Dolgin Eldert Corp., In re

• Decision Date: 08 June 1972
• Citation: 286 N.E.2d 228,334 N.Y.S.2d 833,31 N.Y.2d 1
• Parties: , 286 N.E.2d 228 In the Matter of DOLGIN ELDERT CORPORATION. In the Matter of KALMON DOLGIN REALTIES, INC. Israel M. DOLGIN et al., Respondents, v. Jordan H. DOLGIN et al., Appellants
• Court: New York Court of Appeals Court of Appeals

Page 833

334 N.Y.S.2d 833

31 N.Y.2d 1, 286 N.E.2d 228

In the Matter of DOLGIN ELDERT CORPORATION.

In the Matter of KALMON DOLGIN REALTIES, INC.

Israel M. DOLGIN et al., Respondents, v. Jordan H. DOLGIN et al., Appellants.

Court of Appeals of New York

June 8, 1972.

Howard Breindel and Jan D. Atlas, New York City, for appellants individually.

Arthur W. Jaspan, for appellants as executors.

Jeremiah B. Bloom, Harold Epstein and Warren B. Pesetsky, New York City, for respondents.

BREITEL, Judge.

The issue is whether an unrecorded, unmemorialized, disputed oral agreement to settle an action and proceedings covering a large number of valuable real properties is enforceable. Except for the fact that the agreement was purportedly made in an informal conference before a court clerk and a Judge in a Judge's chambers, the issue could only be resolved one way, namely, that the agreement was unenforceable. Respondents, in seeking to sustain the oral agreement, rely on CPLR 2104 which requires stipulations to be in writing and subscribed. It excepts, however, stipulations made in 'open court', which in modern times are recorded by the court reporter. Respondents contend that the settlement comes within the exception.

To establish the fact of the settlement respondents rely on the subsequent colloquy in open court in which the dispute as to the agreement, its conditions, and alleged open-endedness were resolved by the recollections of the presiding Judge and the court clerk. No testimony was taken, and a choice was made between the inconsistent written stipulations proffered by the parties. The stipulation proposed by respondents was imposed on appellants.

The issue arises between two embattled branches of a family following the death of one of two brothers who together amassed the assets over which there is now dispute. The surviving brother, Israel Dolgin, continued to manage the properties after his brother's death in 1968. He heads his family group. The opposing group is evidently headed by Jordan H. Dolgin, a son of the deceased brother Morris, joined by Morris' widow.

Two proceedings for dissolution of close corporations were brought by the Jordan group and an action for specific performance of an earlier settlement agreement was brought by the Israel group. They were later consolidated. There are two other actions in Nassau County that were not consolidated. In the consolidated proceeding, by order of June 24, 1971, the Supreme Court, after a hearing but without the taking of testimony, adjudged the matters settled and discontinued, and directed allocation of the real properties. The Appellate Division affirmed, without opinion, Gulotta and Benjamin, JJ., dissenting (38 A.D.2d 554, 328 N.Y.S.2d 384).

The order should be reversed.

There is no common-law evidence of an agreement to settle, but only concessions as to undisputed terms of an inchoate agreement, at best of an agreement not final until reduced to writing, and, most important, CPLR 2104 by its terms bars enforcement.

Not involved is the kind of settlement agreement which does not affect a pending litigation and is not required to be in writing or subscribed under an applicable Statute of Frauds (but, as to executory accords, see General Obligations Law, § 15--501; Goldbard v. Empire State Mut. Life Ins. Co., 5 A.D.2d 230, 233--235, 171 N.Y.S.2d 194, 198--200; 1937 Report of N.Y. Law Rev.Comm., p. 211 et seq.). The term 'open court' as it has been used since ancient times and as, it will be suggested, it is used in CPLR 2104, is a technical term in the law. It refers to a judicial proceeding in a court, whether held in public or private, and whether held in the court house, a courtroom, or any place else, so long as it is, in an institutional sense, a court convened, with or without a jury, to do judicial business. Typically, in a court of record an open court has in attendance a clerk who makes entries of judicial events in a docket, register, or minute book, and in modern times there is a court reporter, who makes a record of all the proceedings. (1 Bouvier's Law Dictionary (1914 ed.), Rawle's Third Revision, p. 713.) An open court is not a 'judge in chambers', in the technical sense of that phrase, and it is neither a Judge nor a clerk acting in his proper person anywhere, whether in the courtroom or elsewhere (3 Bouvier's, op. cit., Supra, p. 2414).

Until 1968 the brothers, Morris and Israel Dolgin, amassed and owned through close corporations and partnerships some 30 real properties of substantial value, those in dispute being fixed at one time at $6,000,000. When Morris died in 1968 his son and widow, individually and as coexecutors under the will, succeeded to his one-half interest. Differences arose between the Jordan group and the surviving brother Israel. When efforts at reconciliation failed, the family considered a division of 23 the properties. After an exchange of letters, a tentative arrangement for division of the 23 properties was reached in 1970 and then disclaimed by the Jordan group. The Israel group contended, however, that a binding arrangement had been reached.

In February, 1971, the Jordan group began the litigations mentioned earlier. In each action and proceeding the Jordan group, among other relief, sought an accounting since the management, after Morris' death, had remained in the hands of Israel Dolgin. The Israel group brought its separate action in Kings County seeking specific performance of the purported settlement agreement reached in 1970. The dissolution proceedings and the action for specific performance, all in Kings County, were consolidated by consent (order dated May 12, 1971, per Di Giovanna, J.). The consolidated proceeding was scheduled for pretrial conference on June 10 and trial on June 15.

The June 10 conference began with a preliminary discussion with the clerk at Special Term. The conference with the Justice assigned, in his chambers, followed, at which, unquestionably, an oral agreement of some kind to settle the consolidated proceeding was reached. There was no record or writing to evidence the agreement, and the Judge directed the parties to prepare a stipulation of settlement. On June 15, each side submitted a proposed stipulation, substantially identical except that the Jordan stipulation provided for an accounting by Israel and deferred the exchange of general releases. On June 16, for the first time, in open court, with a court reporter present, the parties appeared before the presiding Justice. The court found that an accounting had not been discussed during negotiations in his chambers and held that Israel proposed stipulation binding.

It is significant, and was especially noted by one of the dissenters at the Appellate Division, that despite its rejection of the recollections of the Jordan group, the court determined, on the consent of the Israel group, and provided in its order that the Jordan group would have a time-limited inspection of the books affecting the properties, to cover only the last year of Israel's management. There was further provision for application to the court for inspecting the books beyond the one-year period, if serious wrongdoing were uncovered during the test period.

The Jordan group justifies its concern over the period of Israel's exclusive management because they have received only uncertified statements from the accountant, and have been refused better evidence of the financial history since Morris' death in 1968. They also assert that the estates and trusts may not accept, without better proof, the description of financial events since 1968, lest they fail in their fiduciary obligations.

The record of the colloquy on June 16 demonstrates a flat contradiction among the parties, the court clerk, and the presiding Justice as to the scope and intention of the oral agreement in chambers.

On the initial discussion with the court clerk on June 10, according to the clerk, an accounting as part of any settlement was brought up. Notably, the petitions in the proceedings also requested an accounting. It was then, again according to the clerk, that the conference was continued in the Justice's chambers where the parties agreed to a division of the 23 properties. The Judge instructed the parties to reduce their agreement to writing because real property was involved and the most advantageous exchange for tax purpose was yet to be considered.

A part of the recorded colloquy on June 16 is revealing:

'(The Clerk): If I may, when we had reached an impasse on the Richardson and the Sutphin and Jamaica and the Elton Street properties, all sorts of other questios started to come up and at that point I called your Honor in.

'(The Justice): Was one of the questions that came up the right to an accounting?

'(The Clerk): Yes. And one of the thigs that I said was that if there was going to be an accounting there would be no settlement, because it was not in the pleading and it was not before us and it was not in the settlement.

'And I will testify that you did ask if there was anything else open and Mr. Jordan said no, and it was my understanding that the settlement was for all purposes and that we were not going to open up that question again; otherwise there was nothing.

'(Counsel for Jordan): Your Honor, the pleadings, do ask for an accounting, and the question was discussed with (the clerk). The settlement before your Honor was focused primarily upon the properties and the seventeen thousand five hundred dollars.'

The Jordan group admitted that the request for an accounting was not repeated at the conference with the Justice but argued that the function of the conference in chambers was limited to working out a division of the 23 properties leaving the matter of an accounting, general releases, and problems over jurisdiction of the several estates and trusts involved to be worked out. The Judge's assistance was sought, the Jordan group said, only in...