Court Opinion

ID: 5388120
Source: CourtListenerOpinion
Date Created: 2022-01-08 09:35:50.62172+00
Date Added: 2024-06-11T08:30:15.786804
License: Public Domain

Van Voorhis, J.
(dissenting). Plaintiff seeks to escape from the obligation of his stock subscription agreement upon the theory that there has been a breach of the following express warranty contained therein: 16 No claims have been asserted, nor do any exist and no legal actions have been instituted, nor is there any reasonable basis for legal action against either Lord Calvert or Sen Sen, and none of their respective properties or assets are subject to any lien or encumbrance or claim of right by any person, other than those described in Exhibits A, B and C.”
Several months after plaintiff had signed this stock subscription agreement, an information was filed against the individual respondents and Sen Sen Extract Co., Inc., in the United States District Court for the Eastern District of New York under subdivision (a) of section 331 and subdivision (a) of section 343 of title 21 of the United States Code, known as the Food and Drugs Act. To this charge those defendants eventually *358pleaded nolo contendere and were each fined $500. A previous decision in the United States District Court for the Eastern District of Wisconsin, later reversed on appeal, had been to the effect that a shipment in interstate commerce of the ingredient which was the subject of this charge was not forbidden. The acts complained of occurred over five years ago, and no current shipment in interstate commerce of any contraband potable extract is involved.
The circumstance that Sen Sen and the Hirshleifers had been for some time prior to the signing of the subscription agreement under investigation by the Food and Drugs Administration concerning this shipment, did not constitute the assertion of a claim against Sen Sen in violation of the warranty. No claim, civil or criminal, was asserted until the filing of the information after the subscription agreement had been signed. The only part of the warranty which could possibly be applicable is contained in the clause, “ nor is there any reasonable basis for legal action against either Lord Calvert or Sen Sen ”. This language might broadly be interpreted to represent that the facts on which the information was based were not in existence when the subscription agreement was signed. There might be a breach of this warranty if the facts stated in the information filed in the Federal court stood admitted or had been proved to exist. The record contains no independent proof of such facts. They can only be held to have been established by the plea of nolo contendere as a result of which the Hirshleifers and Sen Sen were punished by these small fines. The difficulty with this reasoning is that a plea of nolo contendere does not create an estoppel, and is not an admission of guilt except in the proceeding directly involved. It may not be used against a defendant in any civil or criminal proceeding except to establish the fact of a prior conviction. (Hudson v. United States, 272 U. S. 451; United States ex rel. Bruno v. Reimer, 98 F. 2d 92; United States v. Larr, 195 F. 47; Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F. Supp. 308.)
The judgment dismissing the complaint should be affirmed, with costs.
Peck, P. J., and Heffernan, J., concur with Dore, J., Van Voorhis, J., dissents and votes to affirm, in opinion, in which Cohn, J., concurs.
Judgment and order reversed, with costs to the appellant and the motion for summary judgment denied. Settle order on notice.