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George W. RUCKMAN, Appt.,
UNION RAILWAY et al., Respts.
( . . . . . . Or......)
1. A decree for defendant in an action to compel the surrender of corporate bonds to a corporation which had succeeded to the rights of the one which issued them, on the ground that they had been wrongfully transferred by one in whose hands they had been placed for negotiation for the benefit of the corporation, will estop the corporation plaintiff, in a subsequent suit to foreclose the mortgage by which the bonds are secured, from setting up that they had been paid, or that the present plaintiff's grantor was present when the corporation that issued the bonds transferred its property to the present defendant, and knew that the latter understood that it was acquiring the property free from the lien of the mortgage, since these were matters which should
have been tried in the former suit.
2. A decree denying the right of a corporation to have bonds secured by mortgage on its property surren
dered by a pledgee who was seeking to foreclose its lien on the bonds against the pledgeor, on the ground that the bonds had been wrongfully put upon the market and had never been rightfully negotiated, is no bar to a subsequent suit against the corporation to foreclose the mortgage by which they are secured, since the latter question could not have been determined in the former ac
(December 12, 1904.)
A PPEAL by plaintiff from a judgment of the Circuit Court for Union County in favor of defendants in an action brought to foreclose a mortgage. Reversed.
Statement by Bean, J.:
In January, 1893, the Union Railway Company issued and delivered to J. W. Shelton twenty bonds, of the par value of $1,000 each, secured by mortgage on its property. Shelton sold four of the bonds, and they came into the hands of F. L. Richmond and W. T. Wright. Wright and Richmond borrowed $1,500 of the First National Bank of Union on their promissory note, and deposited the four bonds as collateral security therefor, under an agreement that in case the note was not paid at maturity the bank might, at its option as to time and manner, and without notice to the pledgeors, sell the bonds at public or private sale to pay the amount due on the note, together with ac
NOTE. For a collection of authorities upon the doctrine of res judicata, see notes to Wiese v. San Francisco Musical Fund Soc. 7 L. R. A. 577, and Shores v. Hooper, 11 L. R. A. 308, and also the case of Draper v. Medlock, which immediately follows this, and which takes a somewhat different view of the question involved.
cruing interest and costs. Default was made in payment of the note, and the bank elected and undertook to foreclose its lien upon the bonds in the manner provided in the agreement, whereupon the defendant the Union Street Railway Company, which had purchased the mortgaged property after the bonds had been transferred to the bank, brought a suit in equity to compel the bank to surrender up such bonds for cancelation, on the ground that they were issued in trust to Shelton, in order that he might negotiate them to intending purchasers for the use and benefit of the company, and had been delivered to the bank by Shelton for safekeeping until so sold and disposed of; that no sale had been made, and therefore, in equity, they belonged to the plaintiff, as the purchaser of the property covered by the mortgage given to secure the payment thereof. Issue was joined, and the suit tried and determined on the merits, resulting in a decree in favor of the defendants. Union Street R. Co. v. First Nat. Bank, 42 Or. 606, 72 Pac. 586, 73 Pac. 341. The bank thereafter foreclosed its lien upon the bonds, and sold them to the present plaintiff, who brings this suit to enforce the mortgage given by the railway company to secure the payment thereof. For a defense to the present suit, the defendants allege, in brief, (1) that the bonds were paid in full to the bank out of the money paid by the promoters of the Union Street Railway Company for the mortgaged property; and (2) that W. T. Wright, the president of the bank, was present at, and participated in, the negotiations for the purchase, and knew that such pro
moters understood and believed at the time that such purchase would be free of all liens and encumbrances, notwithstanding which he failed and neglected to disclose to them the lien of the bank on the four bonds in suit, but permitted them to pay over the money and take a conveyance of the property in ignorance thereof, and therefore the bank and its successor with knowledge should now be estopped from asserting that such bonds are a lien upon the property. The plaintiff pleaded the decree in the former suit as a bar, and averred that all the matters and things now alleged as a defense to the present suit were known to the defendants at the time the former suit was commenced, and should have been alleged therein as a ground of recovery. The court below held the former decree not a bar or estoppel, found the facts in favor of the defendants, and dismissed plaintiff's complaint.
Messrs. C. E. Cochran and Crawford & Crawford, for appellant:
The terms of the contract of security govern the parties, and it was the duty of the
First National Bank of Union to sell there- | 77 N. W. 1041; Stone v. United States, 12 under. C. C. A. 451, 29 U. S. App. 32, 64 Fed. 667. Messrs. Leroy Lomax and C. H. Finn, for respondents:
Colebrooke, Collateral Securities, § 118; Foote v. Utah Commercial & Sav. Bank, 17 Utah, 283, 54 Pac. 104; Union Trust Co. v. Rigdon, 93 Ill. 458; Griggs v. Day, 136 N. Y. 152, 18 L. R. A. 120, 32 Am. St. Rep. 704, 32 N. E. 612; Waring v. Gaskill, 95 Ga. 731, 22 S. E. 659.
Having followed the terms of the contract strictly, the appellant, as purchaser of the bonds, acquired a valid title to the property pledged, all the property of the pledgeors and pledgee therein.
22 Am. & Eng. Enc. Law, 2d ed. p. 893, ¶ 4; Halliday v. Bank of Stewart County, 112 Ga. 461, 37 S. E. 721; Rozet v. McClellan, 48 Ill. 345, 95 Am. Dec. 551; Potter v. Thompson, 10 R. I. 1.
A judgment of a court of competent jurisdiction, delivered upon the merits of the cause, is final and conclusive between the parties in a subsequent action or suit upon the same cause, not only as to all matters actually litigated and determined in the former action, but also as to every ground of recovery or defense which might have been presented and determined therein.
24 Am. & Eng. Enc. Law, p. 781, note 3; Barrett v. Failing, 8 Or. 152; Neil v. Tolman, 12 Or. 289, 7 Pac. 103: Belle v. Brown, 37 Or. 592, 61 Pac. 1024; White v. Ladd, 41 Or. 332, 93 Am. St. Rep. 732, 68 Pac. 739; 2 Black, Judgm. § 731; Cromwell v. Sac County, 94 U. S. 351, 24 L. ed. 195; Lake County
v. Platt, 25 C. C. A. 87, 49 U. S. App. 216, 79 Fed. 571; Holt County v. National L. Ins. Co. 25 C. C. A. 469, 49 U. S. App. 376, 80 Fed. 689; Stewart v. Stebbins, 30 Miss. 66; Burford v. Kersey, 48 Miss. 642; Patterson v. Wold, 33 Fed. 793; Farwell v. Brown, 35
The issues in Union Street R. Co. v. First Nat. Bank, 42 Or. 606, 72 Pac. 586, 73 Pac. 341, were: First. Plaintiff's right to have the bonds and mortgage securing the same surrendered up and canceled, and the defendant's corresponding primary duty so to do; and second, the delict or wrongful act or omission of defendant by which primary right and duty have been violated.
Pom. Rem. & Rem. Rights, 3, c. 3, § 518, also § 519; Patterson v. Wold, 33 Fed.
The issues in the case at bar presented by the defendants are identical with those presented and tried in the former case, for the reason that the same evidence supports both the present defense and the former suit.
Freeman, Judgm. § 259; Hahn v. Miller, 68 Iowa, 745, 28 N. W. 51; Hawk v. Evans, 76 lowa, 593, 14 Am. St. Rep. 247, 41 N. W. 368; Prouty v. Matheson, 107 Iowa, 259,
One who advises another to purchase property, without mentioning a lien which he claims thereon, is estopped from asserting it after the negotiations are completed and the purchase price paid.
Alabama G. S. R. Co. v. South & North Ala. R. Co. 84 Ala. 570, 5 Am. St. Rep. 401, 3 So. 286; Jones v. Gates, 24 Or. 411, 33 Pac. 989; Titus v. Morse, 40 Me. 348, 63 Am. Dec. 665; Copeland v. Copeland, 28 Me. 525.
| A former judgment or decree can operate as a bar or estoppel only as to matters in issue which were actually litigated or determined.
Gentry v. Pacific Live Stock Co. (Or.) 77 Pac. 115; La Follett v. Mitchell, 42 Or. 465, 95 Am. St. Rep. 780, 69 Pac. 916; Cromwell v. Sac County, 94 U. S. 351, 24 L. ed. 195.
The essential qualities of res judicata are: "There must be a suit, actor, reus, judex, and the judgment must be final; that is, it must settle the matter which it purports to conclude."
Wells, Res Adjudicata, p. 8.
Bean, J., delivered the opinion of the court:
Upon the record, we have substantially this state of facts: A party commenced a suit against another to compel the surrendering up for cancelation of negotiable instruments on the ground that they were the suit tried on the merits, and a decree never issued for value. Issue was joined, rendered in favor of the defendant. At the time the suit was commenced, the plaintiff therein had two other grounds upon which he might have recovered, neither of which, however, he set up or alleged in the complaint. Thereafter, when the defendant in the former suit, or the party who had succeeded to his interest with knowledge, brought an action to enforce the payment of the instruments, and to foreclose the lien given as security therefor, the defendant therein and the plaintiff in the former suit pleads as a defense the two matters which he might have relied upon for relief in his first suit. The question for decision is whether he is estopped by the former decree against him from pleading such defenses.
It is settled law in this state, as elsewhere, that a judgment or decree rendered upon the merits is a final and conclusive determination of the rights of the parties, and a bar to a subsequent proceeding between them upon the same claim or cause of suit,
not only as to the matter actually deter-, amount of $1,200, and that the land was mined, but as to every other matter which conveyed to him in payment of this debt, the parties might have litigated and had de- and was a fraudulent preference under the cided as incident to or essentially connected statute, and therefore void. The court (Mr. therewith, either as a matter of claim or de- Justice Brewer presiding) held that the first fense (Neil v. Tolman, 12 Or. 289, 7 Pac. judgment was a bar to the second, although 103; Morrill v. Morrill, 20 Or. 96, 11 L. R. the grounds of recovery were different. After A. 155, 23 Am. St. Rep. 95, 25 Pac. 362; quoting Mr. Pomeroy's analysis of the eleBelle v. Brown, 37 Or. 588, 61 Pac. 1024; ments which constitute "a cause of action" White v. Ladd, 41 Or. 324, 93 Am. St. Rep. (Pom. Rem. & Rem. Rights, § 519), he 732, 68 Pac. 739); but that when the action says: "Now, what is the plaintiff's primary is upon a different claim or demand the for- right, as alleged in these cases? Obviously. mer judgment can only operate as a bar or in each the same,-the right to have the an estoppel as against matters actually liti-land; and the defendant's corresponding gated or questions directly in issue in the former action (Barrett v. Failing, 8 Or. 152; Applegate v. Dowell, 15 Or. 513, 16 Pac. 651; LaFollett v. Mitchell, 42 Or. 465. 95 Am. St. Rep. 780, 69 Pac. 916; Caseday v. Lindstrom, 44 Or. 309, 75 Pac. 222; Gentry v. Pacific Live Stock Co. (Or.) 77 Pae. 115). This distinction should always be kept in mind in considering the effect of a former judgment or decree. If the second action or defense is upon the same claim or demand, the former judgment is a bar, not only as to matters actually determined, but such as could have been litigated; but, if it is upon another claim or demand, the former judgment is not a bar, except as to questions actually determined or directly in issue. This case comes within the principle first stated. It is a suit between the same parties and upon the same claim or demand as the former suit. The claim or demand in the first suit brought by the defendant Union Street Railway against the bank was the validity of the bonds, and the right of the bank to enforce them as against it. This is the same identical question presented, and the only one for adjudication, in the present suit. It was determined in the former suit, and the decree therein is a bar to further litigation thereof between the same parties, although the plaintiff therein did not allege or urge all the reasons entitling it to relief as demanded. The law requires a party to try his whole suit or action at one time, and he cannot separate his claim or divide his grounds of recovery or defense. The application of this principle is illustrated by two Federal cases. In Patterson v. Wold, 33 Fed. 791, the plaintiff, a receiver of an insolvent estate, brought a suit
to set aside a deed from the insolvent to his
son, and a mortgage given by the son to certain creditors of the insolvent; alleging the deed to be without consideration, and the mortgage a fraudulent preference. Judg. ment was rendered for the defendants. Thereafter the plaintiff brought another suit to avoid the same deed, alleging that the son was a creditor of the father to the
primary duty is to let him have the land;
that a final decree on the merits had been missed, was barred as to all by the decree." rendered in its favor. The circuit court These two cases and the principles applied held the plea to be bad, but upon an appeal are decisive of the present suit. The claim the Supreme Court reversed the case, hold- or demand of the defendant Union Street ing that the former decree was a bar, al- Railway Company in the suit brought by it though the grounds of recovery were essen- was that the bank had no interest in the tially different, and it was urged that the bonds, and they should be surrendered up plaintiff was suing in a different capacity for cancelation. The reasons why this from that in which it brought the first suit. should be done were not the cause of action The court, by Mr. Justice Holmes, said: "On or primary subject of inquiry. There may the general principles of our law, it is toler- have been many reason why the bonds ably plain that the decree in the suit, under should have been surrendered up and canthe foregoing statute, would be a bar. The celed, and why the bank could not enforce parties, the subject-matter, and the relief them as against the property of the railway sought all were the same. Here the company; but, if the plaintiff in that suit plaintiff is the same person that brought was content to rely upon only one of such the former bill, whatever the difference of reasons as a ground for recovery, the others the interest intended to be asserted. are lost to it as completely as if they never The best that can be said, apart from the act existed. just quoted, to distinguish the two suits, is that now the United States puts forward a new ground for its prayer. Formerly it sought to avoid the patents by way of forfeiture. Now it seeks the same conclusion by a different means; that is to say, by evidence that the lands originally were excepted from the grant. But in this as in the former suit it secks to establish its own title to the fee. It may be the law in Scotland that a judgment is not a bar to a sec ond attempt to reach the same result by a different medium concludendi. . . . But the whole tendency of our decisions is to require a plaintiff to try his whole cause of action and his whole case at one time. He cannot even split up his claim . . and a fortiori he cannot divide the grounds of recovery. Unless the statute of 1889 put the former suit upon a peculiar footing, the United States was bound then to bring for ward all the grounds it had for declaring the patents void, and, when the bill was dis
The position that the decree in the former suit is a bar to the right of the plaintiff to foreclose the mortgage given to secure the payment of the bonds is untenable, because that matter was not germane to or connected with the cause of action or suit, and did not in any way affect the merits of the controversy then before the court for determination. The bank was not the owner of the bonds, but held them as collateral security for the debt of persons not parties to the suit. It was bound by the terms of the contract between it and the pledgeors, and no decree of foreclosure could have been made in the former suit, because the proper parties were not before the court. Union Street R. Co. v. First Nat. Bank, 42 Or. 606, 72 Pac. 586, 73 Pac. 341.
The decree of the court below will, therefore, be reversed, and one entered here as prayed for in the complaint.
Petition for rehearing overruled.
GEORGIA SUPREME COURT.
William W. DRAPER et al., Exrs., etc.,
R. O. MEDLOCK.
1. Where a judgment is pleaded as an estoppel, the burden is upon the party relying upon the estoppel to
*Headnotes by FISH, P. J.
Note. As to estoppel by julgment. See also In this series, notes to Fowler v. Bowery Sav. Bank, 4 L. R. A.. on page 148, and Morrill v. Morrill, 11 L. R. A. 155.
See, upon the doctrine of res judicata generally, the proceeding case of Ruckman v. Union Railway, and note thereto.
sustain the plea by showing that the particular matter in controversy was necessarily or actually determined in the former litigation: and if it appear, from the record introduced in support of the plea, that several issues were involved in such litigation, and the verdict and judgment do not clearly show that this particular issue was then decided, before such plea can be sustained this uncertainty must be removed by extrinsic evidence showing that such matter was then decided in accordance with the contention of the party relying upon the plea.
2. Evidence offered in opposition to such plea, which shows that in the former litigation the parties alleged to be es topped by the judgment therein sought to so amend their pleading as to have the question in controversy in the subsequent litigation
determined, and that the court disallowed | between the same parties is not conclusive such amendment, is admissible.
(March 4, 1905.)
in a subsequent suit between them on a different cause of action, except as to issues actually made and determined in the former litigation. Accordingly, where two notes were given upon a consideration arising in one and the same transaction, a judgment rendered in favor of the payee against the maker upon one of such notes did not
The case sufficiently appears in the opin-operate to estop the latter from setting up in a subsequent action brought by the for
Messrs. N. L. Hutchins and C. H. mer against him on the other note a defense Brand for plaintiffs in error.
Messrs. T. M. Peeples, N. L. Hutchins, Jr., and Atkinson & Barn for defendant
which was not in issue when the judgment was rendered." If two notes given by the same maker to the same payee upon a consideration arising in one and the same transaction, when sued upon separately, represent different causes of action, then it is perfectly obvious that the suit against Medlock in the city court of Lawrenceville upon the three promissory notes payable to the order of Moore, Marsh, & Co., signed by him as maker, was upon a different cause of action from that involved in the present suit in the superior court of Gwinnett county against him upon his indorsements of two notes payable to his own order, and executed by Zachry and Richmond as makers. Even if, in comparing the causes of action, we look merely to the present case, and to whatever cause of action Medlock may be said to have had in his equitable action against Moore, Marsh, & Co., ignoring the fact that that was merely in the nature of an equitable answer to their suit against him, it seems hardly necessary to say that his cause of action in that proceeding was different from the cause of action of the plaintiffs in the present case against him. Whatever cause of action he had and set up then is obliged to be different and distinct from the cause of action set up against him now.
The plea of res judicata in the present case is more properly a plea of estoppel by judgment, as the decree relied on in support of the plea was not rendered in a case in volving the same cause of action. Medlock's equitable action against Moore, Marsh, & Co., in which this decree was rendered, was brought for the purpose of setting up his defenses to the suit which they had instituted against him in the city court of Lawrenceville upon the three promissory notes which he individually had executed to them, and obtaining certain equitable relief. such as the cancelation of a security deed. etc., which he could not obtain in the city court. This action by Medlock was not an independent suit, but was merely in the noture of an equitable answer to the suit against him in the city court. It is evident that the cause of action in the suit brought by Moore, Marsh, & Co. against Medlock in the city court, which was tried under his equitable action in the superior court, was entirely different and distinct from the cause of action in the present case. In the As "a judgment rendered in litigation besuit in the city court the action was based tween the same parties is not conclusive in upon three promissory notes given by Med- a subsequent suit between them on a differlock to Moore, Marsh, & Co., payable to ent cause of action, except as to issues actheir order, and signed by him alone as tually made and determined in the former maker. In the case in hand the suit is litigation," the question arises whether, in based upon Medlock's indorsements of two the case under consideration, Medlock promissory notes, each payable to his own showed that in the former litigation, upon order, signed by Zachry and Richmond as the result of which he relied to support his makers, indorsed in blank by Medlock, and plea of res judicata, the issue as to his liatransferred to Moore, Marsh, & Co. It is bility to Moore, Marsh, & Co. upon his inclear that the two suits were upon different dorsements of the two Zachry and Richinstruments or obligations, and the liability mond notes now sued on was both made and upon which the plaintiffs in the suit in the determined. For him to sustain his defense city court sought to recover against Med- of estoppel by judgment, it was necessary lock was different from that upon which the for him to show not only that this issue was plaintiff's in the present case seek to recover raised in the former litigation, but also that against him. Hill v. Freeman, 7 Ga. 211. it was then determined in his favor. The 220: Worth v. Carmichael, 114 Ga. 699, 40 defenses which he then set up were contraS. E. 797. In the case last cited it was dictory and inconsistent. One of them was held: "A judgment rendered in litigation | that the two notes of Zachry and Richmond, 69 L. R. A.