Breslin, J.c.c., Temporarily Assigned.
[123 NJSuper Page 365] This is a motion for summary judgment by three corporate plaintiffs (Continental Can Company, Horn Hardart Company and New York Susquehanna and Western Railroad Company) in a negligence action against defendant Hudson Foam Latex Products, Inc. (hereinafter Hudson). The action grows out of a fire that occurred in a warehouse located at 309 River Road, Edgewater, New Jersey, on or about February 22, 1966. At that time Hudson was a tenant on the second floor of the warehouse and plaintiffs had stored goods belonging to them on the first floor. The fire started in one of the baling machines used by defendant in its business, allegedly as a result of negligent maintenance by defendant. Plaintiffs' goods were damaged when large quantities
of water used to extinguish the fire flowed from the second floor to the first floor. The water flowed from two sources, a sprinkler system in the building, automatically activated after the fire had started, and the fire-fighting equipment used by the firemen who responded to the alarm. Plaintiffs further allege that defendant negligently failed to take precautionary measures to see that any fire would be extinguished immediately without the need for the application of excessive quantities of water.
The fire in question was the subject of a prior suit captioned "Novamont Corporation and/or Chemore Corporation v. Hudson Foam Latex Corporation and Summit Warehouse Corporation," Docket No. L-28180-68. Plaintiff therein had stored its goods on the first floor of the warehouse and, as do plaintiffs in the instant suit, complained of damage to its goods caused by the flow of water. Plaintiff therein (unrelated to plaintiffs in the instant case) brought an action against Hudson and against Summit Warehouse Corporation. The latter was bailee of Novamont's goods, so that Novamont included in its complaint a count for breach of the bailment contract, as well as a negligence count against both defendants. A five-day trial on liability in April 1971 resulted in a jury verdict in favor of plaintiff and against Hudson only. In the present suit plaintiffs contend that the prior judgment conclusively established the negligence of Hudson and the causal connection between such negligence and the water damage to the goods on the first floor of the warehouse. Therefore, plaintiffs argue, the instant matter should summarily be determined in their favor on the issue of liability.
The resolution of the issue presented is complicated by the fact that at the prior trial, due to the alleged unavailability of the only two individuals who could testify for the defense, defendant (represented by the same attorneys who are handling the defense of the instant case) called no witnesses and the matter went to the jury in that posture. The two individuals referred to are Oscar Shuffman and
his brother Fred, the principals of Hudson. According to representations made by Oscar, Fred had been incapacitated by an illness from September 1969 through the time of trial. Oscar was unavailable at the time of trial allegedly because he had been injured in an automobile accident a short time before the day on which the trial began; a doctor's affidavit was submitted to corroborate the fact that he had injuries and that attendance at trial might prove detrimental to his health. Based on the unavailability of the Shuffman brothers, defendant made application for an adjournment before trial, for an adjournment and/or a mistrial during trial, and for a new trial after the verdict. All applications were denied and defendant applied to the Appellate Division for leave to appeal, which was denied. The matter was subsequently settled between the parties.
Plaintiffs contend that their motion in the instant case should be granted "either on the basis of res judicata or the doctrine of collateral estoppel." It is probably more accurate to characterize the effect, if any, that the prior judgment would have on this case as one based upon the doctrine of collateral estoppel rather than res judicata. The latter doctrine involves the effect of a final judgment as between the parties to an original action and those in privity with such parties; the doctrine would normally be invoked in a subsequent action based upon the same claim or demand. See Mazilli v. Accident, etc., Casualty Ins. Co. , 26 N.J. 307 (1958), citing Paterson v. Baker , 51 N.J. Eq. 49 (Ch. 1893). Collateral estoppel, on the other hand, is the doctrine which renders conclusive in a subsequent action on a different claim the determination of issues actually litigated in a prior action. However, it may or may not be allowable for a non-party to the prior action to assert in a subsequent action collateral estoppel against one who was a party (or is in privity with one who was a party) to the prior action, depending upon the view taken as to whether or not "mutuality of estoppel" is required. Mutuality of estoppel, if applicable, requires that a court not hold a judgment as
conclusive in favor of a person unless it would be equally conclusive against him. Miller v. Stieglitz , 113 N.J.L. 40 (E. & A. 1934).
In the instant case three non-parties to the prior action are attempting to assert collateral estoppel against one (Hudson) who was a party to said prior action. The doctrine seems prima facie to be applicable to this case, at least if one accepts the reasoning of Justice (now Chief Justice) Traynor in Bernhard v. Bank of America Nat. Trust & Sav. Ass'n , 19 Cal. 2d 807, 122 P. 2d 892 (Sup. Ct. 1942), wherein the prerequisites for the application of collateral estoppel were set forth as follows: (1) an identity of issues, (2) a final judgment on the merits, and (3) the party against whom collateral estoppel is asserted must have been a party or in privity with a party to the prior action. Although the cause of action in this case is different from the one prosecuted in the prior action, the primary issue appears to be identical: whether Hudson was guilty of negligent conduct which proximately caused damage to goods stored on the first floor of the warehouse. The other two prerequisites are obviously present in this case.
The Bernhard doctrine has been criticized as overbroad insofar as it would allow a plaintiff, who had not been a party to the prior action, to assert the estoppel in a subsequent action against a defendant who had unsuccessfully defended in the prior action. The result would be that in cases involving multiple claims emanating from a single occurrence, such as the crash of a commercial airliner, individual prospective plaintiffs could sit idly by while other plaintiffs attempt to establish the negligence of the defendant; as soon as one plaintiff is successful, the other plaintiffs could immediately come forward and assert collateral estoppel in lieu of having to prove their case. Prior judgments in favor of the defendant could, of ...