Rust v. Hauselt

The history of this case has been somewhat remarkable and complicated, and is, to that extent, at least, interesting. A. statement of its history is necessary to an intelligent discussion of the questions involved- in these motions.

The action was begun in April, 1875. The plaintiff, in his complaint, alleged that he and his copartner one Henry Rancke (who was made a defendant because he declined to unite with him as a plaintiff), on October 23, 1873, made an assignment to the defendant for the benefit of their creditors ; that the defendant, with' the assets of the firm, had discharged their debts and liabilities, and had remaining in his hands a considerable surplus; that Rancke had transferred his interest in such surplus to the plaintiff ; demanded an accounting, and asked judgment upon such accounting that the defendant pay over to him the sum remaining in his hands.

The answer of the defendant admitted the assignment and the payment of the indebtedness of the firm of Rancke & Rust, except that due himself, but alleged

The case was tried in November, 1875, before a judge without a jury, who dismissed the complaint and ordered judgment for the defendant Háuselt against the plaintiff Rust, and against his co-defendant- Rancke, for the sum of $1,881.

On appeal to the general term, on May 8, 1876, the judgment of the special term was reversed. The judgment first entered upon such reversal did not direct a new trial (41 Super. Ct. 467).

The defendant Hauselt thereupon appealed to the court of appeals from the judgment of reversal, without giving the stipulation required by section 191 of the Code upon an appeal from a judgment ordering a new trial.

The court of appeals declined to hear the appeal unless the notice of appeal was amended by inserting-such stipulation upon the argument. That being done, the court of appeals heard the argument, but dismissed the appeal on the ground that it was from a simple order of reversal from which no appeal would lie to that court ( 69 N. Y. 485 ). Thereupon, by stipulation of counsel, the order of this court, dated May 8, 1876, was so amended as to reverse the judgment of the special term and to order a new trial; and judgment to that effect was entered.

From this judgment the defendant Hauselt again

The judgment of the court of appeals was in due form made the judgment of the superior court. It was then, at a special term of this court, on March 29, 1879, ordered that the plaintiff John C. Rust have judgment absolute against the said defendant Charles Hauselt, with costs. It was further ordered that it be referred to a “ referee to state the account and to ascertain and determine the sum or amount which was due from the defendant Charles Hauselt to the plaintiff John C. Rust, under the judgment of the court of appeals and the judgment of this court - entered thereon.”

The parties attended before the referee, who reported, July 8, 1879: “That the defendant Hauselt received under the assignment the sum of $13,000; that he paid to creditors of the firm $11,235.32, leaving abalance of $1,764.68; that the indebtedness of Charles Hauselt was recognized and stated in the statement of liabilities of said firm, furnished to him by said firm at the time of said assignment, to be the sum of $3,000; that all of said balance is not sufficient to pay the indebtedness due the said Hauselt from the „ said firm, irrespective of his commissions as assignee ; that he has ascertained and reports that there is no sum or amount whatever due from the said defendant Charles Hauselt to the plaintiff John C. Rust.”

The defendant took up and filed the referee’s report and moved for its confirmation. No exceptions

The defendant then attempted to tax the costs of the action. The clerk declined to tax his costs, on the ground that the costs had not been awarded to him. The court sustained the clerk’s ruling. The defendant then attempted to tax, as his disbursements, the §80 paid the referee upon taking up his report. This was refused by the clerk, and Judge Freedman, before whom the matter was taken, sustained the clerk, holding that disbursements followed costs, and that a party not entitled to costs was not entitled to tax disbursements.

Now the defendant seeks to enter an affirmative s judgment against the plaintiff for the amount of the indebtedness of Rancke & Rust to him, stated in the computation of the referee as remaining unpaid after the application of all the moneys which came into his hands by virtue of the assignment.

The question then is whether, under the circumstances recited, the defendant is entitled to enter such judgment, and what costs the respective parties are entitled to.

The defendant claims substantially the same rights as if the reference ordered for the purpose of carrying out the order of the court of appeals giving the plaintiff judgment absolute, were an ordinary reference to hear, try and determine all the issues in the action, on the coming in of the report as to which he would be entitled, as a matter of course, to enter judgment.

There are two objections to this theory: In the first place, it was not such a reference, but a reference to state the accounts and to report what was due the

What was the effect of that stipulation and judgment % Did it mean something or nothing % Could the defendant stipulate that judgment absolute should Be rendered against him, and under such a judgment still enter an affirmative judgment for all that he originally claimed ?

I. think not. Any right which he had to the affirmative relief, claimed in his answer, was lost by the judgment of the court of appeals on his stipulation, so that when the case came back to the superior court, it stood in the same position as if there had been no answer interposed—at any rate, no answer asking for affirmative relief. The court might have taken the account, and, having ascertained that there was nothing due the plaintiff, ordered judgment for the plaintiff simply for costs, in conformity with the decision of the court of appeals. It chose, instead, to have the examination made by a referee, under its direction.

The defendant acquired no new rights by reason of the matter being sent to a referee. The referee was simply to perform an act for the court, mainly ministerial, whereupon, it became the duty of the court to enter a final judgment in conformity to the decision of the court of appeals.

There cannot be such a thing as a judgment absolute for the plaintiff, and a finding for defendant of a larger balance due him (Shufelt v. Rowley, 4 Cow. 58 ).

In Thompson v. Lumley ( 7 Daly, 74 ), which was an action for malicious prosecution, the complaint was dismissed at the trial. The general term reversed the judgment and ordered a new trial. The court of ap.

“ The effect of the judgment of the court of appeals was the same as if the whole of the plaintiff’s cause of. action had been admitted. It was equivalent to an admission, by a failure to put in an answer, that the defendants had, maliciously and without probable cause, caused the plaintiff to be arrested, imprisoned and. prosecuted upon a charge of perjury. But the amount paid for counsel fees and costs the plaintiff had to-prove upon the assessment, for that was in no way settled by the judgment of the court of appeals, the effect-of which was simply to establish the plaintiff’s cause-of action as averred in his complaint,but nothing more,, and the ruling of the judge upon this point was, in my opinion, erroneous (p. 76). ... As respects the assessment of damages in this case, it is to be regarded as-analogous to a default upon a failure to answer, and to-be governed by the practice which existed upon assessing damages upon an inquest at the circuit, or upon a. writ of inquiry before a sheriff’s jury” (p. 78).

What, then, is the effect of an admission by failure to answer \ Clearly, that the plaintiff in an action is entitled to the relief demanded.

It would be an extraordinary thing for a defendant who did not answer, to get an affirmative judgment in. the nature of a counter-claim.

“The principle still remains that the judgment to be rendered by any court must be secundum allegata et probata, and this rule cannot be departed from without inextricable confusion, uncertainty and mis- • chief in the administration of justice. Parties go to court to try the issues made by the pleadings, and courts have no right to make new issues for them on the trial, to their surprise or prejudice, or to find judgments on grounds not put in issue and distinctly and fairly litigated” (See also Kniffen v. McConnell, 30 N. Y. 285 -290 ; Stephens v. Hall, 2 Robt. 674; Doyle v. Mulrein, 1 Sweeney, 517 ; Norbury v. Seeley, A How. Pr. 73 ; Glen Manufacturing Co. v. Hall, 6 Lans. 158 ).

The rendering of an affirmative judgment in favor of a party who had stipulated that judgment absolute should be rendered against him would be quite as improper as to render j udgment in his favor for what his pleadings did not claim.

It is suggested that the case of People v. Denison, decided at the Albany special term in May last (N. Y. Daily Register, July 1), is an authority for the position here taken by the defendant. I think not. In that case the action was brought by the People to re

In the Denison case, the defendant, in whose favor judgment absolute had been ordered, sought to enter judgment without having his damages assessed, and was forbidden.

The court of appeals, in affirming the judgment of the general term, and ordering a new trial, with judgment absolute for the plaintiff, said, “with costs.”

I am of opinion that that judgment for costs carries the general costs of the action from beginning to end, except the costs of the appeals taken by plaintiff from the order confirming the report of the referee, which were specially adjudged to the defendant Hauselt.

These costs should be offset against each other, and judgment should be entered for the plaintiff for the excess.