was to be read as something else. The question is fairly here whether the facts establishing the need for reformation, even if not stated as a counterclaim, make out an equitable defense. The plaintiff produces a writing which in form is a contract and asks the judgment of the court that it be enforced according to its terms. The defendant answers that enforcement is inequitable because fraud or mutual mistake has brought about the result that the writing is not a true expression of the meaning of the parties. This is good as a bar, and does not cease to be good because the defendant, if it had so chosen, might have asked for something more. There is no dearth of subtle discussion as to the effect of mistake in advance of reformation (Cook, Equitable Defenses, 32 Yale Law Journal, 645; Pomeroy, Remedies and Remedial Rights, § 87 et seq.; Hinton, Equitable Defenses under Modern Codes, 18 Mich. L. R. 717). Much of it is an echo of precedents and distinctions formulated in an era when there was no such thing as an equitable defense in a trial at common law. Now, "a defendant may set forth in his answer as many defenses and [or] counterclaims, or both, as he has [;] whether they are such as were formerly denominated legal or equitable" (Civ. Prac. Act, § 262; Code Civ. Pro. § 507; Code of Procedure, § 150). A discussion of equal subtlety has centered upon the distinction between equitable defenses and equitable counterclaims. We have no need at this time to retrace and follow its refinements. They have been made irrelevant or largely so for the courts of this State by a series of early decisions which placed our law of pleading, in this respect at least, upon a broad and simple basis. With us, the rule is that “under the head of equitable defenses are included all matters which would have before authorized an application to a Court of Chancery for relief against a legal liability, but which at law could not have been pleaded in bar" (Mandeville v. Reynolds, 68 N. Y. 528, 545; Dobson v. Pearce, 12 N. Y. 156). The application of this test makes it immaterial that in the absence of judicial declaration of the existence of the defendant's equities, a legal liability would exist. The judicial declaration may be had as an incident to the litigation of a defense with the same effect as if incidental to the litigation of a counterclaim. All that is necessary is that the equities when established be destructive of the plaintiff's right. There are repeated restatements of the rule and illustrations of its meaning. Crary v. Goodman (1855, 12 N. Y. 266) was an action of ejectment. Plaintiff claimed the legal title. Defendant said in defense that the property in dispute was by mistake omitted from his deed. We held the answer good as an equitable defense. There was the same situation, followed by the same ruling in Hoppough v. Struble (1875, 60 N. Y. 430). We said (p. 434) that a decree of reformation, though proper, was not necessary. "The same state of facts which would entitle the defendant to a reformation of the deed would establish his equitable right to the

possession, and would as effectually defeat the action as would the legal title." Other cases, both earlier and later, announce a like conclusion in situations similar in substance though varying in details. We may instance Haire v. Baker (5 N. Y. 357), where we said that in an action to recover damages for the breach of a covenant against incumbrances, defendant might show by way of defense that by mistake the incumbrance complained of was omitted from an exception; Pitcher v. Hennessey (48 N. Y. 415), where upon an answer, which, like this one, was a cross between a counterclaim and a defense, we said (p. 422) that the equitable defense "should have been tried and determined by the court," though the action was at law; Cavalli v. Allen (57 N. Y. 508), where upon pleadings much the same we reached the same conclusion; Mandeville v. Reynolds (68 N. Y. 528, 543, 545), where in an action on a judgment the defendant showed in defense that there was fraud in its procurement; and Young v. Overbaugh (145 N. Y. 158), where the legal title was overcome by a defense of a parol gift, followed by possession and improvements. To this list may be added Lamont v. Cheshire (65) N. Y. 30); Chase v. Peck (21 N. Y. 581, 586); Glacken v. Brown (39 Hun, 294, 298); Madison v. Benedict (73 App. Div. 112); Page v. Higgins (150 Mass. 27, 28); Eustis Mfg. Co. v. Saco Brick Co. (198 Mass. 212, 217), and Lowenthal v. Haines (160 App. Div. 503). There is, indeed, a dictum in Born v. Schrenkheisen (110 N. Y. 55, 60) that mistake, though of such a nature as to justify reformation, does not help a defendant sued at law unless it is pleaded as a counterclaim. What was said, if more than dictum, was at all events not essential to the decision, for the case went off upon the ground that the defect of pleading was unimportant because disregarded by the parties. We find a return in later cases to the earlier and simpler view (Walker v. Am. Central Ins. Co., 143 N. Y. 167; Bennett v. Edison Electric II. Co., 18 App. Div. 410; 164 N. Y. 131; cf. City of N. Y. v. Matthews, 213 N. Y. 563). Cases to the contrary may be found in the Appellate Division (see, e. g., Ward v. Union Trust Co., 166 App. Div. 762), but they go back to Born v. Schrenkheisen (supra) for whatever authority supports them. Tọ . hold that mistake, though adequate for reformation, is never the basis for relief unless pleaded as a cause of action or a counterclaim would lead, indeed, to unexpected consequences of circuity and hardship. A plaintiff would then be helpless if the defendant were to plead a release or an accord and satisfaction which through some scrivener's mistake had been stated so broadly as to include his cause of action. The bar would stand unless the complaint was amended so as to change the nature of the suit. New matter in an answer is deemed, it is true, to have been controverted by traverse or avoidance (Civ. Prac. Act, § 243; Code Civ. Pro. § 522), but mistake is not a ground of traverse, and unless sufficient as a defense may not be ranked as an avoidance. Our decision in Kirchner v. New Home

.

Sewing Machine Co. (135 N. Y. 182, 189) shows that the remedies available to suitors have not been circumscribed so narrowly. We think the principle that underlies our law of equitable defenses was stated long ago with precision and discernment. "The question now is, ought the plaintiff to recover; and anything which he shows that he ought not is available to the defendant, whether it was formerly of equitable or legal cognizance" (Dobson v. Pearce, 12 N. Y. 156, 168; Mandeville v. Reynolds, supra). The whole body of principles, whether of law or of equity, bearing on the case, becomes the reservoir to be drawn upon by the court in enlightening its judgment (N. Y. Central Ins. Co. v. Nat. Protective Ins. Co., 14 N. Y. 85, 90, 91). There remains for consideration the manner of the trial. Our statute provides that in an action for money only, "an issue of fact must be tried by a jury unless a jury trial is waived or a reference is directed" (Civ. Prac. Act, § 425; Code Civ. Pro. §968). An issue of fact arises upon a denial in the answer, or upon "a material allegation of new matter," constituting a defense (Civ. Prac. Act § 422; Code Civ. Pro. § 964; Code of Procedure, § 253 et seq.), There is no distinction in this respect between kinds of defenses, dependent upon their origin in equity or at law. The distinction is between all defenses on the one side and counterclaims on the other (Civ. Prac. Act, § 424; Code Civ. Pro. § 974). The rule is settled under these provisions that equitable defenses are triable in the same way as defenses that are legal (Southard v. Curley, 134 N. Y. 148; Kirchner v. N. H. S. M. Co., supra; Bennett v. Ed. El. II. Co., supra; Dobson v. Pearce, supra; cf. Stockbridge Iron Co. v. Hudson Iron Co., 107 Mass. 290; Cook, supra; Hinton, supra). Possibly, though this is far from clear, a different construction might have been given to the statute in its beginnings. The question was one not of constitutional privilege, but of the meaning of legislation. The Federal courts have found it possible in construing the provisions of the Judicial Code to reserve to the judge the trial of equitable defenses while leaving the legal issues to the verdict of the jury (Plews v. Burrage, 274 Fed. Rep. 881; Susquehanna Coal Co. v. Pratt & Young, 276 Fed. Rep. 919, 920; Union Pac. R. Co. v. Syas, 246 Fed. Rep. 561; cf. Liberty Oil Co. v. Condon Nat. Bank, 260 U. S. 235, 242; Nat. Aniline & C. Co. v. Arnhold, 298 Fed. Rep. 755; Lestrade v. Barth, 19 Cal. 671). Those provisions, however, when they are compared with the provisions of our statute, will be seen to be essentially different, though to some extent analogous. We are committed to another holding, not only by the reported precedents, but by the consistent practice of trial judges extending over many years. A familiar illustration is the defense of fraud in the inducement, as distinguished from fraud in the factum of a conveyance (Whipple v. Brown Bros. Co., 225 N. Y. 237, 241, 243), a defense which though equitable in origin and history (Jackson v. Hills, 8 Cow. 290), is submitted almost daily along with legal issues for the verdict of a jury. We have held that even

the label of a counterclaim will not change the mode of trial at the instance of a defendant if what is described as a counterclaim is also a defense (Bennett v. Ed. El. II. Co., supra; Civ. Prac. Act, § 424; Code Civ. Pro. § 974), unless the situation is one in which affirmative relief through a formal judgment or reformation is essential for complete protection (Walker v. Am. Central Ins. Co., supra). That situation may arise where an instrument is capable of being used thereafter to the prejudice of the signer, for the verdict of a jury, if the possibility exists that it has been based on more grounds than one, is an uncertain basis for a plea of res adjudicata. In the absence, however, of a counterclaim, all defenses, legal and equitable, stand upon a parity. The process of assimilation has been made easier by the growth of the action for money had and received which has accustomed us to the solution of problems essentially equitable through the medium of juries. Very likely there is danger of confusion and injustice at times in this blending of the issues. Juries may find it difficult to apply the presumption that preliminary treaties are merged in the written contract if they are permitted to consider such treaties as evidence of misake. Against these and like dangers, there are two methods of relief. One is suggested by the provision of the statute that "the court in its discretion may order one or more issues to be separately tried prior to any trial of the other issues in the case" (Civ. Prac. Act, § 443, subd. 3). The other is to be found in a strict enforcement of the rule that reformation must be refused unless the case in support of it is "of the clearest and most satisfactory character" (Philippine Sugar Est. Dev. Co. v. Phil. Islands, 247 U. S. 385, 391; Christopher & Tenth St. R. Co. v. 23d St. R. Co., 149 N. Y. 51, 58). This rule is as applicable to equitable defenses as it is to independent suits (Hoppough v. Struble, 60 N. Y. 430, 435). Judgments for reformation have been reversed even in this court for failure to obey it. We have withheld approval from such judgments when the evidence of mistake, though not lacking altogether, was too contradictory or uncertain to measure up to the prescribed standard (Allison Bros. Co. v. Allison, 144 N. Y. 21, 31, 33; Nevius v. Dunlap, 33 N. Y. 676, 680). The judge must still be satisfied that this standard has been reached.

The plaintiff argues that the defense is foredoomed to failure, and that any error in excluding evidence to support it is too technical and unsubstantial to lead to a reversal. We cannot say that this is so. There is some suggestion that the defendant's letter as it stands is a departure from an earlier letter written by the defendant's representative, who is said to have been hampered by an imperfect knowledge of the language. Even if he should be shown, however, to have written it himself, the right to reformation would not be lost if the true agreement of the parties was imperfectly expressed (Pitcher v. Hennessey, supra, at p. 424). These matters are for the trial. We may assume that the defendant will have no easy task in making proof

of its defense. We are not at liberty for that reason to bar it from

its day in court.

There are other questions in the case, but they were properly disposed of in the courts below.

The judgment of the Appellate Division and that of the Trial Term should be reversed, and a new trial granted, with costs to abide the

event.

POUND, CRANE and LEHMAN, JJ., concur; HISCOCK, Ch. J., McLAUGHLIN and ANDREWS, JJ., dissent.1

Judgments reversed, etc.2

JACKSON, v. STRONG.

COURT OF APPEALS, NEW YORK. 1917.

222 New York 149.

CUDDEBACK, J. The complaint in this action sets forth that the plaintiff and the defendant Strong, who are attorneys at law, entered into a contract to prosecute for their joint benefit a negligence case. One William Simons had been killed in an accident, caused, as it was said, by the carelessness of the International Railway Company.

The plaintiff and Strong agreed, as the complaint shows, to investigate the circumstances of Simons' death and ascertain if his personal representatives had a cause of action against the railway company and to bring suit against the company if it was ascertained that a cause of action existed. They were to bear equally the expenses of the litigation, become partners in the conduct of the case, and share equally in the receipts.

The complaint further sets forth that the suit was brought by Strong as attorney against the railway company and a verdict of $8,550 was rendered in favor of the personal representatives of the decedent, and that the judgment entered on the verdict was subsequently affirmed at the Appellate Division and in this court. Furthermore, that the defendant Strong received from the railway company the amount of the judgment with interest and costs, and that he now repudiates the contract with the plaintiff and refuses, after due demand, to pay over to the plaintiff his share of the recovery.

The defendants Petrie, Fiederspiel and Thayer are joined as defendants because the plaintiff assigned to each of them a certain un

1 There was no dissenting opinion.

2 See U. S. Fidelity & Guaranty Co. v. Goetz, 285 N. Y. 74 (1941). See also Clark, "Trial of Actions under the Code," 11 Corn. L. Q. 482 (1926). Cf. Penninger Lateral Co. v. Clark, 22 Idaho 397 (1912); Gunn v. Madigan, 28 Wis. 158, 166-168 (1871); Clark, Code Pleading (1928) 61-65.