The Two-Court Rule

In reading an unpublished Appellate Division decision recently, I learned about the “two-court rule.”  That rule, which dates back at least as far as a 1949 Supreme Court of the United States decision, Graver Tank & Mfg. Co. v. Linde Air Products Co., 336 U.S. 271 (1949), states that an appellate court will not “undertake to review concurrent findings of fact by two courts below in the absence of a very obvious and exceptional showing of error.”

The two-court rule apparently first came to New Jersey in Midler v. Heinowitz, 10 N.J. 123 (1952).  Our Supreme Court decided that case by a 4-2 vote, with Justice Brennan writing the majority opinion.  That was a Chancery matter in which a special master took an accounting of a joint venture in which the parties to the case had engaged.  Defendant filed exceptions to the special master’s report, and the Chancery Division ,made findings of fact and altered certain aspects of the special master’s ruling.  Plaintiff then appealed to the Appellate Division.  That court independently analyzed the evidence and “concurred with the trial court’s findings as supported by the believable evidence.”  One Appellate Division judge dissented as to one issue.

The Supreme Court granted review.  Justice Brennan stated that, in these circumstances, the Court saw no reason to make its own findings of fact.  “Ordinarily …, after two lower courts have considered the facts and have reached concurrent findings thereon, this court will not have the occasion to make a new and independent finding unless there is such palpable error in the concurrent findings or such clear showing otherwise of a miscarriage of justice as that a new finding by us in necessary to serve the essential ends of justice.”  He then cited the Graver case from the Supreme Court of the United States, and noted that New Jersey’s court system is modeled on that of the federal system.

The fact that one judge dissented on one issue did not alter the result.  Though a dissent in the Appellate Division permits an appeal as of right, “standing alone, the fact that the appellant for that reason is assured of a hearing here does not operate to avoid the application of the two court rule if we see fit to apply it.   [Citation].  The essential inquiry remains whether palpable error underlies the concordant judgments of the two lower courts, or whether for other reasons there has been a clear miscarriage of justice.  This has long been the rule of practice followed in the House of Lords notwithstanding a dissent in the intermediate appellate court.  [Citations].”

Finally, Justice Brennan concluded that there was no reason to depart from the two-court rule in that case.  “The concurrent finding ha[d] ample support in the evidence in the record and [would] not be disturbed.”

The two-court rule has been cited many times since Midler.  The most frequent contexts in which the rule has been invoked are municipal court appeals, in which the Law Division engages in a trial de novo following a Municipal Court proceeding, and Workers’ Compensation matters, where there are likewise two levels of review of the facts.  As Justice Brennan made clear, the doctrine is discretionary.  But it is a useful tool for respondents in cases where two lower tribunals have each evaluated the facts and reached the same favorable (to the respondent on a further appeal) conclusion.