¶1The referee found that whatever agreement the plaintiff made with the defendant at the time of the arrest was void, as the plaintiff was under the stress of great excitement. He further allowed to the defendant the sums paid out, aggregating sixty-five dollars, and directed judgment for seventy-seven dollars, the balance paid to the defendant by the plaintiff. The referee further found as a fact that the defendant rendered valuable assistance to the plaintiff in the proceeding in the Recorder’s Court, and for which he should be compensated, but as the action was in form for conversion it was improper to deduct the claim of the defendant from the moneys in his custody.
¶2According to the findings of the referee the plaintiff was to deduct the expenses incurred in connection with the arrest and examination of the plaintiff. This implied an accounting by the defendant, and the correctness of the decision of the referee that the complaint is for conversion is quite doubtful. (Greentree v. Rosenstock, 61 N. Y. 583; Segelken v. Meyer, 94 id. 473, 483 et seq.; Conaughty v. Nichols, 42 id. 83.)
¶3Conceding, however, that the complaint is in tort, still the alleged counterclaim was a proper defense, as it and the plaintiff’s cause of action originated in the same transaction. (Code Civ. Proc. § 501, subd. 1; Savage v. City of Buffalo [No. 2], 50 App. Div. 136; Carpenter v. Manhattan Life Ins. Co., 93 N. Y. 552 ; D'Auxy v. Dupre, 47 App. Div. 51 ; Eckert v. Gallien, 40 id. 525.)
¶4The transaction which is the basis of the plaintiff’s cause of action was the payment of the money to provide for his defense or discharge, and the services performed by the defendant were “ connected with the subject of the action ” (Code, § 501, subd. 1), and hence, irrespective of the form of the action, were proper to be shown “ to diminish … the plaintiff’s recovery.”
¶5While the defendant is apparently making the distressful situation from which the plaintiff was 'seeking to be extricated the pretext for an extortionate demand, yet the defendant was not a volunteer. He was not.rendering a gratuitous service for the plaintiff, but it may fairly be said that the expenses incident to the arrest and a fair recompense for defendant’s time and labor in behalf of the plaintiff were in the contemplation of the parties at the time *41the money was turned over to the defendant and to be paid therefrom. The allowance to the defendant for his services fall in the same category as the payment to Hertzberg, which is sustained by the referee. All these charges had a common origin and pertained to the proceeding in the Becorder’s Court.
¶6The amount involved is small, and we would modify the judgment, except that the only proof in the record of the value of the defendant’s services is that given by himself fixing their worth at twenty dollars a day, which is largely in excess of their real value.
¶7We, therefore, grant a new trial before another referee and reverse the judgment, with costs to the appellant to abide the event.
¶8Williams, Hiscock and Davy, JJ., concurred ; McLennan, J., dissented.
¶9Judgment reversed and a new trial ordered before another referee, with costs to the appellant to abide event.