On appeal from Superior Court, Appellate Division, whose opinion is reported in 9 N.J. Super. 59.
For affirmance -- Chief Justice Vanderbilt, and Justices Case, Oliphant, Wachenfeld, Burling and Ackerson. For reversal -- None. The opinion of the court was delivered by Burling, J.
[6 NJ Page 305] This appeal is from a judgment of the Superior Court, Appellate Division, affirming a judgment of the Superior Court, Law Division, dismissing Charles S. Einsiedler's petition in the first captioned cause and his complaint in the second captioned cause in both of which proceedings Einsiedler sought reformation, together with incidental relief, of a contract upon which suit had been originally brought by the Massaris against Einsiedler and in which judgment had been entered in favor of the Massaris and against Einsiedler.
The cause was certified by this court pursuant to a petition therefor by Einsiedler.
The litigation between the parties leading to the present appeal has been extensive and the recital of the procedural background will be limited to such facts as are necessary for a determination of the question presently before us.
On September 17, 1948, the Massaris commenced suit in the Superior Court, Law Division, to collect the unpaid balance of the purchase price alleged to be due under a contract between the parties, dated September 16, 1946, whereby the Massaris agreed to sell a business owned by them and Einsiedler agreed to purchase the same on a deferred payment plan as therein stated, the full purchase price being payable within two years. Summary judgment was entered by the trial court in favor of the Massaris, pursuant to a motion therefor. In that suit, Einsiedler's answer admitted the balance due under the contract but pleaded a loan agreement and a security trust agreement, both dated September 25, 1946. The contract dated September 16, 1946, was executed by the Massaris and Einsiedler, whereas the two subsequent agreements were executed solely by Einsiedler. The purport of the latter two agreements was to require the Massaris to accept shares of stock, at their book value, of a corporation to be formed by Einsiedler, in satisfaction of the unpaid balance of the purchase price of the business so sold in the event of a breach by Einsiedler of the contract of sale, dated September 16, 1946. The trial court held that the security trust and loan agreements, executed solely by Einsiedler, were inadmissible in evidence to vary the terms of payment as contained in the contract of sale. Einsiedler then filed a petition and supplement thereto seeking to compel the Massaris to accept the aforementioned stock at book value in reduction of the judgment. The petitions were dismissed by the Law Division. On appeal by Einsiedler, the order of dismissal and the summary judgment were affirmed by the Appellate Division. Massari v. Einsiedler, 3 N.J. Super. 40 (App. Div. 1949); certification was denied, Massari v. Einsiedler, 1 N.J. 604 (1949).
Einsiedler, in the present proceedings, sought relief by way of reformation, urging that the true agreement between the parties was that expressed by the contract of September 16, 1946, as modified by the loan and security agreements. A petition was filed with the Superior Court, Law Division, and a complaint was filed in the Chancery Division in both of which proceedings reformation and incidental relief was sought. The complaint in the Chancery Division was transferred to the Law Division, where, by subsequent amendment, Einsiedler sought restitution and damages for breach of contract as reformed. These several actions instituted by Einsiedler were consolidated and, on motion of the Massaris, were dismissed by the Law Division. The judgment was affirmed by the Superior Court, Appellate Division. Certification was granted by the Supreme Court to review the judgment of the Appellate Division pursuant to a petition therefor by Einsiedler.
The primary question to be determined is whether the disposition of the former proceedings is res judicata of the right of Einsiedler to seek reformation of the contract of sale and to enforce it as so reformed. The question must be answered in the affirmative.
The litigation in this cause was commenced after the effective date of the Judicial Article of the 1947 Constitution, September 15, 1948, Art. XI, Sec. IV, par. 14, 1947 Constitution, and the disposition of the question involved must be determined by a reference to the 1947 Constitution and the rules promulgated by the Supreme Court pursuant thereto.
One of the designs of the Judicial Article of the 1947 Constitution was to facilitate and expedite the hearing of causes by disposing of all matters, whether legal or equitable, arising in a controversy in one trial and thus avoid multiple trials of the same case. Article VI, Sec. III, paragraphs 3 and 4 of the Constitution provides:
"3. The Superior Court shall be divided into an Appellate Division, a Law Division, and a Chancery Division. Each division shall have such Parts, consist of such number of Judges, and hear such causes, ...