Court Opinion

ID: 5235302
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:07:30.723303+00
Date Added: 2024-06-11T08:27:43.313307
License: Public Domain

Lambert, J.:
On May 1, 1907, the plaintiffs in this action were the owners of real property upon which there were then various buildings, including a brewery, and in such buildings machinery and appliances affixed thereto. On that date the plaintiffs conveyed the real property to the Canada way Fertilizer Company, and took back from that company a bond and mortgage for the sum of $9,000.
The fertilizer company entered into possession of the premises and devoted the brewery building to its purposes as a fertilizer plant. Some of the fixtures were retained for use in the plant and others were removed and different appliances substituted, more adaptable to the fertilizer business. New fixtures were also added. While so in possession, and in the operation of such plant, the fertilizer company executed its mortgage thereon to one Wright for the sum of $2,000.
In 1910 the plaintiffs began foreclosure of their purchase-money mortgage. The fertilizer company had become involved, and in the efforts of some of its creditors to realize against it, the defendant was appointed receiver of that company and as such defended the foreclosure. His defense was fraud in the sale of the property to the fertilizer company. In that defense he was successful, and the trial court awarded him a judgment rescinding such sale and canceling the bond and mortgage, and requiring that the plaintiffs pay to him, upwards of $9,000.
The judgment in the foreclosure action was affirmed in this court by a divided court (152 App. Div. 391), and was later modified in the Court of Appeals (208 N. Y. 607).
In its modification of the foreclosure judgment the Court of *828Appeals reduced, somewhat, the amount to be paid by plaintiffs to the receiver, and expressly held that the second mortgage, given to Wright, was a valid and subsisting lien upon the premises covered thereby. The findings of fraud in the sale of the real property were affirmed. The amount of the Wright mortgage was deducted from the amount to be paid by the plaintiffs, and that mortgage was left' as a valid lien enforcible by Wright as against the title so left in the plaintiffs. The plaintiffs have paid to the receiver the amount directed by the Court of Appeals.
Following that litigation the receiver procured an ex parte order from the Special Term of this court, allowing and directing the sale, by him, of the various fixtures in the buildings upon this real property. This action followed, with the permission of the court, and an injunction was procured staying such sale, pending this action.
The plaintiffs claim title to the fixtures upon the theory that the effect of the judgment in the foreclosure case was to place the title to the real property in them, and that such fixtures, by reason of their manner of affixation and their general use, were a portion of the real property.
The defendant receiver also bases his claims to title to such fixtures upon the findings and judgment in the foreclosure action.
The trial court has held that the findings and judgment in the foreclosure action are res adjudicata in this action as to the ownership of such fixtures.
. Upon the trial the court refused to permit evidence of the manner of the affixation of such chattels to the realty and of the use to which same were put. In other words, the court regarded the doctrine of res adjudicata as the controlling feature of this case and based its decision wholly thereon.
It is well-settled law that a judgment is conclusive upon the parties thereto only as to the matters adjudicated and the facts litigated or necessary to sustain that adjudication. It is not ah facts (whether immaterial or otherwise) that may creep into a litigation that become irrevocably established by the judgment in the action. It is those facts only which may be fairly said to have been within the issues and to have been *829determined "by the court as a part of the actual controversy between the parties which become finally established. (Matter of Mason, 120 App. Div. 741; Lance v. Shaughnessy, 86 Hun, 411; Griffen v. Keese, 187 N. Y. 464; Rudd v. Cornell, 171 id. 114, 128.)
Examination of the record in the foreclosure action discloses the following situation, as to this controversy over the chattels. The complaint in that action is the ordinary foreclosure complaint and alleges nothing with reference to such chattels except as same may be determined to be a portion of the real estate. In other words the only property described in the complaint is the real property. Three amended answers were served, and while the allegations therein are inartistically drawn, yet we prefer to hold those answers sufficient as containing allegations of ownership by the fertilizer company of those articles of property now in controversy. These answers demand judgment decreeing such ownership, and we may, therefore, assume that among the issues presented by the pleadings was one as to the ownership of this very property.
In its findings in that action the trial court has not passed upon such issue in any way, except it be by its 20th finding. By such finding the court has said:
“ 20. That the total assets of said corporation consist of the real property described in the complaint and certain personal property situated on the premises described in the complaint, being [here follows a list of property embodying the articles now in dispute].”
Upon the, findings thus made judgment was entered, which recited each of the findings in full as prehminary to the adjudicating portion of the judgment. In the adjudicating portion thereof is to be found no reference to these chattels or fixtures. The judgment simply decrees as void the deed from the plaintiffs to the fertilizer company and the bond and mortgage given by the fertilizer company to the plaintiffs. The liability of plaintiffs to pay the fertilizer company a sum therein specified, and the dismissal of the plaintiffs’ complaint, with costs, aro also decreed.
The findings contain no conclusion of law as to the ownership or character of these fixtures. It is thus apparent that the *830doctrine of res adjudicata, if applicable at all, must rest solely upon the 20th finding of fact in the foreclosure action. '
The extent to which a judgment is res adjudicata has been frequently discussed by our courts. In the case of Rudd v. Cornell (171 N. Y. 114) the question was exhaustively treated and many of the cases reviewed.
It was there said: “ It is settled by the decisions of this court that a judgment is conclusive in a second action only when the same question was at issue in a former suit and the subsequent action was between the same parties or their privies, and that the conclusive character of a judgment extends only to the precise issues which were tried in the former action; they must be identical in each action, not merely in name, but in fact and in substance, and the party seeking to avail himself of a former judgment must show affirmatively that the question involved in the second action was material and actually determined in the former, as a former judgment will not operate as an estoppel as to immaterial or unessential facts, even though put in issue and directly decided. In other words, a former judgment is final- only as to the facts which are actually litigated and decided, which relate to the issue therein, and the determination of which was necessary to the determination of that issue.”
It will be observed that finding “twentieth” refers to both real and personal property, and that in form it adjudges the extent of the assets of the corporation. The same reasoning which spells out from it a finding of title in the corporation to the property now in dispute, is applicable to place the title of the real property in such corporation. Yet it is clear that the court did not intend to so decree ownership of the real property, for the findings of the fraud make void the transfer of the real property, to the corporation, and necessarily leave the title to such property in the plaintiffs.
It is true that such finding identified the property as “personal property.” Such description, however, was evidently descriptive only and used apparently as a means of identification of the fixtures. We see therein no indication of intention on the part of the .court to finally and judicially determine the character of these fixtures.
*831The purpose of the finding was quite evidently to point out the extent of the assets of the corporation rather than to adjudge the character of such assets.
But even if it is said that the defendant’s contention as to the construction of finding “twentieth” is the correct one, still we see no room for the application of the doctrine of res adjudicaba. It is the judgment which creates the estoppel. (Rudd v. Cornell, supra.) The breadth of the judgment is to be measured by the adjudications therein contained. If the trial court has made its finding determining the character of these fixtures, it has not seen fit to make its adjudication based thereon. Nor is it necessary to infer such a determination on the part of the trial court to sustain the judgment actually rendered. The various adjudications made in no wise depend upon it, and are amply supported by the other findings in the case exclusive of that finding.
In its determination in the foreclosure action the court apparently did not reach the question of ownership of these chattels. Ownership was claimed by the defendant receiver in that action as an affirmative claim there asserted by him.
The action was disposed of by the dismissal of plaintiffs’ claim, and the court apparently did not pass upon the defendant’s affirmative claim.
We cannot see the application of the doctrine of res adjudicaba to this situation, and hence no reason why the character of these fixtures is not to be determined by the ordinary rule in such cases. This requires a reversal and a new trial wherein there may be adduced proof as to the character of the affixation to the realty and the general and contemplated use of the fixtures in connection with the realty.
Irrespective of the correctness of the above conclusion, the judgment in this case is unauthorized. The trial court in this action has-found as matter of fact that the plaintiffs took possession of the articles of property in controversy, and took them from the possession of the defendant and retained them and disposed of them to the use and benefit of plaintiffs; that defendant suffered loss and damage thereby to the amount and value of the property so taken.
As a conclusion of law the court found the defendant was *832entitled to judgment against the plaintiffs for such loss and damage. The effect of these conclusions clearly is that plaintiffs converted and disposed of this property, and that the defendant was entitled to a judgment for its value. The judgment entered upon these findings expressly includes the value of such property and provides for the ascertainment of such value.
There is no evidence in the record now before us of any act of conversion by plaintiffs. So far as this record shows, the property remains to-day exactly where it was when the foreclosure action was started. Nothing in this record justifies the inference that plaintiffs have exercised any act of ownership over same, or any part of it. In fact this action is brought to determine the question of such ownership. Under such circumstances, the findings of fact and law above mentioned are unauthorized and cannot be sustained.
The judgment appealed from should be reversed and a new trial ordered, with costs to the appellants to abide the event.
All concurred, Foote, J., in a separate opinion, except Kruse, P. J., and Robson, J., who dissented in a memorandum by Kruse, P. J.