Santilli v. Illinois Surety Co.

Seabury, J. This action is upon a bond of the Illinois Surety Company given pursuant to chapter 185 of the Laws of 1907, as amended by chapter 479 of the Laws of 1908. The condition of the bond was, that one 'Oianchetta, a private banker, should faithfully hold and transmit moneys deposited with him for transmission to persons in foreign countries. The liability of the appellant under the bond was stipulated not to exceed $15,000. On August 3, 1908, plaintiff deposited with Oianchetta $100, and subsequently withdrew $50 of this amount. The balance left with Oianchetta was to be transmitted to a person residing in Italy. Oianchetta, instead of transmitting the money, absconded. The present action is to recover the amount left on deposit with Oianchetta, and was commenced on October 1, 1912. Upon the trial the defendant offered in evidence the judgment roll in an action commenced October 14, 1911, in the Supreme Court of this state by one Terragni and one Di Tizio, who sued on behalf of themselves and all other creditors of said Oianchetta who may be similarly situated and who may come in and become parties and contribute to the expenses of said action. The action was brought against this appellant upon the same bond as that upon which the plaintiff now sues. Notice of the pendency of that action being given by publication, the action was referred to a referee to hear and determine, and, pursuant to an order therein entered, notice was published requiring all those having claims under said bond to appear before the referee and make proof of their claims. Six claimants including the plaintiffs appeared and made proof of claims aggregating $2,617.24. The referee submitted findings of fact and conclusions of law. The findings of fact recite that the six claimants appearing before the referee have claims against the appellant on the bond, and that their claims, are just and legal obligations of the appellant. There is no finding of fact that only those who appeared in that action have claims against the appellant upon the bond. Notwithstanding the absence of any finding of fact that no one other' than the claimants appearing in the action are entitled to recover upon the bond, the referee found as a con [602] elusion of law that no person other than the plaintiffs and the claimants who appeared “ have established claims against the said bond, or are entitled to recover upon said bond.” The judgment entered upon the findings merely determines that the plaintiffs and the claimants appearing in that action have just and valid claims against the appellant herein, and that the six claimants named recover the respective sums due them. The judgment itself does not provide that no persons other than those named “ are entitled to recover upon said bond.” Upon appeal, the appellant contends that the judgment rendered in the Supreme Court action is res adjudicata in the present action. The appellant makes this claim although its liability under the bond might equal $15,000, and notwithstanding the fact that it has only paid claims aggregating $2,617.24. In support of this contention the appellant invokes the rule that a final judgment entered in such a representative action is binding not only upon those who become parties and prove their claims, but upon those who neglect to come in and be made parties. Kerr v. Blodgett, 48 N. Y. 66; Brinckerhoff v. Bostwick, 99 id. 194; Hirshfeld v. Fitzgerald, 157 id. 180; Davids v. Lambden, N. Y. L. J., Feb. 24, 1913. The rule invoked, however, is not decisive of the present appeal. Where the final judgment in such, an action determines that no others than those who appeared in the action are entitled to recover, that judgment is doubtless, under the authorities cited, conclusive as a bar against all those who have neglected to come in and be made parties to that action. The judgment which the appellant claims to be a• bar in this case contains no such provision. It determines merely that the plaintiffs and those appearing as claimants in that action are entitled to recover the amount of their respective claims. It does not adjudge that there are no others who have claims against the bond, nor does it contain any injunctive clause restraining those who. were not parties to that action from the' prosecution of their claims. It is true that the conclusion of law made in the findings of the referee states that no persons other than the plaintiffs and the claimants ap [603] pearing “ are entitled to recover upon said bond,” but that finding was not included in the judgment, and is not, therefore, to be deemed res adjudicaia upon the claim of this plaintiff. A question does not become res adjudicaia until it is settled. by a final .judgment. A mere finding by a referee has no such binding effect; “nothing but final determinations upon the merits are exalted to that pre-eminent distinction.” The finding of a court or referee is nothing more than an order for judgment, and is not in itself a judgment of the court. Andrews v. Welch, 47 Wis. 132, 134. In Webb v. Buckelew, 82 N. Y. 555, 559, Judge Finch, after pointing out that, a judgment is a bar, said: “ But without such actual determination on the merits, evidenced by a record which cannot be contradicted, the reason of the rule does not apply, and the evidence ceases to be effective. Thus, where the litigation has ended in a discontinuance, or a non-suit, so that an actual decision on the merits has not been reached; or where a verdict of a jury, or the finding of a judge or referee has not passed into a judgment, and so become absolutely fixed and final, the proceedings have no conclusive character, and cannot operate as a bar. Carlisle v. McCall, 1 Hilt. 399; Audubon v. Excelsior Ins. Co., 27 N. Y. 216; Leonard v. Barker, 5 Denio, 220. It is, therefore, only a final judgment upon the merits, which prevents further contest upon the same issue, and becomes evidence in another action between the same parties or their privies. Hntil final judgment is reached the proceedings are subject to change and modification; are imperfect, and inchoate, and can avail nothing as a bar, or as evidence, until the judgment, with its verity as a record, settles finally and conclusively the questions at issue. An interlocutory order is not such a judgment. It is not a judgment at all.” In Auld v. Smith, 23 Kan. 65, 69, the court said: “ Final judgments and of course adjudications; and findings of courts are verdicts of juries, and reports of commissioners or referees, may also sometimes be considered as adjudications, but they can be considered such only in cases where they, themselves are final, or in eases where a final judgment [604] has afterward been rendered upon them sustaining and confirming them, and even when confirmed by a final judgment they are adjudications only so far as they are necessarily included in and become a part of such judgment. A finding or verdict partially sustained by a judgment, and partially not, is an adjudication or evidence in a subsequent suit, only so far as it is sustained by the judgment. A thing contained in the finding or verdict, but not included in or confirmed by the judgment, cannot be considered as an adjudication or used as evidence .unless some other ground can be found for its use than merely that it is contained in such finding or verdict. 'We would refer to the following as among the authorities which we think tend to sustain the foregoing propositions: Donaldson v. Jude, 2 Bibb (Ky), 57; MacReady v. Rogers, 1 Neb. 124; Hawks v. Truesdell, 99 Mass. 557; Nash v. Hunt, 116 Mass. 237; Fisk v. Parker, 14 La. Ann. 496; Whitaker v. Bramson, 2 Paine, 209; United States v. Addison, 73 U. S. 292; Ridgely v. Spenser, 2 Binney (Pa.), 70; Collins v. Freas, 77 Pa. St. 493, 497.” In Freeman on Judgments (4th ed., § 251), the rule is declared as follows: “ Ho question becomes res adjudicaba until it is settled by a final judgment. For this reason, the verdict of a jury, the finding of a court, or the report of a referee or master is not admissible as evidence to create an estoppel, before it has received the sanction of the court, by passing into a judgment.” In 23 Cyc. 1227, it is said: “Findings of fact made by the court, or decisions on contested issues, when made the basis of a judgment or decree, are conclusive on the parties 'in subsequent litigation; but unless followed by a judgment, or incorporated in or covered by a judgment, findings by the court, special findings of a jury, reports of referees and masters, and the like are not conclusive adjudications.” Citing Canhape v. Parke, Davis & Co., 121 N. Y. 152; Leonard v. Barker, 5 Den. 220. The judgment offered in evidence made no determination adverse to this plaintiff. It merely determined that those who appeared in that action established their claims. It [605] did not adjudicate upon the rights of any other person, and contained no injunction restraining others than those who appeared in that action from bringing an action against the appellant upon its bond. It seems that the appellant sought to have that judgment amended so as to contain an injunction against all other claimants, but this amendment the court refused to make, and, upon appeal to the Appellate Division, the judgment was affirmed. The record upon which the appellant relies is not a bar to the plaintiff’s claim, and the judgment was, therefore, properly rendered in favor of the plaintiff. Gerard and Bijur, JJ., concur. Judgment affirmed with costs.