Mintzer v. Carl M. Loeb, Rhoades & Co.

• Decision Date: 23 February 1960
• Citation: Mintzer v. Carl M. Loeb, Rhoades & Co., 197 N.Y.S.2d 54, 10 A.D.2d 27 (N.Y. App. Div. 1960)
• Parties: Albert MINTZER, Plaintiff-Appellant, v. Carl M. LOEB, RHOADES & CO., Defendant-Respondent, and E. J. Korvette Co., Inc. and Martin Kane, Defendants.
• Court: New York Supreme Court — Appellate Division

Page 54

197 N.Y.S.2d 54

10 A.D.2d 27

Albert MINTZER, Plaintiff-Appellant, v. Carl M. LOEB, RHOADES & CO., Defendant-Respondent, and E. J Korvette Co., Inc. and Martin Kane, Defendants.

Supreme Court, Appellate Division, First Department.

Feb. 23, 1960.

Sam Rosenblum, New York City, of counsel (Fixel & Rose, New York City, attys.), for plaintiff-appellant.

Sheldon Oliensis, New York City, of counsel (Joseph P. Conway, New York City, with him on the brief, Cahill, Gordon, Reindel & Ohl, New York City, attys.), for defendant-respondent Carl M. Loeb, Rhoades & Co.

Before BOTEIN P. J., and BREITEL, M. M. FRANK, McNALLY and STEVENS, JJ.

STEVENS, Justice.

In this action for breach of contract for failure to pay an alleged finder's fee, plaintiff appeals from a judgment entered July 14, 1959, in favor of defendant Carl M. Loeb, Rhoades & Co., and from an order of July 3, 1959, granting the defendants' motion to dismiss the complaint as to it and dismissing the same with prejudice.

On or about January 10, 1956, plaintiff commenced an action by the service of an unverified complaint. April 1, 1957, plaintiff filed an amended and still unverified complaint adding a third defendant.

On January 3, 1958, the complaint was dismissed pursuant to Rule 302, Rules of Civil Practice, for failure to prosecute. November 20, 1958, plaintiff moved to vacate the dismissal. The motion was opposed primarily on two grounds--lack of merit and inexcusable delay. December 5, 1958, the court disposed of the motion in a single word 'denied'. No appeal was taken therefrom. Prior to the motion to vacate, and on July 17, 1958, plaintiff had examined one of the defendants at which examination all defendants were represented by counsel. December 12, 1958, plaintiff commenced the present action by service upon Carl M. Loeb, Rhoades & Co. Issue was joined by defendants' answer December 31, 1959.

Thereafter defendant Carl M. Loeb, Rhoades & Co. moved to dismiss the complaint and it is from the granting of that motion that plaintiff appeals.

Appellant urges that 'a dismissal for failure to prosecute is not on the merits so as to bar a subsequent action on the same cause of action.'

Respondent argues in support of the dismissal and judgment that plaintiff cannot evade the decision of December 5, 1958, and (1) the action is barred by direct or collateral estoppel, (2) res judicata, and (3) waiver and relinquishment. Respondent contends that by making a motion to vacate the original default plaintiff squarely submitted to the court the issues of (1) merit or lack of merit in the complaint; and (2) whether he had abandoned or relinquished his claim.

A dismissal under Rule 302, Rules of Civil Practice, is not a dismissal on the merits (Gundershein v. Bradley-Mahony Coal Corporation, 295 N.Y. 539, 541, 68 N.E.2d 599; Loomis v. Girard Fire & Marine Insurance Co., 256 App.Div. 443, 10 N.Y.S.2d 283). Where a case has been dismissed under Rule 302, Rules of Civil Practice, the remedy is not to move to restore to the calendar but to open the default (Klein v. Vernon Lumber Corporation, 269 App.Div. 71, 54 N.Y.S.2d 248; Niewiadowski v. Kulp-Waco, Inc., 279 App.Div. 974, 111 N.Y.S.2d 564). The issue then must turn upon the question whether a motion to open the default necessarily involves such consideration of the merits of the case that a denial of such motion is in effect a litigation of the matter so as to preclude any further independent action except an appeal therefrom.

Generally, the granting of a motion to open such default rests in the discretion of the court (Schlesinger v. Springer-Van Beuren Estates Inc., 269 App.Div. 950, 57 N.Y.S.2d 912) and such discretion is reviewable on appeal (Dold v. County of Niagara, 270 App.Div. 344, 59 N.Y.S.2d 426 where defendant made a motion to dismiss pursuant to Rule 156, Rules of Civil Practice and § 181, Civil Practice Act). Although there must be an adequate showing of merits (Gabrielsen v. Brookhattan Trucking Co., Inc., 250 App.Div. 861, 294 N.Y.S. 937), the relief is a matter of discretion. In passing upon the merits the court does not purport to determine the issues involved in the merits, but only to consider the substantiality of the issues for the purpose of extending discretionary grace.

'There are two main rules of res adjudicata. One is that a judgment of a competent court, on the merits, is a bar to any future suit between the same parties, or their privies, upon the same cause of action. The other is that a point directly in issue and judicially passed upon in a judgment of a competent court on the merits cannot be again drawn in question in any future action between the same parties, or their privies, whether the cause of action is identical or not. * * * a determination coming within the former rule is a bar or complete defense, the cause of action being merged in the judgment, and the scope of the estoppel being complete and all-inclusive.' Hollenbeck v. Aetna Casualty & Surety Co. of Hartford, Conn., 215 App.Div. 609, 611, 214 N.Y.S. 402, 404. [Emphasis supplied.]

'A judgment [entered thereon] in one action is conclusive in a later one not only as to any matters actually litigated therein, but also as to any that might have been so litigated, when the two causes of action have such a measure of identity that a different judgment in the second would destroy or impair rights or interests established by the first. Cromwell v. County of Sac, 94 U.S. 351, 24 L.Ed. 195; Reich v. Cochran, supra, [151 N.Y. 122, 45 N.E. 367, 37 L.R.A. 805].' Schuylkill Fuel Corporation v. B. & C. Nieberg Realty Corporation, 250 N.Y. 304, 306, 307, 165 N.E. 456, 457. 'The decisive test is this, whether the substance of the rights or interests established in the first action will be destroyed or impaired by the prosecution of the second.' Schuylkill Fuel Corporation v. B. & C. Nieberg Realty Corporation, supra, 250 N.Y. at page 308, 165 N.E. at page 458.

Such 'A judgment is conclusive upon the parties only in respect to the grounds covered by it and the facts necessary to uphold it * * *.' Donahue v. New York Life Ins. Co., 259 N.Y. 98, 102, 181 N.E. 62, 63. It 'does not operate as an estoppel as to immaterial or unessential facts' but only as to those facts 'which have such a relation to the issue that their determination was necessary to the determination of that issue'. Stokes v. Stokes, 155 N.Y. 581, 592, 50 N.E. 342, 345.

Applying the test heretofore referred to (Schuylkill Fuel Corporation v. B. & C. Nieberg Realty Corporation), since the first cause of action was never litigated, no rights could be established thereby which are destroyed by the present action. Nor was the order of December 5, 1958, final as that term is used, for the motion could have been renewed on additional papers correcting the deficiency or supplying a meritorious cause or explaining the reasonableness of the delay. (Cf. Franklin v. Franklin, 295 N.Y. 431, 68 N.E.2d 429, which discussed whether a defendant...