Ajamian v. Schlanger
| Decision Date | 07 August 1953 |
| Docket Number | No. A--332,A--332 |
| Citation | 29 N.J.Super. 497,103 A.2d 3 |
| Parties | AJAMIAN v. SCHLANGER et al. . Appellate Division |
| Court | New Jersey Superior Court — Appellate Division |
Aaron Ajamian, attorney pro se.
Isadore Glauberman, Jersey City, argued the cause for defendants.
Before Judges EASTWOOD, BIGELOW and JAYNE.
BIGELOW, J.A.D.
Ajamian alleges that he was induced to buy the defendants' embroidery business by fraudulent misrepresentations. But, with full knowledge of the alleged fraud, he continued for more than six months to deal with the property as his own and to pay the monthly installments of the purchase price. Thereafter he instituted an action in which he set forth that he elected to rescind; he offered to retransfer the business to the defendants and prayed that they be decreed to return to him the purchase price. The case went to trial and judgment was rendered for the defendants at the conclusion of the plaintiff's case, on the ground that his actions constituted an election to confirm the transaction; the election was irrevocable and rendered futile his later attempt to rescind. On appeal, the judgment was affirmed by the Appellate Division, 20 N.J.Super. 246, 89 A.2d 702.
Shortly after the affirmance was announced Ajamian began the second action, the one now before us, in which he recognizes that he must abide by his first election. He demands damages arising from the fraud. The defendants moved for summary judgment on the grounds of (1) Res judicata and (2) election of remedies. The motion was denied and the defendants appeal.
Upon principles of Res judicata, the judgment in the first action conclusively established that Ajamian had elected to confirm the transaction and could not thereafter rescind, and that in his action based on the supposed rescission he had mistaken his remedy. The judgment did not establish an absence of fraud or damage or that the plaintiff could not recover in an action of deceit. Restatement, Judgments, §§ 49 and 65; Estelle v. Board of Education, 26 N.J.Super. 9, 97 A.2d 1 (App.Div.1953). I note that the judgment of dismissal included the words 'on the merits,' but these words do not change the character of the judgment or its effect on later litigation. Chirelstein v. Chirelstein, 12 N.J.Super. 468, 79 A.2d 884 (App.Div.1951).
The doctrine of election of remedies was discussed by Justice Heher in Adams v. Camden, etc., Co., 121 N.J.L. 389, 2 A.2d 361, 364 (Sup.Ct.1938). He said that The same rule was pronounced in Levy v. Massachusetts Acc. Co., 127 N.J.Eq. 49, 11 A.2d 79, 81 (E. & A.1940):
And in Schrage v. Liebstein, 16 N.J.Super. 384, 84 A.2d 750, 752 (App.Div.1951), Judge Brennan, now a member of our highest court, wrote that a 'party who fancies he has a remedy and futilely pursues it,' is not to be denied another remedy '' For cases to the same effect from other jurisdictions, see 28 C.J.S., Election of Remedies, § 12.
Simon & Diamond Coal, etc., Co. v. Belz, 107 N.J.L. 193, 151 A. 784 (E. & A.1930), seems to be contrary to the above cited cases. If so, it should be overruled.
Ajamian asserts that he has suffered damages to the amount of thousands of dollars as a result of the fraud of the defendants. No court has yet determined whether or not the charge is true. That is the salient fact before us and it should lead to an affirmance.
JAYNE, J.A.D. (concurring).
The circumstance that my learned associates have reached adverse conclusions relative to the affirmance or reversal of the judgment under review and authoritative decisions are cited in support of each determination induces me to submit a brief explanation of my concurrence in the affirmance of the judgment.
The decision of this appeal seems to me to involve in some measure a choice between a strict adherence to the so-called traditional doctrine of election of remedies and an adoption of its modern decisional modification in cases of alleged fraud practiced in contractual transactions. I have particularly in mind elections between the remedy of rescission normally grounded upon a disaffirmance of the contract and the recovery of compensatory damages for deceit upon an implicit affirmance of the agreement. The majority and dissenting opinions in U.S. v. Oregon Lumber Co., 260 U.S. 290, 43 S.Ct. 100, 67 L.Ed. 261, (1922), are illustrative.
The fact in the situation before us that the initial action was one for rescission attains significance in the consideration of the more recent adjudications.
My research has indicated to me that numerically the majority of the pertinent decisions would favor a reversal of the judgment here under review, while the rationalism of the decisions rendered in recent years recommends an affirmance. Compare, Simon & Diamond Coal & Lumber Co. v. Belz, 107 N.J.L. 193, 151 A. 784 (E. & A.1930), with the avenues of reasoning in Adams v. Camden Safe Deposit & Trust Co., 121 N.J.L. 389, 2 A.2d 361 (Sup.Ct.1938); Levy v. Massachusetts Accident Co., 127 N.J.Eq. 49, 11 A.2d 79 (E. & A.1940); Schrage v. Liebstein, 16 N.J.Super. 384, 84 A.2d 750 (App.Div.1951), certification denied 8 N.J. 431, 86 A.2d 145 (1952).
I united with Mr. Justice Brennan in the comments which, then as a judge of this Division, he made concerning the doctrine of election of remedies in his opinion in Schrage v. Liebstein, supra.
In the present case I perceive that essentially the actionable wrong for which some redress is sought is the fraud alleged to have been perpetrated by the defendants. In the former action it seems evident that it was merely determined that the plaintiff was not entitled to disaffirm the contract since by his course of conduct he had treated the contract as valid. Fraud or not was not resolved. It was the right of rescission that was considered and denied.
I am influenced by the fact that the commission of the alleged fraud was not determined on the merits in the previous action for rescission. Cf. Estelle v. Bd. of Ed., Red Bank, 26 N.J.Super. 9, 97 A.2d 1 (App.Div.1953).
I therefore vote to affirm.
EASTWOOD, S.J.A.D. (dissenting).
As the result of my consideration of this appeal, I find myself in disagreement with my esteemed colleagues.
In October 1946 plaintiff's assignor, Harry Ajamian, instituted a suit against the defendants for a rescission of the contract made between them for the purchase of defendant's embroidery business. That suit was dismissed without prejudice. Thereafter, in March, 1947, Harry Ajamian again filed suit against defendants for rescission of the contract based upon allegation of fraud. At the close of plaintiff's case and on motion of defendants the complaint was dismissed. The judgment of dismissal by this court is reported in 20 N.J.Super. 246, 89 A.2d 702 (App.Div.1952), to which reference is suggested to ascertain the facts upon which that and the present action are grounded.
Thereafter, the plaintiff filed an action for damages against the defendants based upon similar allegations of fraud as were contained in the previous actions for rescission. The defendants unsuccessfully moved for summary judgment, contending that plaintiff's action was barred by the conclusive election of remedy in instituting the action for rescission and that the ensuing judgment was Res adjudicata of the present action. Defendants were granted leave to appeal to this court from the order denying summary judgment.
Defendants contend that the trial court erroneously ruled that the prior judgment in favor of defendants in the action for rescission did not bar the plaintiff's action for damages under either the doctrine of election of remedies or Res adjudicata.
The legal term 'election' is properly applied where a person has the choice of one of two alternative and inconsistent rights or remedies. If he pursues one he necessarily surrenders the other. Any decisive action of a party, with knowledge of his rights and the facts, determines his election, in case of conflicting and inconsistent remedies.
'While it is uniformly held that prosecution of a remedy to a judgment on the merits is a conclusive choice precluding the plaintiff from thereafter maintaining an incosistent remedy, and this rule has been held applicable even though the judgment was against the plaintiff, there is considerable doubt as to whether the mere commencement of a suit, short of prosecution to judgment, is a conclusive election.' 6 A.L.R.2d, pp. 11--12, and cases cited.
Cf. Goetaski v. California Packing Corp., 19 N.J.Super. 460, 88 A.2d 685 (Law Div.1952).
A first inquiry in all cases where a litigant seeks to charge another with the consequences of having elected a remedy must be directed to the question whether at the time of the election there were two or more remedies available to him. If it is disclosed that there were available and inconsistent remedies, it must further appear that the party has actually chosen and pursued the one in exclusion of the others. The essential conditions or elements of the election of remedies are: (1) the existence of two or more remedies; (2) the inconsistency between such remedies, and (3) a choice of one of them. Levy v. Massachusetts Accident...
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Ajamian v. Schlanger
...in the rescission suit, but the motion was denied. On appeal, the Appellate Division affirmed, one judge dissenting, 29 N.J.Super. 497, 103 A.2d 3 (1953). This appeal is therefore here under former Rule 1:2--1(b), now R.R. Under the former practice, a Chancery judgment adverse to the compla......