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Gardner v. Rosecliff Realty Co.

Decided: July 9, 1956.


Clapp, Jayne and Francis. The opinion of the court was delivered by Clapp, S.j.a.d.


[41 NJSuper Page 5] Following certain proceedings in this court and the trial court, which need not be referred to here, the complaint was amended below so as to set out in four counts the following causes of action, all to recover damages: the first count, against defendant Rosecliff Realty Co., Inc., for breach of contract; the second count, against defendant Irving Rosenthal, Rosecliff's president, for breach of his warranty that he was authorized by it to sign the contract; and the third and fourth counts, against both defendants for deceit. At the close of the trial, the court

below dismissed the first two counts as to both defendants and the third and fourth counts as to Rosenthal. A verdict of $15,000 was returned against Rosecliff for deceit. Rosecliff appeals.

Rosecliff owns and operates the Palisades Amusement Park at Edgewater, New Jersey. Faced with a loss of revenue, when ferry service between Edgewater and New York, N.Y. was discontinued, Rosecliff, through Rosenthal, entered into negotiations with plaintiffs to induce them to establish another ferry service between those points. The alleged deceit, in substance, was this: Rosenthal on behalf of his company falsely represented to plaintiffs that it could (that is, had the right to), and moreover would, make available to them, for the purposes of the new ferry service, the dock of the Public Service Coordinated Transport Company at Edgewater. Allegedly relying thereon, plaintiffs (through John M. Gardner) entered into the above-mentioned contract with Rosecliff, chartered a yacht located in Florida, reconditioned it in order to comply with the contract and then transported it from Florida to New York. At about the time it reached New York, Rosenthal informed plaintiffs (so they testified) that Public Service was to run buses between New York and Edgewater and it would not allow plaintiffs to use the dock. To the plaintiffs, Rosenthal said (according to the testimony of one of them) "I have buses running now; I have no need for the boat."

The trial court dismissed the case against Rosenthal with respect to the fraud, on the ground that an agent making a fraudulent representation within the scope of his authority is immune from personal liability. This is error, and no one pretends to defend it. Martin v. Baldwin , 90 N.J.L. 241, 244 (E. & A. 1917); see Bocchino v. Cook , 67 N.J.L. 467, 469 (Sup. Ct. 1902); Restatement of Agency , § 348. However, Rosecliff in its first point before us now claims that the dismissal of the case against Rosenthal at the close of the trial required a dismissal of the case against Rosecliff at the same time. It relies on authorities, holding (subject to exceptions not pertinent here) that a court or jury exonerating

an agent on the ground that his conduct was not tortious, cannot hold the principal responsible for that conduct under the doctrine of respondent superior. The inconsistency in the finding or verdict vitiates it. See authorities cited in Kelley v. Curtiss , 16 N.J. 265, 270 (1954); cf. Freint v. Gilmore , 110 N.J.L. 170, 172 (E. & A. 1933), a case of fraud. It seems to have been said on the oral argument here that since plaintiffs have not appealed from the judgment absolving Rosenthal, we have now no alternative but to absolve Rosecliff too. See Vaniewsky v. Demarest Brothers Co. , 106 N.J.L. 34, 37, 38 (Sup. Ct. 1929), affirmed 107 N.J.L. 389 (E. & A. 1931).

It is to be observed immediately that the point was not raised below on the motion to dismiss. But, aside from that, it must be obvious that there is no inconsistency in the record here. The trial court proceeded upon the notion (erroneous, as stated) that the law invests an agent with immunity from all responsibility for his own fraudulent utterances, provided he acts within the scope of his authority. The action taken below, exculpating the agent because of such an immunity, and the action taken there to hold the principal for the fraud are in no way contradictory. A principal

"may be liable for an act as to which the agent has a personal immunity from suit." Restatement, Agency , § 217(2).

More may be said on the point, but this disposes of it.

There is another point involved here, or perhaps it is another aspect of the same point. On the new trial allowed (as will appear herein) as to damages, the question may arise whether, by virtue of the doctrine of collateral estoppel, the judgment in favor of Rosenthal precludes plaintiffs' recovery from Rosecliff. See Kelley v. Curtiss , 16 N.J. 265 (1954); cf. Carter v. Public Service Gas Co. , 100 N.J.L. 374 (E. & A. 1924); Templeton v. Scudder , 16 N.J. Super. 576, 584 (App. Div. 1951); Solimine v. Hollander , 128 N.J. Eq. 228, 297 (Ch. 1940); Developments in the Law, Res Judicata , 67 Harv. L. Rev. 818, 861-863 (1952). The short

answer is that the judgment for Rosenthal was based on what the trial court conceived to be (as above stated) a personal defense or immunity relieving him of liability; a judgment for an agent resting on such a defense clearly does not bar a subsequent litigation by the same plaintiffs against the principal. See Restatement, Judgments , § 99, relied upon in Kelley v. Curtiss, supra; cf. § 96 comment g.

Rosecliff's second point (if we may divide up its argument thus) is that the motion it made below to dismiss the case should have been granted because plaintiffs could not obtain dockage facilities in New York City. The contention is that any damage plaintiffs suffered in this matter is attributable to this circumstance, ...

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