A setoff or counterclaim may be pleaded as a defense to any cause of action, notwithstanding such setoff or counterclaim may be barred by the preceding provisions of this chapter, if such setoff or counterclaim so pleaded was the property or right of the party pleading the same at the time it became barred and at the time of the commencement of the action, and the same was not barred at the time the cause of action sued for accrued or originated; but no judgment for any excess of such setoff or counterclaim over the demand of the plaintiff as proved shall be rendered in favor of the defendant.

History: Laws 1880, ch. 5, § 14; C.L. 1884, § 1874; C.L. 1897, § 2927; Code 1915, § 3357; C.S. 1929, § 83-112; 1941 Comp., § 27-114; 1953 Comp., § 23-1-15.

Bracketed material. — The bracketed material was inserted by the compiler and is not part of the law.

Compiler's notes. — The compilers of the 1915 Code substituted "preceding provisions of this chapter" for "provisions of this act."

The words "this chapter," refer to Chapter 68 of the 1915 Code, which is compiled as 37-1-1 to 37-1-4, 37-1-6 to 37-1-19, 37-1-21, 37-1-22, 37-1-25, 37-1-26 NMSA 1978.

Cross references. — For rule regarding counterclaims, see Rule 1-013 NMRA.

Recoupment claim not prohibited. — This section does not prohibit a party from asserting the defense of recoupment, even if that party would be barred from bringing an action for affirmative relief under 37-1-24 NMSA 1978. City of Carlsbad v. Grace, 1998-NMCA-144, 126 N.M. 95, 966 P.2d 1178.

Section allows common-law recoupment, not affirmative relief. — Where a counterclaim for personal injuries is barred at the commencement of an action, this section expressly allows the assertion of the counterclaim only to the extent that it seeks relief in the form of common-law recoupment, but it does not make allowance for affirmative relief. Hartford v. Gibbons & Reed Co., 617 F.2d 567 (10th Cir. 1980).

Defense to quiet title suit. — In suit to quiet title to land, which title was held void 15 years earlier, defendant's counterclaim that the deed was void on the basis of previous court proceedings was not barred; he was able to set up the invalidity of the deed as a defense under this section, since it was a defense, and was valid at the time the cause of action accrued. Gabaldon v. Westland Dev. Co., 485 F.2d 263 (10th Cir. 1973).

Judgment lien barred. — Defendant's right, if any, under a certain judgment lien, which was the basis of his counterclaim, became barred at the same instant of time that plaintiff's cause of action to quiet title against defendant accrued or originated, as plaintiff could not have quieted title against the judgment lien until that lien had been barred. Pugh v. Heating & Plumbing Fin. Corp., 1945-NMSC-031, 49 N.M. 234, 161 P.2d 714.

Contract claims. — To an action arising on contract, any other cause of action arising also on contract, though barred by limitations, may be interposed as a counterclaim, but no judgment for excess can be had. Great W. Oil Co. v. Bailey, 1930-NMSC-108, 35 N.M. 277, 295 P. 298.

Gambling losses. — In action to recover money lost at gambling, within one year prior to the bringing of the action, moneys won at gambling by plaintiff from defendant more than one year prior to the bringing of plaintiff's action were not within the terms of this statute, and could not be pleaded as a setoff or counterclaim. Mann v. Gordon, 1910-NMSC-059, 15 N.M. 652, 110 P. 1043.

Burden of showing avoidance. — A defendant who relies upon an avoidance of limitations upon the right to assert a counterclaim carries the burden and should procure a finding of the trial court showing the facts constituting such avoidance. Pacheco v. Fresquez, 1945-NMSC-041, 49 N.M. 373, 164 P.2d 579.

Plea of statute initial court. — Plea of the statute of limitations in answer to defendant's counterclaim and considering exception by plaintiff was sufficient to raise claim in trial court that counterclaim was barred when plaintiff's cause of action originated. Pacheco v. Fresquez, 1945-NMSC-041, 49 N.M. 373, 164 P.2d 579.

Assignment of error. — Contention that counterclaim was barred when plaintiff's cause of action originated was raised sufficiently by assignment of error which charged error in allowing defendant's counterclaim on ground that it was barred by limitations. Pacheco v. Fresquez, 1945-NMSC-041, 49 N.M. 373, 164 P.2d 579.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 51 Am. Jur. 2d Limitation of Actions §§ 78, 79.

Commencement of action as suspending running of limitation against claim which is subject to setoff, counterclaim or recoupment, 127 A.L.R. 909.

Claim barred by limitation as subject of setoff, counterclaim, recoupment or cross bill, 1 A.L.R.2d 630.

Estoppel to rely on statute of limitations, 24 A.L.R.2d 1413.

54 C.J.S. Limitations of Actions § 224.