McDonald v. McDonald

McAvoy, J.

The action was brought to recover $5,000 on a promissory note made in January, 1927, by the defendant, who is the husband of the plaintiff.

Plaintiff alleges that the note was given by defendant to her as consideration under a separation agreement. The complaint states that on February 2, 1927, a decree was entered in the District Court of Idaho, Fourth District, in favor of plaintiff and against defendant, granting plaintiff an absolute divorce; that said decree found that the separation agreement was just, equitable and fair, and ordered that it should remain in full force and effect; that no part of the note has been paid, and plaintiff is the holder.

The answer admits the making and execution of the note and separation agreement, the entry of the decree of divorce in Idaho, but denies the other allegations. It also contains two affirmative defenses: (1) That the plaintiff violated and breached the agreement, and (2) that the separation agreement and note set out in the complaint were executed by the parties in consideration of plaintiff’s agreement to procure a divorce, and that said agreement and note are invalid, and that they were founded on an illegal consideration, and that such agreement and note are contrary to public policy of this State. (This is also pleaded as a counterclaim.) Defendant demands judgment dismissing the complaint and adjudging the separation agreement and note to be illegal and of no force and effect, and an injunction preventing the plaintiff from taking any proceedings to enforce the terms of the agreement or to collect the note during the pendency of this action and thereafter.

Plaintiff moved in Special Term to strike out the two affirmative defenses on the ground that they were insufficient in law, and to dismiss the alleged counterclaim on the ground that it does not state facts constituting a cause of action.

This motion was granted as to the first defense, but denied as to the second defense. The question for our ruling is as to the sufficiency of the second defense and the counterclaim. The facts in the counterclaim arise out of the facts set forth in the complaint. The complaint alleges that the note was given in part consideration for- a separation agreement. The second defense attacks the validity of the consideration for both the note and the agreement. A counterclaim must tend to diminish or defeat plaintiff’s recovery. The defense which is attacked alleges the illegality of consideration to support the note sued on, and, if proven on the trial, plaintiff’s cause will be defeated. This constitutes the defendant’s plea, as given, a counterclaim. It is an equitable cause of action arising out of the same contract or transaction pleaded as the cause of action in the complaint. It is asserted as an equitable cause, arising out of the same transaction, which may be pleaded as a counterclaim against a cause of action at law brought thereon.

We think that this equitable cause to set aside the agreement and to cancel the note is a good counterclaim against the suit upon the note.

We think, too, that the second, defense, that the separation agreement was procured by an illegal consideration, i. e., that it was entered into for the purpose of procuring the divorce, and the plea that such agreement is invalid, a fraud upon the law, against public policy, and cannot be enforced in a law suit, is a good defense and counterclaim against the plaintiff’s complaint. A court will annul or restrain the enforcement of a judgment obtained by fraud either between the parties, or upon the court. The rule of merger would not make the agreement and the note coalesce into the decree of the Idaho court. In order that a judgment should have the effect claimed of merger, it is not enough that the party produce a record showing a judicial determination of the same question litigated in his favor, but it must also appear that it was rendered upon the merits, upon a material point and substantially upon the same facts presented in the subsequent case. While it appears in the Idaho judgment that the action was between the same parties, it does not appear whether the separation agreement was considered from the point of view of defendant's counterclaim. In that proceeding defendant defaulted. The pleadings in that action and the testimony taken on the trial are not part of the record in this case, and it cannot be determined that the doctrine of merger applies and that the agreement has become as though it were a mandate of that court,

In all the cases cited by plaintiff, in which there was a merger declared, the foreign decree directed the payment of a stipulated sum. In this case the decree does not direct the defendant to do anything. It does not indicate that the agreement was merged into it. If the decree had merged the note, the action should be upon the decree, for the doctrine of merger would extinguish the debt.

The question of the validity or invalidity of the separation agreement was never adjudged by the Idaho court. If the courts of Idaho would have power to set aside this judgment as contrary to the public policy of that State, and a fraud upon the court, certainly the facts which would afford affirmative relief there would constitute a defense to the judgment here. If not, the judgment of the court of Idaho would be entitled to greater faith and credit in New York than would be conceded to it in the court of its own State where it was rendered. Such consideration to the judgments of a sister State, says the Supreme Court of Iowa, the Constitution and acts of Congress do not require. (Dunlap v. Cody, 31 Iowa, 260.)

The rule is that a judgment rendered in our own, or a sister State, or in a foreign country, may be attacked collaterally for want of jurisdiction, or for fraud on the court, or between the parties to ,the action. (Schley v. Andrews, 225 N. Y. 110.) However regular the proceeding in the Idaho court was, it was alleged by the' defendant that it was founded upon an agreement to obtain a divorce. If defendant succeeds in proving this counterclaim, the court will not enforce the terms of the agreement, not because of favor to this defendant or in his right alone, but because of the policy of the State and its courts.

The order so far as appealed from should be affirmed, with ten dollars costs and disbursements to the respondent.

Merrell, J., concurs; Dowling, P. J., and Proskauer, J., dissent.