2020 Georgia Code
Title 13 - Contracts
Chapter 7 - Setoff and Recoupment
§ 13-7-13. Actions in Which Recoupment May Be Pleaded; Procedure Where Damages of Defendant Exceed Damages of Plaintiff

Recoupment may be pleaded in all actions ex contractu where the plaintiff is liable to the defendant under the same contract.

If the damages of the defendant exceed those of the plaintiff, the defendant shall be awarded the amount of such excess from the plaintiff.

(Orig. Code 1863, § 2853; Code 1868, § 2861; Code 1873, § 2912; Ga. L. 1878-79, p. 147, § 1; Code 1882, § 2912; Civil Code 1895, § 3759; Civil Code 1910, § 4353; Code 1933, § 20-1314.)

- Counterclaim and cross-claim, § 9-11-13.

Joinder of claims and remedies under Civil Practice Act, § 9-11-18.

ANALYSIS

• General Consideration
• Recoupment in Tort
• Application
• Pleading and Practice

General Consideration

Recoupment sums up grievances on each side, strikes balance and gives judgment for difference.

- Recoupment looks through the whole contract, treating the contract as an entirety, and regarding things done and stipulated to be done on each side as the consideration for things done and stipulated to be done on the other; and when plaintiff seeks redress for breach of stipulations in the plaintiff's favor, it sums up grievances on each side, strikes a balance, and gives the plaintiff a judgment for only such difference as may be found in the plaintiff's favor. Atlas Auto Fin. Co. v. Atkins, 79 Ga. App. 91, 53 S.E.2d 171 (1949).

Recoupment in Georgia is not limited to a defensive purpose. Multivision N.W., Inc. v. Jerrold Elecs. Corp., 356 F. Supp. 207 (N.D. Ga. 1972).

For recoupment to lie, plaintiff should be liable to defendant under contract sued upon. Tench v. Downey Hosp., 36 Ga. App. 20, 135 S.E. 106 (1926).

- Late performance may constitute a breach of contract by plaintiff, but remedy for breach is not nonpayment; it is recoupment, or what is now a counterclaim. Sasser & Co. v. Griffin, 133 Ga. App. 83, 210 S.E.2d 34 (1974).

Carrier's breach of duty imposed by law is not the basis of recoupment. Atlantic Coast Line R.R. v. A. T. Snodgrass & Co., 14 Ga. App. 668, 82 S.E. 153 (1914).

Cited in Williams v. Waters, 36 Ga. 454 (1867); Weaver v. Roberson, 134 Ga. 149, 67 S.E. 662 (1910); Wood & Bro. v. Jones & Son, 10 Ga. App. 735, 73 S.E. 1099 (1912); Copeland v. White, 17 Ga. App. 565, 87 S.E. 846 (1916); Phillips v. Lindsey, 31 Ga. App. 479, 120 S.E. 923 (1923); Bennett v. Tucker & Pennington, 32 Ga. App. 288, 123 S.E. 165 (1924); Mashburn Drug Co. v. Valdosta Drug Co., 53 Ga. App. 88, 184 S.E. 903 (1936); Middleton v. Pruden, 191 Ga. 893, 14 S.E.2d 82 (1941); Otwell Motor Co. v. Hill, 79 Ga. App. 686, 54 S.E.2d 765 (1949); Alpharetta Feed & Poultry Co. v. Cocke, 82 Ga. App. 718, 62 S.E.2d 642 (1950); Copeland v. Beckham, 87 Ga. App. 34, 73 S.E.2d 34 (1952); Leslie, Inc. v. Russ, 123 Ga. App. 611, 181 S.E.2d 912 (1971); Windjammer Assocs. v. Hodge, 153 Ga. App. 758, 266 S.E.2d 540 (1980); Natale v. The Home Depot U.S.A. (In re Krause, Inc.), Bankr. (Bankr. N.D. Ga. July 11, 2005).

Recoupment in Tort

Rule for obtaining affirmative relief on tort claim against contract claim is same for setoff and recoupment.

- The rule as to setting off a tort claim against a contractual claim, and obtaining affirmative relief in a court of law, is the same when counterclaim is based on recoupment as it is in cases when counterclaim is based on setoff. Georgia Mach. Co. v. Auburn Mach. Works, Inc., 103 Ga. App. 574, 120 S.E.2d 28 (1961).

- Causes of action ex delicto cannot, except in some special instances, be set off against a suit proceeding ex contractu. While damages resulting from plaintiff's breach of contract sued on may be set off by plea of recoupment, still this right of set off is not broad enough to include damages alleged to have arisen from plaintiff's wrongful act in connection with a transaction legally distinct from contract sued on, even though closely connected with it in point of time. Aetna Ins. Co. v. Lunsford, 179 Ga. 716, 177 S.E. 727 (1934).

Tort committed subsequent to completion of contract cannot be set up as as a defense thereto. Georgia Lumber Co. v. Johnson-Battle Lumber Co., 31 Ga. App. 290, 120 S.E. 640 (1923).

Recoupment in tort allowed unless breach complained of is simply neglect of contractual duty. Porter v. Davey Tree Expert Co., 34 Ga. App. 355, 129 S.E. 557, cert. denied, 34 Ga. App. 836 (1925).

Waiver of rights under contract and recoupment in tort. See Porter v. Davey Tree Expert Co., 34 Ga. App. 355, 129 S.E. 557, cert. denied, 34 Ga. App. 836 (1925).

Damages for breach of warranty may be recouped. Bowers v. Williams, 17 Ga. App. 779, 88 S.E. 703 (1916).

Expenses incurred in attempting to operate threshing machine can be recouped in action for price. Cochran v. Jones, 85 Ga. 678, 11 S.E. 811 (1890).

Tenant may recoup damages to goods resulting from landlord's failure to repair roof after notice of leaky condition. Guthman v. Castleberry, 48 Ga. 172 (1873).

- In proceeding to foreclose bill of sale retaining title to secure debt, the debtor may, by affidavit of illegality avail oneself of any defense which the debtor might set up in an ordinary suit upon demand secured by a mortgage, and which goes to show that amount claimed is not due and owing; and, while the debtor is thus permitted to avail oneself of a valid defense by way of recoupment, one is not entitled to plead defense of setoff in such a summary proceeding, since latter defense is not one which goes to justice of the plaintiff's demand. Atlas Auto Fin. Co. v. Atkins, 79 Ga. App. 91, 53 S.E.2d 171 (1949).

- When a plaintiff sues on one part of contract consisting of mutual stipulations made at same time and relating to same subject matter, defendant may recoup the defendant's damages arising from breach of that part which is in the defendant's favor, whether the different parts are contained in one instrument or several; and though one part be in writing and the other in parol; otherwise, when the contract for the breach of which damages are claimed by defendant is entirely distinct and independent of one on which plaintiff sues. Atlas Auto Fin. Co. v. Atkins, 79 Ga. App. 91, 53 S.E.2d 171 (1949).

- When seller of automobile or transferee of note given for purchase price thereof rely on contract by suing thereon, defendant is entitled to recoup damages against either, suing as plaintiff for alleged breach of contract. Commercial Credit Co. v. Anthony, 48 Ga. App. 725, 173 S.E. 204 (1934).

- Remedy of recoupment applies to actions ex contractu, between contractor and subcontractor, and for damages alleged to have been caused by delay in completion of construction. Sasser & Co. v. Griffin, 133 Ga. App. 83, 210 S.E.2d 34 (1974).

- Summary judgment under O.C.G.A. § 9-11-56(c) was properly granted to a creditor in the creditor's action seeking to collect on a debt, since the debtor's defense consisted of a claim in recoupment, pursuant to O.C.G.A. §§ 13-7-2 and13-7-13, based on personal injuries the debtor suffered from the negligent conduct of the creditor; the court ruled that such a defense was not applicable to the creditor's claim because the claims were legally distinct. Long v. Reeves Southeastern Corp., 259 Ga. App. 257, 576 S.E.2d 641 (2003).

- When defendant's plea of recoupment seeks to recoup against plaintiff's action on contract with a plea that defendant was forced to spend a certain amount of money to have conveyor system, which the plaintiff erected under contract, repaired due to unskillful and improper manner in which plaintiff did certain of the work, motion to strike plea of recoupment was properly denied. Burton v. Campbell Coal Co., 95 Ga. App. 338, 97 S.E.2d 924 (1957).

In action on note given for purchase price of property or in payment or part payment of contract price agreed to be paid for performance of work and labor, it is competent for defendant to set off any claim the defendant may have against plaintiff arising out of performance of work embodied in contract, including damages arising by reason of failure of plaintiff to perform contract in accordance with the contract's terms. Williams v. Metropolitan Home Imp. Co., 110 Ga. App. 770, 140 S.E.2d 56 (1964).

While it is true that on acceptance of work by owner after building contractor has rendered entire service for which owner has contracted, the contractor is authorized to proceed to collect balance due the contractor by terms of contract, any damage to owner resulting from negligent performance of contract by contractor is a matter for recoupment. Sasser & Co. v. Griffin, 133 Ga. App. 83, 210 S.E.2d 34 (1974).

Recoupment, by way of cross-action, does not arise ex delicto and does not require affirmative equitable relief. Allied Enters., Inc. v. Brooks, 93 Ga. App. 832, 93 S.E.2d 392 (1956).

- In order for doctrine of res ipsa loquitur to be applicable when defendant in a plea of recoupment alleged that plaintiff was not entitled to recover for construction of conveyor system because of improper construction of the system, defendant must show plaintiff had control of premises. Burton v. Campbell Coal Co., 95 Ga. App. 338, 97 S.E.2d 924 (1957).

Averments in plea of recoupment must be full, clear, certain, and definite in setting out defendant's demand as much so as the defendant's allegations would be if the defendant were a plaintiff asserting demand in original declaration. H.W. Ivey Constr. Co. v. Southwest Steel Prods., 111 Ga. App. 527, 142 S.E.2d 394 (1965).

Plea of recoupment subject to same test of sufficiency as a petition as against a general demurrer (now motion to dismiss). H.W. Ivey Constr. Co. v. Southwest Steel Prods., 111 Ga. App. 527, 142 S.E.2d 394 (1965).

Recoupment may be pleaded regardless of statute of limitations. Therefore, a party may recover damages on claims raised as recoupments after limitations have run. Multivision N.W., Inc. v. Jerrold Elecs. Corp., 356 F. Supp. 207 (N.D. Ga. 1972).

Plea of recoupment is not barred by statute of limitations if main action is timely. Multivision N.W., Inc. v. Jerrold Elecs. Corp., 356 F. Supp. 207 (N.D. Ga. 1972).

Properly asserted claim for recoupment is not barred by statute of limitation. H.R. Kaminsky & Sons v. Yarbrough, 158 Ga. App. 523, 281 S.E.2d 289 (1981).

Recoupment may be used to gain affirmative recovery on claim ordinarily barred by limitations. Multivision N.W., Inc. v. Jerrold Elecs. Corp., 356 F. Supp. 207 (N.D. Ga. 1972).

RESEARCH REFERENCES

Am. Jur. 2d.

- 20 Am. Jur. 2d, Counterclaim, Recoupment and Setoff, §§ 1, 2, 6, 10, 12, 17.

- 80 C.J.S., Set-Off and Counterclaim, § 13.

- Counterclaim or setoff as defense to proceeding to revive judgment, 131 A.L.R. 802.

Landlord's liability for damage to tenant's property caused by water, 35 A.L.R.3d 143.

Failure of creditor, or creditor's assignee, to secure credit insurance as affecting rights or liabilities of debtor, upon debtor's loss, 88 A.L.R.3d 794.