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Israel v. Wood Dolson Co., Inc.

Supreme Court of New York, Appellate Division

May 10, 1955

Israel
v.
Wood Dolson Co., Inc.

APPEAL from an order of the Supreme Court at Special Term (HOFSTADTER, J.), entered October 18, 1954, in New York County, which denied a motion by defendant-appellant for summary judgment dismissing the complaint.

COUNSEL

Sidney Roffman for appellant.

George J. Rudnick for respondent.

CALLAHAN, J.

We are required to determine whether under the rule of res judicata a prior judgment estops plaintiff from establishing against defendant Gross a fact necessary to the maintenance of this action, viz., the breach of a certain contract by codefendant Wood Dolson Company, Inc.

The action, as it now stands, is one against defendant Gross for inducing defendant Wood Dolson Company, Inc., to breach its contract to pay plaintiff a share of the brokerage commissions on the sale of a parcel of real estate.

Page 720

The plaintiff instituted this action against both Wood Dolson and Gross, alleging a first cause of action against Wood Dolson for breach of contract and a second cause of action against Gross for the unlawful inducement of said breach. The two causes of action were later severed, and plaintiff tried the case against Wood Dolson alone. The result of this trial was a holding that Wood Dolson had not breached the contract because, in fact, plaintiff had not procured the purchaser of the real property. Accordingly, the complaint against Wood Dolson was dismissed. Plaintiff did not appeal.

Gross thereupon amended his answer to plead the judgment in Wood Dolson's favor as an estoppel, and moved for summary judgment dismissing the complaint against himself on the basis of that judgment. Special Term denied the motion, holding that the judgment bound only the parties involved on the trial of the prior action and their privies, and that no estoppel existed as to Gross because privity and mutuality of estoppel were lacking. We are of a different view because we believe that this case presents an exception to the general rule.

Where certain relationships exist between the party claiming estoppel and the successful party in the prior litigation, the courts recognize exceptions to the rule requiring mutuality of estoppel. Those relationships, generally speaking, are principal and agent, master and servant, and indemnitor and indemnitee (Good Health Dairy Products Corp. v. Emery, 275 N.Y. 14, 18). But further exceptions have been recognized at times in cases where liability is altogether dependent upon the culpability of another (Portland Gold Mining Co. v. Stratton's Independence, 158 F. 63), and also in other instances where liability is not entirely derivative and the precise relationships aforesaid do not exist. In these cases the grounds for upholding the estoppel are said to be difficult to classify (Liberty Mut. Ins. Co. v. Colon & Co., 260 N.Y. 305, 310).

The basic reason for the rule of res judicata is that in the interest of the orderly administration of justice issues once fully tried should be deemed conclusively determined as to all future litigation where, at least, no injustice would result from the application of the rule. Under the present circumstances, where plaintiff had a full and untrammeled opportunity to establish the breach of contract by Wood Dolson and failed to succeed in a suit entirely controlled by him, it would seem that he should not be entitled to a second chance to prove the breach in an action against one charged with inducing the same.

Page 721

The Restatement of the Law of Judgments recognizes the present situation as a typical instance where an ...


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