184 F.

2d 1021

PRODUCERS RELEASING CORPORATION DE CUBA

v.
PATHE INDUSTRIES, Inc.
No. 35.
Docket 21719.

United States Court of Appeals Second Circuit.

Argued October 11, 1950.
Decided November 6, 1950.

In 1946, plaintiff brought suit against PRC Pictures, Inc. The district court
entered judgment dismissing this action on the merits, cf. 8 F.R.D. 254.
On appeal, this judgment was affirmed but modified to provide for
dismissal but not upon the merits, 2 Cir., 1949, 176 F.2d 93, 96. The suit
was dismissed, in accordance with this court's mandate, on July 26, 1949.
Meanwhile, PRC had been dissolved, and Pathe Industries, Inc., had
acquired all its assets, including those which were the subject matter of the
dismissed suit. The instant action was begun on July 28, 1949. The
complaint names Pathe as defendant and sets forth the dissolution of PRC
and the acquisition of its assets by Pathe; otherwise the complaint is
substantially the same as that in the suit against PRC.
The contracts between plaintiff and PRC on which the complaint relies,
contain this provision: "No action or proceeding shall be commenced,
prosecuted or maintained until the expiration of ninety (90) days from the
date of the act, event or default upon which the claim is based, and no
such action or proceeding shall be maintained on such claim unless
commenced within nine (9) months after the date of such act, event or
default."
On Pathe's motion, the district court entered a summary judgment
dismissing the first three causes of action (for specific performance and
damages) on the ground that the action was not begun within the nine
months prescribed by the provision of the contract referred to above. The
fourth cause of action, for reformation, was not dismissed. The district
judge stated: "In accordance with Rule 54(b), Fed.R.Civ.P. [28 U.S.C.A.]

it is hereby determined that there is no just reason for delay and the entry
of judgment accordingly is directed." The opinion of the district court will
be found in 10 F.R.D. 29, 32.
Section 23 of the New York Civil Practice Act reads: "Effect of reversal
of judgment or termination of action. If an action is commenced within the
time limited therefor, and a judgment therein is reversed on appeal without
awarding a new trial, or the action is terminated in any other manner than
by a voluntary discontinuance, a dismissal of the complaint for neglect to
prosecute the action, or a final judgment upon the merits, the plaintiff, or,
if he dies and the cause of action survives, his representative, may
commence a new action for the same cause after the expiration of the time
so limited and within one year after such a reversal or termination."
Budner & Budner, New York City (Sidney S. Bobbe, New York City, of
counsel), for appellant.
Robert L. Augenblick, New York City, for appellee.
Before AUGUSTUS N. HAND, CHASE and FRANK, Circuit Judges.
FRANK, Circuit Judge.

1. Considering our opinion in connection with the dismissal of the former suit,
2 Cir., 176 F.2d 93 and the New York decisions interpreting 23 of the New
York Civil Practice Act, we think that the dismissal of the complaint in that suit
was not for "neglect to prosecute", and that therefore the present suit was
timely brought within the meaning of 23. In Gaines v. City of New York, 215
N.Y. 533, 539, 109 N.E. 594, 596, it was said: "The statute is designed to insure
to the diligent suitor the right to a hearing in court till he reaches a judgment on
the merits. Its broad and liberal purpose is not to be frittered away by any
narrow construction. The important consideration is that, by invoking judicial
aid, a litigant gives timely notice to his adversary of a present purpose to
maintain his rights before the courts."

In London v. Hessberg, 147 Misc. 719, 265 N.Y.S. 829, 832, affirmed without
opinion 264 N.Y. 435, 191 N.E. 501, the fact that the defendant was not
prejudiced by plaintiff's delay was held to be an important factor.

2. Defendant argues that, because it was not a party to the earlier suit, Section
23 does not apply. We do not agree. Where the parties to the second action are
identical in interest with the parties to the first, Section 23 applies; thus a

trustee in bankruptcy may be joined as co-plaintiff with the bankrupt in the

second action, Van der Stegen v. Neuss, Hesslein & Co., 243 App.Div. 122,
276 N.Y.S. 624, affirmed 270 N.Y. 55, 200 N.E. 577; and see Gibbons v. City
of New York, 196 Misc. 89, 66 N.Y.S.2d 34. Here plaintiff, in the first suit,
could have substituted defendant for PRC.1
4

Streeter v. Graham & Norton Co., 263 N.Y. 39, 188 N.E. 150, is not apposite;
there the court held 23 inapplicable because, in the second suit, a new
plaintiff, in part representing different interests, sought to assert new rights. But
here the same plaintiff sues, on the same causes of action, a defendant which
represents all the interests of the defendant in the first action. All the assets,
rights and duties of PRC have devolved on defendant: the fact that defendant
represents other interests in addition to those derived from PRC cannot free it of
the duties undertaken by PRC whose assets defendant now enjoys.

We think we are not required to follow Breen v. State, 179 Misc. 42, 37
N.Y.S.2d 371, a decision by the New York Court of Claims, even assuming that
that court has a sufficient status to make its decisions authoritative within the
doctrine of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed.
1188.2 For the court in the Breen case did not consider the earlier conflicting
decision of a higher court, Van der Stegen v. Neuss, Hesslein & Co., 243
App.Div. 122, 276 N.Y.S. 624, affirmed 270 N.Y. 55, 200 N.E. 577; and Breen
seems also at odds with Gaines v. City of New York, 215 N.Y. 533, 539, 109
N.E. 594, 596, where the court (per Cardozo, J.) said: "The important
consideration is that, by invoking judicial aid, a litigant gives timely notice to
his adversary of a present purpose to maintain his rights before the courts.
When that has been done, a mistaken belief that the court has jurisdiction
[essentially the situation in the Breen case] stands on the same plane as any
other mistake of law."

Reversed.

Notes:
1

See N. Y. Civil Practice Act, 83; Trotter v. Lisman, 209 N.Y. 174, 102 N.E.
575; Atlantic Dredging Co. v. William Beard, 145 App.Div. 342, 130 N.Y.S. 4,
affirmed 203 N.Y. 584, 585, 96 N.E. 415

Cf. State of California v. Fred S. Renauld Co., 9 Cir., 179 F.2d 605