On appeal from the Supreme Court, Essex county.
For the appellant, Henry Ewald, Jr. (John G. Flanigan, of counsel).
For the respondent, Lum, Tamblyn & Fairlie (Charles S. Barrett, Jr., of counsel).
The opinion of the court was delivered by
LLOYD, J. The appeal is from a judgment obtained in an action on a written agreement entered into between the plaintiff and the defendant below guaranteeing payment of moneys to become due under an agreement between the plaintiff and her husband, William Robertson, Jr. (son of the defendant).
To the complaint alleging default in such payments, the defendant set up several defenses, one of which was that the agreement between the plaintiff and her husband, as also the agreement sued on, were predicated on an arrangement between husband and wife for a collusive divorce; that this collusion tainted both agreements. These defenses were all struck as either sham or frivolous and judgment entered for the plaintiff. We find it necessary to consider the defense of collusion only.
Prior to the institution of the present action another suit for installments due on the agreement here sued on was begun and determined in favor of the plaintiff. This judgment was later affirmed in the Supreme Court. 114 N.J.L. 558. In that suit the defense of collusion was not pleaded, but it is contended by respondent that the judgment is nevertheless conclusive here and res adjudicata of the rights of the parties under the agreement.
This court decided otherwise in the recent case of Phillips v. Phillips, 119 N.J. Eq. 497. There, as here, defense of collusion to obtain a divorce was set up in a suit to enforce payment of alimony agreed on between the parties, and this defense was met by the admitted fact that an action on the same agreement had been determined in a prior action in the courts of New York. Although in another appeal the bill itself in that case was directed to be dismissed as outside Chancery jurisdiction (Phillips v. Phillips, 119 N.J. Eq. 462) the court passed upon the sufficiency of the plea and held that in effect collusion to obtain a divorce was available to the defendant as a defense to the action notwithstanding the earlier decision.
It may be conceded that as a general rule under our cases and the general principle of the doctrine of res adjudicata the plea that the agreement sued on was based on a fraudulent underlying agreement and that that question was determined in the first action would be conclusive here; and even if the plea were available as a defense, though not raised, it would be equally conclusive. McMichael v. Horay, 90 N.J.L. 142; Margolies v. Goldberg, 101 Id. 75; White v. Mindes, 106 Id. 606; The Ordinary v. Webb, 112 Id. 395; Paterson v. Baker, 51 N.J. Eq. 49, 53; Cashin v. Alamac Hotel Co., 98 Id. 432, 441, 442.
That this applies to ordinary cases of fraud by one party or the other or by both the above citations abundantly show. But the present case, like that of Phillips v. Phillips, supra (at p. 497), rests upon a different principle, and that principle is that an agreement which is a fraud upon the court and against public policy cannot attain a status by the neglect
or connivance of the parties, so as to bar its use as a defense in a subsequent action. This much was involved and decided in the Phillips case. More than this, we think, was not decided. It was not intended to change the rule as stated in McMichael v. Horay, supra, by Chancellor Walker, that "parties and those in privity with them are concluded not only as to every matter offered and received to sustain or ...