
    Deming and Colt v. Kemp.
    Where, under a parol contract for the future delivery of a feed quantity of goods, at such times, and in such parcels, as might be required, separate deliveries are made and settled for as furnished, each delivery is to be considered as in its nature a separate and distinct contract, and in an action for the price of the parcel last furnished, the buyer cannot reeoup for his damages growing out of the inferior quality of the goods previously delivered.
    Damages cannot be recouped, unless they arise in the particular contract on which the action is founded.
    (Before Oaklet, Ch. J., and Campbell and Paine, J. J.)
    Sept. 18,19;
    Sept. 28, 1850.
    This was an action brought to recover the price of sixty barrels of “ animal carbon,” alleged to have been sold to the defendant in April, 1849, at the price of 2£ cents per pound, amounting to three hundred and eight dollars and forty-one cents, to be paid for in the defendant’s note at six months, which note he had refused to give. The answer admitted the sale and delivery, but averred that the carbon in question was delivered in pursuance of a contract made in December, 1848, by which the plaintiffs agreed to furnish the defendant with carbon of the quality of a sample exhibited at the time of making the contract. That in pursuance of the contract, two deliveries were made in the months of February and April following, previous to the one for which suit was brought, which subsequently proved to be of a greatly inferior quality t6 the sample, and that by reason thereof the defendant had sustained damages to the amount of eight hundred dollars, which he claimed to set off against the demand of the plaintiffs. The answer also set up that the plaintiffs were insolvent. The reply denied that the sale and delivery in question were in pursuance of any previous contract, but alleged that this was a distinct and separate transaction. It also denied that the article was sold by sample, or that it was inferior to what it had been represented.
    The cause was tried on the 25th of April, 1850, before Sand-FORD, J. After proof of the sale and delivery of the carbon, and the price agreed to be paid, and that the defendant had refused to comply with his agreement to give the note upon its delivery, the plaintiffs rested.
    The defendant’s counsel claimed, upon the pleadings and evi- • dence, to be entitled to a verdict for the balance of eight hundred dollars, after deducting the amount the plaintiffs were entitled to recover. The judge ruled that the defendant was not entitled to set off or have allowed his demands against the plaintiffs, on the pleadings and proceedings as they then appeared. Some testimony was then adduced on the part of the defendant which went to show that in December, 1848, a conversation was had between the plaintiffs and the defendant, in which the former agreed to supply the latter with carbon, which they guarantied should be of the best quality, and should correspond with the samples delivered. It was to be supplied during the fall and following winter, at various times, as the defendant might require, not exceeding forty tons, at 2f cents per pound, in parcels of twenty thousand pounds. It appeared in the cross-examination of the defendant’s witness, that the carbon had been delivered at separate times, and that the defendant had paid or settled for the same at the times of the several deliveries.
    The testimony here closed, and the court directed the jury to find a verdict for the plaintiffs, on the ground that the contract for the forty tons being by parol and within the statute of frauds, each delivery was an independent transaction, and the defendant could not recover damages in respect of any delivery prior to the one for which the suit was brought, 
    
    The jury found a verdict for the plaintiffs, for the amount claimed.
    
      L. Hoyt, for the defendant.
    I. Upon the pleadings and the evidence as it stood when the respondents rested their case, the appellant was entitled to a verdict and judgment for eight hundred dollars, less the amount that the evidence showed the respondents entitled to recover— because, first, the facts set forth in the answer of the- appellant, and not denied by the replication of respondents, showed that the respondents were indebted, to the appellant in the sum of eight hundred dollars, arising out of a contract entered into between them. Second, if the proof on the part of respondents showed that the indebtedness for which this suit was brought arose out of a separate and distinct contract, then, upon equitable principles, the appellant was entitled to a verdict for that sum, less the amount of the respondents claim. Third, this court now possesses all the jurisdiction that the court of chancery of this state formerly possessed and exercised; and that court, upon these facts, to wit, the indebtedness of respondents, arising on contract, and their insolvency, would have afforded the appellant the remedy and relief he claims in this suit. (Reed v. The Bank of Newburgh, 1 Paige, 215 ; Lindsay v. Jackson, 2 Paige, 581.) Fourth, where the mutual indebtedness arises out of the same contract, the court of equity takes jurisdiction and gives relief, without reference to the solvency or insolvency of the plaintiff; but where it arises out of separate contracts, insolvency of the plaintiff is material to jurisdiction and relief. (See cases above cited, and especially case in 1 Paige, 215.)
    II. The contract out of which the indebtedness of respondents to appellant arose, as established by the pleadings, was not within the statute of frauds, inasmuch as there was a delivery of the goods sold under it.
    III. The contract proved by the witness on the part of the appellants was not within the statute of frauds. First, because there was a delivery of the goods under it, and second, because the goods were to be delivered as fast as manufactured — which made it in part, a contract for work and labor. The distinction, with reference to the statute of frauds, between such a contract and one for the selling of goods in existence at the time of the contract, is well settled both in England and in this state. (Crookshank v. Burrill, 18 Johns. R. 58; Sewall v. Fitch, 8 Cowen, 215; Outwater v. Dodge, 6 Wend. 397.)
    
      
      8. P. Nash, for the plaintiffs.
    The plaintiffs sued for the price of 60 bbls. of “ animal carbon,” sold on the 26th of April, 1849, to the defendant, for his note at sixty days. The plaintiffs proved their ease, and no objection was made to their claim. The defendant, however, sought to set-off against it a sum of unliquidated damages, claimed on account of an alleged breach of warranty as to two parcels of the same article previously, to wit, in February and April, sold by the plaintiffs to the defendant. This set-off was claimed, not under the statute, but on the equitable ground of the plaintiffs’ supposed insolvency.
    I. The defendant was not entitled to his set-off on the grounds taken on plaintiffs’ resting. The pleadings do not admit the alleged sale by 'sample and breach of warranty.- The reply was intended to put these matters in issue, not only as it respects the parcel sued for, but also as to the previous parcels. But the allegation in the reply, that the several sales were distinct transactions, and not a part of an entire contract, was an answer to the defendant’s motion. What is called an equitable set-off of unliquidated damages, is allowed only when the cross-claims result from breaches of the same contract, and of portions of the same contract mutual in their nature and dependent on the samé consideration.
    II. The defendant was not entitled to his equitable set-off on any evidence subsequently given or offered. The verbal bargain by which the several transactions were sought to be united was void by the statute of frauds as an entire contract. The transactions were therefore in law distinct. The delivery of the prior parcels was not the part performance contemplated by the statute. They were not deliveries of a portion of a larger bulk, but entire deliveries of distinct parcels. But though the verbal bargain were valid, the contract was nevertheless severable. The several parcels were delivered according to sundry and distinct samples, each sale having a distinct consideration, and raising a separate warranty, and being closed and settled on its own basis. The transactions were therefore in fact distinct. The theory of an equitable set-off of unliquidated damages, or recoupment, requires that the cross-claims flow from the same consideration, as well as from the same contract. See Batterman v. Pierce, 3 Hill; 171, and cases there cited; Rawson v. Samuel, 1 Craig and Ph. 161, 172; Schermerhorn v. Anderson, 2 Barb. Sup. Ct. Rep. 584. The prior transaction being closed and settled, there was no equity in the defendant’s claim.
    III. But a defendant cannot, under the code, obtain by answer the benefit of a cross-claim for unliquidated damages, either as a set-off so as to have a verdict for a balance, or by way of recoupment of the plaintiff’s demand. Set-off, as a defence to a legal claim, whether at law or in equity, rests entirely-on the statute of set-off, (2 R. S. 454; Ibid. 174, § 43,) and only a set-off within the statute can be pleaded in bar, or set up by answer in equity. (Holden v. Gilbert, 7 Paige, 208; Chapman v. Robertson, 6 Ibid. 627; Knapp v. Burnham, 11 Ibid. 330.) Cross-claims were never allowed by way of plea or answer, at law or in equity. In equity they were, made available as a set-off only by a cross-bill. (Knapp v. Burnham, 11 Paige, 330; 3 Daniell’s Ch. Prac. 1742, 1744; Cartwright v. Clarke, 4 Metc. 104.) At law, they could only be the subject of a cross-action, or. available to a limited extent, by way of reducing damages, but never as a bar. (Batterman v. Pierce, 3 Hill, 171; Nichols v. Dusenbury, 2 Comst. 283.) An answer under the code can only set up “matters constituting a defence,” not cross-claims. (The code “reported complete” of 1850, supplies this, by providing expressly for the setting up of counter claims in the answer. §§ 645, 646.) Special notices of matters in diminution of plaintiff’s claim, but not amounting to a defence, are not provided for under the code. They were creatures of the old system, and fell with the general issue. But the defendant’s claim is not set up as a recoupment. It must be sustained, if at all, as ground for a verdict in his favor.
    
      
       See Seymour v. Davis, ante yol. ii p. 289.
    
   By the Court.

Oaklet, Ch. J.

This is an action brought to recover the value of sixty barrels of bone black, alleged to have .been sold by them to the defendant at a fixéd price. The answer contains a denial of the right of the plaintiffs to recover, which denial is equivalent to the old general issue. The answer further sets up that the article, if ever delivered, was delivered in pursuance of a contract made some time previously, and that, under this contract, bone black was to be delivered at different times, in different quantities, the present action being for the third delivery; that the article delivered in the first instance was of an inferior quality, and the defendant seeks to set-off in this action the damages arising from that cause. The answer does not allege that there was any defect in the article for which this action is brought. Upon the trial, the judge held the contract void under the statute of frauds, and that therefore each delivery constituted a separate contract,.and that any defect in the quality of the article delivered at the previous times, could not.be the ground of a set-off. Unliquidated damages cannot be set-off.

The only inquiry worthy of consideration is, whether the damages arising from the defect can be brought in by way of recoupment. We think they cannot. Without inquiring whether the contract was void by the statute of frauds, and assuming that it was valid, still we think that these separate deliveries are to be considered in their nature as separate contracts. The deliveries were separate and distinct acts, and the payments for the quantities delivered were made at each delivery, and the contracts arising from such delivery wefie settled . and closed.

Damages cannot be recouped, unless they arise on the particular contract on which the action is founded.

The judgment at the special term must be affirmed.  