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the Northwestern Company and placed among its assets. In brief, the substance of the affirmative defenses is, first, that the sale of the bonds and stock and the execution of the notes therefor were fraudulently procured, and that the whole transaction was the outcome of a fraudulent conspiracy between Howard, Dingee, and Bachman to foist upon the plaintiff in error worthless bonds and stocks of a corporation in which it had no interest, and for which bonds it was to pay the full par value; and, second, that although the resolution of the board of directors of the plaintiff in error authorizing the transaction was adopted by the requisite number to constitute a quorum, Dingee, owing to his personal interests adverse to the corporation, was disqualified to act as a director, and without his presence there was not a quorum.

The matter so pleaded requires the aid of a court of equity to give it effect, and is not available as a defense in an action at law in a federal court. The facts alleged do not show that the notes were not executed by the corporation, or that the execution thereof was procured by any trick or fraud, so as to render them void, and thus present a defense that might be made under a plea of non est factum. They show that the notes were executed understandingly and intentionally, but that the assent of the plaintiff in error to the execution of the same was procured by fraud and deceit, and that the action of one of the officers of the plaintiff in error was influenced by fraudulent motives. These allegations, if true, present equitable defenses. The distinction between these two classes of defenses is clear and is well established by the decisions. George et al. v. Tate, 102 U. S. 564, 26 L. Ed. 232; Burnes v. Scott, 117 U. S. 582, 6 Sup. Ct. 865, 29 L. Ed. 991; Hill v. Northern Pac. Ry. Co., 113 Fed. 914, 51 C. C. A. 544; Levi v. Mathews, 145 Fed. 152, 76 C. C. A. 122; Heck v. Missouri Pac. Ry. Co. (C. C.) 147 Fed. 775; Pac. Mut. Ins. Co. v. Webb, 157 Fed. 155, 84 C. C. A. 603, 13 Ann. Cas. 752; Cook v. Fidelity & Deposit Co., 167 Fed. 95, 92 C. C. A. 547; Union Pac. R. Co. v. Whitney, 198 Fed. 784, 117 C. C. A. 392. In George et al. v. Tate, it was said:

"It is well settled that the only fraud permissible to be proved at law in these cases is fraud touching the execution of the instrument, such as misreading, the surreptitious substitution of one paper for another, or obtaining by some other trick or device an instrument which the party did not intend to give"-citing Hartshorn v. Day, 19 How. 211, 15 L. Ed. 605.

[2] Nor can jurisdiction of such a defense be conferred upon a court of law by waiver or consent of parties. Thompson v. Railroad Companies, 6 Wall. 134, 18 L. Ed. 765; Lewis v. Cocks, 23 Wall. 466, 23 L. Ed. 70; Oelrichs v. Spain, 15 Wall. 211, 21 L. Ed. 43.

The judgment is affirmed.

NOTE.

Equitable Defenses in Actions at Law.

I. IN GENERAL.

[a] (Ark.,1905) When sued at law, defendant must interpose all defenses which he has, legal or equitable; and, when any defense interposed is purely of equitable cognizance, the issue must be determined in the chancery court.American Soda Fountain Co. v. Futrall, 84 S. W. 505, 73 Ark. 464.

[b] (Ark. 1908) Where a sale by an administrator is made to a bank, of which he is a stockholder and the cashier, the administrator's interest could not be interposed as a defense in a suit at law by the purchaser to recover the land, for, the sale being merely voidable at the election of the beneficial owners of the estate, and not void, upon the beneficial owners' election to avoid the sale, the purchaser would be entitled to credit for the payments, and the doctrine of granting relief upon terms or conditions imposed is purely a creature of equity, and not one at law.-Crawford County Bank v. Bolton, 112 S. W. 398.

[c] (Ark. 1910) Where a 60 days' notice is made a condition precedent to the right of the lessee to renew his lease without providing how the notice should be given, an answer setting up the failure of such a notice, sent by mail, to be received by the lessor, does not plead such a "mistake" as gives equity jurisdiction in an action by the lessor for possession of the premises, defended on the ground that the notice so sent should be held sufficient though without proof of its actual delivery.-Bluthenthal v. Atkinson, 124 S. W. 510.

[d] (Ark. 1910) A defendant must interpose all his defenses to the action at law.-Automatic Weighing Mach. Co. v. Carter, 128 S. W, 557; Cotton v. Steel, 129 S. W. 1198.

[e] (Fla. 1905) Pleas on equitable grounds in actions at law must be purely defensive, and are never admissible when they raise issues with which the court on its common-law side is competent to deal.-Pensacola Lumber Co. v. Sutherland-Innes Co., 39 South. 789, 50 Fla. 244.

[f] (Ill.) The rule that a party cannot avoid his contract in a court of law by showing fraudulent representations as to the consideration, but must resort to equity, only applies where the contract is under seal, and not where the action is on a simple contract, in which case fraud is a good defense.-(1909) Robinson v. Yetter, 87 N. E. 363, 238 Ill. 320, affirming judgment (1908) 143 Ill. App. 172.

[g] (Ind. 1831) A., as the agent of a county, sold certain town lots belonging to the county to B., giving him the title bond for the same. The bond was, by mistake, and contrary to the intention of both parties, so drawn as to appear obligatory on A. personally. Held, that the mistake could not be pleaded in bar to an action at law against A. on the bond.-Lindley v. Cravens, 2 Blackf. 426.

[h] (Ind. T. 1906) An equitable defense is permissible to an action at law.Sharrock v. Krieger, 98 S. W. 161.

[i] (Mo. 1894) An answer in an action on promissory notes, setting up equitable defenses and praying for affirmative equitable relief, converts the case into a proceeding in equity, to be governed by principles and rules of procedure applicable to such cases.-Wendover v. Baker, 121 Mo. 273, 25 S. W. 918.

[j] (N. J. 1904) The fact that in an action involving title to personal property one of the parties rests his claim on an equitable estoppel is no ground for an injunction restraining the action and transferring the litigation to chancery.-Kronson v. Lipschitz, 60 Atl. 819, 68 N. J. Eq. 367.

[k] (Pa. 1901) An assignor of a mortgage, who is also part owner of the mortgaged premises, in a suit brought by the assignee, may set up as a defense fraud alleged to have been committed in the procurement of the assignment on which the plaintiff's right to sue is founded; for, though it is an equitable defense, a resort to equity will not be required where the common-law machinery has been set in motion by the plaintiff and furnishes adequate opportunity

for a determination of the pending dispute.-Cummings v. Horter, 15 Pa. Super. Ct. 458.

[1] (Pa. 1904) An equitable defense may be interposed in a common-law action, under the mixed system of jurisprudence which prevails in Pennsylvania. -Highlands v. Philadelphia & R. R. Co., 58 Atl. 560, 209 Pa. 286.

[m] (R. I. 1892) In an action of debt on a bond conditioned that defendant shall faithfully discharge his duties as agent, and pay over to plaintiff all funds, etc., received as agent, an equitable plea set up a contract with plaintiff to act as its agent, and to receive certain commissions, and alleged that defendant performed all the conditions on his part, and expended large sums of money in furnishing offices, etc., and that plaintiff, without his consent, seized the offices, ejected his servants, and converted the furniture to its own use, and refused to account with him for commissions. Held, that an accounting could only be had by a resort to a bill in equity or to an action at law for that purpose.-American Building, Loan & Investment Co. v. Booth, 17 R. I. 736, 24 Atl. 779.

[n] (Tenn. 1906) Fraud in procuring a release may be set up as against a plea of accord and satisfaction in an action at law.-Memphis St. Ry. Co. v. Giardino, 92 S. W. 855, 116 Tenn. 368.

II. DEFENSES UNDER CODES AND STATUTES OTHER THAN IN EJECTMENT. [a-c] (Cal. 1866) A party may set up any equitable defense to an action at law, provided it is set forth fully and distinctly, and is not barred by the statute of limitations.-Carpentier v. Oakland, 30 Cal. 439.

[d] (Fla. 1908) The purpose of the statute authorizing pleadings on equitable grounds in certain cases at law is to facilitate the administration of justice in courts that deal with such equitable pleadings.-Hobbs v. Chamberlain, 45 South. 988.

[e] (Ky. 1874) Under Civ. Code, § 14, an equitable defense to an action at law, if not made, will be deemed waived.-Thomasson v. Townsend, 73 Ky. (10 Bush) 114.

[f] (Me. 1906) Rev. St..c. 84, § 17, declaring the defendant may plead in defense any matter which would be ground for relief in equity as against the claims of the plaintiff, does not authorize the court in an action at law to reform a written instrument to correct mistakes of the scrivener, as they cannot under the statute be held a legal or equitable defense to the action.-Martin v. Smith, 65 Atl. 257, 102 Me. 27.

[g] (Minn. 1858) Under Act March 5, 1853, § 5, which provides that equities in favor of a defendant, which would have availed in a suit in chancery to defeat an action at law, may be set up in the answer and the same relief granted that could have been awarded in chancery, the test of an equitable defense is whether, on the same facts presented by a bill in chancery, the court would have entertained the cause and granted the relief sought. If it would, the defense is good; otherwise not.-Gates v. Smith, 2 Minn. 30 (Gil. 21).

[h] (Mo. 1907) Rev. St. 1899, § 605 (Ann. St. 1906, p. 635), provides that defendant may set up by answer as many defenses and counterclaims as he may have, whether legal or equitable, or both. Held, that under such section the pleading of a mere equitable defense in a law action leaves the case one at law, to be tried by a jury.-Pitts v. Pitts, 100 S. W. 1047, 201 Mo. 356.

[i] (N. Y. 1851) Under Code, § 149, an answer may contain whatever is essential to the defense, and if, on the facts stated, defendant is entitled to affirmative relief, it may be had.-Wooden v. Waffle, 6 How. Prac. 145.

[j] (N. Y. 1854) Code, § 69, having abolished the distinction between actions at law and in equity, a defendant in an action on a judgment may show as a defense that the judgment was obtained by fraud.-Dobson v. Pearce, 12 N. Y. (2 Kern.) 156, 62 Am. Dec. 152.

[k] (N. Y. 1854) In an action for the possession of land based on the legal title held by plaintiff, defendant may show as a defense that he is the equitable owner of the premises, and entitled to a conveyance thereon.-Crary v. Goodman, 12 N. Y. (2 Kern.) 266, 64 Am. Dec. 506.

[1] (N. Y. 1864) The fact that the plaintiff's action is a substitute for what, before the Code of Procedure, was a special proceeding, does not deprive the defendant of the right granted by the Code of setting up equitable defenses in any kind of actions.-Peck v. Brown, 26 How. Prac. 350.

[m] (N. Y. 1871) Equitable defenses and counterclaims to actions at law are confined to the cases in which a court of equity, if its jurisdiction were invoked by suit, would restrain or limit the action at law, and grant equitable relief against it.-Cramer v. Benton, 4 Lans. 291, 60 Barb. 216.

[n] (N. Y. 1887) Under Code Civ. Proc. § 507, allowing both legal and equitable defenses to an action, defendant, in an action by an assignee for benefit of creditors for the price of goods sold by the assignor, may set up as an equitable defense that, relying on the assignor's promise to save him harmless, he had made certain notes for the accommodation of the assignor, that judgment had been recovered against him (defendant) on the notes, and that the assignor was insolvent.-Mack v. Kitsell, 20 Abb. N. C. 293.

[o] (N. C. 1876) Since the Code of Civil Procedure has enabled the courts to administer law and equity in the same action, defendant, in an action on a bond, may show mistake or fraud in the consideration, as a ground for reforming the instrument to correspond with the sum justly due.-Hall v. Guilford, 74 N. C. 130.

[p] (Or. 1884) Where, in an action at law, the facts show defendant to be entitled to relief in equity, he must file a complaint in the nature of a cross-bill in order that the action may be proceeded with as a suit in equity.-Beacannon v. Liebe, 11 Or. 443, 5 Pac. 273.

[q] (Or. 1910) In an action to recover money paid by testatrix as surety on notes executed by defendant as principal, the answer alleged an agreement of testatrix to devise a tract to defendant and a further agreement by which a part of the land was to be sold and the proceeds applied to the payment of notes executed by defendant and testatrix, including the notes paid by intestate, which notes were to have been marked paid out of defendant's expectancy in the land and surrendered to him in lieu of title to the part of the devised land sold, and that the notes were paid out of the proceeds of the land sold. Held, that the answer alleged an ordinary conversion of the land into a fund out of which the notes were to be paid, which could only be set up by a complaint in equity in the nature of a cross-bill, under B. & C. Comp. § 391, providing that, where defendant at law is entitled to relief in equity, he may on answering file a cross-bill in equity, when the case shall proceed as in equity, and further providing that the procedure in the suit shall be as provided in that title only, so that, no cross-bill having been filed, the answer stated no defense.-Watson v. McLench, 110 Pac. 482, rehearing denied 112 Pac. 416.

[r] (Utah, 1910) In view of Const. art. 8, § 19, providing that there shall be but one form of action for the administration of both law and equity, an equitable estoppel may be pleaded as a defense in a legal action for dower.-Hil. ton v. Sloan, 108 Pac. 689.

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[a] An equitable defense may be interposed in ejectment. -(Ark. 1907) Gates v. Gray, 106 S. W. 947, 85 Ark. 25;

(Ga. 1872) Elder v. Allison, 45 Ga. 13; Allison v. Elder, Id. 17; (Mo. 1875) Jones v. Manly, 58 Mo. 559; (1901) Butler v. Carpenter, 63

S. W. 823, 163 Mo. 597;

(Neb. 1907) Union Stock Yards Nat. Bank v. Day, 113 N. W. 530. [b] A mere equitable estate cannot be set up in ejectment to defeat a legal estate.

—(D. C. 1896)

Rathbone v. Hamilton, 4 App. D. C. 475;

(Mich. 1888) Geiges v. Greiner, 36 N. W. 48, 68 Mich. 153; (1904) Rausch v. Briefer, 101 N. W. 523, 138 Mich. 284.

[c, d] (U. S. 1903) A city which has, through its council, legally and effectually authorized a conveyance of property, has received the agreed consideration, and executed a deed by its mayor, under which the grantee has taken and held possession of the property for many years, cannot recover the property by an action in ejectment, on the ground that the mayor was not the proper person to execute the deed, and it is therefore without authority and void. since the grantee is, at least, vested with the equitable title, which a court of equity would protect, by enjoining an action at law, until the city could be required to execute an effective deed.-(1901) Morgan v. Johnson,

106 Fed. 452, 45 C. C. A. 421, affirmed Wright v. Morgan (1903) 24 Sup. Ct. 6, 191 U. S. 55, 48 L. Ed. 89.

[e] (Alaska, 1904) In an action of ejectment brought under the Alaska Code, abolishing distinctions between actions at law and suits in equity, the defendant may plead and rely upon equitable defenses in support of his possession and title to mining claims.-Thompson v. Burk, 2 Alaska, 249.

[f] (Alaska, 1905) The distinctions between actions at law and suits in equity and the forms of such actions are abolished in Alaska. An equitable defense may be interposed by defendant in an action of ejectment.-Pacific Coast Co. v. Brown, 2 Alaska, 621.

[g] (Colo. 1901) Where, in an action to recover possession of real property, the fee of which plaintiff claimed to own, she alleged that defendant had unlawfully ousted her; that defendant unlawfully withheld possession, taken under a contract of sale between them; and also claimed some estate or interest adverse to plaintiff,-under Code Civ. Proc. § 59, providing that the defendant may set forth as many defenses as he has, whether legal or equitable, defenses may be pleaded that the trustee's sale under which plaintiff claimed. was void, and that defendant held the title subject only to the lien of the trust deed; that she made the contract of sale by reason of plaintiff's fraud, but repudiated it on discovery, and did not enter under it, but as a purchaser of the equity of redemption, though such defenses are equitable, while the action is legal.-Cheney v. Crandell, 65 Pac. 56, 28 Colo. 383. [h] (Fla. 1905) The plea upon equitable grounds, provided for by Rev. St. 1892, § 1047, is applicable in actions of ejectment, and when maintained by proof of such matter as would entitle the pleader to an injunction in equity, restraining the judgment in ejectment against him, has the effect of defeating plaintiff's claim to possession, and entitles defendant to a verdict.-Smith v. Love, 38 South. 376, 49 Fla. 230.

[i] (Kan.) Plaintiff deeded all his interest in certain realty to defendant's grantor, representing it to be an undivided half interest. After his wife's death their children, as her heirs, conveyed their various interests to defendant. After 11 years, plaintiff instituted ejectment to recover the interest of a child which had died before its mother, and whose interest in the mother's estate plaintiff inherited. Defendant pleaded plaintiff's laches, and also estoppel of record, based on the conveyance of "all his interest" in the property. Held, that these defenses, though one was of an equitable character and the other might necessitate equitable interference to reform the deed, were available in ejectment.-(1900) Frazier v. Jeakins, 62 Pac. 354, 9 Kan. App. 850, reversed Jeakins v. Frazier (1902) 67 Pac. 854, 64 Kan. 267.

[j] (Mich. 1890) In the cases in which it has been held that an equitable title cannot be set up in ejectment against the legal title, the legal title was fully established, and the evidence of the equitable title was sought to be introduced to overthrow the legal title, which without such evidence, was admitted.-Shaw v. Hill, 47 N. W. 247, 83 Mich. 322, 21 Am. St. Rep. 607.

[k] (Miss. 1902) A defendant in ejectment cannot defend by showing that plaintiff, purchaser at a tax sale, was incapacitated to purchase at the sale; it being an equitable defense, inadmissible at law.-Graham v. Warren, 33 South. 71, 81 Miss. 330.

[1] (Mo.) The fact that the answer in ejectment contains an equitable defense does not change the character of the action, and convert it into a case in equity. (1883) Carter v. Prior, 78 Mo. 222; (1895) Kerstner v. Vorweg, 130 Mo. 196, 32 S. W. 298.

[m] (Mo. 1901) In ejectment by one claiming by deed from defendant, defendant alleged as an equitable defense that, being indebted to a certain bank, plaintiff, her son-in-law, had fraudulently represented to her that the indebtedness amounted to more than it did, and that the bank was about to attach the land and force a sale, whereon she executed the alleged deed to plaintiff and her son for an inadequate consideration. Held, that defendant, having also alleged that the deed was never delivered, was not entitled to equitable relief on the pleadings; nondelivery constituting a defense at law. -McNear v. Williamson, 66 S. W. 160, 166 Mo. 358.

[n] (Mo. 1905) Under Rev. St. 1899, § 605, permitting equitable defenses in actions at law, a naked legal title is insufficient to support ejectment as against an equitable title.-Shaffer v. Detie, 90 S. W. 131, 191 Mo. 377.

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