Reynolds Securities, Inc. v. Underwriters Bank & Trust Co.Reynolds Securities, Inc. v. Underwriters Bank & Trust Co.
OPINION OF THE COURT
The issue on this appeal, seemingly commonplace but a source of more controversy than one would expect, is whether, under the facts in this case, a default judgment, obtained as a result of a willful refusal to comply with discovery orders, was properly entered for the full amount of the ad damnum without the holding of an inquest to assess the damages.
On three separate occasions, the defendant, Andre Rostworowski, placed an order with the plaintiff, Reynolds Securities, Inc., a national brokerage firm, to sell shares of a particular stock for his account. Though notified that the sales had been
After issue was joined and in personam jurisdiction unsuccessfully contested (
Defendant thereupon moved to vacate the judgment, open the default and have the matter set down for an inquest at which the quantum of damages would be the subject of proof. Special Term denied the motion. The Appellate Division, in a single order, unanimously dismissed defendant’s appeal from the judgment, but affirmed on a companion appeal taken from the order denying the motion to vacate. We granted leave to appeal only from so much of the Appellate Division’s order as dismissed the appeal from the judgment.
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Defendant does not, and indeed cannot successfully, quarrel with the order to the extent that it struck the answer and directed the entry of a default judgment on liability, for the court was more than eminently justified in following that
The entry of a default judgment against a defendant, though it be for noncompliance with a discovery order, is governed by CPLR 3215 (4 Weinstein-Korn-Miller, NY Civ Prac, par 3215.02). Where the damages sought are for a "sum certain or for a sum which can by computation be made certain”, subdivision (a) of that section makes it permissible for the clerk, without notice to the defendant (subd [f]) and upon proof by the affidavit of a party setting forth the facts constituting the claim, the default and the amount due, 2 to enter judgment up to the amount demanded in the complaint. Otherwise, application to the court is required (CPLR 3215, subd [b]) and a defendant who has appeared is entitled to five days’ notice of the application (subd [f]), as well as a full opportunity to cross-examine witnesses, give testimony and offer proof in mitigation of damages (see McClelland v Climax Hosiery Mills, 252 NY 347; Default — Damages—Notice and Hearing, Ann., 15 ALR3d 586, 607, § 5).
The term "sum certain” in this context contemplates a situation in which, once liability has been established, there can be no dispute as to the amount due, as in actions on money judgments and negotiable instruments. Obviously, the clerk then functions in a purely ministerial capacity. (Cf. Ace Grain Co. v American Eagle Fire Ins. Co., 11 FRD 364, 365-366 [Weinfeld, J.], construing the analogous provisions of Fed Rules of Civ Pro, rule 55, subd [b] [US Code, tit 28, appendix].)
In the present case, however, the damages sought cannot be determined without extrinsic proof, for the amount of plaintiff’s damages is not readily ascertainable without consideration of the reasonableness of the time which plaintiff
On remittal for that purpose, it is not to be assumed that defendant’s obligation to afford plaintiff the opportunity to pursue discovery terminated when the answer was stricken. Though, as a result of his default, the defendant has now forfeited his right to take the plaintiff’s deposition, it does not follow that plaintiff is to be handicapped in the proof of its damages by defendant’s prior defiance of orders, notices, or subpoenas calling for his production of records or the taking of his deposition (cf.
Glens Falls Ins. Co. v Weiss,
Thus, to anticipate the eventuality that the defendant may elect to proceed with his avowed intention to contest the damage issue by opposing proof, plaintiff, if it chooses to do so, may press its right to discovery in advance of the inquest, whether for direct use as evidence in proving its damages or for the procurement of information that may lead to such evidence.
True, in the past it has been held that ordinarily an examination cannot be had of a party whose default has left no issues to be tried. Such testimony was not regarded as "material and necessary” to the prosecution of the action
(Kozuch v Bachmann,
Moreover, if the defendant’s deposition or his response to subpoena is vital to plaintiff’s proof and the defendant holds to his prior course by refusing to obey orders or subpoenas, the plaintiffs rights should not have to hang on the compulsion to comply which may follow the possible exercise of the trial court’s powers of contempt against the defendant. Among other things* the defendant may then be precluded from offering any evidence at the inquest (CPLR 3126; cf.
Brown v Hilton Hotels Corp.,
Beyond that, if the plaintiffs ability to prove his affirmative case with a fair degree of precision is seriously hampered by the defendant’s obstructiveness, the court, in order that a just result be achieved, is not without power, where necessary, to rely on lesser and more informal proofs. A defendant whose conduct has both caused injury to another and put obstacles in the path of the plaintiff’s recovery is hardly in a position to complain when, as a consequence, the damages cannot be established with exactitude (see
Matter of Rothko,
Accordingly, the order of the Appellate Division should be modified by remitting the matter to the Supreme Court, New York County, for the purpose of conducting an assessment as to damages and for other proceedings consistent herewith, with costs to plaintiff to abide the event. And, pending the final disposition of this action, the judgment affected by this decision should continue to stand as security (cf.
Treitel v Arnold Chait, Ltd.,
Chief Judge Breitel and Judges Jasen, Gabrielli, Jones, Wachtler, and Cooke concur.
Order modified and the case remitted to Supreme Court, New York County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed, with costs to plaintiff to abide the event. Pending final disposition of the action, the judgment shall continue to stand as security.
Notes
. An order dismissing an appeal is the functional equivalent of an affirmance for jurisdictional purposes (Cohen and Karger, Powers of the New York Court of Appeals, § 27, p 110). Contrary to plaintiffs protestations, which were necessarily rejected when we granted leave, we note that this appeal is not barred by CPLR 5511’s preclusion of appeals from default judgments (Cohen and Karger, Powers of the New York Court of Appeals, § 93, pp 401-403; 7 Weinstein-Korn-Miller, NY Civ Prac, par 5511.11; cf.
James v Powell,
. If a verified complaint has been served, it qualifies as an affidavit attesting to the claim and the amount due (CPLR 3215, subd [e]; see, also, CPLR 105, subd [s]).
. Since the complaint was unverified and no affidavit of facts underlying the claim was filed, the clerk should not have entered the judgment even if the case before us had been one for a "sum certain” (CPLR 3215, subds [a], [e];
Grant Co. v Payne,