Allen B. Du Mont Laboratories, Inc. v. Marcalus Mfg. Co.

• Decision Date: 30 June 1959
• Docket Number: No. A--119,A--119
• Citation: Allen B. Du Mont Laboratories, Inc. v. Marcalus Mfg. Co., 152 A.2d 841, 30 N.J. 290 (N.J. 1959)
• Parties: ALLEN B. DU MONT LABORATORIES, INC., a Delaware corporation, Plaintiff, v. MARCALUS MANUFACTURING CO., Inc., a New Jersey corporation, Defendant-Respondent, and Franklin G. Floete, Administrator of General Services, ordered added as a party defendant as transferee of the Reconstruction Finance Corporation, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 290

30 N.J. 290

152 A.2d 841

ALLEN B. DU MONT LABORATORIES, INC., a Delaware corporation, Plaintiff, v.MARCALUS MANUFACTURING CO., Inc., a New Jersey corporationDefendant-Respondent and Franklin G. Floete, Administrator of General Servicesordered added as a party defendant as transferee of the Reconstruction Finance Corporation, Defendant-Appellant.

No. A--119.

Supreme Court of New Jersey.

Argued May 18, 1959.

Decided June 30, 1959.

Harold S. Harrison, of the California Bar, Washington, D.C., for defendant-appellant(Perry W. Morton, Asst. Atty. Gen., Chester A. Weidenburner, U.S. Atty., Newark, Roger P. Marquis and Harold S. Harrison, Attys., Dept. of Justice, Washington, D.C., attorneys).

James A. Hession, Jersey City, for defendant-respondent(O'Mara, Schumann, Davis & Lynch, Jersey City, attorneys; Frederic W. Schumann and James A. Hession, Jersey City, of counsel).

James R. E. Ozias, Newark, for plaintiff as amicus curiae(McCarter & English, Newark, attorneys; James R. E. Ozias, Newark, of counsel).

The opinion of the court was delivered by

WEINTRAUB, C.J.

Defendant, Marcalus Manufacturing Co., Inc., filed a counterclaim in which it included as a partydefendant the Reconstruction Finance Corporation(hereafter R.F.C.), a wholly-owned corporation of the United States.Upon the thesis that the counterclaim was In rem or Quasi in rem, process was served upon R.F.C. outside this State by mail pursuant to court order.R.F.C. moved to quash the service.Pending disposition of the motion, R.F.C. was dissolved, whereupon a motion to abate the action against it was made.Marcalus responded with a motion to substituteFranklin G. Floete, Administrator of General Services, an executive agency of the United States, as the alleged statutory transferee of the pertinent function of R.F.C.The Chancery Division denied the motion to quash the service and ordered the substitution of the Administrator.The Appellate Division granted the Administrator leave to appeal from the orders, and we certified the matter on our motion before the Appellate Division considered it.

The Administrator contends the counterclaim is a suit against the United States to which it has not consented.He further urges the claim is necessarily In personam since Marcalus seeks to reform a contract and deed between it and R.F.C., and hence there may not be constructive service of process.As we see the case, there is no need to consider the delicate question of the authority of our courts to summon the federal agency.We reach this result because, for reasons hereafter stated, we find no interest of the Government in whatever Res may be deemed to be the subject of the action, nor any need for jurisdiction over the Government or its representative in connection with the claim for reformation.This being so, the sole consequence of a judgment against R.F.C. and the Administrator in the present case would be to bind them with respect to possible subsequent litigation In personam, and they may not be brought in by substituted service to that end.

Marcalus also contends that, if substituted service was improper, yet R.F.C. should be deemed to have appeared generally by reason of a stipulation between counsel extending its time to 'answer or otherwise proceed herein * * *' For reasons to be stated, there was no waiver of the objection to jurisdiction.

I.

R.F.C. owned a tract of land in the Borough of East Paterson.It conveyed to Marcalus the portion lying north of Market Street, reserving by its contract of sale and deed an easement for the benefit of the portion of the tract south of that street.Subsequently R.F.C. conveyed the southerly portion and its interest in the easement to plaintiff, Allen B. Du Mont Laboratories, Inc.Du Mont, as transferee of R.F.C., sues Marcalus to enforce the following provision in the contract of sale and deed between R.F.C. and Marcalus:

'The rights and easements herein required will expire on the 15th day of December, 1952, unless exercised by the Seller, its successors or assigns, on or before the 15th day of December, 1952.If exercised by the Seller, its successors or assigns, the Seller, its successors or assigns shall be required to pay to the Purchaser herein the sum of One Hundred Twenty Thousand Dollars ($120,000.00), such payment to apply to the cost of the following installation:

'a.A spur track, to grade, to extend along the above stated easement.

'b.A switch-back to be constructed from a point on the above stated spur track, such point to be on the southerly side of Market Street, and extend across Market Street to the westerly side of BuildingNo. 41.

'c.Construction of a high-level siding along the easterly side of BuildingNo. 41 to serve that building exclusively.'

Du Mont seeks to compel Marcalus to construct the facilities described in the quotation above.Marcalus insists Du Mont must install at its own cost the spur track referred to in 'a', and that Marcalus is obligated to provide only items 'b' and 'c', toward the cost of which it is to receive the stipulated sum of $120,000.Marcalus counterclaimed to reform its contract with and the deed from R.F.C. to conform to its stated version of the agreement.The theme is mutual mistake.For that purpose, Marcalus joined R.F.C. with Du Mont as defendant.

The counterclaim additionally seeks to quiet title against the 'cloud' of the easement, apparently on the ground that Du Mont allegedly failed to exercise its rights within the stipulated time and allegedly failed to seek certain alternative routes for trackage, an effort which R.F.C. and its successor were required by the Marcalus instruments to make before asserting any right to the easement.Marcalus also joined R.F.C. as a defendant in the counts which thus seek to quiet title.

II.

An action In rem or Quasi in rem may proceed upon constructive service only to the end of determining interests in the Res.Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565(1878);R.R. 4:4--5;Wilentz v. Edwards, 134 N.J.Eq. 522, 36 A.2d 423(E. & A.1944);McVoy v. Baumann, 93 N.J.Eq. 638, 117 A. 725(E. & A.1922);Leek v. Wieand, 7 N.J.Super. 501, 71 A.2d 911(Ch.Div.1950).In personam relief may not be founded upon process served outside the jurisdiction.Marcalus disclaims any purpose to obtain a judgment binding R.F.C.In personam.It contends its counterclaim to reform the terms of the easement is a proceeding In rem or Quasi in rem for the reason that the easement is an interest in land.There is no dispute, however, with respect to the location or extent of the easement as such; rather, the controversy is over responsibility for the cost of the improvements to be erected upon or in connection with the easement.Thus viewed, the suit seems indistinguishable for the purposes of this appeal from any other action In personam to enforce contractual obligations.But if it be assumed that an interest in land is thereby implicated on the theory that the monetary obligations are integral parts of the easement, we fail to find any right of R.F.C. in that Res.R.F.C. was the common grantor of Marcalus and Du Mont.It parted completely with its interests in the lands, the easement, and the mentioned contractual provisions.It had no remaining right in the Res which could be disturbed or affected by a judgment in this cause.

At the oral argument Marcalus explained that it joined R.F.C. merely to avoid a possible contention that R.F.C. is an indispensable party.Indeed, both the Administrator and Du Mont do insist that relief cannot be awarded Marcalus in the absence of the Government.If that were true, a nice question could arise as to whether that circumstance would warrant constructive service upon R.F.C. in aid of a proceeding In rem or Quasi in rem notwithstanding the lack of an existing property interest in the subject matter.But we see no substance in the proposition that the presence of R.F.C. or the Administrator is essential to a disposition of the counterclaim.

There seem to be two facets to the position of the Administrator and Du Mont: (1) a judgment for reformation in this case may lead to another action In personam against the Government; and (2) reformation necessarily requires the presence of the original parties to the instrument because otherwise there is no way to litigate a claim that the mistake was 'mutual.'

As to the first, the Administrator's brief reads:

'Because of this interrelationship any purported reformation may be reflected in contract claims asserted against the United States or its agencies in terms of failure of consideration, breach of contract or warranty or in some other form.'

Marcalus concedes, as indeed it must, that it could not bring in R.F.C. for the purpose of obtaining a judgment which would bind it In personam.The aftermath to which the Administrator alludes can only be a possible claim over by Du Mont if it should fail in its defense of the counterclaim.But if a judgment here should conclude the United States in such other proceeding against it, it would not be by virtue of any pretense that the judgment directly binds one who is not a party.Rather that consequence will ensue, if at all, by reason of some collateral obligation of the government to indemnify Du Mont.If that obligation does exist, it lies with the Government to decide whether to intervene as a party or to undertake to defend the counterclaim in discharge of that obligation.That a claim against the United States may be precipitated by the result in this case no more makes it an indispensable party than does the existence of an automobile liability policy operate to require the joinder of the carrier in a suit against its insured.

Whether a party is indispensable depends upon the circumstances of the particular case.As a general proposition, it seems accurate to say that a party is not truly indispensable unless he has an interest inevitably involved in the subject...