[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 250 The demands set forth in the complaint in the action which was compromised, and the claim for which this action was brought, are admitted to have arisen under the same contract; and the latter claim, if valid, was due when the first action was brought. They, therefore, constituted an *Page 251 entire and indivisible cause of action, within the principle of the authorities cited by the counsel for the appellant, and which are collected and reviewed in the case of Secor v. Sturgis (16 N.Y., 548).
It is conceded, in the opinion of the court below, that, if the first action had proceeded to judgment, such judgment would have been a bar to this action, and that, if the pendency of the former action had been properly pleaded, the complaint must have been dismissed on that ground; and these positions have not been questioned by the respondent on this appeal. Such being the scope and effect of the first action, the substantial question here is, what construction should be put upon the stipulation for the settlement of that action. Is it to be construed as embracing and disposing of the specific items mentioned in the complaint, and those only, leaving still open between the parties all other disputed claims of the plaintiff under the contract in question, or should it be deemed in law to have been the intention of the parties to compromise all matters which would have been disposed of by a final judgment in the action?
The stipulation, and the security given and payments made in pursuance of it, were a valid accord and satisfaction. The only question is, what matters were embraced in that accord?
Although a judgment in an action which embraces only part of an entire demand would merge the whole demand, so that no subsequent action could be maintained to recover the part which had been omitted, it does not necessarily follow that a voluntary compromise or satisfaction of the claim made in the action would, under all circumstances, have the same effect. The parties might make a valid agreement to sever the demand and compromise the part sued for, leaving the residue to stand; and where such an agreement is made, or can be inferred from the circumstances, the settlement would be no bar to the demands not actually satisfied or settled.
Whether the legal effect of the stipulation in this case was or was not thus to sever the demand, must be gathered from *Page 252 the language of the stipulation itself, in connection with the circumstances under which it was made.
The evidence showed that some of the items embraced in the complaint in the first action were in dispute; also, that the item now sued for was disputed and was omitted from the complaint, although it had been in part embraced in the summons and attachment.
The sum paid on the settlement was less than that demanded by the plaintiff, even in his complaint. It is clear that the stipulation was for a compromise, and not merely a part payment.
But it is contended that the language of the stipulation fixing "the amount of the plaintiff's claim in this action" necessarily limited it to that portion of his claim which was specially described in the complaint, and that it did not embrace other disputed claims under the same contract, although it is conceded that by not including them in the action the plaintiff would be deemed to have absolutely waived them if he had proceeded to judgment.
In support of this claim the legal rule is invoked that the matters set forth in the complaint only are properly involved in the action, and from this rule the conclusion is drawn that the matters embraced in the summons and attachment, but omitted in the complaint, cannot be deemed to have been covered by the stipulation.
But the reasoning is equally strong in favor of the position that the stipulation was made in view of the rule that a recovery of the amount of the plaintiff's claim in that action would bar any subsequent claim for the amount now sued for; that a judgment in the action would put an end to the latter claim, and, therefore, that it was in legal effect involved in the claim made in the action, though not specifically mentioned in the complaint, and that, if there had been any intention to separate and reserve it such, intention would have been expressed.
But we are not confined to the presumption arising from the omission of such reservation. *Page 253
The provision contained in the stipulation, that in case of default in the payments agreed upon, judgment should be entered in the action for $3,000 and costs, less such payments as might have been made, shows very plainly that the utmost the plaintiff was intended to have under this compromise was such amount as he would be entitled to, in case he entered judgment for the stipulated sum or such part of it as the defendant should fail to pay, and that therefore no agreement was made or can be implied by virtue of which any claim, which would have been barred by such a judgment, can be deemed to have been reserved from the settlement. The provision for the entry of judgment was manifestly intended as a penalty to secure performance by the defendant. But to give to the stipulation the construction claimed by the respondent, we must attribute to it the incongruity of converting this penalty into an inducement on the part of the defendant to violate his agreement; for if the voluntary payment of the stipulated amount leaves the defendant liable to a claim from which he would have been discharged by a judgment entered pursuant to the stipulation, it was plainly to his interest to make default. The plaintiff would then have had no remedy, except to enter judgment for the balance due on the stipulation, and there was to be no increased cost to the defendant in that event.
We cannot interpret the stipulation so as to render it thus incongruous, and are, therefore, of opinion that, properly construed, it operated as a compromise of all claims under the contract in question, which would have been barred by a judgment in the first action.
The judgment should be reversed, and a new trial granted with costs to abide the event.
All the judges concurring, except PECKHAM, J., who dissented.
Judgment reversed and new trial granted. *Page 254