Ertag v. Haines, L--2459

• Citation: 30 N.J.Super. 225,104 A.2d 81
• Decision Date: 24 March 1954
• Docket Number: No. L--2459,L--2459
• Parties: ERTAG v. HAINES et al. . Law Division
• Court: Superior Court of New Jersey

Page 225

30 N.J.Super. 225

104 A.2d 81

ERTAG v. HAINES et al.

No. L--2459.

Superior Court of New Jersey.

Law Division.

March 24, 1954.

Benjamin Shanefield, Newark, for plaintiff.

Jack L. Cohen, Newark, for defendants.

GAULKIN, J.C.C.

Plaintiff sues on a book account, assigned to him by Synvar Corporation, a Delaware corporation, for goods sold and delivered by Synvar Corporation to defendants in Monmouth County between January and September 1953.

Defendants admit the receipt of the goods, and the prices, but allege that the goods did not correspond to the samples in accordance with which they were sold; that deliveries were not in the amounts nor at the times agreed upon, and that consequently defendants suffered damage in excess of the plaintiff's claim.

Defendants concede that they may not counterclaim for the excess against the assignee. Pargman v. Maguth, 2 N.J.Super. 33, 38, 64 A.2d 456 (App.Div.1949).

Consequently, they move 'for an order dismissing the Complaint filed herein on the ground that the plaintiff, Leo Ertag, is not in fact an assignee, but is the nominee, or agent, of his alleged assignor, for the purpose of bringing this suit and thereby permitting his alleged assignor to evade the statutes and rules of the Court with respect to non-resident plaintiffs, and for the purpose of foreclosing the defendants from asserting a counterclaim which in fact and law the said defendants are entitled to assert as against the real party in interest in this action.'

At the argument the attorney for the assignee frankly admitted that the assignee shares offices with him, paid nothing for the assignment, has no interest in the claim or the outcome of the litigation, and is the mere holder of the naked title to the claim as Synvar's nominee. The assignee's attorney said the assignment was made because defendants reside in Monmouth County, and the attorney wanted to sue in this county for his personal convenience. However, when defendants offered to waive any question of venue if Synvar were joined or substituted as a party plaintiff, the offer was declined. In fact, the assignee's attorney at first contended that (because of the peculiar wording of the complaint) defendants could not assert any recoupment for any damages except such as arose from only two of the 12 shipments, but he finally stipulated that defendants could prove, by way of recoupment, damages up to, but not exceeding, the amount of the assigned claim.

Defendants argue this is unjust. They say, and the assignee admits, that the claim, the defense and the counterclaim all arise out of the same transaction--the supplying by Synvar of plastic molding compound to defendants to be molded by defendants into buttons. The plaintiff admits that when the case comes to trial the officers and employees of Synvar will have to be here to testify, and if the assignee is then present at all, it will only be as a mildly curious bystander. The issues and the proof will be the same as if Synvar itself sued, except that defendants will not be able to recover any excess they may prove to be due them over and above the assigned claim. In fact, to protect defendants' right to sue for the excess in Delaware, the court here may have to ask the jury to bring in a special verdict. As to such excess, defendants will have to start a separate suit in Delaware, and perhaps try the whole case all over again, provided there is nothing in the Delaware law that will block defendants because of the proceedings in New Jersey. A resident of New Jersey could not so unjustly advantage himself over us, say defendants, so why should a non-resident be permitted to do so? Cf. Carey v. Brown, 92 N.J.Eq. 497, 113 A. 499 (Ch.1921); Maplewood Bank & Trust Co. v. Carragher Const. Co., 12 N.J.Misc. 227, 170 A. 832 (Sup.Ct.1934).

Such a result is, of course, completely contrary to the spirit of our rules. A fundamental aim of our practice is to dispose of all controversies between the same parties in a single action, as speedily as is consistent with justice. Multiplicity of suits is today as abhorrent to the courts as it always has been to the litigants. Galler v. Slurzberg, 22 N.J.Super. 477, 483, 92 A.2d 89 (App.Div.1952), certification denied 11 N.J. 582, 95 A.2d 644 (1952).

The assignee's attorney insists Synvar is within its legal rights in making the assignment, and the assignee in suing upon it, and firmly states that this court has no power to prevent it. R.R. 4:30--1, says he, provides that 'Every action May be prosecuted in the name of the real party in interest * * *.' This was formerly Rule 3:17--1, which originally read 'Every action Shall be prosecuted,' etc. On November 10, 1949 the rule was amended to change 'shall' to 'may'--a clear indication, says plaintiff, that the option lies with the litigant and not with the court. Furthermore an assignee (at least one for value) is a 'real party in interest.' Zurcher v. Modern Plastic Machinery Corporation, 24 N.J.Super. 158, 163, 93 A.2d 778, 780 (App.Div.1952), affirmed (memo) 12 N.J. 465, 97 A.2d 437 (1953).

Defendants in their brief 'frankly concede that there is no explicit grant of power or authority in the rules' to the court to grant that 'which the defendant on this motion requests,' but they urge that 'to deny defendants' motion is to admit that this court is operating in a vacuum where a wrong is without a remedy. This is contrary to the axiomatic equitable powers of the court to provide a remedy for every wrong.'

Defendants admit there is no New Jersey case to support their motion to dismiss the complaint, but they cite as 'the only two decisions which counsel has been able to uncover at all touching upon this situation,' Fricke v. W. E. Fuetterer Battery and Supplies Co., 220 Mo.App. 623, 288 S.W. 1000 (Mo.Ct.App.1926) and Phoenix Savings Bank and Trust Co. v. Ellis, 50 Ariz. 116, 69 P.2d 796 (Ariz.Sup.Ct.1937). However the Fricke case merely held that in an assignee's action, an unliquidated counterclaim existing against the assignor may be set up, 'but only to defeat recovery.' In the Phoenix case it was the counterclaim that had been stricken out, in a suit by a plaintiff against an ancillary administrator, on the ground that the counterclaim belonged to the principal administrator. The court reversed, holding that for the purposes of the administration of the estate, the ancillary administrator should be permitted to counterclaim. Neither case authorizes the striking of an assignee's complaint in a case such as this. It seems to me that the complaint may not be stricken.

Is the court then helpless to avoid the result complained of by defendants, so inconsistent with the spirit of the rules? If it can properly be avoided, it should be. 'It is the duty of all judges to see that these salutary objectives (of the rules) are not perverted.' Milk Drivers and Dairy Employees etc. v. Shore Dairies Inc., 8 N.J. 32, 39, 83 A.2d 609, 612 (1951).

Courts have inherent power to control their own suitors, and to prevent abuse of their process. Kristeller v. First National Bank of Jersey City, 119 N.J.L. 570, 572, 197 A. 17 (E. & A.1937); Seaman v. Mann, 114 N.J.Eq. 408, 409, 168 A. 833 (Ch.1933); Margarum v. Moon, 63 N.J.Eq. 586, 53 A. 179 (Ch.1902); Standard Roller Bearing Co. v. Crucible Steel Co. of America, 71 N.J.Eq. 61, 63 A. 546 (Ch.1906); Bigelow v. Old Dominion Copper Mining & Smelting Co., 74 N.J.Eq. 457, 473, 480--485, 71 A. 153 (Ch.1908); Von Bernuth v. Von Bernuth, 76 N.J.Eq. 177, 183, 73 A. 1049 (Ch.1909); 21 C.J.S., Courts, § 31, p. 41; 21 C.J.S., Courts, § 88, p. 138.

In Bigelow v. Old Dominion Copper Co., supra, Chancellor Pitney said (74 N.J.Eq. at page 473, 71 A. at page 160):

'The power proceeds from the undoubted authority that a court of equity possesses over persons within its jurisdiction to restrain them from doing anything that is contrary to equity and good conscience, to the wrong and injury of others, whether the threatened inequitable conduct consists in the prosecution of an action or whatever it may happen to be. The court of equity thus appealed to acts In personam, and it is immaterial whether the threatened inequitable conduct is to be carried on within or without the limits of the jurisdiction. 1 High on Injunc. § 103; Story's Eq.Jur. (12th Ed.) §§ 899, 900; Margarum v. Moon, 63 N.J.Eq. (18 Dick.) 586, 53 A. 179, and cases cited.'

In New Jersey the courts may even decline jurisdiction altogether under the doctrine of Forum non conveniens, upon 'considerations of convenience and essential justice.' James H. Rhodes & Co. v. Chausovsky, 137 N.J.L. 459, 462, 60 A.2d 623, 625 (Sup.Ct.1948).

One of the ancient examples of the exercise of this inherent power was the equitable set-off. Recoupment had been fashioned by the common law without the aid of statutes, but set-off at law was a creature of statute. The first statute was New Jersey's, and that was not passed until 1722, six years before the English statute, 2 Geo. 2, c. 22. Stryker v. Little, 8 N.J.L. 209, 212 (Sup.Ct.1925). In the meantime, since justice demanded it, equity had devoloped the equitable set-off. Indeed it was 'a favorite in equity, and is one source of its jurisdiction which Mr. Spence says was assumed on principles of natural equity.' Loder v. Allen, 50 N.J.Eq. 631, 637, 25 A. 541, 543 (Ch.1892); Scarano v. Scarano, 132 N.J.Eq. 362, 28 A.2d 425 (Ch.1942); Camden National Bank v. Green, 45 N.J.Eq. 546, 551, 17 A. 689 (Ch.1889), affirmed on opinion below, Green v. Camden National Bank, 46 N.J.Eq. 607, 22 A. 56 (E. & A.1890); 34 Harv.L.R. 178, 179.

Since recoupment, and set-off at law, were sharply circumscribed by technicalities, equity still stepped in even after the adoption of the statutes permitting set-off at law, when a special equity existed beyond the reach of the law courts. Scarano v. Scarano, supra; Camden National Bank v. Green, supra; Seaman v. Mann, supra.

The non-residence of the...