Ajamian v. Schlanger

Bigelow, J. A. D.

Ajamian alleges that he was induced to buy the defendants’ embroidery business by fraudulent misrepresentations. But, with full knowledge of the alleged fraud, he continued for more than six months to deal with the property as his own and to pay the monthly installments of the purchase price. Thereafter he instituted an action in which he set forth that he elected to rescind; he offered to retransfer the business to the defendants and prayed that they be decreed to return to him the purchase price. The case went to trial and judgment was rendered for the defendants at the conclusion of the plaintiff’s case, on the ground tiiat his ad ions constituted an election to confirm the transaction; the election was irrevocable and rendered futile his later attempt to rescind. On appeal, the judgment was affirmed by the Appellate Division, 20 N. J. Super. 246.

Shortly after the affirmance was announced Ajamian began the second action, the one now before us, in which he recognizes that he must abide by his first election. He demands damages arising from the fraud. The defendants moved for summary judgment on the grounds of (1) res judicata and (2) election of remedies. The motion was denied and the defendants appeal.

Upon principles of res judicata, the judgment in the first action conclusively established that Ajamian had elected to confirm ilie transaction and could not thereafter rescind, and that in his action based on the supposed rescission he had mistaken his remedy. The judgment did not establish an absence of fraud or damage or that the plaintiff could not recover in an action of deceit. Restatement, Judgments, §§ 49 and 65. Estelle v. Board of Education, 26 N. J. Super. 9 (App. Div. 1953). I note that the judgment of dismissal included the words “on the merits,” but these words do not change the character of the judgment or its effect on later litigation. Chirelstein v. Chirelstein, 12 N. J. Super. 468 (App. Div. 1951).

The doctrine of election of remedies was discussed by Justice Heher in Adams v. Camden, etc., Co., 121 N. J. L. 389 (Sup. Ct. 1938). He said that “to make the election conclusive, there must in fact be two inconsistent remedies available to the party seeking enforcement of the claimed right. Neither the mistaken assertion of a right that does not exist nor the unsuccessful invocation of an unavailable remedy operates as a definitive election.” The same rule was pronounced in Levy v. Massachusetts Acc. Co., 127 N. J. Eq. 49 (E. & A. 1940):

“The availability or existence of two inconsistent remedies is one of the important elements of the doctrine. It is difficult to see how there 'can be an election between two remedies, if one - remedy is not available or has no - existence for the complainant. This finds support in those cases where a party mistakes his remedy.”

And in Schrage v. Liebstein, 16 N. J. Super. 384 (App. Div. 1951), Judge Brennan, now a member of our highest court, wrote that a “party who fancies he has a remedy and futilely pursues it',” is not to be denied another remedy “by the application of the doctrine of election of remedies, characterized “a harsh and now largely obsolete rule’ and one fto be strictly confined within its reason and spirit.’ ” Eor cases to the same effect from other jurisdictions, see 28 C. J. S., Election of Remedies, § 12.

Simon & Diamond Coal, etc., Co. v. Belz, 107 N. J. L. 193 (E. & A. 1930), seems to be contrary to the above cited cases. If so, it should be overruled.

Ajamian asserts that he has suffered damages to the amount of thousands of dollars as a result of the fraud of the defendants. No court has yet determined whether or not the charge is true. That is the salient fact before us and it should lead to an affirmance.