Elizabeth C. Harrison, Respondent, v. Frederick Loeser and Company, Inc., Appellant

Elizabeth C. Harrison, Respondent, v. Frederick Loeser and Company, Inc., Appellant. First Department, October 23, 1914. Practice — trial of equitable counterclaim interposed in legal action. Where a defendant, a warehouseman, sued for the conversion of personal property left for storage, denies that the contract was merely one of bailment and pleads an equitable counterclaim for the foreclosure of a lien alleged to have been created by the contract under which the property was stored, and also a lien for storage, the defendant is entitled to an order directing that the issues raised by the equitable counterclaim be first tried at Special Term without a jury. Such equitable counterclaim is properly interposed where it arose out of the transaction upon which the plaintiff predicated the cause of action. McLaughlin, J., dissented. Appeal by the defendant, Frederick Loeser and Company, Inc., from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 19th day of June, 1914, denying defendant’s motion for an order directing that the issues arising upon the counterblaim herein be tried at Special Term without a jury and prior to the trial of the other issues in the action. Joseph M. Gazzam, for the appellant. Maxwell Slade, for the respondent. [MAJORITY — Laughlin, J.:] Laughlin, J.: This is an action for the conversion of furs which plaintiff alleges were delivered to defendant’s predecessor for storage for hire. The conversion is predicated upon defendant’s failure to deliver the furs on tender of the amount due for storage. The defendant denies that the contract under which it received the furs was merely a contract of bailment, and pleads an equitable counterclaim for the foreclosure of a lien on the furs by virtue of the contract under which it claims to have received them as security for past and future indebtedness from plaintiff’s husband to it, and also for storage during the time it held them as such collateral security. On defendant’s theory of the contract it has a cause of action for the foreclosure of its lien, and it could maintain that action without first recovering judgment for the indebtedness. If the defendant succeeds on the counterclaim, the plaintiff’s cause of action for conversion falls, and if on the trial of the counterclaim the facts are found in favor of the plaintiff, she will he entitled to succeed on the issue of conversion and the trial thereof will be a mere formality. It is true that the plaintiff, if the counterclaim were not pleaded, would be entitled to a jury trial as matter of right; and if the issues arising on the equitable counterclaim were tried first, she may only have a jury trial on the settlement of issues, which rests in the discretion of the court. (White v. Shonts, 154 App. Div. 428.) That, however, does not affect the defendant’s right, in such circumstances, to have the equitable counterclaim tried first, provided it is a proper counterclaim. (Brody, Adler & Koch Co. v. Hochstadter, No. 2, 150 App. Div. 530; City of New York v. Matthews, 156 id. 490.) The principal contention, as I understand the argument of counsel for respondent, is that the counterclaim is not necessary to any relief to which defendant may be entitled. But, as has been seen, it is necessary to the foreclosure of a lien, and to that relief defendant may become entitled. Counsel for respondent also claims that the counterclaim is not a proper one; but the authorities on which he relies, I think, do not sustain his contention. I am of opinion that the subject-matter of the action is the furs, and that the transaction upon which the plaintiff predicates her cause of action is the contract under which the furs were delivered to the defendant, and that, therefore, the counterclaim was properly interposed. (Xenia Branch Bank v. Lee, 7 Abb. Pr. 372; Scognamillo v. Passarelli, 157 App. Div. 428; dissenting opinion of Scott, J., adopted by Court of Appeals, 210 N. Y. 550; Ter Kuile v. Marsland, 81 Hun, 420; Thomson v. Sanders, 118 N. Y. 252; Carpenter v. Manhattan Life Ins. Co., 93 id. 552. See, also, Deagan v. Weeks, 67 App. Div. 410, and authorities cited in Adams v. Schwartz, 137 id. 230.) I am of opinion, therefore, that the order should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs. Ingraham, P. J., Clarke and Scott, JJ., concurred; McLaughlin, J., dissented. Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.