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Balip Automotive Repairs Inc. v. Schroeder

November 30, 1949


Wm. J. Brennan, Jr., J.s.c.


Defendant, Atlantic Casualty Insurance Company, has applied under Rule 3:60-2(3) for relief from a final judgment in favor of plaintiff entered on a jury verdict. The cited rule authorizes relief on motion when it is established that the final judgment is the product of "fraud (whether heretofore denominated intrinsic or extrinsic)" of an adverse party. The fraud charged here is the alleged perjured testimony of plaintiff's president which supplied the essential evidence to make out plaintiff's case.

Plaintiff is an automobile repair concern and sued for the amount of a repair bill for repairs to a taxicab damaged in a collision with an automobile of an assured of the insurance company. The defendants were the taxicab owner, the insurance company and one Leonard, a claim investigator for the insurance company. The verdict was against the insurance company only. Plaintiff discontinued the suit as against the taxicab owner, who testified on behalf of plaintiff at the trial. The jury returned a verdict of no cause for action in Leonard's favor in compliance with the court's instructions so to do if they found that he had ordered the repairs to be done for the account of the insurance company within the scope of an authority so to do as its agent.

Plaintiff sought to prove Leonard's agency and scope of authority by statements out of court imputed to Leonard in conversations with plaintiff's officers and the taxicab owner. These were to the effect that Leonard ordered the repairs and had said "My company will take care of the bill." These statements, standing alone, were not evidential either of

agency or scope of authority under the well settled rules that agency cannot be proved by declarations out of court imputed to the alleged agent and that such statements out of court are not to be deemed admissions binding on the principal except when by evidence other than the alleged agent's statements out of court they are proved to be within the scope of his agency or to have been authorized by his principal. Van Genderen v. Paterson Wimsett Thrift Co. , 128 N.J.L. 41 (E. & A. 1941); Ashmore v. Pennsylvania Steam Towing & Transportation Co. , 38 N.J.L. 13 (Sup. Ct. 1875); and see also Van Allen v. Lobel , 123 N.J.L. 273 (E. & A. 1939); Arenson v. Skouras Theatres Corp. , 131 N.J.L. 303 (E. & A. 1943); Leonard v. Standard Aero Corp. , 95 N.J.L. 235 (E. & A. 1920); Rafetto v. Warner Bros. , 121 N.J.L. 333 (Sup. Ct. 1938); Safner v. Gollen , 96 N.J.L. 431 (Sup. Ct. 1921); Yosbimi v. U.S. Express Co. , 78 N.J.L. 281, (Sup. Ct. 1909); Huebner v. Erie R. Co. , 69 N.J.L. 327 (E. & A. 1903); Blackman v. West Jersey, etc., R. Co. , 68 N.J.L. 1 (Sup. Ct. 1902).

However, plaintiff's proofs were not limited to the evidence of the out of court statements of Leonard but included the testimony of plaintiff's president that in the four months prior to the repair of the taxicab plaintiff had repaired 10 to 15 other vehicles on orders of Leonard and had been paid for such repairs by checks of the insurance company. He further testified that Leonard was the only employee of the insurance company with whom plaintiff dealt at any time and that in each of the 10 to 15 instances plaintiff's books "very possibly" recorded the repair job in the name of the owner of the vehicle but with a notation that the repair bill was to be charged to and paid by the insurance company.

Plaintiff's president testified in the morning of the second and last day of the trial. The summons and complaint issued February 27, 1947. The complaint alleged that the agreement for the taxicab repairs was made by Leonard for the account of the insurance company, and a bill of particulars, dated April 10, 1947, supplied the insurance company with information that the plaintiff claimed the agreement was oral

and had been made between Leonard and one Baker, an officer of plaintiff company. A pretrial conference was held February 10, 1949, and the case was tried March 30 and 31, 1949. The insurance company did not before the trial avail itself of the rules permitting discovery proceedings by deposition or interrogatories nor did it subpoena any officer of plaintiff to produce plaintiff's books at the trial. During the cross-examination of plaintiff's president late in the morning of March 31st the insurance company's attorney moved the court to direct the witness to obtain the books and bring them to the trial. This motion was denied when it appeared that no effort had been made to subpoena them and that it would take "probably three hours to get them," or after the time when the trial could be concluded.

The case was tried before the author of this opinion. The charge instructed the jury that they must determine the issues of Leonard's agency and scope of authority solely on the evidence as to the repairs of the 10 to 15 vehicles and without reference to the statements out of court as to the taxicab repairs imputed to Leonard and that such statements were binding on the insurance company as admissions only if the jury concluded from the testimony as to the 10 to 15 vehicles that Leonard had authority to order vehicles to be repaired and to obligate his employer to pay for the repairs. Compare Van Genderen v. Paterson Wimsett Thrift Co., supra.

The insurance company contends that the testimony of plaintiff's president as to the repairs to the 10 to 15 vehicles for its account and the payment of the bills therefor by its checks was willfully false and perjured, and that this perjury frustrated the success of its motion for an involuntary dismissal at the end of the plaintiff's case and of its motion for a directed verdict at the end of the whole case. It is clear that but for such testimony defendant would have prevailed on one of its motions because without that testimony, plaintiff's proofs were barren of legal evidence to support a verdict against the insurance company. Defendant's proofs were confined to the oral testimony of Leonard and its vice-president

and included a categorical denial by Leonard that he had ever ordered repairs to be done by plaintiff to any vehicle at any time including the taxicab and an equally emphatic denial by the vice-president that the insurance company ever issued its check to plaintiff in payment of any repair bill.

The insurance company applied to the court within a few days after the trial and verdict for a rule directing plaintiff to show cause why an order should not issue permitting the taking of depositions in support of an application under Rule 3:60-2(3) for relief against the judgment because of the alleged perjured testimony. The order sought was entered May 23, 1949, the ...

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