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Mount Holly Sunoco v. Executive Commercial Services

New Jersey Superior Court, Appellate Division

Decided: December 28, 1978.


On appeal from Superior Court, Chancery Division, Burlington County.

Allcorn, Seidman and Botter. The opinion of the court was delivered by Botter, J.A.D.


[164 NJSuper Page 431]

Leave of court having been granted, Executive Commercial Services, Ltd. (Executive) appeals from the denial of its motion for summary judgment. By that motion Executive sought to bar plaintiffs' action on the grounds that a prior judgment obtained by Executive against plaintiffs in an Illinois court is entitled to full faith and credit in New Jersey and that, by reason of res judicata , such judgment precludes the relief sought by plaintiffs against Executive in this action. The subject matter of the Illinois action and this New Jersey action, as it involves Executive, is a financing transaction, guaranteed by the individual plaintiffs, in which plaintiffs and Executive entered into a lease agreement with an option to purchase certain equipment to be supplied by codefendant Allstate Transmissions Centers Corp.

The Illinois action was commenced first. There, Executive, an Illinois corporation, sued Paulette Titko and Mount Holly Sunoco, a partnership consisting of Rudolph Schobert and Richard Titko, for moneys due on the lease-option agreements. By their attorney, said defendants, hereafter referred to collectively as Mt. Holly Sunoco, entered a "limited and special appearance" to contest the jurisdiction of the Illinois court over them. Promptly thereafter Mt. Holly Sunoco also filed this action in New Jersey seeking to rescind the agreements between Executive and Mt. Holly Sunoco by reason of fraud of Allstate Transmissions Centers Corp. allegedly perpetrated as agents for and with the knowledge of Executive. Mt. Holly Sunoco sought to enjoin Executive from entering or enforcing in this State

[164 NJSuper Page 432]

any judgment it may obtain against Mt. Holly Sunoco in Illinois.*fn1

Mt. Holly Sunoco's motion to dismiss the Illinois action for want of in personam jurisdiction was rejected by the Illinois court. The trial judge held, in part, that Mt. Holly Sunoco had sufficient minimum contacts in Illinois to sustain the assertion of jurisdiction over such nonresident defendants. Mt. Holly Sunoco did not seek to appeal that ruling. Nor did it defend the action on the merits with the right later to appeal the adverse ruling as to jurisdiction, should its defense on the merits also have failed, as afforded by Illinois Civil Practice Act, Ill. Ann. Stat. , c. 110, § 20 (Smith-Hurd).*fn2

[164 NJSuper Page 433]

In the circumstances of this case we have no doubt that the judgment of the Illinois court is res judicata as to that court's jurisdiction over Mt. Holly Sunoco. If no appearance had been made in the Illinois action, Mt. Holly Sunoco would have been free to litigate the jurisdictional issue in this action. N.J.S.A. 2A:82-4; James v. Francesco , 61 N.J. 480, 485 (1972). See generally, Sprague & Rhodes Commodity Corp. v. Instituto Mexicano Del Cafe , 566 F.2d 861, 863 (2 Cir. 1977).*fn3 Having litigated the jurisdictional issue in Illinois, that issue cannot be relitigated and collaterally attacked in New Jersey. John Simmons Co. v. Sloan , 104 N.J.L. 612 (E. & A. 1928), citing Chicago Life Ins. Co. v. Cherry , 244 U.S. 25, 37 S. Ct. 492, 61 L. Ed. 966 (1917); see People v. Coe Mfg. Co. , 10 N.J. Misc. 1161, 1164 (Sup. Ct. 1932), aff'd 112 N.J.L. 536 (E. & A. 1934), cert. den. 293 U.S. 576, 55 S. Ct. 89, 79 L. Ed. 674 (1934); Restatement, Conflicts of Law , 2d, § 96 at 289 and § 97 at 293 (1971).

A special appearance does not give a defendant the right to litigate jurisdiction and ignore the outcome with impunity. It merely protects against waiver of the jurisdictional defense which would otherwise flow from a general appearance. As stated in Baldwin v. Iowa State Traveling

[164 NJSuper Page 434]

Men's Ass'n , 283 U.S. 522, 51 S. Ct. 517, 75 L. Ed. 1244 (1931):

It is of no moment that the appearance was a special one expressly saving any submission * * *. The special appearance gives point to the fact that the respondent entered the Missouri court for the very purpose of litigating the question of jurisdiction over its person. It had the election not to appear at all. If, in the absence of appearance, the court had proceeded to judgment and the present suit had been brought thereon, respondent could have raised and tried out the issue in the present action, because it would never have had its day in court with respect to jurisdiction.

Public policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties. We see no reason why this doctrine should not apply in every case where one voluntarily appears, presents his case and is fully heard, and why he should not, in the absence of fraud, be thereafter concluded by the judgment of the tribunal to which he has submitted his cause. [283 U.S. at 524-526, 51 S. Ct. at 518, 75 L. Ed. at 1246, 1247]

See also, Durfee v. Duke , 375 U.S. 106, 84 S. Ct. 242, 11 L. Ed. 2d 186 (1963); Treinies v. Sunshine Mining Co. , 308 U.S. 66, 60 S. Ct. 44, 84 L. Ed. 85 (1939); Davis v. Davis , 305 U.S. 32, 59 S. Ct. 3, 83 L. Ed. 26 (1938); In re Universal Display & Sign Co. , 541 F.2d 142 (3 Cir. 1976); Wayside Transportation Co., Inc. v. Marcell's Motor Express, Inc. , 284 F.2d 868 (1 Cir. 1960); Durlacher v. Durlacher , 35 F. Supp. 1005 (D. Nev. 1940), rev'd on other grounds, 123 F.2d 70 (9 Cir. 1941), cert. den. 315 U.S. 805, 62 S. Ct. 633, 86 L. Ed. 1204 (1942); Cascade Chemical Coatings, Inc. v. Wellco Chemical Products Co. , 15 Ill. App. 3d 1056, 305 N.E. 2d 595 (App. Ct. 1973), cert. den. 419 U.S. 841, 95 S. Ct. 72, 42 L. Ed. 2d 69 (1974); Shultz v. Keystone Fireworks Mfg. Co., Inc. , 185 Pa. Super. 245, 137 A.2d 906 (Super. Ct. 1958).

[164 NJSuper Page 435]

Accordingly, the trial judge erred in denying appropriate relief to Executive on its motion for summary judgment.*fn4 We remand the case to the trial court for the entry of a judgment consistent with this opinion, and for further proceedings, including the disposition of other open issues in the case.

Reversed and remanded.

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