Harris & Cole Bros. v. Columbia Water & Light Co.

114 Tenn. 328

• Court: Tennessee Supreme Court
• Decided: December 15, 1904
• Status: Published

Opinion

Mr. Chief Justice Beard

delivered the opinion of the Court.

The bill in this case was dismissed upon the ground that the issues presented by it had been determined against the complainants by a court having jurisdiction of the subject-matter and of the parties. The facts upon which this decree of dismissal rests are as follows: In 1903 N. H. Harris, R. Harris, and Cole Bros., styling, themselves as the firm of Harris & Cole Bros., brought a suit in the circuit court of Maury county, for the use of themselves and certain fire insurance companies named therein, against the Columbia Water & Light Company. In their declaration the plaintiffs alleged that Cole Bros., a member of the firm, was a corporation organized under the laws of the State of Iowa, and that the firm so constituted was engaged in the lumber business in the city of Columbia, in this State, and that on their yards in that city they had stored large quantities Of lumber, and had erected for the use of their business costly buildings, in which they were operating much valuable machinery. The declaration further alleged, that the firm of Harris & Cole Bros.- had entered into a contract with the defendant company whereby, for a consideration, that company agreed and obligated itself to furnish, at the fire plugs located on the premises of the firm, an ample supply of water at all times adequate in force, volume, and quantity to produce a stream of water flowing through hose and fire nozzles to throw upon the buildings, lumber, material, .and machinery sufficient to extinguish any and all fires that might originate or be upon the premises. The declaration further alleged that, after the making of this contract, fire originated on the premises of this firm, and that by reason of neglect and failure of the defendant company to have and keep a sufficient supply of water for use in the ex-tinguishment of fire, as it was bound to do by the contract referred to, the lumber, material, buildings and machinery of this firm were consumed, so that the loss accruing to the firm therefrom was $50,000. The plaintiffs also averred that at the time of this fire they had in force policies of insurance on the property in certain fire insurance companies named in the declaration,, and that these companies had paid to the plaintiffs the amounts set out therein and that by the terms of the policies these companies were entitled, to the extent of the payments made by them severally, to be substituted to any right of action which the plaintiffs might have, and that, to the extent of their payments, a share and interest in the right of action set up in this declaration had been assigned to these companies. It was alleged that the payments made by these companies in the aggregate was greatly less than the loss,sustained by the firm, and the suit therefore was instituted not only for the use of the insurance companies, but of the firm as well. To this declaration certain pleas were filed, in which it was alleged that Cole Bros, was a foreign corporation, and that it had not complied with the laws of Tennessee in the matter of registration of its charter, and that the firm of which it was a constituent member had no right, under the laws of Tennessee admitting foreign corporations to do business in this State, to enter into the contract for the breach of which recovery was sought.

To these pleas the plaintiffs filed a replication in which it was admitted that Cole Bros, was a foreign corporation, and that it had failed to comply with the statutory requirements with regard to such corporations entering the State to do business, but denied that the firm of Harris & Cole Bros, were unlawfully doing business in Tennessee. On these special pleas and this replication the circuit court dismissed the suit, and on appeal to this court the judgment of the lower court was affirmed upon the ground that an action by a firm could not be maintained unless all the partners in the firm were competent to sue, and that a firm composed of individuals and a foreign corporation could not maintain an action upon a contract made in this State, where it appeared that the corporation had not complied with the statutes requiring it to register its charter. Harris v. Water & Light Co., 108 Tenn., 245, 67 S. W., 811.

The bill in the present case is brought by N. H. Harris, Rutledge Harris, J. W. Cole, W. R. Cole, and John J. Cole, trading under the firm name and style of Harris & Cole Bros., against the Columbia Water & Light Company, for the same breach of the same contract, and under the same conditions alleged in the former suit, and a recovery is sought for this breach for the use of the firm of Harris & Cole Bros, and the same insurance companies named in the declaration in that suit. The bill alleges that at the time of the institution of the former suit N. H. and Rutledge Harris, the members of the firm resident in this State, and who had the management thereof, supposed that Cole Bros, was a corporation, and so informed the attorneys, representing the firm, and the allegation in the declaration and the admission in the replication that it was such was made in good faith, but subsequent to the rendition of the judgment in the circuit court, and pending the appeal of the case to this court, it was discovered that this averment was a mistake of fact; that, while Cole Bros, had been a corporation existing under the laws of Iowa, its existr ence as such had been terminated before the making of the contract in question and the institution of the suit, and the three parties named, to wit, J. N., W. R., and John J. Cole, at both periods were in fact doing business as partners under that name, and as individuals were members of the firm of Harris & Cole Bros.

. The chancellor held, on a demurrer raising the question, that the adjudication in the former suit was com elusive upon the complainants in the present case, and dismissed their bill.

Was the chancellor correct in this ruling, and is the matter now sought to be litigated res adjudicata? Two of the essentials to the successful defense of former adjudication are that there must be identity of parties in the two actions, and the judgment in- the prior action must have been upon the merits. As to the first of these essentials, wé think that the complainants in the present action are not identical with the plaintiffs in the first suit. In the present action the three Cole brothers» as individuals, join in this suit with the two Harrises, alleging that they constitute the firm of Harris & Cole Bros., while in the former Cole Bros, was treated as a, corporation. It is manifest that there is no identity between a corporation styled Cole Bros, and a firm of that name composed of individuals. The contract, for the breach of which recovery is sought, was, according to the averment of this bill, made with the firm of Harris & Cole Bros., composed of the two Harrises and of the three Coles. It is clear that where the contract was made with these individuals, constituting the firm, it was necessary that all the obligees should unite as plaintiffs in an action for the breach thereof, as the cause of action was joint only. If the former suit had been instituted by any one or more of the members of the firm, seeking a recovery for a breach, and it had appeared upon the face of the declaration that there were other members of that firm who had not joined as plaintiffs, the declaration would have been demurrable, or if it had not been so averred, but the fact had developed in proof, the variance between the pleading and proof would have been fatal to the plaintiffs’ action. In the former suit, which is relied upon as a bar to the present, it was held that, in suits upon partnership contracts, all the members of the firm must unite in the suit It was there said that there was no such thing recognized in tbe jurisprudence-of this State as the legal entity of a partnership, but that the suit by a firm was nothing more than the suit of the invidual members of the firm; the court adding, “It is apparent that, in the face of this rule, neither one of the members, nor any number less than all, could maintain the present suit." So that it was there held that the corporation of Cole Bros, was an indispensable party to that action, and, being disqualified under our statutes to enter into contracts in this State, the action by the firm of which this corporation was a member could not be maintained. It would seem manifest that, if a'firm so constituted could not recover upon a contract averred in that case, it equally could not on the one which is set up in the present; it being a contract between wholly different parties.

In section 536, volume 2, of his work on Judgments, the author, Mr. Black, says: “It is not only necessary that the person sought to be bound by the former judgment should have been a party to both actions, but he must have appeared in both in the same capacity or character.” The author embodies in his text a paragraph from the opinion in Rathbone v. Hooney, 58 N. Y., 463, which is as follows: “A judgment against a party sued as an individual is not an estoppel in a subsequent action in which he sues or is sued in another capacity or character. In the latter case he is, in contemplation of law, a distinct person, and a stranger to the prior proceedings and judgment."

TMs rule which, is announced as one of the fundamentals of both civil and common law jurisprudence on the subject is illustrated by Mr. Black by a reference to a great variety of cases from many different courts. Among these supporting the text are cited McBurnie v. Beaton, 111 Ind., 56, 12 N. E., 101; Caruth v. Grigsby, 57 Tex., 259; London v. Townshend, 112 N. Y., 93, 19 N. E., 424, 8 Am. St. Rep., 712; McNutt v. Trogden, 29 W. Va., 469, 2 S. E., 328. In addition to the authorities supporting this rule cited by this author, reference may be made to Morrison v. Clark, 89 Me., 103, 35 Atl., 1034, 56 Am. St. Rep., 395; First Nat. Bank v. Shuler, 153 N. Y., 163, 47 N. E., 262, 60 Am. St. Rep., 601; Beals v. Cone, 27 Colo., 473, 62 Pac., 948, 83 Am. St. Rep., 92; Loftis v. Marshall, 134 Cal., 394, 66 Pac., 571, 86 Am. St. Rep., 286.

A corollary of this rule is thus stated by Mr. Freeman in his work on Judgments, in volume 1, section 266: “A judgment given because of misjoinder or nonjoinder of plaintiffs or defendants, or because of the want of capacity of the party plaintiff- or defendant to sue or to be sued, establishes nothing but such defect or incapacity, and cannot defeat a subsequent suit in which the vice causing the former suit does not' exist.” The author cites the following cases, which upon examination are found to support his text: McCall v. Jones, 72 Ala., 368; Tierney v. Abbott, 46 Wis., 329, 1 N. W., 94; Tiffany v. Stewart, 60 Iowa, 207, 14 N. W., 241; Smith v. Auld, 31 Kan., 262,1 Pac., 626; and Richardson v. Richards, 36 Minn., 111, 30 N. W., 457.

Our own reports furnish illustrations of this rule, and all it implies. In the case of L. & N. R. R. v. Atkins, 2 Lea, 248, Atkins sued the railroad for killing a horse; and the defendant pleaded a former suit by Atkins and wife against it for killing the same animal, and a judgment in his favor. It was ruled, however, by this court, that the defense was not maintainable. On this point it was said that the “authorities are uniform that, to make a judgment a bar, the former must be between the same parties. . . . Ordinarily a judgment in the suit would not be a bar to a suit brought by either of those two, for the obvious reason that a joint cause of action in favor of two cannot possibly be a cause of action in favor of one of those two.” In Melton v. Pace, 103 Tenn., 484, 53 S. W., 939, the rule was recognized that, in order to make a judgment effective as res adju-dicata, it is essential that the party sought to be concluded thereby should have sued or been sued in both cases in the same capacity or character, and to enforce the same right. And so it was there held that children inheriting from both father and mother were not es-topped to set up title to the whole of a tract of land inherited from their mother by reason of the fact that a part of it had been by inadvertence embraced in the description of a tract which they, as heirs of their father, had brought to sale by decree of foreclosure of a mortgage. See, also, Bank v. Smith, 110 Tenn., 339, 75 S. W., 1065.

Another one of the essentials to this plea, as we have already seen, is that the former judgment must have been upon the merits of the case. In Hughes v. U. S., 4 Wall., 232,18 L. Ed., 303, it is said: “If the first suit was dismissed for defect of pleading or parties or a misconception of the form of the pleading, or the want of jurisdiction, or was disposed of on any ground which did not go to the merits of the action, the judgment rendered will prove no bar to another suit.” The rule is thus stated by Mr. Black in section 693 of volume 2 of his work on “Judgments”: “A former judgment will not operate as a bar to a subsequent suit upon the same cause of action unless the proceeding and judgment in the first case involved an investigation or offered full legal opportunity for an investigation and determination of the merits of the suit. Or as otherwise expressed, the judgment must be upon the merits in a competent action; the plaintiff having sued in his proper character, and the pleading having been correct.” Among the cases in which this rule has been recognized and applied by this court we will refer to two: In Hoggatt v. White, 2 Swan, 265, the facts were that one B. executed a mortgage of a slave to W. to secure a note which upon its face called for ten per cent interest per annum. After maturity W. filed a bill to foreclose the mortgage, which was dimissed by the chancellor upon the ground that the contract sought to be enforced was, upon its face, illegal. Subsequently the mortgagor brought suit against the mortgagee, who, being in possession of the slave, was proceeding to sell under the mortgage, and sought to recover the same, insisting that the decree in the suit for foreclosure was adetermination of all the rights of the mortgage; but it was held that, the complainant having been repelled upon the ground of illegality, the decree pronounced in the first suit could not be relied upon by the mortgagor as an adjudication of the facts in controversy in the second suit.

In Hurst v. Means, 2 Sneed, 546, it was held that where the plaintiff had brought his action to recover the amount of purchase money paid by him for land, the title to which had failed, but from which he had not yet been evicted, and there was verdict and judgment against him on that ground, this was no bar to subsequent suit for the same cause of action after he had lost possession of the land.

So we hold that the doctrine of res adjudioata cannot be relied upon in this case, because, first, there is a lack óf identity between the parties plaintiff in the first action and the complainants in this cause; and, second, for the reason that the merits of the suit were not determined in the first action. In ruling otherwise the chancellor was in error.

The defendants, however, insist that the complainants are estopped by the admission made in this former judicial proceeding that Cole Bros, was a corporation.This defense is equally unavailing to preclude the complainants from avoiding the effect of the mistake of fact made by them therein. This mistake, according to the bill in this case, was innocently made, in unsworn pleadings, from which, so far as the record shows, no detriment has been worked to the defendant. Such a pleading under these conditions comes within the case of McLemore v. Railroad, 111 Tenn., 639, 69 S. W., 338. The rule of estoppel is applied with peculiar force to admissions or statements made under oath in a pending cause, but even they may be relieved against where made inconsiderately or by mistake. Hamilton v. Zimmerman, 5 Sneed, 39.

The defendant’s insistence, however, over and beyond the defenses to the bill of complainant just disposed of, is that the bill is fatally defective in failing to show that the damages claimed by complainants proximately resulted from the breach of the contract on the part of the defendant to furnish water. This is a mistaken assumption. The bill distinctly avers that the defendant contracted to supply at all times an amount of water ample to extinguish fires, and failed to do> so, and that this failure was the occasion of the loss sustained by complainants. The failure to furnish water did not occasion the fire, but it is averred that it did bring about the loss resulting from the fire. To prevent this loss by supplying a quantity of water sufficient to extinguish any fire which might occur was within the letter of the contract.

Nor do we think that another position assumed by the defendant is any more tenable, and that is that the damages claimed were too vague and indeterminate to authorize a recovery thereof. Granting the averments of the bill to be true, it is as easy in this case to ascertain the value of the loss incurred as it would be in any case where a party was undertaking to recover damages for property which it was alleged was wrongfully destroyed.

Again, it is insisted by the defendant that, at the utmost, complainants can only recover the value of the water which should have been furnished them under the contract, and not the value of the property destroyed. It is true that, where an action is brought to recover for a breach of a contract, “the contract itself must give the measure of damages,” yet, in the light of the aver-ments of the bill in this case, it was clearly within the contemplation of the parties to this contract that, if it was breached by defendant, then it should furnish full indemnity of the damages resulting from the breach. This question has been fully considered in Chisholm, v. U'. S. Canopy Co., Ill Tenn., 202, Tt N. W., 1062, and we can add nothing to the argument or conclusion of that case. The cases of State v. Ward, 9 Heisk., 132, and Foster v. Water Co., 3 Lea, 46, relied upon by the counsel of defendants to bring complainants’ recovery within the narrowest limits, are referred to and construed in the Chisholm case, and are brought in accord with it. It is true that there are expressions in the Foster case which seem in conflict with the rule announced here, but they are not called for by the issues involved and, being dicta, cannot be regarded as authority on the question with which we are dealing.

The result is, the chancellor’s decree dismissing the bill is reversed, and the cause is remanded for further proceedings.