Case Name: DONNELLY v. McARDLE
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1897-02-05
Citations: 43 N.Y.S. 560
Docket Number: 
Parties: DONNELLY v. McARDLE.
Judges: 
Reporter: West's New York Supplement
Volume: 43
Pages: 560–571

Head Matter:
DONNELLY v. McARDLE.
(Supreme Court, Appellate Division, First Department..
February 5, 1897.)
1. Judgments—Vacation—Inherent Power.
It is a power of a court of record to vacate its judgments and award new trials in the furtherance of justice, and does not depend on the Code.
2. Same—Discretion of Court.
In a suit for a partnership accounting the court dismissed the complaint during plaintiff’s examination, on his admission that some of the firm transactions were illegal, though it did not appear that the partnership was formed for illegal purposes, and plaintiff’s counsel, without excepting to the ruling, suddenly withdrew. Plaintiff moved for a new trial, alleging that only a small part of the firm transactions were illegal, and that he was surprised at the summary desertion of his counsel, but the motion was denied, and judgment entered, from which an appeal was taken, hut abandoned, and a second suit, thereafter brought in another court, was dismissed on the ground that the former judgment was a bar. A subsequent motion to amend the original judgment was denied by the justice who rendered it, but nine months afterwards plaintiff again moved for a new trial, which the court granted, vacating the original judgment entered nearly four years previously. Held a proper exercise of discretion. Van Brunt, P. J., and Ingraham, J., dissenting.
Appeal from special term, New York county.
Action by Michael Donnelly against Patrick J. McArdle for the dissolution of a partnership and for an accounting. From an order vacating a judgment for defendant, and granting a new trial on condition that plaintiff pay, certain costs, defendant appeals. Affirmed.
Argued before VAN BRUNT, P. J., and WILLIAMS, PATTERSON, O’BRIEN, and INGRAHAM, JJ.
Delancey Nicoll, for appellant.
E. C. James, for respondent.

Opinion:
O'BRIEN, J.
The application for a new trial (from the order granting which this appeal is taken) was made to the same learned justice before whom the case had been brought for trial, and who had dismissed the complaint. After fully hearing counsel and reviewing all the facts, he disposed of the application in an opinion in which he says:
"There can be no doubt that the plaintiff has not had such a trial as he is entitled to. This has resulted from misapprehension of the real status of the case, —misapprehension for which the plaintiff was certainly in a measure responsible. Upon the trial the plaintiff's counsel was naturally misled by what transpired when their client was being examined, and they were undoubtedly surprised by his sudden avowal of the illegal transactions. The court also derived the impression that the partnership was tainted through and through with these corrupt transactions, that they constituted the bulk of its business, and that the action was really an attempt to induce a court of equity to compel an equal division of the spoils. It now appears that the partnership agreement had relation to an honest business, and that under it honest business to a considerable extent was actually done. The claim is now that the corrupt transactions were few in number, and that they are readily severable from the mass of untainted business. Certainly, a sufficient case upon this head is made out for a rehearing. The plaintiff has never had a fair opportunity of presenting this aspect of his case. It may be that the corrupt transactions were more numerous than he claims they were. It may even be that their ramifications were so extensive as to justify the decision that was made. Still the plaintiff should not lose his right to prove the contrary—if he can—merely because his counsel were surprised, and failed to proceed at the critical moment. There is no question of the inherent power of the court to -relieve under such circumstances. It simply grants a new trial ex debito justifies. Owing to a clear misapprehension,—in which all parties, including the court, shared,—the plaintiff has never had a trial in the proper sense of that term. The court cannot, therefore, hesitate .to afford him relief. He is entitled to try his case through to the end as a matter of right and justice. The only question, therefore, is as to the terms upon which relief should be granted. There has undoubtedly been laches, but the plaintiff is not altogether responsible for that. This is in fact the first time when his position has been clearly and convincingly presented, and I cannot think—looking at the whole history of the case—that the door should be finally shut against him because of the less forcible efforts which have preceded the present application."
In opposing the application below, and in assailing upon appeal the order made, the defendant relies upon three grounds. In disposing of them we might well rest our decision upon the opinion of the learned judge at special term; but the force and ability with which they are again presented, and the controlling influence which the disposition made may have upon the rights of the parties, require at our hands a reconsideration of the questions involved.
We all agree that the court had power to grant the motion, and that such power was not dependent upon or limited by the Code, but is inherent in the court. Vanderbilt v. Schreyer, 81 N. Y. 646; Ladd v. Stevenson, 112 N. Y. 326, 19 N. E. 844. in the latter case it was said:
"The whole power of the court to relieve from judgments taken through mistake, inadvertence, surprise, or excusable neglect is not limited by section 724 fCode Giv. Proe.], but in the exercise of its control over its own judgments it may open them upon the application of anyone for sufficient reason, in the furtherance of justice. Its power to do so does not depend on any statute, but is inherent, and it would be quite unfortunate if it did not possess it to the fullest extent."
And in speaking of such power the court, in Vanderbilt v. Schreyer, supra, said:
"There are so many occasions for its exercise that it should not be curtailed. Whether the power shall be exercised in any case rests in its discretion, in the exercise of which this court will not ordinarily interfere."
The determination as to whether such power in a given case has been wisely exercised must necessarily depend upon the facts; and, as in none of the cases cited by the appellant were the facts similar to those we are here dealing with, they are easily distinguishable. They undoubtedly aid us by way of analogy and illustration, but are no unerring guide or controlling authority. Recognizing this, the appellant insists that, even if the court had the power to vacate the judgment, the exercise of such power, under the circumstances and upon the proofs before the court, was an error of discretion which ought to be corrected here.
It is conceded that the plaintiff has never had a trial, or his day in .court. He was being examined, and his testimony was left unfinished, and none of his witnesses were examined; and because he confessed that certain of the transactions of the firm were illegal, the complaint was dismissed. At that point his counsel became ' demoralized, and made no attempt to bring out the facts fully, but, without excepting to the ruling, withdrew from the case, and abandoned the plaintiff. That the court's action was the result of misapprehension is clearly made to appear; and, without reciting the facts more in detail, we think it must be conceded that these facts would have amply justified the granting of a new trial, if the motion was in time. It is suggested that the error into which the court fell could have been corrected by appeal. This, it appears, was taken in time, but not prosecuted. The plaintiff, however, had equally the right to move for a new trial before the judge who tried the case; or, if his complaint was not dismissed upon the merits, he could begin a new action. Both of these remedies he sought, and the former was denied because the learned trial judge retained and acted upon the misapprehension that the plaintiff was seeking an accounting for illegal transactions. And, although the trial court had expressly refused to find that the complaint was dismissed on the merits, the judgment entered by reason of the findings was held in the new action brought to be a bar. Then followed the other efforts of the plaintiff to obtain redress and a trial, all of which were ineffectual, until the trial judge, upon his attention being finally called to the error into which he had fallen, determined to undo the wrong, and accord to the plaintiff a trial.
It being clear, therefore, that the court had the power to grant a new trial, and that the exercise of such power upon plaintiff's first application would have been a wise and just use thereof, the whole question narrows down to whether the course pursued in the intervening time by the plaintiff was such that he was entitled to no relief upon the ground of laches. We do not think that laches, in the proper acceptation of that term, is present. The plaintiff was neither idle nor inactive: He did not remain quiescent under the default until some action should be taken against him, but was constantly active in seeking redress, and made, as shown, many ineffectual efforts to right the wrong. Having been erroneously deprived of his right to have his ease fully tried, having in the midst of the first trial been abandoned by his then counsel, and obliged to employ others, he was excusable in seeking relief in the form of a new trial rather than by prosecuting an appeal. It is urged that the effect of the order is to extend such right to appeal. We do not think, however, that that question is in any way involved. As we have pointed out, the plaintiff had several remedies open to him; and because he pursued those which were more direct, and would more speedily afford him redress, even though these turned out to be ineffectual, or were erroneously denied him, he should not be deprived of all relief because there was one other remedy by way of appeal which he might have invoked. The reason for his failure to prosecute the appeal, or to appeal from the order subsequently made upon his first application for a new trial, is inferable from the fact that upon the dismissal of the complaint counsel for plaintiff, instead of excepting to' the ruling, as was his duty, abandoned the case; and from that time he was not represented by counsel until he employed others to make the first appli cation for a new trial. The plaintiff and the counsel subsequently employed had some ground, therefore, for concluding that, in the absence of any exception, the error in the ruling could not be corrected upon appeal from the judgment or the order denying a new trial. And, without deciding it, even though we concluded with the learned judge below that his rulings were erroneous, there was a question whether, by appeal, the error could be corrected. Having the other remedies, more certain, direct, and speedy, must the plaintiff be denied justice because he did not pursue his remedy in one particular direction? If he had pressed his appeal, and had been defeated because his counsel abandoned him in the midst of the trial, instead of protecting him by proper exceptions, would not the argument be equally potent that, having chosen that remedy, he was thereafter debarred from pursuing any other? Would not the time consumed in appealing be urged against him with equal force on any new application, upon the .claim of laches? And what, after all, is the only substantial ground advanced against the granting of the order? It is that plaintiff has been guilty of laches. • And what kind of laches? Laches in not pursuing one remedy, by appeal, when it is conceded he was actively and persistently engaged in pursuing others which, equally with the right to appeal, were open to him. There is here no question of the rights of third parties, the only persons affected by the granting or refusing of the application being the parties to the action. It must be conceded that the plaintiff was deprived of his legal right, and that the judgment as entered was erroneous. It is but equitable and right that relief should be afforded him; and, to paraphrase the language of the court of appeals, it would be unfortunate if the court did not possess the power to undo the wrong, or declined to exercise it in furtherance of justice.
A word in conclusion in reference to the third ground urged by the appellant,—that, upon the admitted facts, including those that appeared upon the trial and those appearing by the moving papers, the plaintiff can never recover in this action, and, therefore, that the judgment should not have been disturbed. It is insisted that the plaintiff parted with his rights by executing a so-called "agreement of dissolution." But the merits of this dispute were not passed upon on the trial, the complaint having been dismissed before the trial ended. Nor are we called upon now to determine whether the ruling of the court at special term was right, it being sufficient to say that we think, as did the learned judge below, that there are two sides to the question as to whether the plaintiff should be turned out of court entirely because he confessed that certain transactions of the firm were of an illegal character. The complaint was dismissed before the plaintiff rested, upon the theory that this showing was fatal to any relief. But, as appears by his opinion, the attention of the trial judge was not then directed to the proposition that, if the co-partnership agreement was legal, and if the bulk of the transactions of the firm were legitimate, and it was practicable to separate the legal from the illegal transactions, he might have directed an accounting, determining himself, or leaving it to a referee to find, whether the plaintiff was entitled to any proceeds as against his partner on account of the legal transactions. The principle invoked by the appellant, and the authorities cited by him in support thereof, are undoubtedly sound,—that where the agreement is of an illegal character for some reason, such as the nature of the business, or as contrary to public morals, or in violation of statutory enactment, in such cases the complaint must be dismissed, and the party not allowed to enforce the illegal agreement, or to obtain any benefit thereunder. Here, however, it was not shown that the co-partnership agreement was other than a legal one; and, granting that the bulk, or, as shown upon this motion, that at least 90 per cent., of the transactions carried on under it were honest, and could be accounted for, would it not be right to allow the plaintiff an opportunity of presenting his case fully; and would it not then be for the court to determine the extent of the relief, if any, which it would accord? This question should only be disposed of after both sides have had a hearing. We do not mean to decide it, our purpose being merely to point out that there is a distinction to be observed between the enforcement of an agreement of an illegal character and giving effect to a legal agreement under which certain illegitimate acts have been done. Whether, in the latter case, the rule would be the same, we think, as suggested, should be determined upon the trial.
The order appealed from is right, and should be affirmed, with costs.
WILLIAMS and PATTERSON, JJ., concur.