Bolte v. Aits, Inc., 5967

• Decision Date: 08 December 1978
• Docket Number: No. 5967,5967
• Citation: 60 Haw. 58,587 P.2d 810
• Parties: James A. BOLTE, Plaintiff-Appellant, v. AITS, INC., a corporation, Defendant-Appellee, and THI Hawaii, Inc., a corporation, Defendant.
• Court: Hawaii Supreme Court

Page 810

587 P.2d 810

60 Haw. 58

James A. BOLTE, Plaintiff-Appellant, v. AITS, INC., a corporation, Defendant-Appellee, and THI Hawaii, Inc., a corporation, Defendant.

No. 5967.

Supreme Court of Hawai'i.

Dec. 8, 1978.

Rehearing Denied Dec. 29, 1978.

Syllabus by the Court

1. The rule against splitting a cause of action is an aspect of Res judicata and precludes the splitting of a single cause of action or an entire claim either as to the theory of recovery or the specific relief demanded.

2. With respect to continuing contracts, the rule against splitting a cause of action will not prevent the bringing of successive suits based on successive breaches of the same continuing contract where the contract is not terminated by a single breach and each suit is brought after the subject breach but before a subsequent breach.

3. If at the time an action is commenced for a specific breach of a separable and divisible contract there exists other prior breaches of that contract which are not so independent of each other as to constitute separate and distinct causes of action, they are all parts of one, indivisible demand and must be included in the action or be barred.

4. A recovery in a prior lawsuit will not bar claims of which the plaintiff was ignorant, even if those claims existed at the time suit was commenced in the former recovery and could have been joined, unless plaintiff's ignorance was due to his own negligence. The rule is also applicable if plaintiff's ignorance was due to the fault or fraud of an adverse party.

5. In a motion for summary judgment, the movant is asserting that there is no genuine issue of material fact to be resolved by the factfinder and that the movant is entitled to judgment on the merits as a matter of law.

6. In deciding whether to grant a motion for summary judgment, the court must view the record in the light most favorable to the respondent.

7. On appeal, this court will reverse the granting of a motion for summary judgment by the trial court if there are disputed issues of material fact.

Robert A. Franklin, Honolulu, for plaintiff-appellant.

Edward A. Jaffe and Richard J. Kowen, Cades, Schutte, Fleming & Wright, Honolulu, for defendant-appellee.

Before RICHARDSON, C. J., and KOBAYASHI, OGATA, MENOR and KIDWELL, JJ.

RICHARDSON, Chief Justice.

Plaintiff, Bolte, appeals from the judgment of the circuit court granting defendant AITS, Inc.'s motion for summary judgment and attorney's fees.

We reverse.

Plaintiff and defendant entered into an agreement whereby plaintiff was to receive from defendant a commission of 20% Of the cost of the premiums of all insurance placed on a certain hotel. Defendant failed to pay plaintiff his first commission of $1458 and plaintiff filed his first action against defendant in the district court on July 2, 1971. After a judgment for defendant, plaintiff filed an appeal to the circuit court on December 30, 1971. A trial De novo took place in the circuit court on October 4, 1972, and resulted in a judgment for plaintiff.

On June 14, 1974, plaintiff filed a second action in the circuit court against defendant based on a second breach of the same insurance commission agreement at issue in the first action. Plaintiff alleged that defendant failed to pay plaintiff his $14,357 commission on subsequent insurance placed on the hotel.

There is conflicting evidence as to when plaintiff became aware of defendant's second breach. Plaintiff contends that he had no actual knowledge of the second breach until after June 23, 1973. Defendant argues that plaintiff had constructive knowledge of the second breach no later than September 30, 1971, and actual knowledge no later than September 30, 1972. There is no evidence, however, as to exactly when this second breach occurred.

The circuit court granted defendant's motion for attorney's fees and summary judgment holding that plaintiff's second cause of action based on a second breach of the same contract at issue in the first action was barred by the doctrine of Res judicata.

This appeal presents the sole issue of whether it was error for the circuit court to invoke the doctrine of Res judicata to bar plaintiff's second action. We believe that it was error.

The rule against splitting a cause of action is an aspect of Res judicata and precludes the splitting of a single cause of action or an entire claim either as to the theory of recovery or the specific relief demanded. The rationale for the rule is to prevent a multiplicity of suits and provide a limit to litigation. It exists to avoid harassment of the defendant, vexatious litigation, and the costs incident to successive suits on the same cause of action. See generally 1 C.J.S. Actions § 102(b), (c).

With respect to continuing contracts, however, the rule against splitting a cause of action will not prevent the bringing of successive suits based on successive breaches of the same continuing contract where the contract is not terminated by a single breach and each suit is brought after the subject breach but before a subsequent breach. Id. at § 103(b). See also Eastland County v. Davisson, 13 S.W.2d 673 (Tex.1929). But, if at the time an action is commenced for a specific breach of a separable and divisible contract there exists other prior breaches of that contract which are not so independent of each other as to constitute separate and distinct causes of action, they are all parts of one, indivisible demand and must be included in the action or be barred. In re Carlin's Estate, 212 Md. 526, 129 A.2d 827 (1957); Kruce v. Lakeside Biscuit Co., 198 Mich. 736, 165 N.W. 609 (1917); Fidelity and Deposit Co. of Md. v. Brown, 65 S.W.2d 1064 (1933); Maloney v. McMillan Book Company, 52 Misc.2d 1006, 277 N.Y.S.2d 499 (1967); Advance Lamp Shade Corp. v. Bloom, et al., 211 N.Y.S. 568, 125 Misc. 829 (1925); Eastland County v. Davisson, supra. See also Okamura v. Advincula, 26 Haw. 633 (1922).

Thus, for example, in Adams v. International Supply Co., 61 W.Va. 401, 56 S.E. 607 (1907), plaintiff contracted with defendant to dress and reload on cars lumber sent to plaintiff by defendant. Plaintiff initially brought suit against defendant on July 21, 1905, based on defendant's breach of the contract in failing to pay plaintiff for work previously performed. On July 28, 1905, plaintiff brought a second suit against defendant based on the same contract. Again, this action was based on defendant's failure to pay plaintiff for his services in dressing and reloading defendant's lumber. The court dismissed defendant's plea of Res judicata and determined that plaintiff's first action did not bar his second action. The court reasoned that plaintiff could bring a second suit based on a second breach of the contract notwithstanding the fact that plaintiff had brought a prior suit based on a prior breach of the same contract since the second breach occurred after commencement of the first action. The first suit was for payment due for lumber dressed and reloaded by plaintiff prior to the first suit. The second action was for payment due for lumber dressed and reloaded by plaintiff after the filing of the first suit. Plaintiff was "not splitting one demand into pieces and suing on each, because it was not all due at date of the first suit." Id., 56 S.E. at 608.

On the other hand, in Maloney v. McMillan Book Company, supra, plaintiffs leased certain premises to defendant. Defendant was to pay the plaintiffs the rent on the premises on the first of each and every month. Defendant failed to pay rent for the months of September, October, November and December, 1964. On December 23, 1964, plaintiffs filed suit against defendant for rent allegedly due for the month of September, 1964 only. A default judgment was entered in favor of plaintiffs and against defendant. Thereafter, on April 29, 1965, plaintiffs instituted a second action to recover, Inter alia, for the rent allegedly due for the months of October, November and December of 1964. The court held that plaintiffs' second action for rent which was already due prior to the filing of their first action for rent for the same premises and pursuant to the same rental agreement was barred by Res judicata.

(W)here several sums or installments are due upon a single contract, they Must be united in one action, and if several suits are brought upon such an installment contract for separate installments after all are due, recovery upon one will be a bar as to the others. Lorillard v. Clyde, 122 N.Y. 41, 25 N.E. 292, 42 A.L.R. 128; Kennedy v. City of New York, 196 N.Y. 19, 89 N.E. 360. The reason for the rule lies in the necessity of preventing vexatious and oppressive litigation and implicit in this rule is an assumption that a plaintiff who has split his cause of action has acted inequitably, knowing that he was causing unnecessary vexation to the defendant or at least careless as to whether or not he was causing such vexation. Gedney v. Gedney, 160 N.Y. 471, 55 N.E. 1; White v. Adler, 289 N.Y. 34, 43 N.E.2d 798, 142 A.L.R. 898. (Emphasis in original.)

Id., 277 N.Y.S.2d at 502.

While the timing of the filing of each successive action in relation to each successive breach is crucial in determining whether a prior action will bar a subsequent action by Res judicata, it is not the sole inquiry. Implicit in resolving the issue of Res judicata when two or more breaches of the same contract have occurred prior to the filing of the first action based only upon one of the breaches is the consideration of whether the plaintiff knew or had reason to know of the other prior breaches. We adhere to the rule adopted by the majority of jurisdictions that have dealt with the problem that a former recovery...