract merely, but on an equity growing out of the relation of mortgagor and mortgagee to have the mortgaged premises, in case of default, sold for the satisfaction of the secured debt." Murphy v.McNeill, 82 N.C. 224.

It follows, therefore, that the court had jurisdiction of the cause of action alleged in the complaint, whether treated as one to recover personal property or to foreclose a mortgage.

The amount of plaintiff's claim was found to be correct ($37), while defendant was awarded a verdict on his counterclaim of $108. The court entered judgment for the difference of $71 in favor of the defendant. Plaintiff appeals, assigning as error his Honor's refusal to sustain a demurrer to the counterclaim, on the ground that the sum demanded, being less than two hundred dollars, was not within the jurisdiction of the Superior Court.

It is not denied that the plaintiff's cause of action is cognizable in the Superior Court and that the defendant is entitled to judgment on his counterclaim, provided the court has authority to grant such relief. It is further conceded that the defendant may use his counterclaim as a bar or defense to plaintiff's suit. But is he entitled to an affirmative judgment for the excess over and about the plaintiff's claim? This is the question for decision.

The Constitution of 1868 (Art. IV, sec. 33) Provided that "The several justices of the peace shall have exclusive original jurisdiction, under such regulations as the General Assembly shall prescribe, of all civil actions, founded on contract, wherein the sum demanded shall not exceed two hundred dollars, and wherein the title to real estate shall not be in controversy," etc. But the words "exclusive original" were omitted from this section by the Convention of 1875, and it now appears as Art. IV, sec. 27. Since this amendment, it has been held that the General Assembly may give to other courts, including the Superior Courts, concurrent jurisdiction in such cases. S. v. Anderson, 80 N.C. 429;Rhyne v. Lipscombe, 122 N.C. 650. This authority has been exercised very generally by the Legislature in granting county courts and city courts concurrent jurisdiction with justices of the peace. Also it has been held that these courts may be given exclusive original jurisdiction of certain crimes committed within the corporate limits of a city, which were originally cognizable before a justice of the peace. S. v. Doster,157 N.C. 634; S. v. Baskerville, 141 N.C. 811.

While it is true, sections 12 and 14, Article IV of the Constitution, Provide for an allotment and distribution of certain powers among these inferior courts, recorders' courts, etc., yet these "special courts," as they were designated originally in the Constitution, were not given concurrent jurisdiction with justices of the peace in civil matters untilafter the change of 1875. Oil Co. v. Grocery Co., 169 N.C. 521; S. v.Lytle, 138 N.C. 738; Edenton v. Wool, 65 N.C. 379; Wilmington v. Davis,63 N.C. 582. The Convention, by several amendments, placed the matter again in the hands of the General Assembly. See Battle's History of the Supreme Court, 103 N.C. 475, and dissenting opinion in Mott v. Comrs.,126 N.C. 866.

But has similar jurisdiction, in such case, been given to the Superior Courts? This question must be answered in the negative, when dealing with the plaintiff's cause of action or when considering the genesis of a suit.Shoe Store Co. v. Wiseman, 174 N.C. 716; Wooten v. Drug Co., 169 N.C. 64, and numerous other cases to like import. Exclusive original jurisdiction in civil actions, founded on contract, wherein the sum demanded, exclusive of interest, does not exceed two hundred dollars, is vested in the several justices of the peace by the express provisions of C. S., 1473. This has been modified to some extent by subsequent legislation in which other courts have been given concurrent jurisdiction with these courts of first instance. But, unless thus affected by some different statute, every such suit must originate in the court of a justice of the peace.

The case at bar, however, presents the question in relation to a counterclaim, pleaded in an action already pending and properly brought in the Superior Court. The jurisdiction, so far as the plaintiff's suit is concerned, is not attacked. It is admitted.

In sections 519 and 521, Consolidated Statutes, under the title of Civil Procedure, it is provided that the following may be set up by way of counterclaim;

"1. A cause of action arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiff's claim, or connected with the subject of the action.

"2. In an action arising on contract, any other cause of action arising also on contract and existing at the commencement of the action."

Again, C. S., 602, provides that the court may grant judgment in favor of the defendant for "any affirmative relief to which he may be entitled."

Under a proper construction of these Statutes, it would seem that the judgment below on the verdict should be affirmed.

We are not here confronted with a constitutional barrier as in CheeseCo. v. Pipkin, 155 N.C. 394 (and similar cases), where the defendant undertook to set up in the magistrate's court, by way of counterclaim, a cause of action in excess of the limited jurisdiction of a justice of the peace. Nor does it appear that the decision in Wiggins v. Guthrie,101 N.C. 661, is a controlling authority contra. In fact, no case has been found exactly in point which, under the doctrine of stare decisis, would require us to hold in accordance with the plaintiff's contention. On the other hand, the opinion in McClenahan v. Cotten, 83 N.C. 332, satisfactorily states the reasons for sustaining the judgment appealed from in the instant case. After discussing the sections of The Code relating to defenses and counterclaims, and comparing the old practice with the new procedure,Dillard, J., speaking for the Court, says;

"The question now arises, how may a party use and rely on his cross-demand? The answer is, he may plead it or not at his will, but if he elect to plead it, he may do so, and then, if it be equal to or greater than the opposing demand, he may plead it in bar, as formerly, or plead it as a defense, so called, under The Code, the plea or defense having the operation merely to defeat the action, and not to admit of any judgment for an excess, or he may, if he will, instead of pleading it as a bar merely, set up his demand under the name and with the proper prayer of a counterclaim as introduced by The Code, and then the defendant will have judgment for the excess."

In Wiggins' case the plaintiff recovered $639.65. The defendant was allowed to use his counterclaim as a recoupment in reducing the plaintiff's demand, the Court saying: "This accorded to the defendant all the benefit to which he was entitled, and he should be content in being allowed to use it for this purpose. But the objection disappears in presence of the fact that precisely the same purpose was subserved whatever name be given to the defense. Inasmuch as the plaintiff recovered a much larger sum, whether a counterclaim, recoupment, or set-off, the opposing demand, if allowed by the jury, would necessarily be in effect a diminishing of the plaintiff's claim, and this to some extent, would seem from the verdict to have been done, as the sum assessed by the jury is less by $25 than that demanded in the complaint, or it has been disallowed altogether." It is true the jurisdictional question was squarely presented and ruled upon in the Superior Court, and the judgment was affirmed on appeal. But the crucial point here debated was brushed aside as immaterial, because the plaintiff recovered, and the question of granting affirmative relief to the defendant never arose; or, at least, it became academic. This identical procedure was pursued in Coblev. Legg at this term, apparently as a matter of course, and without question.

In Garrett v. Love, 89 N.C. 207, the point was raised that the defendant's cross-action did not come within the purview of the statute defining what might he set up by way of counterclaim, and that if it did, it was not properly pleaded. Upon this ground the Superior Court declined to enter judgment in favor of the defendant and dismissed the action at the cost of plaintiff. This was reversed on appeal, and it was held that an affirmative judgment should be entered in favor of the defendant.

In Electric Co. v. Williams, 123 N.C. 51, the amount set up by way of counterclaim was in excess of the jurisdiction of a justice of the peace; and, of course, the defendant was not entitled to an affirmative judgment because of the constitutional limitation. This case is in the same class asCheese Co. v. Pipkin, supra.

In Smith v. French, 141 N.C. 6, it is stated: "Our statute on counterclaim is very broad in its scope and terms, is designed to enable parties litigant to settle well-nigh any and every phase of a given controversy in one and the same action, and should be liberally construed by the court in furtherance of this most desirable and beneficial purpose."

The decision in Yellowday v. Perkinson, 167 N.C. 147, has no bearing upon the question of jurisdiction unless by implication, for there it was held that the plaintiff could not submit to a judgment of nonsuit without the consent of the defendant when a counterclaim was pleaded. The question under consideration was whether or not the allegations of the defendant were sufficient to constitute a counterclaim. The Court held that when such facts were alleged as would entitle the defendant to maintain a separate action against the plaintiff, legal or equitable, this would amount to a counterclaim. The sufficiency of the defendant's allegations was the point at issue. This distinguishes it from the case at bar.

The leading authority elsewhere, cited in support of the text in 24 R. C. L., 796, is Dureson v. Blackmarr, 117 Minn. 206. But, upon examination, it appears that the question involved in that case dealt only with a counterclaim in excess of the limited jurisdiction of a municipal court. In this respect, it is not unlike many cases in our own Reports touching the jurisdiction of a justice of the peace. And in every case so far examined the question apparently has been made to turn on the limited jurisdiction of the court. For a valuable collection of cases in point, see note 37, L.R.A. (N.S.) , 606.

The case of Griswold v. Pieratt, 110 Cal. 259, as we understand it, is not an opposite persuasive authority, though it might appear to be from a reading of the syllabus only. It is provided in the Constitution of California that their Superior Courts shall have jurisdiction in all "cases at law . . . in which the demand . . . amounts to three hundred dollars." From this language it will be seen that the Superior Courts of that State are limited in their jurisdiction like our justices of the peace. They may not entertain a claim for less than $300, while our justices of the peace may not entertain a claim for more than $200. The limitations differ only in direction and amount, and not in kind. The Supreme Court of California in this case lays down the same Principle as announced by our Court inCheese Co. v. Pipkin, supra; the only difference being that in the California case the limitation is downward, while with us the limitation is upward.

The jurisdiction of our Superior courts is general and not limited, except in the sense that it has been narrowed, from time to time, by carving out a portion of this general jurisdiction and giving it, either exclusively or concurrently, to other courts. As said by Furches, J., inMott v. Comrs., 126 N.C. 871: "The Superior Courts were (at the time of the adoption of the Constitution) courts of general jurisdiction, and when the jurisdiction of other courts, which were special, was taken out, the remainder was left as the jurisdiction of the Superior Courts."

It has been held with us in a number of instances that any counterclaim, coming within the purview of the statute, regardless of its amount, may be set up in a justice's court for the purposes of set-off and recoupment, as a bar or defense to the plaintiff's cause of action. But, of course, and affirmative judgment could not be entered on a counterclaim in this court unless it fell within the limitation of the jurisdiction of a justice of the peace. Hurst v. Everett, 91 N.C. 399. So it was said in Lutz v.Thompson, 87 N.C. 334, that while a justice could not affirmatively administer an equity, it might so far recognize it as to admit it to be set up as a defense, citing McAdoo v. Callum, 86 N.C. 419.

One of the most important purposes of the adoption of The Code system of pleading was to enable parties to determine and settle their differences in one action. The law favors the ending of litigation, and frowns upon the multiplicity of suits. Hence, whenever possible, in the construction of statutes, this wise and wholesome policy should be observed.

"The adjustment of demands by counterclaim or set-off, rather than by independent suit, is favored and encouraged by the law, to avoid circuity of action and injustice." North Chicago Rolling Mill Co. v. St. Louis Oreand Steel Co., 158 U.S. 596.

What is said here in no way militates against the settled doctrine of derivative jurisdiction where a case comes to the Superior Court on appeal from a justice of the peace (Comrs. v. Sparks, 179 N.C. 581; McLaurin v.McIntyre, 167 N.C. 350; Robeson v. Hodges, 105 N.C. 49; Ijames v.McClamrock, 92 N.C. 362); nor is it to be understood that the distribution among the different courts of constitutional and statutory powers is sought to be impaired in the least. These principles, already firmly established by numerous decisions of this Court, must be preserved in their full integrity, unless and until changed in a duly authorized manner. Mott v. Comrs., supra; Tate v. Comrs., 122 N.C. 661. The only question here presented is one of procedure, involving no rule of property; and we think our present decision coincides with the intention of the Legislature, and is in keeping with the true meaning and spirit of our Code of Civil Procedure.

The exceptions relating to the statute of limitations must be overruled, for the reason that the statute is pleaded only as to a part of the account; and his Honor submitted the matter to the jury as a question of fact, which they have answered in favor of the defendant.

Plaintiff's demurrer to the defendant's counterclaim for want of jurisdiction was properly overruled.

Affirmed.