Court Opinion

ID: 5752864
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:00:08.155064+00
Date Added: 2024-06-11T08:41:20.004899
License: Public Domain

Staley, Jr., J.
This is an appeal from an order dismissing defendant’s first affirmative defense of res judicata and his second affirmative defense of Statute of Limitations upon the merits after a trial of those issues before flic court below.
The plaintiff and defendant were married in the Province of Ontario on April 29, 1916 and their marriage was dissolved by an act of Parliament passed on May 9, 1950 and assented to by the Governor General of Canada on June 1, 1950. Subsequent to the divorce, on June 2, 1950, pending litigation that had been instituted by the plaintiff for separation and for dissolution of community of property was settled and the plaintiff renounced any claim to community of property, and the defendant contracted to pay and is paying her $1,400 per month for her support and secured said monthly payments by establishing a trust for the plaintiff’s benefit in the sum of $450,000.
In 1955 plaintiff commenced this action to recover damages for fraud in inducing her to enter into the contract of settlement on June 2,1950 after she allegedly discovered that defendant had misrepresented the value of the total community property that existed at the time they entered into the contract. Plaintiff alleges that she became a resident of New York in 1952 and later a citizen of the United States, Plaintiff served process on the defendant, a citizen and resident of Canada in New York State when he was temporarily in the State. The defendant moved to dismiss the complaint on the grounds of legal insufficiency; lack of jurisdiction of the subject of the action; forum non conveniens; res judicata and Statute of Limitations under the law of the Province of Quebec.
The Special Term denied the motion in all respects, which order was affirmed by this court, with two Justices dissenting, and by the Court of Appeals. (Cardy v. Cardy, 7 A D 2d 721, affd. 6 N Y 2d 943.) After service of the answer, the defendant made a motion for a separate prior trial of the issues of res judicata and Statute of Limitations raised by his affirmative defenses based on the application of Quebec law, which motion was granted by this court. (14 A D 2d 735.)
It is contended by the defendant that the execution of the agreement on June 2, 1950 resulted in a “ transaction” under the Civil Code of the Province of Quebec.
Articles 1918 to 1920 of the Civil Code provide as follows :
“1918. Transaction is a contract by which the parties terminate a lawsuit already begun, or prevent future litigation by means of concessions or reservations made by one or both of them.
*119“ 1919. Those persons only can enter into the contract of transaction who have legal capacity to dispose of the things which áre the object of it.
‘ ‘ 1920. Transaction has between the parties to it the authority of a final judgment (res judicata).”
The main issue tried by the court below was whether or not the transaction herein sustains the defense of res judicata so that plaintiff is prohibited from collaterally attacking the transaction in a suit for damages for fraud. Both parties presented expert testimony as to the controlling law of Quebec on this issue.
The defendant’s expert was an attorney admitted to the Quebec Bar in January, 1930. He held a Bachelor of Law degree from Dal ho usie University in Halifax, and a Master of Laws degree from Harvard Law School. He had practiced law continuously in the Province of Quebec from January, 1930 until the present time, with the exception of three years when ho was a Judge of the Superior Court of the Province of Quebec from November, 19-16 until July, 1919. He unequivocally stated that the agreement of June 2, 1950 was a transaction within the meaning of the Civil Code; that there were reciprocal concessions given by the parties; and that in any event reciprocal concessions were unnecessary. He testified that the transaction is the equivalent of a final judgment of a court and is res judicata; that the transaction having the same quality as a judgment could not be collaterally attacked and until it is set aside by direct action subsists for all purposes and entirely precludes this action against the defendant.
The plaintiff presented the testimony of two expert witnesses, the first of whom was a professor of law at McGill University and a well-known teacher and lecturer of Quebec law. He stated that in an action for frattd the party defrauded is not limited to the sole and exclusive remedy of rescission but may institute an action for indemnity; that a person electing to sue for damages could continue to receive benefits under the contract but must act as soon as he had knowledge of the fraud itself. He further testified that the agreement on June 2, 1950 terminated a pending lawsuit and was, therefore, a transaction; that a final judgment entered by a court could only be attacked by direct attack as provided by article 1177 of the Civil Code of Quebec. Nevertheless he testified that an action for damages grounded on fraud was a direct attack on the transaction.
The second expert witness of the plaintiff testified that a transaction was in effect a contract and a party to a contract in *120a suit for fraud was not limited to the sole remedy of rescission but could either rescind or sue for damages only.
The learned trial court found “neither side could find any Quebec ease directly in point ’ ’ and concluded ‘ ‘ in view * * * of the absence of direct Quebec authority the resolution of these issues requires an analysis of the various code provisions and decisions dealing with such matters as marriage status, community of ptoperty, transaction, and fraud, in an endeavor to ascertain the essence and spirit of Quebec law and apply it to the issues here presented”. Thus the judgment below is grounded on the trial court’s original adjudication of Quebec law on the legal effect of a transaction.
We find the Quebec statute, article 1920 of the Civil 'Code, the Quebec adjudications, and the commentaries thereon preclude this action.
It is undisputed that the settlement made on June 2, 1950 was a transaction. The Civil Code of Quebec explicitly provides it has the quality of a final judgment (Civil Code of Quebec, art. 1920).
In the case of Hardy v. Filiatrault (17 Can. S. C. R. 292), the Supreme Court of Canada in referring to articles 1918,1920 and 1921 of the Quebec Civil Code stated as follows: “ As one can see, transaction has at the same time the character and authority of an agreement and the force of a judgment. There cannot therefore be risen any question, even a question of law, which could have for effect to attack the present transaction. It has the effect of a court of last resort.”
In the ease of Watson v. O’Shea (34 Qué K. B. 236), a personal injury action was settled by means of a transaction. The plaintiff thereafter instituted an action claiming the same damages as in the original suit and the defendant pleaded the transaction as an absolute defense., The plaintiff then alleged that the transaction had been obtained through fraudulent means. The plaintiff obtained a judgment which on appeal was reversed, the appellate court stating as follows (as translated by Judge Campbell, defendant’s expert): ‘ ‘ The settlement made with the tutor terminated any recourse against the appellant because of the accident. He could not be sued without setting aside the settlement, without demanding the annulment thereof.”
“ Transaction ” was the subject of a law lecture given at the University of Montreal by the late Mr. Justice Phillippe Demees who had been a Supreme Court Judge for 43 years and the Dean of the University of Montreal for more than 20 years on which subject he stated as follows:
*121‘‘Law-suits, poison our lives with a multitude of torments; often, they arc the ruin of families. The transaction which terminates them is the better part of wisdom. One does not lose in transacting, because whatever sacrifice one may accept, he gains in return the most valuable of all assets, tranquility; ‘ melior est certa quam sperata victoria ’; ‘ Many remain beggarly after twenty legal victories. (Boileau) ’
“ This is the reason why the transaction has always been favourably considered; so favourably, indeed, that it is recognized by law to possess an authority, which must be respected as much as that of a judgment.”
Likewise the law of Louisiana, which has a Civil Code provision on transactions similar to the Quebec Civil Code and which law the experts agreed is the same as Quebec law, holds that a direct attack by annulment against a transaction is necessary and that a collateral attack by an action for damages cannot be made. (Chapin v. Federal Transp. Co., 70 So. 2d 189 [La.]; Wholesale Distr. Co. v. Warren, 84 So. 2d 250 [La.] ; Oglesby v. Attrill, 105 U. S. 605.)
In Oglesby v. Attrill (supra, pp. 610-611) the Supreme Court reviewed the effect of a compromise under the Code of Louisiana and stated as followsA compromise, by the code of Louisiana, is defined to be ‘ an agreement between two or more persons, who, for promoting or putting an end to a lawsuit, adjust their differences by mutual consent, in the manner which they agree on, and which any one of them prefers to the hope of gaining balanced by the danger of losing ’ (art. 3071); and has, between the interested parties, a force equal to the authority of a thing adjudged. It cannot be attacked on account of any error in law or any lesion. Art. 3075. * * * The compromise stands, therefore, as a judgment, making a settlement of the very matters now set up as grounds of complaint in the petition. * * * No allegations of fraud, in addition to those made at the settlement, can prevent the compromise from having effect as a judgment thereon. It may, indeed, by a direct proceeding instituted for that purpose, be rescinded for fraud, but it cannot, any more than any other judgment, be attacked collaterally. Adle v. Purdhomme, 16 La. Ann. 343. ’ ’
The experts, plaintiff’s and defendant’s, agree that Quebec law (Code Civ. Pro., art. 1177) provides for revocation of a judgment on various grounds, including fraud, and that revocation is necessary to enable resort to the claims thereby adjudicated. Quebec law does not enable a collateral action for fraud so long as the judgment persists. Plaintiff, however, argues a transaction is not a judgment within the meaning of *122article 1177. This argument rests on adjudications pertaining to simple contracts, In the light of Hardy, Watson and Oglesby (supra), we conduele that under Quebec law the transaction herein has the attributes of a judgment, and until it is revoked precludes this action. •
The judgment appealed from should be reversed, on the law and on the facts, and the motion to dismiss the second amended complaint granted, without costs and disbursements.