Court Opinion

ID: 6163391
Source: CourtListenerOpinion
Date Created: 2022-02-05 18:17:42.69864+00
Date Added: 2024-06-11T08:55:32.176319
License: Public Domain

Pitshke, J.,
(dissenting.) The superior court case was brought to recover the proceeds of an alleged discount, obtained by Watts, of the note in question; and, if he (Watts) had not yet had the note discounted, that action necessarily had to be dismissed, and a verdict given for Watts as defendant there; for that was the gravamen of the complaint there, and the main issue before the jury, therefore, who found for Watts thereon; and the result simply is that no proceeds of a discount were then yet received by Watts for Adler to “gather, ” and there was nothing as yet to deliver up. Watts might realize some such proceeds the very next day after said judgment was entered, and then another such superior court suit would at once lie, notwithstanding the judgment roll in that ease between Adler and Watts. This self-evident statement, of itself, disposes of the supposed efficacy of said judgment roll as res adjudícala. Plaintiff, Hartnett, in the present action, as transferee from Watts, asserts that Watts was absolute owner and lawful holder of the note in suit, for his own use. According to the defense pleaded herein, however, Watts was not entitled to dispose of or pass said note for his own benefit, but only to Axller’s use. In that aspect, Watts’ holding of the note would be a fiduciary one; the title to said note meanwhile remaining in his principal, Adler, who might follow and claim it anywhere,.subject only to the rights of bona fide purchasers thereof for a valuable consideration. Comstock v. Hier, 73 N. Y. 277; Baker v. Bank, 100 N. Y. 33, 2 N. E. Rep. 452; Decker v. Mathews, 12 N. Y. 323. But Watts, as indorsee after maturity, was not such a bona fide purchaser, (Newell v. Gregg, 51 Barb. 263;) and he expended only $100 in the ac*325quisition of this $1,000 note. The superior court judgment roll was perfected in ¡November, 1886; while the note herein in suit did not leave Watts, or pass unto plaintiff, Hartnett, until October, 1887. The complaint in the superior court case against Watts alleged the making of the note in question, the agreement to discount it for the maker’s benefit, and that such discount on Watts’ part had occurred. The answer there was a general denial of these allegations, admitting, however, the making of the note to Watts; and such answer .also maintained that Watts took and held said note as absolute owner for his •own use. The judgment in that suit was a “dismissal” of said complaint. It is not the former recovery, but the decision of that which was in previous •contestation, that constitutes the estoppel of res adjudicaba. Dawley v. Brown, 79 N. Y. 390. A judgment is only conclusive on those grounds it covers, and "the facts necessary to uphold it; and if the fact or rule of law apparently involved was immaterial to the issue, or the controversy did not necessarily turn ■on it, the parties are not concluded. Woodgate v. Fleet, 44 N. Y. 13, 14; People v. Johnson, 38 N. Y. 65. Hence the present defendant is herein not •estopped from disproving an allegation contained in the answer in the former suit, the truth of which was not involved in the judgment rendered in :said former suit. Sweet v. Tuttle, 14 N. Y. 465. The burden to show (which ■may be by extrinsic evidence) that the precise question was not only raised, but determined, in the former action, rests upon the party making use of such •former judgment as conclusive evidence thereon, (viz., on plaintiff, as transferee from Watts.) If there be uncertainty whether or not the question was passed on, such judgment is not conclusive as evidence. Bell v. Merrifleld, 16 N. E. Rep. 58, (N. Y. Ct. App., April 10,1888,) and cases there cited, particularly Cromwell v. County of Sac, 94 U. S. 351, and Russell v. Place, Id. 606. Thus, in Stowell v. Chamberlain, 60 N. Y. 277, in a'second cause between same parties in regard to the same transaction, where the former judgment was for wrongful conversion, and the second in assumpsit, (both as herein,) it was held that, in order to make such former judgment available •either in bar or as evidence, it was necessary to show that the question of plaintiff’s title was passed upon in the first suit; for said previous judgment may have passed on the fact that the defendant there had not had “possession,” and hence, on that ground, was found not guilty of “conversion.” That judgment was therefore held not, of itself, to be conclusive in the subsequent action between the same parties. That was just the present case. Similarly as in Stowell v. Chamberlain, supra, when Watts was sued in the .superior court for a “conversion” of the proceeds of a discount obtained by him on the note herein in suit, his answer there denying all possession of any such proceeds, besides a denial of Adler’s complaint generally, (with a claim •of absolute title to said note in Watts,) that judgment so there rendered, dismissing the complaint, may have passed on the fact that Watts was never "“possessed ” of any proceeds of the note, because he till then had not had it transferred or discounted; and this, without at all deciding Watts’s title respecting it. Therefore that judgment roll was, of itself, not conclusive .herein; and the defendant herein should not thereby have been precluded from proving his defense pleaded in his answer herein. To obtain the benefit of a .prior adjudication of a fact, it is entirely reasonable to exact from the party asking such benefit clear proof that such adjudication took place. Bell v. Merrifleld, supra. The superior court record alone did not show it; for there was nothing in it whereby it could be ascertained on which of the two possible grounds—i. e., either a dismissal because no note proceeds were then yet procured or received by Watts, or because Watts was absolute owner, and so himself entitled to all proceeds of the note—the said record proceeded and was based. And the evidence which was given in this action dehors the record did not fill the gap. As it was undisputed in the superior court case that Watts did not get the note discounted, and never had any proceeds, it was un*326necessary to go beyond that for a verdict that defendant was clear of any claim for conversion in such former suit; and that, presumably, the verdict passed on alone,—it being, for such a finding inWatts’ favor there, utterly unnecessary to determiné the nature of Watts’ title to the note, and the jury, hence, presumably did not. The superior court judgment is consequently not conclusive herein as res adjudieata on the question of Watts’ absolute title to the note in suit. The present plaintiff took the said note from Watts after maturity, subject to all equities, and stands in the same position, as to any defense herein thereto, that Watts, as payee of the note, would have stood in had he been suing Adler, (Lansing v. Gaine, 2 Johns. 300,) that is to say, any defense Adler could, raise against Watts, were he now the plaintiff, Adler can raise against Hartnett herein. This plaintiff is a mere “assignee” of the note, and Watts and he are privies. Hence the total failure of consideration in its inception was a good defense to this note, taken after maturity, (Prall v. Hinchman, 6 Duer, 354;) and, as.above demonstrated, Mr. Alder would, by such superior court record as herein adduced, not be estopped or barred herein, as against Watts as a plaintiff, from specially litigating the claim of Watts as alleged lawful owner of said note. The direction of-a verdict in favor of the present plaintiff against Adler was, in consequence, entirely unwarranted. Furthermore; if there thus existed a good defense between Adler and Hartnett, the same as between the maker and payee, provable herein, this plaintiff (were he a bona fide holder before maturity) could not, in any aspect, be protected or recover herein beyond the extent of the consideration actually paid by him, which was only $100, and, moreover, for the said $1,000 note, when overdue. Huffy v. Wagner, 63 Barb. 231, 232; .Harger v. Wilson, Id. 237. Holds Danforth, J., in Nickerson v. Ruger, 76 N. Y. top page 284, as follows: “Only to the extent that the plaintiff has paid value for the note can he recover; and not for that, even, if he is chargeable with notice of the diversion of the note.” That was a case where similarly there existed a defense of “diversion” against the note sued on; and the complainant claimed, as an alleged bona fide holder without notice, the full amount of the note. Hartnett, however, was a taker of the note in suit after maturity thereof, and hence took it with implied notice of its real status. And the court below accordingly erred in directing a verdict in favor of plaintiff for the full amount of this note. In my opinion,- the judgment and order appealed from should, for the above reasons, be reversed, and a new trial ordered.
Since writing the above, I find that the common pleas general term, in. Insurance Co. v. Bishop, 1 Daly, 449, specifically held that where a record discloses two issues, and the jury finds generally for the defendant, both questions are presumptively res adjudieata; and that, in a subsequent proceeding in which one of such questions arises, it is for the party combating the record to show that it was not passed upon by the jury. According to this case, the onus rested on the defendant herein to prove that both questions involved in the superior court action were not adjudicated; and, as the defendant did not-establish this fact, I reluctantly concur in the conclusion arrived at by Justice McGown that the judgment and order appealed from must be affirmed, with costs.