[640] it shall be lawful for such defendant to plead though it is true, as a general rule, that un- This statute, in its very terms, embraces all matters of contract, and no matter of tort; and so it has always been construed. A breach of warranty is a breach of a contract, and may be sued on as such; and for that reason, and that only, has been allowed to be given in evidence by the defendant, under the statute, not only in an action on the same contract (in which it might be admissible by way of recoupment only, without the aid of the statute), but even in an action upon a distinct contract. Steigleman v. Jeffries, i Serg. & R. 477; Nicklev. Baldwin, 4 Watts & S. 290; Phillips v.Lawrence, 6 Watts & S. 150; Carman v. Franklin Ins. Co. 6 Watts & S. 155; Ellmaker v. Franklin Ins. Co. 6 Watts & S. 439; Hunt v. Gilmore, 59 Pa. 450; Seinworth v. Leffel, 76 Pa. 476; Halfpenny v. Bell, 82 Pa. 128. But from the earliest to the latest times, damages for a mere tort is not within the stat The distinction between the right of equitable [642) defense or recoupment, independent of any statute, which may arise even out of a tortious act of the plaintiff, immediately connected with the contract sued on, and by which the defendant In matters of contract, the defendant's right can do no more than defeat the plaintiff's claim, of set-off, with the additional right to recover in whole or in part, and the right of counterjudgment against the plaintiff for any sum ciaim under this statute, which can be based onproved in excess of his claim, is given and reg-ly on contract, and by which the defendant may ulated by a statute which has been in force in not only defeat the plaintiff's action, but rePennsylvania since 1705, and is there common-cover an affirmative judgment against him, has ly known as the Defalcation Act, by which been clearly brought out in the judgments of "If two or more dealing together be indebted Chief Justice Tilghman. to each other upon bonds, bills, bargains, promises, accounts, or the like, and one of them commence an action in any court of this Province, if the defendant cannot gainsay the deed, bargain or assumption upon which he is sued, In assumpsit to recover for services as a housekeeper, the defendant pleaded nonassumpsit, and payment, with leave to give the special matters in evidence; and offered to prove that the plaintiff, while in his service, clandes might be too late afterwards. And certainly tinely took and sent away goods of his from the | taken from the pocket of the defendants. It The result of the Pennsylvania decisions may be summed up thus: First. Independently of the statute, any matter, either of contract or of tort, immediately connected with the plaintiff's cause of action (which would seem to include everything that could be set up by way of recoupment, under the law as generally understood ard administered in the American courts), may be set up by way of defense to the action and in abatement of the plaintiff's damages only. Second. Any matter of contract may be set up by way of counterclaim, under the statute, not only to defeat the plaintiff's action, in whole or in part, but also, if the defendant proves that the plaintiff owes him more than he owes the plaintiff, for the purpose of recov ering the excess against the plaintiff. Third. No mere matter of tort can be availed of by the defendant under the statute. The defendants in the present case pleaded So in assumpsit for goods sold and delivered, it was held that the defendant could not give in evidence, by way of set-off, that the goods had been detained by the plaintiff and conveyed by him to third persons; and the same eminent judge said: "Without undertaking, at present, to draw the line which limits the right of de-"payment, with leave, etc.," and the special falcation, it may be safely affirmed that defalcation is not permitted by reason of any demand against the plaintiff for an act done by him of a tortious nature." "But there are cases in [643] which the defendant is permitted to give evidence of acts of nonfeasance or misfeasance by the plaintiff, where these acts are inmediately connected with the plaintiff's cause of action; although perhaps such evidence is not so properly a defalcation, as a defeating, in whole or in part, the plaintiff's action." Gogel v. Jacoby, 5 Serg. & R. 117, 122. Again; in debt against principal and surety on a bond given for the purchase money of a mill sold by the plaintiff to the principal defendant, the defendants proved that at the time of the sale the grantee supposed the dam was at its lawful height; whereas, it was in fact, as the plaintiff knew, so high as to overflow and injure the land and mill of a neighbor without his consent; and that if the grantee should lower his dam to its lawful height, the value of his mill would be greatly reduced; and then offered to show how much the value of his mill would be diminished by so lowering the dam. It was held that the evidence, though going to prove unliquidated damages, was admissible, for reasons thus stated by Chief Justice Tilgh man: "It is very true that these damages were not in the nature of a debt, which can be set off. But they were not offered as a set-off. It was an equitable defense, showing that the plaintiff ought not to be permitted to recover the whole purchase money; and if not, then it was necessary to show what would be a reasonable abatement. Such defenses have always been admitted in our courts. Having no court of chancery, we could not get along without them. To permit the plaintiff to recover the whole purchase money, and leave the defendants to their remedy by an action for fraudulent concealment, would be most unjust. The purchase money and damages arise out of the same transaction; and the proper time for inquiry was before the money was matter stated in the affidavits of defense pre- The special matter stated in the affidavits of [644] [6451 ruption and injury to the defendants' business | his knowledge and belief they were clean and thereby occasioned, and the money paid by the free from infection, and there was no sulphur, defendants to those disabled by the disease, carbolic acid or other disinfectant in the bales, they were put to loss and expense far exceed- and that he never used disinfectants in his esing the amount of the plaintiff's bill; that the tablishment. In contradiction of this testiplaintiff shipped the rags, knowing them to be mony, the defendants produced a letter sent to infected, and intending to deceive, cheat and them by him with the first invoice of rags, defraud the defendants; and that the defend- showing that he did not then have all the rest ants, as soon as they discovered the infection, on hand; and introduced the testimony of three informed the plaintiff of the fact, and held those work women in the mill, that the rags, when which had not been consumed subject to his opened, smelt strongly of sulphur and carbolic [647] order, until their foreman by mistake used them acid. up. The affidavits concluded by submitting that the defendants ought not to pay the prices charged, but such amount only as the rags were reasonably worth, if anything; and by asking for a certificate for the amount of their damages in excess of what the plaintiff might be entitled to. In short, the matter stated in the affidavits of defense was a sale of rags, upon a warranty or a fraudulent representation that they were clean and free from infection, and a delivery by the plaintiff, under that contract of sale, of rags infected with the smallpox, causing the breaking out of the disease in the defendants' mill, and consequent injuries to their workmen and their business. The plaintiff, by counter affidavit of claim, met all the issues so notified to him by the defendants' plea and affidavits. At the trial, the defendants, as appears by the answer of their counsel to an inquiry of the court after the arguments to the jury, and by [646] the statement thereupon made by the court in its charge, did not deny the sale and delivery of the rags at the prices sued for; but relied on their counterclaim for damages on the cause of action growing out of the infected condition of the rags, both by way of a full defense to the plaintiff's action, and also as a ground for obtaining a certificate and judgment for the damages sustained by them in excess of his claim. The defendants offered evidence tending to show that the contract was for clean rags, that the rags delivered were filthy and infected with the smallpox, and that their infected condition caused the breaking out of the disease in the defendants' mill. This was of itself sufficient evidence to be submitted to the jury of a warranty and a breach of it. A warranty, express or implied, that rags sold are fit to be manufactured into paper, is broken, not only if they will not make good paper, but equally if they cannot be made into paper at all, without killing or sickening those employed in the manufacture. Upon the question whether the plaintiff, when he shipped the rags, knew them to be infected with the smallpox, and fraudulently represented to the defendants that they were clean and free from infection, the evidence was as follows: The plaintiff, having been called as a witness in his own behalf, admitted on cross examination that the rags were collected by him in Pittsburgh and Allegheny City and the country round about, where he knew that the smallpox was then epidemic, and that he bought rags from any and all dealers, not knowing where they were collected; and further testified that the rags were assorted and baled up under his instructions in his establishment, and had been baled up and lain in his warehouse for a year or more before that to the best of This evidence, taken in connection with that already mentioned, was in our opinion sufficient to be submitted to the jury, as tending to prove that the plaintiff knew that the rags which he sold and shipped as clean rags, fit to be used in the manufacture of paper, were in fact infected with the smallpox, and that he fraudulently represented them to be clean, intending to deceive and defraud the defendants. Upon the question of damages, there was distinct proof, not only of the rags being so infected with the smallpox that they could not be made into paper without injury to the workmen, but also of sums paid by the defendants to support those workmen who had been disabled by the disease; besides evidence that the defendants, in consequence of the injury to their business by the smallpox introduced in the rags, were obliged to run their mill shorthanded, and lost a considerable part of a profitable country trade. This evidence was compctent for the consideration of the jury; and the want of more full and definite proof of the amount of damages, resulting to the defendants from the unfitness of the rags to be manufactured into paper, while it might lessen the sum which the jury could find in the defendants' favor, did not justify the court in withdrawing the defendants' claim from the jury. In the rulings excluding evidence offered by the defendants in the course of the trial, there was no error. The court might properly decline to permit one of the defendants to testify in general terms what he estimated the amount of their damages to be, when he had not testified to the items of damages, or to any facts upon which his opinion was based. The testimony of workmen, not shown to be experts, that the infected rags were the cause of smallpox, which they or their children had taken, was clearly incompetent. But for the reasons above stated, we are of opinion that the court erred in instructing the jury that the evidence admitted would not justify them in finding that the plaintiff knowingly and fraudulently shipped to the defendants rags infected with the smallpox; as well as in instructing them that there was no evidence which would enable the jury to estimate the amount of damage, if any, which the defendants had sustained; and in directing the jury to return a verdict for the plaintiff for the whole [648] amount of his claim. The defendants' exceptions to these instructions must therefore be sustained, and a new trial had. For the guidance of the parties and their counsel, it may be well to restate exactly what will be open to the defendants upon another trial. By way of recoupment or equitable defense, which is limited to defeating the plaintiff's ac [775] tion, in whole or in part, the defendants may avail themselves of any evidence tending to show that by reason, either of a breach of warranty, or of a fraudulent representation, the goods were worth less than they would have been if they had been such as they were warranted or represented to be; as well as of any evidence tending to show that the defendants suffered damages which, in the contemplation of the parties, or according to the natural or usual course of things, were the consequences of the breach of warranty, or the fraudulent representation. But under their counterclaim, seeking, as permitted by the Statute of Pennsylvania, not only to defeat the plaintiff's action, but also tc recover an affirmative judgment against him, they can avail themselves only of a claim sounding in contract, in the nature of an action of assumpsit upon the supposed warranty. If they fail to prove a warranty, express or implied, the statute can have no application; because it extends to no claim sounding in tort only, whether in the nature of an action of deceit, or of such an action as these defendants might maintain against a person, with whom they never had any contract, who wilfully or negligently introduced the smallpox into their mill. Judgment reversed, and case remanded to the Circuit Court, with directions to set aside the verdict and to order a new trial. True copy. Test: James H. McKenney, Clerk Sup. Court, U. 8. KATE W. GOODWIN ET AL., Appts., 0. ELEANOR FOX ET AL. (See S. C. Reporter's ed. 775-778.) Practice-approval of appeal bond, equivalent to citation-whether cause was docketed in timeorders as renewals of allowance of appeal. On motion to dismiss an appeal for want of a citation and for failure to docket the cause in time it is held: that an indorsement on the bond by counsel for appellees approving it "as to form and surety" was the equivalent of a citation; and that the cause was docketed in time; various orders entered by stipulation extending the time for filing the appeal bond and certificate of evidence being equivalent to an order at the date of each respectively, renewing the allowance of the appeal in open court in the presence of the parties. [No. 759.] Submitted March, 14, 1887. Decided March 21, 1887. Yeaton v. Lenox, 32 U. S. 7 Pet. 220 (8: 664), Ex parte Crenshaw, 40 U. S. 15 Pet._119; (10: 682); Villabolos v. U. S. 47 U. S. 6 How. 90 (12: 356); Alviso v. U. S. 72 U. S. 5 Wall. 824 (18. 492); Garrison v. Cass Co. Id. 823 (18: 492); Vansant v. Gas Light Co. 99 U. S. 213 (25:265); Haskins v. St. L. & S. E. R. Co. 109 U. S. 106 (27-873). In Hewitt v. Filbert, 116 U. S. 144 (29:582), this court reviewed the cases on this subject, and reiterated that a citation is one of the necessary elements of an appeal taken after the term, and if it is not issued and served before the end of the term to which it must be made returnable, the appeal becomes inoperative, and that without a citation or its waiver this court cannot take jurisdiction. An appeal must be dismissed if the transcript has not been filed at the term next succeeding the one at which the appeal is allowed. U. S. v. Pacheco, 61 U. S. 20 How. 261 (15:820), Castro v. U. S. 70 U. S. 3 Wall. 46 (18:163); Villabolos v. U. S. 47 U. S: 6 How. 81 (12:352); The Virginia v. West, 60 U. S. 19 How. 182 (15:594); Grigsby v. Purcell, 99 U. 8. 505 (25:354); The Lucy, 75 U. S. 8 Wall. 307 (19:394); The Tornado, 109 U. S. 110 (27:874); Caillot v. Deetken, 113 U. S. 215 (28:983); Mesa v. U. S. 67 U. S. 2 Black, 721 (17:350); Killian v. Clark, 111 U. S. 784 (28:599). Messrs. Charles H. Wood and John N Jewett, solicitors for appellants, contra. Mr. Chief Justice Waite delivered the opinion of the court: The facts on which this motion rests are these: On the 17th of February 1877, Kate W. Fox filed a bill in equity against I. Willard Fox and Eleanor Fox to enforce a lien on certain property held by her through a deed from them, absolute on its face as security for a debt. Pending the suit she was married to Charles S. Goodwin, and Sarah E. R. Smith, wife of Charles M. Smith, in some way acquired title to a part of the mortgaged property. To the original bill some amendments were made, and answers were filed. On the 8th of December, I. Willard Fox and Eleanor Fox filed a cross bill against Kate W. Goodwin, Charles S. Goodwin, Sarah E. R. Smith, and Charles M. Smith. To this cross bill answers were filed, and on the issues made in the suit there was a final hearing, which resulted in a decree July 29, 1884, fixing the amount of debt due and allowing a redemption on terms specified in the decree. The record then shows that on the 6th of August, 1884, the "complainant came into court and prayed an appeal, which was "allowed APPEAL from the Circuit Court of the United on her filing a bond in the penal sum of one States for the Northern District of Illinois. On motion to dismiss. Denied. The history and facts of the case sufficiently appear in the opinion of the court. Mr. W. C. Goudy, for appellees, in support of motion: No notice was given of the application for an appeal, nor that it had been taken by the filing of a bond. This action was not taken at the same term at which the main decree was entered; no citation was signed by the judge, and, of course, none was served. Upon such a state of facts the appeal must be dismissed. thousand dollars within sixty days from this date, with surety to be approved by the court." and the time for filing certificate of evidence was extended to October 1. On the 29th of August, I. Willard Fox died testate, leaving Eleanor Fox, his widow, and Isaac B. Fox, Flora F. Clark, Truman G. Fox, Emily F. Beckley, Eleanor J. Fox, and Gertrude R. Fox, his heirs at law, all of whom were legatees and devisees under his will. On the 29th of September an amendment of some kind was made to the decree, and on the 6th of October an order was entered in accord [776] ance with a stipulation that day filed, extending | proved by the court at the same term no citation James H. McKenney, Clerk, Sup. Court, U.S. On the 12th of January, 1885, the death of 1. Willard Fox was suggested on the record, and his heirs made parties in his stead. The defendants were thereupon required to convey the property in accordance with the decree. On the 26th of January, the master reported the execution of the deeds and they were confirmed. On the 31st of January, the time for filing certificate of evidence and bond was extended until March 1; afterwards, February 28, by stipulation, until March 20; then March 19, also by stipulation, for thirty days; and finally, by stipulation, the time for filing the certificate [777] of evidence was extended until May 1. On the first of May the certificate of evidence was signed and filed. On the 20th of June, 1885, an appeal bond in the penal sum of $1,000, executed by Kate W. Goodwin, Charles S. Goodwin, Sarah E. R. Smith, and Charles M. Smith, with J. Bradner Smith as surety, to Eleanor Fox and the above named heirs and representatives of I. Willard Fox, was duly approved by the district judge, and filed with the clerk. The bond, when it was approved, had on it this indorsement: "This bond, as to form and sure-national banks cannot remove suits to which they ty is satisfactory. W. C. Goudy." Mr. Goudy The appeal was docketed in this court Octo- [778] LEATHER MANUFACTURERS' NATION. [778] V. WILLIAM B. COOPER, JR. (See S. C. Reporter's ed. 778-784.) Removal of causes-right of national banks to 1. Under section 4 of the Act of July 12, 1882, 2. A case is not removable because a colorable assignment has been made to give a state court exclusive jurisdiction. 3. A case does not arise under the laws of the United States simply because a federal court has Submitted March 7, 1887. Decided March 21, 1887. The grounds of the motion to dismiss are, In our opinion, the entries on the stipulation of the parties of the various orders extending the time for filing the appeal bond and certificate of evidence, were equivalent to an order at the date of each respectively, renewing the allowance of the appeal in open court in the presence of both parties. They were evidently made to keep alive the original allowance, but to give it effect as of the new date, and this because the record in its then condition was incomplete and not ready for filing in this court. Under these circumstances, the docketing of the cause here at October Term, 1885, was in time. The appeal was not actually taken until the entry of the last extension of time for filing a bond and certificate of evidence. This was March 19, 1885, too late to make it returnable at October Term, 1884. Had the appeal bond been taken and ap States for the Southern District of New York. Review of an order of the circuit court remanding the cause to the state court from which it had been removed. Affirmed. The history and facts of the case appear in Messrs. Noel B. Sanborn and Charles Cases arising under the laws of the United Tennessee v. Davis, 100 U. S. 257, 264 (25: 648, 650); R. R. Co. v. Mississippi, 102 U. S. 141 (26: 98); Starin v. N. Y. 115 U. S. 248, 257 (29: 388, 890). And this rule includes within its operation all cases where the due or operative effect of a |