Opinion
No. 47/384.
06-03-1921
JOSEPH W. NORTH & SON, Inc. v. NORTH et al.
A. J. David, of Elizabeth, for complainant. Lum, Tamblyn & Colyer and Ralph Lum, all of Newark, for defendants.
Suit by Joseph W. North & Son, Incorporated, against Herbert S. North and others. Decree for complainant.
See, also, 93 N. J. Law, 438, 108 Atl. 244; 93 N. J. Law, 476, 108 Atl. 247; 110 Atl. 581.
A. J. David, of Elizabeth, for complainant.
Lum, Tamblyn & Colyer and Ralph Lum, all of Newark, for defendants.
BACKES, V. C. The complainant has supplemented its bill, as suggested in the conclusions filed May 9, 1920 (North v. North [Ch.] 110 Atl. 581), and now sets up that on February 24, 1921, the Plaut Company recovered a judgment against it for $300 damages for failure to fill one of the orders mentioned in the "schedule," and that payment is demanded; and it prays that sufficient money be appropriated out of the fund of $20,000 in the Elizabeth Trust Company to extinguish the liability. (Since the filing of the supplemental bill the fund has been paid over to the defendant, he being financially responsible, and the prayer is regarded as calling upon him to relieve the complainant of the judgment.) The answer admits, sub silentio, the allegation, but denies the right of the complainant to relief. The cause came on for hearing on bill and answer. I have already held that the complainant is entitled to recover upon establishing its liability. This has now been done by the judgment. The judgment is prima facie evidence against the defendant, and if he had notice of the suit, and an opportunity to defend (which is not pleaded, but counsel states he had), it is conclusive against him. 32 Cyc. 270. The present position of the parties is analogous to that of principal and surety. The defendant has now become the principal, and the complainant the surety. A surety may call upon his principal to save him harmless; he need not wait until he has suffered harm by paying the debt. Irick v. Black, 17 N. J. Eq. 189; Holcombe v. Fetter, 70 N. J. Eq. 300. 67 Atl. 1078; Chancellor v. Towell, 80 N. J. Eq. 223, 82 Atl. 861, 39 L. R, A. (N. S.) 359, Ann. Cas. 1914A, 710.
The defendant's counsel draws a distinction between the right to equitable relief where the liability is a fixed sum, as in Loosmore v. Radford, 9 M. & W. 657, cited in Sparkman v. Gove, 44 N. J. Law, 252, and in North v. North, 93 N. J. Law, 438, 108 Atl. 244, affirmed 93 N. J. Law, 476, 108 Atl. 247, and where, as in the present case, the liability is unliquidated. The difference, if any lies in the character of the proof, and not in the applicability of the principle. The distinction vanishes with the coming of the judgment. The liability is then liquidated. This distinction was adverted to in my former conclusions (110 Atl. 581), where it was said that "to invoke that equity (the one now sought) the complainant must point out with certainty and definiteness the double liability, as to amount and person, and establish it by satisfactory proof." The liability reduced to judgment is one form of proof;proof of payment of the exact damage is another.
The defendant also sets up in his answer and contends that he suffered damage to the amount of $60,000 because of the complainant's failure to save him harmless from liability, and that, although he was limited by the ad damnum of his complaint in his suit at law to a maximum recovery of $20,000, which he recovered (93 N. J. Law, 438, 108 Atl. 244), his damage of $60,000 was in fact mitigated, in some degree at least, by the testimony of the complainant that it had novated much of the defendant's liability and had caused other of it to be canceled. This testimony, he alleges, was untrue, and he avers that he is still liable to his former customers in sums in the aggregate greatly in excess of the amount of his judgment, and that therefore it would be inequitable to compel him to apply the amount of his judgment, or any part of it, in discharge of the complainant's liability. I confess I am unable to follow the argument. Whenever and however the defendant discharges the complainant's liability he discharges his own. Their liability is identical. And so, whether the defendant be compelled to apply his $20,000 verdict towards the satisfaction of one or the other of his customer creditors' claims, it releases both only to that extent, leaving each still liable for the balance. The defendant's dilemma is that he has not enough money verdict to go around. This unfortunate situation was brought about by the rule of the law court. The jury was not privileged to award the defendant as much as was necessary to relieve him of the liability against which the complainant had promised to protect him, because of his pleadings he had limited the amount of his damage, which was unliquidated, to $20,000. Excelsior Electric Co. v. Sweet, 59 N. J. Law, 441, 31 Atl. 721. Withdrawal of a juror, by permission of the court, and an amendment to an otherwise formal part of the pleading, and a new trial, or submitting to a nonsuit and a suit de novo, were the only ways open to a verdict equal to the damage. Then, had the verdict been the amount of the defendant's liability to his customers, he would not be in his present predicament to stretch a $20,000 verdict to pay a $60,000 liability.
This situation may arise hereafter; it is not now before me. A customer creditor may sue the complainant only, foregoing his right of action against the defendant. If, perchance, the customer should be one whose claim the complainant set up in the action at law as having been settled or taken over by it, the defendant could, probably, raise an estoppel and defeat the complainant's bill for protection pro tanto. The court would then marshal the liabilities.
The complainant is entitled to a decree for the amount of the Plaut judgment.