Singer and Belzberg v. J.H. Ashdown Hardware Co. Ltd.

Singer and Belzberg v. J.H. Ashdown Hardware Co. Ltd.
Collection
Supreme Court Judgments
Date
1953-03-30
Report
[1953] 1 SCR 252
Judges
Kerwin, Patrick; Taschereau, Robert; Estey, James Wilfred; Locke, Charles Holland; Cartwright, John Robert
On appeal from
Alberta
Subjects
Action
Decision Content
Supreme Court of Canada
Singer and Belzberg v. J.H. Ashdown Hardware Co. Ltd., [1953] 1 S.C.R. 252
Date: 1953-03-30
Jack Singer and Abraham Belzberg (Defendants) Appellants;
and
The J. H. Ashdown Hardware Company Limited (Plaintiff) Respondent.
1952: November 3, 4; 1953: March 30.
Present: Kerwin, Taschereau, Estey, Locke and Cartwright JJ.
ON APPEAL FEOM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION
Judgments—Merger—Sale of goods—Prior action against three partners—Joint liability—Default judgment against one—Discontinuance as to other two—New action against the two and another—Order setting default judgment aside—Whether merger—Rule 113 of the Supreme Court of Alberta.
The respondent had brought an action against the appellants and one Barker, former members of a partnership and whose liability was joint, for the price of goods sold and delivered. Judgment in default of defence was obtained against Barker and the action against the appellants discontinued. The respondent then commenced this action for the same debt against the appellants and another. After the joinder of issue but before the action had come to trial, the judgment in the first action against Barker was, upon his application, set aside. The appellants pleaded, inter alia, the recovery of the judgment against Barker and that the indebtedness had been merged in that judgment. The action was maintained by the trial judge and by the Appellate Division of the Supreme Court of Alberta.
Held (Locke J. dissenting), that the appeal should be dismissed and the action maintained.
Per Kerwin, Taschereau and Estey JJ.: Where a judgment has been set aside properly and without consent, as was done in the present case, there is an exception to the general rule that a judgment against one of several persons who are jointly liable on a contract effects a merger of the original cause of action.
Per Kerwin, Taschereau, Estey and Cartwright JJ.: As long as the judgment was set aside before the adjudication, it matters not that it was done after the issue of the writ in the second action.
Per Cartwright J.: The rule in King v. Hoare (1844) 13 M. & W. 494, does not apply when the judgment against one of several co-contractors who are jointly liable on the same contract has been, 'as in the present case, validly set aside. Having been set aside, the judgment against Barker ceased to operate as a bar to the action against the other co-contractors; it ceased to exist and therefore to have any effect thereafter, except possibly as a justification for an act done in reliance upon it during its existence. Semble, that the same result would obtain even where the order setting such judgment aside had been made on consent and no grounds had existed for setting it aside against the opposition of the plaintiff.
Per Locke J. (dissenting): The rule at common law that a cause of action against several joint debtors is merged if judgment is taken against one of them whose liability is admitted has been altered in Alberta only to the extent provided by Rule 113 of the Supreme Court and upon the discontinuance of the action after judgment had been signed against Barker the cause of action was extinguished: King v. Hoare (1844) 13 M. & W. 494; Kendall v. Hamilton [1879] 4 A.C. 504; Odell v. Cormack (1887) 19 Q.B.D. 223; Hammond v. Schofield [1891] 1 Q.B. 453; Price v. Moulton (1851) 10 C.B. 561; Cross v. Matthews (1904) 91 L.T.R. 500, followed. Re Harper and Township of East Flamborough (1914) 32 O.L.R. 490 and Partington v. Hawthorne (1888) 52 J.P. 807, distinguished. While upon the evidence it should have been found that the judgment against Barker was set aside by consent, whether or not this was the case was not decisive, since Barker's liability for the debt for which judgment had been signed was expressly admitted and the cause of action having merged, could not be revived.
APPEAL from the judgment of the Supreme Court of Alberta, Appellate Division 1, affirming the judgment of the trial judge. C. F. H. Carson Q.C. and A. L. Barron Q.C. for the appellants.
H. W. Riley Q.C. and D. R. Fisher for the respondent.
The judgment of Kerwin, Taschereau and Estey JJ. was delivered by
Kerwin J.:—The appellants Jack Singer and Abraham Belzberg are, together with William Kluner, the defendants in an action brought by the respondent to recover the price of goods alleged to have been sold and delivered by it to a partnership known as Atlas Plumbing and Heating which is said to consist of the defendants and one John Barker. So far as appears Kluner was never served with the writ of summons. The judgment at the trial in favour of the respondent against the appellants was affirmed by the Appellate Division of the Supreme Court of Alberta 2. In the Courts below it was alleged that the respondent had failed to prove that the goods had actually been sold and delivered but such contention was abandoned before us. I agree with the Appellate Division that the unsigned memorandum, Exhibit 2, was not a release or an estoppel. The only remaining question therefore is whether the respondent's claim was defeated under the circumstances now narrated.
On November 28, 1949, an earlier action had been commenced by the respondent against Barker and the appellants for the same sum of money and based on the same cause of action. On December 16, 1949, default judgment was entered against Barker only. On January 26, 1950, that action was discontinued as against the appellants and, on the same day, the present action was commenced. On February 23, 1950, judgment by default was entered against the appellants but on March 6, 1950, this was set aside. By their statement of defence, dated March 8, 1950, the appellants pleaded the default judgment against Barker in the former action and alleged that any indebtedness of the appellants was merged in that judgment. The joinder of issue and reply denied that there was any merger. Upon the application of Barker the default judgment against him in the previous action was set aside by an order of Mr. Justice Egbert on March 21, 1950. The trial of the present action did not take place until April, 1951. Even if it could be said that, in the absence of an allegation by the respondent that the previous judgment had been set aside, the trial judge should not have permitted to be produced the Court records, including the order of Egbert J., nevertheless he did so, and the Court of Appeal affirmed his ruling. The solicitors for the appellants were not taken by surprise as they had known for some time that the order had been made and, therefore, if the respondent had applied to set up in its pleadings the order of Egbert J. in order to show that the allegation of the appellants that there was an existing prior judgment against Barker was not correct, leave would undoubtedly have been given.
It is not the law, as was argued on behalf of the appellants that a judgment against one of several persons who are jointly liable on a contract effects a merger of the original cause of action which remains in force under all circumstances that may arise in the future. In Halsbury, 2nd ed. Vol. 13, 416, after referring to the principle that where there is but one cause of action the damages must be assessed once for all, it is stated:—
471. On this principle a judgment recovered (though unsatisfied) against some one of a number of persons who are jointly (not jointly and severally) liable on the same contract or are liable for the same tort with others, is, until set aside (d), a bar to an action.
The words "until set aside" are significant and in general the rule is subject to that condition. In principle I would think that must be so and it has been held that if such a judgment is properly set aside, it is as if it had never existed,—Goodrich v. Bodurtha 3 referred to by Riddell J. in Re Harper and Township of East Flamborough 4, and Partington v. Hawthorne 5 cited in note (d) in Halsbury. We are not here concerned with the qualification contained in the note:—
but a consent judgment regularly obtained, and not objectionable on the merits, cannot be set aside by consent of parties, so as to prejudice a third person in whose favour it is a bar (Hammond v. Schofield (1891) 1 Q.B. 453; 21 Digest 219; Cross & Co. v. Matthews and Wallace (1904) 91 L.T. 500; 21 Digest 223,575).
because I agree with the Appellate Division, that it must be taken that the trial judge had decided that the order of Egbert J. had not been granted with the consent of the respondent, and that on the evidence this was a proper conclusion.
The judgment in Hammond v. Schofield 6 proceeded upon the fact that there a consent had been given by the plaintiff to set aside a default judgment but some expressions in the reasons of Wills J. were relied upon by the present appellants. At page 455, referring to the effect of the signing of a default judgment, he says:—
If a judgment be improperly obtained, so that it never ought to have been signed, there can be no doubt when set aside it ought to be treated as never having existed. I am inclined to think (though it is not necessary to decide the question), that if it be regularly obtained, but through a slip on the part of the defendant, so that on an affidavit of merits it might be set aside, and it ultimately turns out that the defendant never was liable, it may equally be regarded as a judgment which never ought to have been signed, and would in such a case be properly treated as a nullity. If, being regularly obtained, though through a slip on the part of the defendant, and set aside upon an affidavit of merits, it ultimately turns out that the original defendant was liable, I do not think it could be treated, so far as the rights of other persons are concerned, as a nullity. Still less, when there is no pretence for saying that there is any ground for setting it aside upon the merits as' between the plaintiff and the defendant, and when as between them it could only be set aside by consent.
Although not so expressed, the third sentence is in my opinion obiter but whether that be so or not, I am, with respect, unable to agree with it. In the first sentence, although stating it was unnecessary so to decide, Wills J. thought that if a judgment had been improperly obtained, if it is set aside, it ought to be treated as never having existed. However, if the effect of a merger be absolute, the original cause of action could never be resuscitated. In Parr v. Snell 7, Scrutton L.J. referred to what he has said in Moore v. Flanagan 8, where he adopted as correct what Vaughan Williams J. had stated in Hammond v. Schofield, at p. 457:—
The basis of this defence (i.e. based on Rice v. Shute and Kendall v. Hamilton) is not the election or unconscious election, if there can be such a thing, of the plaintiff, but the right of the co-contractor when sued in a second action on the same contract to insist, though not a party to the first action, on the rule that there shall not be more than one judgment on one entire contract. If a judgment be set aside properly and without consent, as I hold to have occurred in the present case, there is an exception to the general rule which although binding by precedent was founded upon a fiction and should be restricted and not enlarged. The judgment having been set aside, there is not more than one judgment on one entire contract.
It was objected that the order of Egbert J. was made after the issue of the writ in the present action and that therefore the respondent had no cause of action at the date of the writ. Whether the default judgment against Barker be put forward as estoppel or merger cannot, I think, make any difference. The decision of the Appellate Division of Ontario in Cornish v. Boles 9, was cited on behalf of the appellants and it may be added that in that case there is a reference to Northern Electric and Manufacturing Co. Limited v. Cordova Mines Limited 10. Mr. Justice Riddell, who took part in both these decisions, subsequently decided the Harper case referred to above. I agree with the decision in Harper and in the Massachusetts case and conclude that the objection cannot be sustained.
The appeal should be dismissed with costs.
Locke J. (dissenting):—On November 29, 1949, the respondent commenced an action in which the appellants and one Barker described in the Statement of Claim as "carrying on business under the firm name of Atlas Plumbing and Heating", and these three persons individually were named as defendants. The claim made was for the purchase price of goods sold and delivered to the alleged partnership. Barker was served with the Statement of Claim and on December 16, 1949, in default of defence, judgment was entered against him for the sum of $10,898.95, the amount claimed, and costs. Whether the appellants were served with the Statement of Claim in the action does not appear. On January 6, 1950, the respondent discontinued the said action as against the present appellants and on that date commenced the present action against the appellants and one William Kluner, the Statement of Claim alleging that during the years 1948 and 1949 the defendants had been partners with Barker in the business known as Atlas Plumbing and Heating, and claiming the same amount as in the first action for goods sold and delivered to such partnership. In the second action the defendants were served with the Statement of Claim and on March 8, 1950, filed a Statement of Defence in which it was alleged, inter alia, that the respondent had recovered judgment in the amount claimed against Barker in the first action, that, if there was a debt, the liability of the partners was joint and not joint and several and that the appellants had accordingly been released from any liability. On March 21, 1950, upon the application of Barker, Egbert J. made an order setting aside the judgment in the first action and gave Barker leave to defend.
The main question to be determined upon this appeal is as to whether the cause of action which the respondent asserted against the appellants and Barker in the first action was extinguished by the action of the respondent in signing a final judgment against Barker for the amount of its claim and thereafter discontinuing the action as against the other defendants.
Except to the extent that the matter is affected by Rule 113 of the Supreme Court of Alberta, it is the law that, where action is brought against one or more persons liable jointly for a liquidated amount upon a contract and final judgment is entered against one of them, the cause of action merges in the judgment and the liability of the others is extinguished. The rule in King v. Hoare 11, that a judgment even without satisfaction recovered against one of two joint debtors is a bar to an action against another, was expressly approved by the House of Lords in Kendall v. Hamilton 12.
Rule 113, while not in identical terms, appears to have been taken from the rule which is now Rule 3 of Order 27 of the Rules of the Supreme Court 1883. In so far as it touches the present matter, the Alberta Rule reads:—
When a Statement of Claim includes a claim for a debt or liquidated demand with or without interest … and any defendant, fails to deliver a Statement of Defence … the plaintiff may as against such defendant enter final judgment for any sum in respect of which no defence is delivered … and may proceed with the action against any other defendants and in respect of any other claims. In the present matter the respondent might thus after signing judgment against Barker have proceeded in that action with its claim against the appellants but, for reasons which are not explained, elected to discontinue the action as against them and to start afresh, adding a third person as defendant. It is to be noted that when these proceedings were commenced the judgment against Barker in the first action had not been set aside and, as an additional argument to that upon the main point, the appellants contend that in any event the existence of this judgment was a bar to the proceedings as of the date they were instituted.
In King v. Hoare, Baron Parke, after saying that the question of substance to be decided was whether a judgment recovered against one of two joint contractors is a bar in an action against another, said (p. 504):—
If there be a breach of contract, or wrong done, or any other cause of action by one against another, and judgment be recovered in a court of record, the judgment is a bar to the original cause of action, because it is thereby reduced to a certainty, and the object of the suit attained, so far as it can be at that stage; and it would be useless and vexatious to subject the defendant to another suit for the purpose of obtaining the same result. Hence the legal maxim, "transit in rem judicatam,"—the cause of action is changed into matter of record, which is of a higher nature, and the inferior remedy is merged in the higher. This appears to be equally true where there is but one cause of action, whether it be against a single person or many. The judgment of a court of record changes the nature of that cause of action, and prevents its being the subject of another suit, and the cause of action, being single, cannot afterwards be divided into two.
And later (p. 505):—
We do not think that the case of a joint contract can, in this respect, be distinguished from a joint tort. There is but one cause of action in each case.
In Kendall v. Hamilton 13, the action was against one of three members of a partnership. A previous action had been brought and judgment recovered against two members of the firm and nothing was realized under the judgment. At the time the first action had been brought the plaintiff was unaware that the defendant in the second action had been a partner of the firm. The judgment was held to be a bar to the claim. Earl Cairns L.C. said in part (p. 515):—
In the present case I think that when the appellants sued Wilson & McLay, and obtained judgment against them, they adopted a course which was clearly within their power, and to which Wilson & McLay could have made no opposition, and that, having taken this course, they exhausted their right of action, not necessarily by reason of any election between two courses open to them, which would imply that, in order to an election, the fact of both courses being open was known, but because the right of action which they pursued could not, after judgment obtained, co-exist with a right of action on the same facts against another person.
These remarks were made on the footing that Wilson and McLay, against whom judgment had been recovered, were the agents, and that Wilson, McLay and Hamilton, the partnership, was the undisclosed principal. The Lord Chancellor then proceeded to discuss the matter on the basis that Wilson, McLay and Hamilton were in the position of co-contractors and, considering King v. Hoare to have been correctly decided, was of the opinion that the recovery of the judgment against two of the three was fatal to the claim. Lord Selborne (p. 539) said that the judgment had the effect of extinguishing the legal liability of Hamilton as a partner on the debt previously due from the partnership of which he was a member. Lord Blackburn, who agreed with the other Law Lords that King v. Hoare had been rightly decided and that it did not depend on any such principle as that by suing some he had elected to take them as his debtors to the exclusion of those whom he had not joined in the action, said that the plaintiffs had a right of recourse against Hamilton for which they had never bargained and that they had destroyed that remedy by taking a judgment against persons who turned out to be insolvent.
In Odell v. Cormack 14, where a former member of a partnership was sued upon a bill of exchange accepted in her name without authority by one Carter who had been employed to realize the assets of the firm of which the defendant had been a member, judgment had been recovered in another action against Carter. Hawkins J., after finding that the action failed, since the defendant's acceptance had been given without her authority, said that this view rendered it unnecessary to discuss the effect of the judgment obtained. He then said that he was very strongly disposed to think that if a joint liability could have been established against Cormack and Carter, the fact that that action was abandoned against Cormack and judgment afterwards signed against Carter alone would have afforded her a good defence to the action on the authority of King v. Hoare and Kendall v. Hamilton, and that he did not think the effect of that judgment, so far as Cormack was interested, could have been altered to his prejudice by the plaintiff obtaining, with Carter's consent, a Master's order to set it aside.
In Hammond v. Schofield 15, the plaintiffs, a firm of printers, sued the defendant for the cost of printing for him a certain newspaper of which they supposed him to be the sole proprietor and the defendant consented to final judgment being signed against him. After judgment had been signed, the plaintiffs received information that at the time the work was done one T. was a partner of the defendant and joint proprietor with him of the newspaper. Accordingly, with the consent of the defendant, they applied for an order that the judgment should be set aside and the writ amended by adding T. as a defendant in the action. It was held that the consent of the defendant to the setting aside of the judgment could not enable the plaintiff to evade the rule that judgment recovered against one of two joint contractors is a bar to an action against the other, and that there was consequently no jurisdiction to make the order. The facts differ from those in the present case in an important particular since T. was not a party to the action at the time the judgment was signed against the defendant, and so the joint debt had merged in the judgment obtained before it was set aside. Wills J., speaking of the effect of the judgment, said (p. 455):—
The effect of the judgment was undoubtedly to destroy the right of action against a co-contractor with the defendant—King v. Hoare—even though the plaintiff did not know when he signed judgment that he had a remedy against him.
and again (p. 456):—
I cannot see upon what principle the consent of the plaintiff and defendant can be allowed to create a new right, or (which is the same thing), to resuscitate an extinguished right in favour of the plaintiff against a third person, or to create on the part of a third person a new liability.
In this matter no reasons for judgment were delivered by the learned trial judge. In delivering the judgment of the Appellate Division 16, Clinton J. Ford J.A. considered that since the judgment obtained against Barker had been set aside (though after this action had been commenced) it was not a bar to the action. He was further of the opinion that it should be presumed that the trial judge found that it was not set aside by the consent, either express or tacit, of the plaintiff and that a statement made in Vol. 13 of Halsbury, p. 416, was authority for the view that if the judgment were set aside otherwise than by consent any objection to the merger of the cause of action was overcome.
If the question were as to whether or not the judgment had been set aside with the tacit, if not the express, consent of the solicitor for the respondent, I would have difficulty in coming to the conclusion that by his conduct before Egbert J. he had not tacitly consented to the judgment being set aside. At the trial the respondent put in as part of its case the order setting aside the judgment which had been signed against Barker, but tendered no evidence as to how it had been obtained. The order setting aside the judgment and the court file in the matter disclose that there was no affidavit made by Barker explaining the reason why he had not defended the action or denying his liability to the plaintiff in the action, or explaining the delay of something more than three months in making the application to set the judgment aside. The appellants, however, at the trial called the solicitor who had appeared for Barker on the application who said that he had discussed with the solicitor for the respondent "the project of opening up the judgment" in advance of the making of the application and that, when the latter appeared before Mr. Justice Egbert and the judge had asked him what position he took towards the application, he had said that "he was neither opposing nor consenting to the order" or words to that effect. The solicitor acting for Barker said that he had mentioned to the judge that, in his opinion, there might be some question of contribution as between Barker and Belzberg and Singer but that he made no suggestion that his client did not owe the money. On being cross-examined he said that it was not a consent order and, in answer to a question: "There is no doubt that it was granted on the merits?", said that that was correct and that in making the application he was considering the welfare of Barker and that he had had no arrangements with the respondent or its solicitor. He, however, repeated that his client did not dispute liability on his part for the amount of the judgment. I have difficulty in understanding how any question of contribution as between these partners could have arisen since as the evidence showed Barker, Belzberg and Singer had on April 1, 1949, almost a year prior to the date of the application to Egbert J., entered into an agreement dissolving the partnership in which Barker convenanted, inter alia, to indemnify Belzberg, Singer and Kluner against all debts and liabilities of the partnership and all claims and demands in respect thereof. Furthermore, even had there been no outstanding covenant at the time, the signing of the judgment against Barker would not have affected any claim to contribution he might conceivably have had against his former partners. The solicitor for Barker expressed the view that this judgment was not set aside with the consent of the solicitor for the respondent, but this does not appear to me to be the proper conclusion from these facts. I think it is quite clear that the solicitor for the respondent who had charge of the proceedings in these two actions considered that it was in his client's interests that the judgment against Barker should be set aside and, while he did not expressly consent, it appears to me that by his conduct he tacitly consented to the making of such an order. That it had been regularly obtained and that the debt was due and owing is conceded and it cannot be seriously suggested that if the solicitor for the respondent had said that he opposed the application the Chamber Judge would not have refused it.
The passage from 13 Halsbury, p. 416, relied upon in the judgment of the Appellate Division, reads:—
On this principle, a judgment recovered (though unsatisfied) against some one of a number of persons who are jointly (not jointly and severally) liable on the same contract, or are liable for the same tort, with others is, until set aside, a bar to an action.
This statement follows Article 470 in which the effect of the rule in King v. Hoare and other cases touching the same matter is discussed and which concludes with the sentence:
The principle is that where there is but one cause of action, the damages must be assessed once for all.
I think this statement in Halsbury, if it is to be construed as meaning that, apart from the rule of Court, it is only until a judgment recovered against one of several joint debtors is set aside that it is a bar to an action against the others, is inaccurate. I am unable, with respect, to agree in the conclusion of Mr. Justice Clinton J. Ford that the judgment against Barker was not set aside by consent but, if I were, I do not think that that fact and the further fact that the judgment itself was signed in default of defence and was not a consent judgment are decisive of the matter.
This subject is discussed by Wills J. in Hammond v. Schofield at p. 455 where, speaking of the effect of the signing of a judgment in such cases, he said in part:—
If a judgment be improperly obtained, so that it never ought to have been signed, there can be no doubt when set aside it ought to be treated as never having existed. I am inclined to think (though it is not necessary to decide the question), that if it be regularly obtained, but through a slip on the part of the defendant, so that on an affidavit of merits it might be set aside, and it ultimately turns out that the defendant never was liable, it may equally be regarded as a judgment which never ought to have been signed, and would in such a case be properly treated as a nullity. If, being regularly obtained, though through a slip on the part of the defendant, and set aside upon an affidavit of merits, it ultimately turns out that the original defendant was liable, I do not think it could be treated, so far as the rights of other persons are concerned, as a nullity. Still less, when there is no pretence for saying that there is any ground for setting it aside upon the merits as between the plaintiff and the defendant, and when as between them it could only be set aside by consent. I cannot see upon what principle the consent of the plaintiff and defendant can be allowed to create a new right, or (which is the same thing), to resuscitate an extinguished right in favour of the plaintiff against a third person, or to create on the part of a third person a new liability.
In the present case there is no pretence for saying that there was any ground for setting aside the judgment against Barker upon the merits.
An opinion apparently inconsistent with that of Wills J. was expressed by Riddell J. in Re Harper and Township of East Flamborough 17, upon an application by a ratepayer of the Township for an order quashing a by-law passed by the Municipal Council. Prior to the time when the proceedings were launched, the by-law had been approved by the Ontario Railway and Municipal Board and by a section of the Municipal Act it was provided that, after such approval, the validity of the by-law "shall not thereafter be open to question in any court." After the motion had been launched the Board set aside its certificate of approval. It was objected that the by-law could not be quashed since at the time the motion was launched it was not "open to question in any court." Riddell J. held that the objection failed and construed the section of the statute as meaning that the Court could not question the validity of the by-law which had been approved by the Court, if such approval was in existence when the Court was called upon to decide the point. He then said in part (p. 492):—
Were this a case of estoppel, difficult questions might arise: but, even then, there is respectable authority for the proposition that an action begun which can be met by a plea of estoppel, will lie if the estoppel be removed before the matter comes to adjudication.
In support of this statement Riddell J. referred to Goodrich v. Bodurtha 18, a decision of Thomas J. of the Supreme Judicial Court of that State. In that case the plaintiff brought his action upon a judgment recovered in the Court of Common Pleas upon a joint and several promissory note. While the action was pending, the judgment upon which it was based was reversed on the ground of want of jurisdiction in the Court. After the reversal the plaintiff obtained leave to amend his declaration in order to claim upon the original note and the defendant pleaded that the right of action had merged in the judgment. As to this claim, Thomas J. said (p. 324):—
To this amended declaration the defendant answered the merger of the note in the judgment. To this the obvious reply was and is that, upon the reversal of the judgment, the merger ceased. It was as if no judgment had been rendered.
With respect, the learned judge might have said with greater force that since the judgment had been awarded by a court which was without jurisdiction it was itself a nullity and could not either effect a merger or have any other legal consequence. What was meant by the expression "the merger ceased" I do not understand. The statement, that upon the reversal of the judgment it was as if no judgment had been rendered, was directed to the judgment he was then considering and was not, I think, intended as having universal application. If it was, it was obiter and, I think, inaccurate. Riddell J., while noting that the judgment had been set aside by reason of lack of jurisdiction in the Goderich case, appears to have relied upon it as authority for the statement that when "the obstruction by way of merger" was removed and the judgment set aside there was no estoppel. It is to be noted that no question of merger affected the decision in Harper's case. There was no such question to be determined as the effect of the signing of a judgment upon further proceedings upon a cause of action, in respect of which it was awarded, and anything said by Mr. Justice Riddell on the subject of merger was simply obiter.
Some support for the view that the signing of the judgment did not extinguish the cause of action and that it might be pursued, if the judgment is set aside, might appear to be found in the case of Partington v. Hawthorne 19. In that case the action was brought for goods sold and delivered by the plaintiff to the defendant at the Princess's Theatre. The order for the goods had been given by a person named Kelly, who the plaintiff afterwards discovered to be the agent of Hawthorne. The plaintiff brought an action against Kelly and recovered judgment in default of defence and thereafter sued Hawthorne. At the time the latter action was commenced, the judgment against Kelly was still in effect. Hawthorne applied to the Master and obtained unconditional leave to defend. On the plaintiff appealing from this order, Sir James Hannen, in Chambers, varied it by giving the defendant leave to defend only on paying the sum in dispute into Court. Hawthorne appealed from the latter order to a court consisting of Pollock B. and Manisty J. Two days before the appeal came on for hearing, the judgment against Kelly was set aside on an order of the Divisional Court, presumably on Kelly's application though the report does not say so. On the appeal, counsel for Hawthorne contended that since Partington had taken judgment against Kelly he could not proceed against Hawthorne for the same subject matter since the question was res judicata and that, having chosen to proceed first against the agent, he could not now proceed against the principal, referring in support of this contention, inter alia, to Kendall v. Hamilton. It was further contended that Hawthorne should at least have unconditional leave to defend. Baron Pollock said that the action against Kelly, in which the judgment had been obtained, was "obviously a mistaken proceeding" and should have been directed against Hawthorne. He said further:—
That judgment, however, has been set aside. It is not now existing and there is nothing to show that the second action is frivolous or vexatious.
Manisty J. said in part:—
The judgment therein obtained has gone and is as if it never had been. The matter is now just as if Miss Hawthorne had been sued originally; besides, she does not deny receipt of the goods.
It is unfortunate that the statement of facts in the report is so meagre. The case is not reported elsewhere, however. I think the decision does not touch the present question. Kelly, ordering the goods in the name and on behalf of Princess's Theatre, in which name apparently Hawthorne carried on business, was not liable to Partington for the purchase price. The judgment against him was set aside presumably on this ground. Taking the judgment against him did not merge the only cause of action that existed, which was as against Hawthorne for goods sold and delivered.
I have been unable to find that the decision in Partington's case has been considered in any case in England. It was, however, explained and distinguished in a judgment of the Appellate Division of Ontario in Brennen v. Thompson 20, the judgment of the Court being written by Riddell J. In that case, the plaintiff sued three defendants T., L. and C. in the County Court for the price of goods sold and delivered. All three were sued as if liable in the same way. T. did not appear and judgment was entered against him upon default; the defendants L. and C. however, appeared and the plaintiff then delivered a statement of claim which, in substance, stated that T. had bought the goods as agent of L. and C, that the plaintiff had recovered judgment against T. and asked that if it should appear that L. and C. were liable as principals, the judgment taken by default should be set aside. On a motion by L. and C. to strike out the statement of claim and dismiss the action against them, the County Court Judge made an order setting aside the judgment which had been signed against T. and allowing the plaintiff to amend the statement of claim as it might be advised. L. and C. appealed and their appeal was heard by a Court consisting of Falcon-bridge, C.J.K.B., Riddell, Latchford and Kelly JJ. The judgment of the Court was that the case presented by the statement of claim was that the two defendants were undisclosed principals of the defendant against whom judgment had been signed by default and that that judgment was a bar to the prosecution of an action against the principals, the cause of action having passed into a judgment which could not be set aside without their consent.
Counsel for the respondent on the appeal had relied upon the decision in Partington v. Hawthorne, apparently to support a contention that the judgment against T. having been set aside it was, as had been said by Manisty J., "as if it never had been." Dealing with this contention, Riddell J. pointed out that in Partington's case Kelly, representing himself as acting for the Princess's Theatre, had ordered goods for the theater from the plaintiff and that they were sold, delivered to and debited against the Princess's Theatre. Further, they were sold on the credit of the theatre and Hawthorne did not deny receipt of them. As to the judgment which had been recovered against Kelly, he was of the opinion that it had been obtained necessarily on the hypothesis that Kelly had not the authority to act for Hawthorne. If, indeed, this was the ground upon which Partington proceeded against Kelly, the latter's liability would be in damages for breach of warranty of authority. Whether the action proceeded on this basis or on the ground that Kelly had contracted personally, though also on behalf of his principal, cannot be determined from the report. The statement in the judgment of Baron Pollock that the action against Kelly was obviously a mistaken proceeding can only mean that Kelly was not personally liable on either ground. Riddell J. pointed out that the cause of action against Hawthorne had accordingly not merged and, referring to his judgment in Re Harper and Township of East Flamborough, he said that once the judgment against Kelly was out of the way the action against Hawthorne could proceed. Mr. Justice Riddell's opinion as to the effect in law of the merger of a cause of action is made apparent by a further passage in his judgment dealing with a supposititious case where A. goes to C. and buys goods ostensibly for himself and on his own credit.