Brick v. Cohn-Hall-Marx Co.

• Decision Date: 28 May 1940
• Citation: 283 N.Y. 99,27 N.E.2d 518
• Parties: BRICK et al. v. COHN-HALL-MARX CO.
• Court: New York Court of Appeals Court of Appeals

283 N.Y. 99

27 N.E.2d 518

BRICK et al.

v.COHN-HALL-MARX CO.

Court of Appeals of New York.

May 28, 1940.

Appeal from Supreme Court, Appellate Division, First Department.

Action by George H. Brick and others agains Cohn-Hall-Marx Company for breach of a covenant. From a judgment of the Supreme Court, Appellate Division, First Department, 257 App.Div. 254, 12 N.Y.S.2d 876, entered upon an order unanimously affirming a judgment entered upon an order of Special Term granting a motion to dismiss the complaint, the plaintiffs appeal by permission of the Appellate Division, First Department, granted in 258 App.Div. 707, 14 N.Y.S.2d 1013.

Judgment reversed, and motion denied. Norman Winer and Eugene L. Bondy, both of New York City, for appellants.

Melvin A. Albert, of New York City, for respondent.

FINCH, Judge.

This is an appeal by leave of the Appellate Division certifying that a question of law is involved which should be reviewed by this court.

Defendants move ti dismiss the complaint upon three grounds, (1) under rule 106, that upon its face it fails to state a cause of action, (2) under rule 107, that a prior adjudication had determined the same cause of action between the parties, and (3) that under section 476 of the Civil Practice Act, prior admissions by plaintiffs barred this action.

To paraphrase, in brief, the complaint in the first action (Brick v. Cohn-Hall-Marx Co., 276 N.Y. 259, 11 N.E.2d 902, 114 A.L.R. 521): it was alleged that plaintiffs and defendants entered into an agreement in writing which was annexed to the complaint, and which provided that, in order to settle patent litigation, defendant would pay to plaintiffs throughout the life of the patent so much per package for each package sold by defendant, its subsidiaries or licensees; that defendant would keep accurate books showing the number of packages used and send quarter-annually statements and royalties due; that subsequently, defendant used or licensed the use of packages exceeding 300,000 in number but paid to plaintiffs royalties on only some 67,000, thus owing plaintiffs the difference in royalties; that defendant sent statements intended to induce plaintiffs to rely thereon, and to refrain from suing, but these statements were knowingly false; that defendant kept false books to prevent detection of the falsity of the statements; that plaintiffs relied on the statements and permitted the six-year statute of limitations to run on the cause of action for breach of contract; that except for the fraud, plaintiffs would have sued; but because of the fraud, plaintiffs lost their right to sue for the breach, as the six-year statute of limitations had run; that plaintiffs subsequently discovered the fraud in February, 1936, and demanded payment of the amount due with interest. Upon appeal to this court, it was held that, in so far as the statute of limitations was concerned, the cause of action was based on simple contract and was barred by the statute of limitations applicable to simple contracts. Brick v. Cohn-Hall-Marx Co., 276 N.Y. 259, 11 N.E.2d 902, 114 A.L.R. 521.

Plaintiffs thereupon served a second complaint so as to plead that the same agreement, involved in the first action, was under seal, in that the president of defendant, in signing on behalf of defendant, adopted the seal of plaintiffs and acknowledged to a notary public that he signed and sealed the instrument by order of the board of directors of defendant. The agreement was again annexed to the complaint. Then follow allegations of the use by defendant of 300,000 packages, the rendering of accounts and payment to plaintiffs for the use of only some 67,000, thus leaving due the said amount of royalties unpaid for, with interest. In other words, this second suit is for breach of covenant. Defendant moved to dismiss this second complaint upon the grounds set forth above, and this motion was granted by the Special Term. The Appellate Division, first judicial department, unanimously affirmed the order, but granted leave to appeal to this court.

First. Little need be said to show that the present complaint states a cause of action. It has long been settled in this State, as well as in other jurisdictions, that one party to a contract may adopt the seal of the other party to the contract without independently affixing any seal whatsoever. Cammack v. J. B. Slattery & Bro., Inc., 241 N.Y. 39, 148 N.E. 781;Brooklyn Public Library v. City of New York, 222 App.Div. 422, 226 N.Y.S. 491, affirmed on other grounds, 250 N.Y. 495, 166 N.E. 179;Van Alstyne v. Van Slyck, 10 Barb. 383; American Law Institute, Restatement of the Law of Contracts, ss 98, 99; 1 Williston on Contracts, Rev.Ed., s 208. In Cammack v. J. B. Slattery & Bro., Inc. (241 N.Y. at page 45, 148 N.E. at page 782), we said: ‘The original contract recited that it was under seal, and, while only the seal of the defendant as a matter of fact was attached, it is well settled that under such circumstances the party whose seal is not attached is to be regarded as having adopted the seal which has been affixed,’ and it has been stated that ‘A corporation as well as an actual person may adopt as its seal to a document anything which is capable of being adopted as a seal by a natural person, even though the corporation have a special seal which it ordinarily uses.’ 1 Williston, op. cit. s 208.

Where the instrument recites that one party has sealed, and it is not recited that the other has sealed, external evidence of an adoption may be offered and the allegations of a complaint to that effect are sufficient against demurrer. Brooklyn Public Library v. City of New York, 222 App.Div. 422, 226 N.Y.S. 491, affirmed, 250 N.Y. 495, 166 N.E. 179; 1 Williston, op. cit. s 208.

Second. A more difficult question is whether the decision of this court in the previous case (Brick v. Cohn-Hall-Marx Co., supra) between the same parties may be set up as a bar to the present action. By section 482 of the Civil Practice Act, where a final judgment dismisses the complaint before the close of the plaintiff's evidence, a new action is not prevented for the same cause unless the prior judgment expressly declares that it is rendered upon the merits.

No question of a judgment on the merits arises in the case at bar, as the complaint heretofore has been dismissed upon motion before trial on the ground that plaintiff had declared upon a simple contract, as to which he admitted the six-year statute was...