Gursten v. Kenney, 69

• Decision Date: 10 May 1965
• Docket Number: No. 69,69
• Citation: 375 Mich. 330,134 N.W.2d 764
• Parties: Nat GURSTEN, Plaintiff and Appellant, v. Frank E. KENNEY, Lewis A. Rockwell, Frank E. Kenney, Jr., Conrad D. Chapman and John M. Sheridan, d/b/a Kenney, Rockwell, Kenney, Chapman and Sheridan, Defendants and Appellees.
• Court: Michigan Supreme Court

Page 764

134 N.W.2d 764

375 Mich. 330

Nat GURSTEN, Plaintiff and Appellant, v. Frank E. KENNEY, Lewis A. Rockwell, Frank E. Kenney, Jr. Conrad D. Chapman and John M. Sheridan, d/b/a Kenney, Rockwell, Kenney, Chapman and Sheridan, Defendants and Appellees.

No. 69.

Supreme Court of Michigan.

May 10, 1965.

Nat Gursten, in pro per.

Kenneth E. Prather, Detroit, for defendants and appellees.

Before the Entire Bench.

ADAMS, Justice.

This is an appeal from an order granting defendants' motion to dismiss plaintiff's complaint on the ground of res judicata.

Plaintiff an attorney, complained against the defendants, a firm of attorneys, alleging they forced him to stipulate to an order in the nature of a consent judgment.

A client and business associate of plaintiff became bankrupt. The client's trustee in bankruptcy, represented by defendants, proceeded against plaintiff to recover assets of the client that had been acquired by plaintiff. A compromise of the dispute was reached. On February 15, 1963, the referee in bankruptcy entered an order directing plaintiff to pay $5,800.

On June 12, 1963, plaintiff petitioned the referee to set aside the order, alleging that the settlement had been brought about by the conduct of the trustee's attorneys who had, at a time when plaintiff was in ill health, insisted that the hearings continue, threatened personal litigation based on unfair dealings between plaintiff and his client, and generally pursued a course of action to extort money from plaintiff.

On August 8, 1963, the referee heard the petition. Appellant admits in his brief on appeal that he:

'* * * raised the questions of the alleged tortious conduct of the appellees and that said matters were put in issue as the basis for the taking of testimony.'

At the end of that day's hearing, the referee directed the appellant and appellees to appear on August 12, 1963, to continue the proceeding. Plaintiff did not appear, his reason being that he was in another court upon the business of a client.

On August 19, 1963, the referee denied the petition of plaintiff to set aside the compromise order:

'Nat Gursten, having failed to appear and having failed to sustain the burden of proof * * * the petition filed by Nat Gursten * * * is hereby denied.'

Plaintiff never proceeded with an appeal in the Federal district court to vacate the order denying his petition. He paid the $5,800, prompted by an order of the district judge.

The trial judge held:

'It is plaintiff's claim that he was in attendance in another court for a client and that it was physically impossible for him to be in two places at the same time. Whether his non-appearance before the referee was voluntary or involuntary is unimportant for decision. As an aggrieved party, he had the right to appeal from the order of the referee, which he did not do. Moreover, he paid the settlement amount, upon his being ordered so to do by the federal district court, on penalty of contempt.

'* * * It is his claim, however, that since his proceedings to revoke proved abortive, the bankruptcy court did not and could not have passed on his claim of tortious conduct; that, therefore, he has the right to renew said charges herein; and that the plea offered by defendants--whether it be called res judicata, former adjudication or collateral estoppel--is no bar.

'Plaintiff's claim is untenable. Indispensable to the approval of the settlement agreement in bankruptcy court was an inferential finding of good faith negotiations between the parties, resulting in a voluntary agreement--untainted by fraud or overreaching, by duress, or by any other infirmity. The settlement agreement was akin to a contract. When the contract was challenged by plaintiff through proceedings initiated before the very court that had approved the contract, and the proceedings were not completed by plaintiff, regardless of the reason, and he thereafter performed the contract by paying the amount due, he is thereafter estopped to challenge anew the validity of the contract and the means by which it was procured, on the familiar principle of res judicata.'

Upon this appeal plaintiff reiterates his position as follows:

'Appellant submits that although he raised the questions of the alleged tortious conduct of the appellees and that said matters were put in issue as the basis for the taking of testimony before the bankruptcy referee; nevertheless, said matters and issues were never decided and were never determined so as to be conclusive on the instant matter before this Court.'

Plaintiff misconceives his rights. The correct rule is stated in Olsen v. Muskegon Piston Ring Co., 117 F.2d 163 (6 Cir.1941). In that case a Federal district court had entered an order of dismissal because the plaintiff failed to proceed to trial upon the merits. A second suit was instituted upon the same grounds. The court of appeals, in upholding the Federal district court's decision that the matter was res judicata, stated:

'The dismissal of the first suit was entered upon a finding and legal conclusion made after hearing, and after calling upon appellant to...