statute does not go so far as to provide for the separate determination of a legal right and of a distinct, independent, equitable right in the same action at law, and then for setting off the judgment upon the equitable right against the judgment upon the legal right. The equitable matter to be pleaded in the action at law must be matter of defense to the plaintiff's claim, not matter of set off, not matter constituting ground for relief in equity apart from and independent of the action at law.

In this action the plaintiffs set up only a legal right and prima facie sustain it by an effective deed of conveyance from the defendants themselves. Without some matter, legal or equitable, to upset or avoid that deed, there is no defense to the action. The evidence does not disclose any such matter. The only claim made affecting the deed is that in drafting it there was omitted one provision the parties intended to have inserted. The validity of the deed as it stands is not questioned, and its effect to vest title and right of possession in the plaintiffs is clear. It is a muniment of title and must be given effect according to its terms in any action, legal or equitable, until duly reformed so that its terms shall have a different effect.

The procedure to reform a written instrument by changing its language to such as the parties intended to use, or to change its effect to accord with their intention, has always been exclusively in equity, and necessarily in equity, in those jurisdictions where the distinction between legal and equitable procedure still prevails. Winnipiseogee Paper Co. v. Eaton, 64 N. H. 234. It is evident that any judgment at law though it might avoid the deed or refuse it effect, could not reform it. The nature of the right of reformation is such as to require for its enforcement the flexible decrees obtainable by suits in equity.

This right of reformation of a written instrument is not mere matter of defense to an action in which the instrument is set up as the basis or source of a right. It is an independent affirmative right arising as soon as the instrument is delivered. Being independent of any action at law and requiring decrees in equity for its enforcement, it should be enforced by a separate suit in equity and not interposed as an equitable defense to an action at law. In this case the sustainable claim of the defendants (if it should prove to be sustainable) is not that the deed is void, but only that in one particular its language fails to express an intention of the parties. If this be so, the deed is not to be declared void nor refused effect in an action at law, but is to be reformed so it can have the effect intended. For reasons above given such reformation can be effected only by suit and decrees in equity. The statute, R. S., ch. 84, sec. 17, does not go so far as to provide that it shall, or even may, be done in an action at law.

Nor can such reformation be effected under sec. 16 of the same statute, ch. 84, which provides for the transformation of an action. at law into a suit in equity "when it appears that the rights of the

parties can be better determined and enforced by a judgment and degree [decree] in equity." This provision applies only to the rights of the parties which are made the subject matter of the action at law, not to other and independent rights. In this action the only right in question is that of the plaintiffs, to the possession of the demanded land. That right, if it exists, is a pure legal right to be enforced by judgment and execution at law. Should the action be transformed into a suit in equity in order to have the deed reformed, the right of possession under the deed as reformed is still to be determined and enforced by judgment and execution at law. In Lewiston v. Gagne, 89 Maine, 396, begun and decided after the passage of the statute, (secs. 16 and 17) the action was at law upon a tax collector's bond, and it was heard on report as in this case. It appeared in evidence that the bond was intended to cover the year 1893, but by mistake had been written to cover the year 1894. The court said that the bond must be reformed by process in equity, unless the parties would agree to have the damages assessed as if the bond were written for the correct year.

Though we cannot consider in this action the question of how or whether the deed should be reformed, we think the defendants should have reasonable opportunity to present that question by suit in equity before judgment in this action. They should not be deprived of that opportunity because of this opinion that it could not be presented here. The statute is not so clear as to make the contrary opinion evidence of ignorance or carelessness. The report will therefore be discharged, and this action remitted to nisi prius to be continued for a reasonable time to enable the defendants to present by suit in equity their claim to have the deed reformed.

So ordered.

CHICAGO & NORTHWESTERN RAILWAY CO. v.
MCKEIGUE.

SUPREME COURT, WISCONSIN. 1906.

126 Wisconsin 574.

WINSLOW, J. This is an action in equity brought to restrain the prosecution of an action at law theretofore brought by the defendant McKeigue as administrator against the plaintiff. It appears by the complaint, in brief, that one Broderick was employed by the plaintiff as switchman, and on the 16th day of July, 1904, was so injured in course of his employment that he died about three hours later intestate, leaving no widow, descendents, or ancestors surviving, but only his sister, the defendant Johanna Murphy, his sole heir at law; that Johanna Murphy thereafter claimed damages of the plaintiff on account of Broderick's injuries; that said claim was after

wards and in the month of August, 1904, compromised and settled by the payment to said Johanna by plaintiff of $1,000; that said Johanna thereupon executed and delivered a written release of all claims resulting from said injury and death and agreed to save and keep the plaintiff harmless from all claims against it by heirs at law or personal representatives of Broderick; that the defendant McKeigue was appointed administrator of the estate of Broderick in September, 1904, and that the time fixed for presentation of claims against said estate has fully expired and but one claim was presented and allowed; that the property of the estate in the hands of the administrator is largely in excess of the amount of said claim, and that there are no other creditors; that in October, 1904, said McKeigue, as administrator, commenced an action against the plaintiff to recover damages for the pain and injuries suffered by Broderick in his lifetime; and that if a recovery is had in said action the amount thereof will be received by said Johanna Murphy as sole heir at law of Broderick, thereby nullifying the said compromise and satisfaction. Upon these allegations the plaintiff prayed judgment that the prosecution of the action at law be perpetually enjoined. Separate demurrers to this complaint were sustained, and the plaintiff appeals.

The appellant claims that the allegations of the complaint present a case where it appears that a trustee is prosecuting an action at law upon a claim which has been settled and compromised by the sole beneficiary (who is sui juris), and that a court of equity will interfere to prevent the accomplishment of such an injustice. Granting this premise, the question is whether the plaintiff has not an adequate and complete remedy by equitable defense in the action at law. The plaintiff claims, in substance, that this question must be answered in the negative for the reason that the facts must be presented by way of equitable counterclaim, and to that counterclaim Johanna Murphy would be a necessary party, and as she is not a party to the action at law the counterclaim would not be well pleaded on account of defect of parties, or at least would not be as adequate and effective as the separate action in equity. The contention practically is that there is no such thing as an equitable defense; but that facts which in equity would defeat the plaintiff's claim at law must always be pleaded as a counterclaim, if pleaded at all in the action at law. We do not understand this to be the law. The Code recognizes equitable defenses as well as equitable counterclaims when it provides that the defendant may "set forth by answer as many defenses and counterclaims as he may have, whether they be such as were formerly denominated legal or equitable, or both." Stats. 1898, see. 2657. It seems to be true that there are decisions to the effect that a defendant cannot plead facts which in equity would defeat the plaintiff's cause of action at law, except by way of counterclaim demanding affirmative relief. Pomeroy, Code Rem. (4th ed.) § 29. This, however, is not the approved doctrine, nor is it a logical doctrine.

true and logical rule doubtless is that where facts are relied on which in equity simply defeat the plaintiff's cause of action and go no further, they may be set up by equitable defense, just as facts which at law go simply to defeat the plaintiff's cause of action may be set up by legal defense, but in those cases where the action at. law can only be defeated by virtue of an affirmative judgment by a court of equity, such for instance as the reformation of a contract sued on at law, the equitable defense must be made by way of counterclaim. In a word, facts which if true simply defeat the plaintiff's action may be set up as a defense alone, but facts which call for affirmative relief in favor of the defendant before the plaintiff's action can be defeated must be set up by counterclaim. Bliss, Code Pl. (3d ed.) §§ 347, 348, 349; Pomeroy, Code Rem. (4th ed.) §§ 90, 91, 92; Baylies, Code Pl. & Pr. (2d ed.) ch. 11, § 11. See, also, Pennoyer v. Allen, 50 Wis. 308.

Applying this rule to the complaint before us, it is very evident that the plaintiff has a complete remedy by equitable defense in the action at law. The object of the present action is simply to defeat the plaintiff's action at law. No affirmative relief to the defendant is necessary to accomplish that object. The only result desired or necessary in this action is to prevent any judgment against the railroad company in the action at law. That may be accomplished by defense in the legal action brought by the administrator alone as well as by the prosecution of this equitable action to which Johanna is a party, for Johanna has no right of action herself. Hence the demurrers were properly sustained. Pennoyer v. Allen, supra. It may properly be noted before leaving the subject that there is an exception to the rules above stated, well settled in this state. In actions of ejectment a defense which is purely equitable and would not be available at law must be pleaded by way of counterclaim. The reason of this rule is that an equitable defense concedes the legal title to be in the plaintiff, so in order to bring the title and possession together affirmative relief must be sought by the defendant, and hence the ejectment statute requires that in case of an equitable defense the answer shall contain a demand for such judgment as the defendant claims, i. e. must be framed as a counterclaim. Stats. 1898, sec. 3078; Lombard v. Cowham, 34 Wis. 486; Du Pont v. Davis, 35 Wis. 631; Lawe v. Hyde, 39 Wis. 345; Dobbs v. Kellogg, 53 Wis. 448; Appleton Mfg. Co. v. Fox River P. Co. 111 Wis. 465.1 This rule, however, is peculiar to ejectment actions and does not affect the rule above stated with reference to actions generally. Mr. Pomeroy, in his work on Code Remedies (4th ed.), at sec. 29 seems to have

1 See Lombard v. Cowham, 34 Wis. 486 (1874) (full discussion). Compare Crary v. Goodman, 12 N. Y. 266 (1855); Phillips v. Gorham, 17 N. Y. 270 (1858). As to the requisites of an equitable defense or counterclaim to an action of ejectment under the codes, see Golde Clothes Shop v. Loew's Buffalo Theatres, 236 N. Y. 465 (1923).

thought that the rule laid down in these cases applied to all actions; but this is plainly an erroneous idea.

UNITED STATES CIRCUIT COURT OF APPEALS, FIRST CIRCUIT. 1921.

274 Federal 881.

IN ERROR to the District Court of the United States for the District of Massachusetts.

ANDERSON, J. Plews brings this suit at law on a written contract under which Burrage agreed to pay Plews 5 per cent. of all profits in stock or money accruing to Burrage out of his acquisition of copper properties brought to his attention by Plews. On a record made up of a declaration, answer, replication, and demurrer to the replication, the District Court was of the opinion that the crucial questions were close and doubtful, and therefore sustained the demurrer and entered judgment for the defendant. Although this unusual array of pleadings covers about 80 pages, and has been argued by learned counsel at great length, yet, stripped of confusing details and irrelevant issues, the case falls within narrow compass. There is no dispute as to the making, or the terms, or the application of the contract to properties out of the acquisition of which Burrage derived large profits either in January, 1912, or January, 1913. This makes a prima facie case for the plaintiff. But defendant alleges and plaintiff admits that, shortly before February 28, 1912, Burrage personally and through his agent, Ross, paid Plews £500 for a settlement or informal release of Plews' profit-sharing rights under this contract. If valid, this settlement is a good defense. In his replication the plaintiff attacks this settlement as vitiated by Burrage's fraud, and offers to repay the £500. By his demurrer to the replication defendant urges:

(1) That as matter of procedure the action cannot be maintained, until separate proceedings in equity the settlement is set aside.2 . . . We think the replication on these points good, and the demurrer bad.

1. The case is as to procedure closely analogous to Manchester Street Railway v. Barrett, 265 Fed. 557, 559, in which this court recently sustained the District Court of the New Hampshire district⚫

1 See Hinton, “Equitable Defenses under Modern Codes," 18 Mich. L. Rev. 717 (1920); Cook, "Equitable Defenses," 32 Yale L. J. 645 (1923); Clark, Code Pleading (1928) § 96.

2 Only so much of the opinion as relates to this ground of demurrer.is given.