Cummings v. Baker

16 App. D.C. 1, 1900 U.S. App. LEXIS 5270

• Court: Court of Appeals for the D.C. Circuit
• Decided: February 6, 1900
• Docket: No. 898
• Status: Published

Opinions

Mr. Justice Shepard

delivered the opinion of the Court:

1. The appellant’s plea of set-off, if sustained, would, under the statutes regulating the practice in this District, entitle him to judgment for any balance found due after allowing the just demands of the plaintiff. R. S. D. C., Secs. 810, 811, 812.

This plea, with the replication thereto and rejoinder, present the direct issue of fraud in the procurement of the assignment made by Cummings to Baker, September 6, 1886, of his interest in the fees in the “ Inspector’s Cases.” And the sole question involved in this appeal is the sufficiency of the appellee’s defense of former adjudication of that issue, founded on the decree in the equity branch of the case.

The doctrine of res judicata, with the general limitations of its application, has been well settled by decisions of the Supreme Court of the United States; and there is no occasion to inquire beyond them. In the latest of these it is expounded by Mr. Justice Harlan, who delivered the opinion of the court, in the following words:

“The general principle announced in numerous cases is that a right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction, as a ground of recovery, can not be disputed in a subsequent suit between the same parties or their privies; and even if the second suit is for a different cause of action, the right, question or fact once so determined must, as between the same parties, be taken as conclusively established, so long as the judgment in the first suit remains unmodified. This general rule is demanded by the very objects for which civil courts have been established, which is to secure the peace and repose of society by the settlement of matters capable of j udicial determination. Its enforcement is essential to the maintenance of social order; for the aid of judicial tribunals would not be invoked for the vindication of rights of person and property, if, as between parties and their privies, conclusiveness did not attend the judgments of such tribunals in respect of all matters properly put in issue and actually determined by them.” So. Pac. R.R. v. United States, 168 U. S. 1, 48.

2. The application of this general principle to the peculiar features of the case shown by this record presents a question of grave difficulty, involving, as it does, also the delicate task of defining the scope of a general decree entered in pursuance of a mandate of the Supreme Court of the United States.

The litigation between Baker and Cummings began with this action at law, in which, necessarily, the relief of both parties was confined to matters withití the jurisdiction and remedies of a court of common law.

Cummings filed his bill in equity to stay the proceedings at law before the expiration of the time for pleading thereto had expired.

Therein, as shown in the statement of the case, he alleged the procurement of the said assignment through fraudulent misrepresentations and concealment, and prayed its cancelation. This, being a relief that could not be had at law, presented the necessary foundation of the jurisdiction of the court of equity. In addition, he prayed for an accounting in respect of the claims, included now in the plea of set-off, and for a decree awarding him the balance found to be due thereon.' This last relief could' only be given by a court of equity as incidental to. the matter upon which its jurisdiction was invoked and depended; upon the principle that, equity jurisdiction having once attached, might be retained for the purpose of complete relief through the final adjudication of-all rights involved.

The order staying the proceedings at law was shortly after dissolved, and the plea of set-off was then filed. Subsequent prosecution of the law suit was then suspended by consent. This plea would, of course, stop the Statute of Limitations as to any items properly included in it from the date of its entry. Strange to say, the pendency of this issue at law was not brought to the attention of the courts which, in succession, passed on the case in equity: Had it been, it is probable that the pending question would have been avoided either by a decree of qualified dismissal, on the one hand, or by an express adjudication on the other.

3. Notwithstanding the dismissal was ordered and entered without words of qualification, the appellant contends that the opinion of the Supreme Court may be resorted to for the ascertainment of the grounds and the limitation of the scope of that decree.

In this we concur. The opinion is a part of the record returned to this court and transmitted in turn to the court below. The mandate in the usual terms directs that further proceedings be in accordance with the transmitted opinion. It is the one certain source of information in respect of the issues considered and determined.

In a case wherein the effect of a general decree of dismissal of a bill in a State court was under consideration, the Supreme Court of the United States, without question, looked to the opinion of the Supreme Court of the State wherein the decree .had been affirmed to ascertain what had been actually adjudicated. Phelps v. Harris, 101 U. S. 370, 374, 375.

In another case, the unauthorized findings of fact filed by the trial court of a State were resorted to for the same purpose. Last Chance Mining Co. v. Tyler Mining Co., 157 U. S. 683, 690.

In that case Mr. Justice Brewer said: “If it be true that the statutes of Idaho do not authorize findings of fact, it is none the less true that such findings are a declaration by the court of the matter it determines. Even if not conclusive against all testimony, they are certainly very persuasive evidence of what the court did in fact decide.” He also quotes with approval an opinion of the Court of Appeals of Virginia in a case where that court held it proper to examine an opinion filed by the trial judge to ascertain the grounds of his judgment.

4. Before proceeding to an examination of the opinion of the Supreme Court for the ascertainment of the questions actually adjudicated by the decree, it is in order to consider a contention on behalf of the appellee. That contention is, that the estoppel of former adjudication not only applies to what was actually decided, but also to everything that might have been decided in the equity suit, and is founded on an expression so often found in opinions discussing this vexed question. This expression — might have been decided— can not, consistently with reason, be made to include every matter of fact and law that might have been determined in a case under some contingency that did not arise.

It would better mean, in our opinion, that which ought to have been decided; that is to say, what must have been decided as expressly at issue, and that also which must either have been assumed, admitted, expressly or by implication, or proved in order to warrant the judgment or decree rendered.

This idea is clearly set forth by Mr. Justice Field in Cromwell v. County of Sac, 94 U. S. 351, 352. Referring therein to the conclusiveness of a former judgment,.he says:

“It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. Thus, for example, a judgment rendered upon a promissory note is conclusive as to the validity of the instrument and the amount due upon it, although it be subsequently alleged that perfect defenses actually existed, of which no proof was offered, such as forgery, want of consideration, or payment. If such defenses were not presented in the action, and established by competent evidence, the subsequent allegation of their existence is of no legal consequence.” See, also, Dowell v. Applegate, 152 U. S. 327, 343; W. A. & G. S. P. Co. v. Sickles, 24 How. 333, 341, 344-5; Burlen v. Shannon, 99 Mass. 200, 202; Snyder v. McComb, 39 Fed. Rep. 292, 300.

5. It now remains to ascertain the questions actually determined by the Supreme Court in the equity case of Baker v. Cummings, 169 U. S. 189. Was that decision an adjudication of the merits of the cause?

A decree in equity, in accordance with the general principle before stated, is conclusive of the rights and questions involved in the case, “unless made because of some defect in the pleadings, or for want of jurisdiction, or because the complainant has an adequate remedy at law, or upon some other ground which does not go to the merits.” Durant v. Essex Co., 7 Wall. 107, 109; Hughes v. United States, 4 Wall. 232, 237; Phelps v. Harris, 101 U. S. 370, 376; Cramer v. Moore, 36 Ohio St. 347, 349.

Now, as we have seen, the gravamen of the bill of Cummings was the cancelation of the assignment held by Baker. This alone conferred the jurisdiction in equity, and its finding in his favor was the necessary foundation of an inquiry into the state of the accounts between the parties, looking to a decree for the balance that might be ascertained thereon.

The answer of Baker, it is true, contained a specific denial of each and every allegation of fraud; but at the same time raised the question of Cummings’ laches in seeking a remedy in equity.

Granting that all the other elements of jurisdiction may appear, yet courts of equity will, notwithstanding, refuse relief to which a complainant might otherwise be entitled, where he has been guilty of inexcusable laches in seeking relief. “This form of quasi estoppel does not cut off the party’s title, nor his remedy at law; it simply bars his right to equitable relief, and leaves him to his legal actions alone.” 2 Pom. Eq., Sec. 817. He is simply refused consideration — turned out of equity, and remitted to his chances at law.

And this objection to the consideration of the merits of the complainant’s case may be raised by the court, of its own motion, when it has not been suggested by his adversary. Mayse v. Gaddis, 2 App. D. C. 20, 27, and cases cited.

Refusal, then, to entertain a bill because of the laches of the complainant is not an adjudication upon the merits of the suit, and dismissal, for that reason, ought not to bar an action at law involving the same cause of action any more than where it is for want of jurisdiction on other grounds, or for defect in the pleadings.

Turning now to the opinion by which the decree is to be interpreted, we think it shows with reasonable certainty that the decision was made to turn exclusively upon the complainant’s laches.

This can be made to appear in no better way than by quoting freely from the opinion.

After a very careful and complete statement of the case and of the issues to which the evidence was directed, the learned justice who delivered the opinion, said :

“We will defer an examination of the testimony as to the existence of the fraud and misrepresentation complained of until we have passed on the charge that, if there was fraud and misrepresentation, Cummings had full knowledge thereof immediately after the sale. We adopt this order of consideration because if it be found that such was the case, the question whether the fraud originally existed will become immaterial, in view of the defenses of limitation and laches. Moreover, in reviewing the question of knowledge, we will do so in the order stated — that is, first, discovery of the alleged fraud and misrepresentation as to the amount of fees collected and in process of collection from claims appropriated for at the time of the sale, and, second, discovery of the misrepresentation as to the amount of pending claims from which further fees were expected. Here, also, it is to be premised that if the first proposition be found to be well taken an examination of the second will be wholly unnecessary. This, obviously, is the case, for as the Statute of Limitations began to run from the time when suit might have been brought to annul the sale, it results that the discovery of the falsity of any material and fraudulent representations by which the sale had been induced gave rise to the fight to commence an action to rescind, and therefore fixed the period when the Statute of Limitations commenced its course.”

The court then entered upon the inquiry whether the schedules of earned fees given by Baker to Cummings immediately after the assignment were sufficient to convey to Cummings full information in regard to the amounts thereof.

After an analysis of the evidence on this point, the conclusion reached was thus announced: “That the evidence not only clearly, but beyond all question or dispute, overwhelmingly shows that if the false representations as to the earned fees were made as alleged, there was entire knowledge thereof by Cummings. And, for reasons heretofore stated, this conclusion renders unnecessary any inquiry into the question of when Cummings discovered the falsity of the alleged representations as to the amount of pending claims.” The question to be decided was then stated:

“ The question which arises is, can Cummings invoke the aid of a court of equity to afford him the relief which he seeks? A negative answer is compelled by a consideration of the most elementary principles.”

Towards the,conclusion of the opinion it is again said : “But the principle by which the bar of the Statute of Limitations is enforced by a court of equity, and upon which the doctrine of laches rests is, that equitable powers will not be exercised to discover whether one has been wronged when, with full knowledge of the alleged wrong, he has allowed the bar of the Statute of Limitations to arise, and has slept upon his rights until such a situation has arisen as to render it inequitable to afford him relief.”

Then, as if to remove all doubt as to the real grounds of the decision, and at the same time to prevent any inference that actual fraud had been found to exist, the opinion concludes with the following words:

“Because we rest our conclusions upon the application of the bar of the statute and the laches of Cummings, we must not be considered as intimating that we conclude that there was either clear and convincing proof, or even a preponderance of proof, that the sale was as claimed by Cummings.”

It is further contended on behalf of the appellee, that the opinion shows an express adjudication that the entire demand of Cummings had been barred b}r the Statute of Limitations because of the lapse of more than three years between the discovery of the alleged fraud and the filing of the bill. This expression can only refer to the case before the court, which was the right to obtain cancelation of a contract on the ground of fraud, after the lapse of more than three years from time of discovery.

That, as we have seen, was the essential purpose of the bill; the account and its items sought to be established after that cancelation were not passed upon. In the present action, it is certainly true that all items of money received by Baker, more than three years before the entry of the plea of set-off, are barred by the Statute of Limitations; but as to items within that period it can not operate. The action of 'Cummings — treating his plea of set-off as substantially a cross-action — is founded on the-items of money had and received. The assignment of the interest in those fees is the defense of Baker; and that defense, so far as fraud in its procurement affects the right of recovery, is open to attack. Cummings has simply failed to cancel it and remove it as a ground-of defense through his unsuccessful appeal to equity. He has been remitted thereby to his less effective remedjr at law, where the Statute of Limitations can apply only to his cause of action as set out in his plea, and not-to the evidence necessary to support it, or to meet and overcome the defense of his adversary.

The conclusion that the decree in equity is not a conclusive adjudication of the merits of the issue joined in this action at law, is fully sustained by a decision of the Supreme Court, heretofore cited. Phelps v. Harris, 101 U. S. 370, 376, 382.

The case at bar seems stronger than that. It was an action of ejectment. The plaintiff had first instituted a suit in the chancery court of Mississippi to remove a cloud upon his title to the land in controversy, raised by a partition made under the supposed power contained in the will of the testator under whom he claimed. Th'is bill was dismissed on the ground recited, “the court being of the opinion that the complainants are not entitled to the relief prayed for in their bill, or to any relief in the premises from this court.” On appeal to the Supreme Court of the State, the decree was affirmed.

In the action of ejectment, brought in the Circuit Court of the United States, that decree was pleaded as a conclusive adjudication of the title of the plaintiff. The denial of this effect in the Circuit Court was affirmed, on the ground that the decree amounted in realitj»-, to nothing more than a refusal by the equity court to take jurisdiction, because the plaintiff’s remedy, if any, was at law.

The opinion of the Supreme Court of Mississippi was examined to show that this was the ground of decision. But that opinion went much further and expressly declared the validity of the partition that had been assailed, and the title of the defendant thereunder.

Referring to that opinion Mr. Justice Bradley said:

“It is true that the court in the former part of its opinion discussed the question of the validity of the partition made by H. W. Vick and his son, and held that the partition was good, and that the title of Henry G. Yick to the lands in controversy was perfect; and, as a consequence, that the defendant’s title was also perfect. But this discussion was entered into for the purpose of showing that the title of the defendant was not so devoid of validity as to constitute a mere cloud on the title; and consequently that the case was not one in which a court of equity could give relief. We think, therefore, that the court below was right in determining that the decree in the equity case did not render the main controversy res judicata, but only decided that the bill would not lie; in other words, that it was not a proper case for a court of equity to determine the rights of the parties.”

In disposing of the case on the merits, however, the learned justice, delivering the opinion of the entire court, adopted the opinion of the Supreme Court of Mississippi as a satisfactory disposition thereof. In doing so, he said :

“In disposing of the equity case on appeal, that court fully considered the power of the trustee, Henry W. Vick, both under the deed and under' the will, and came to the unanimous conclusion that he had full power and authority to make the partition in question. As to the power under the will, the court had no doubt; and as to that given by the deed, they relied on the authority of Abell v. Heathcote and the opinions of Sugden and Fearne. And although this conclusion was not embraced in the decree so as to become res judicata, yet it was the ground on which the decree was rested.”

Notwithstanding, then, that the decree was unqualified in its terms, and rendered under the mandate of the Supreme Court of the United States, we are constrained to hold that it did not render the question in issue here res judicata.

If we have erred, we have the satisfaction of knowing that the amount in controversy gives the appellee the right to obtain a review of our decision.

’ For the reasons given the judgment will be reversed, with costs, and the cause remanded, with direction to set aside the judgment rendered on the agreed statement, and award a new trial. It is so ordered. Reversed.