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Mayflower Industries v. Thor Corp.

Decided: January 25, 1952.

MAYFLOWER INDUSTRIES, A NEW JERSEY CORPORATION, PLAINTIFF,
v.
THOR CORPORATION, AN ILLINOIS CORPORATION, AND TELDISCO, INC., A NEW JERSEY CORPORATION, DEFENDANTS



Freund, J.s.c.

Freund

The issue for consideration is this: Should an order dismissing plaintiff's complaint with prejudice be vacated under Rule 3:60-2 because of counsel's mistake of law? The answer depends upon the determination of (1) the effect of the dismissal of the complaint with prejudice, and (2) whether counsel's mistake of law is the kind of mistake contemplated by the rule.

The facts of this litigation are fully stated in the opinions of Judge Francis, 15 N.J. Super. 139 and 337 (Ch. Div. 1951). For the purposes of the motion now before the court, these are the pertinent facts: The plaintiff had instituted an action against the defendant, Thor Corporation, for alleged breach of contract for the exclusive distributorship of the defendant's products within specified territory. On the basis of affidavits submitted to the court, the plaintiff obtained an order restraining the defendant pendente lite from distributing its products to anyone except the plaintiff. The defendant filed a counterclaim charging the plaintiff with malicious prosecution and seeking damages for losses sustained by reason of the injunction. Preparatory for trial, each party sought an inspection of the books and records of the other, and the defendant also sought inspection of the records of corporations affiliated with or controlled by the plaintiff. Thereupon the plaintiff voluntarily dismissed its complaint, allegedly upon the advice of its counsel that thereby the inspection of the records of the affiliated corporations would be avoided. On May 28, 1951, an order was duly entered, the pertinent part of which reads as follows:

"The plaintiff, before the date fixed for pretrial conference and before the date fixed for trial, having moved orally before this Court for leave to dismiss the plaintiff's complaint without prejudice; and the defendants having opposed the dismissal of the action unless it be granted with prejudice * * *

It is, on this 28th day of May, 1951, ORDERED as follows:

1. The plaintiff's complaint is hereby dismissed with prejudice to the institution of any other suit against the defendants or either of them in any court for the causes set forth in plaintiff's complaint herein. Said dismissal is made without any determination of the merits of the controversy. * * *"

In the course of his opinion, 15 N.J. Super. 139, Judge Francis adverted to the circumstances under which the foregoing order was entered. He said, at page 160:

"Plaintiff refused to permit this broad discovery and on application to the court by defendant, it indicated a willingness to permit inspection of its records so far as they related to the products manufactured by Thor, but it was unwilling to allow any further examination. At the argument of the motion, the court studied the list of records the defendant wished to examine, and without detailing here the reasons therefor, ruled that an order would be entered permitting such inspection. Thereupon, plaintiff announced its decision to dismiss the action and said further that the dismissal would be with prejudice if the defendants would take a like step with respect to their counterclaims. Defendants refused and plaintiff's suit was then dismissed with prejudice."

No appeal was taken from the entry of the order dismissing the complaint with prejudice and the time for appeal has long since expired.

Contrary to the opinion of plaintiff's counsel, the court on December 3, 1951, granted the defendant on its counterclaim an order for inspection of the books and records of the plaintiff and its affiliated corporations. Thereupon, the plaintiff moved to vacate the order dismissing the complaint with prejudice because of its counsel's mistaken opinion as to the extent of the defendant's right of inspection of the books and records of plaintiff's affiliates, that the order as entered was broader and more comprehensive than the plaintiff and its counsel had anticipated, and that they would not have dismissed the complaint with prejudice but for such opinion. Thus, the application is, for all practical purposes, to reinstate the complaint. The relevant portion of Rule 3:60-2 is as follows:

"Mistake; Inadvertence, Excusable Neglect; Newly Discovered Evidence; Fraud, etc.

On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order or proceeding for the following reasons: (1) mistake, ...


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