Hallock v. State - 64 N.Y.2d 224, 485 N.Y.S.2d 510, 474 N.E.2d 1178 (1984)

Rule:

Stipulations of settlement are favored by the courts and not lightly cast aside. This is all the more so in the case of open court stipulations, where strict enforcement not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and integrity of the litigation process. Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation.

Facts:

A pre-hearing conference was held. One of the buyers was ill and did not attend the pretrial conference, but his attorney did. The other buyer was present with his attorney. In open court, the parties entered into a stipulation of settlement whereby the non-attending buyer's attorney agreed to accept reconveyance of the land and retention of the advance. Throughout the proceedings, the other buyer and his attorney remained silent. Subsequently, the buyers filed a motion to vacate the stipulation, which the trial court granted. The appellate division ruled that a plenary action was required to set aside a stipulation of settlement, and the lawsuit followed. After trial, the court directed specific performance of the settlement stipulation. A divided appellate division reversed, concluding that the negotiating attorney had no authority to settle the case on the terms embodied in the stipulation, and restored buyers' actions to their respective calendars.

Issue:

Did a stipulation of settlement made by counsel in open court bind his clients, even where it exceeded his actual authority?

Answer:

Yes

Conclusion:

The court reversed, holding that a stipulation of settlement made by counsel in open court bound his clients, even where it exceeded his actual authority. The court reinstated the judgment of trial court. Stipulations of settlement are favored by the courts and not lightly cast aside. This is all the more so in the case of open court stipulations, where strict enforcement not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and integrity of the litigation process. Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation.