Swedish American Nat'l Bank v. Dickinson Co.

49 L.R.A. 285, 69 N.W. 455, 6 N.D. 222, 1896 N.D. LEXIS 28

• Court: North Dakota Supreme Court
• Decided: November 19, 1896
• Status: Published

Opinions

Corliss, J.

The sole question of law at issue on this appeal relates to the extent of the power of the District Court to allow a plaintiff to file a supplemental complaint. The causes of action set forth in that pleading in this case were promissory notes. While this suit was pending the plaintiff recovered in the State of Minnesota, against the same defendants, a judgment upon the identical causes of action embraced in the complaint. Thereafter its counsel applied in this action to the District Court for permission to file a supplemental complaint, averring the recovery of this judgment. The court refused to grant this motion, on the sole ground of a want of power. The correctness of this ruling is the only question before us. Should we reach the conclusion that the power exists, it would be our duty to reverse the judgment and order appealed from, and direct the District Court to bring to bear upon the application its judicial discretion. But, in our judgment, the court did not err in its decision. A few fundamental principles of law control this case. It has long been the doctrine that a final judgment merges, within the jurisdiction in which it is rendered, the original- cause of action on which it is founded. 1 Freem. Judgm. § § 215-217; 15 Am. and Eng. Enc. Law, 336. This rule applies in this country to judgments rendered in the different states, on the ground that, under the provisions of the federal constitution, they are practically assimilated to domestic judgments. 1 Freem. Judgm. § 221; 15 Am. and Eng. Enc. Law, 341; Barnes v. Gibbs, 31 N. J. Law, 317; Bank of U. S. v. Merchants' Bank of Baltimore, 7 Gill, 415; Bank v. Wheeler, 28 Conn. 433; Rogers v. Odell, 39 N. H. 452; McGilvray v. Avery, 30 Vt. 538; Child v. Powder Works, 45 N. H. 547; 2 Black, Judgm. § 864. A different rule applies in the case of a foreign judgment. 2 Black, Judgm. •§ 847. The origin of this rule was the technical basis of the doctrine of merger. It was supposed to rest upon the principle that a higher security or 'evidence of liability swallowed up that of inferior character. A foreign judgment not being regarded in England as technically a matter of record, the foreign judgment was not there looked upon as an evidence of indebtedness superior to the claim on which it was founded. See cases cited in 2 Black, Judgm. § 847; 2 Freem. Judgm. § 220; 15 Am. and Eng. Enc. Law, 341, note 7. In this country there has been a disposition to follow the English decisions in all cases not falling within the class of judgments specified in the federal constitution. See 2 Black, Judgm. § 847. But if a foreign judgment is, on sound principles of private international law, conclusive between the parties, there is no reason, save an extremely technical one,' — a reason unsuited to jurisprudence in its present stage of development, — why such a judgment should not in every civilized country be • treated as merging the original cause of action upon which it rests. As Chief Justice Beasley said in Barnes v. Gibbs, 31 N. J. Law, 317: “The doctrine of merger arises out of the quality of the judgment which renders it conclusive upon the parties as to the questions which it involves.” See, also, Freem. Judgm. § 220; Jones v. Jamison, 15 La. Ann. 35.

From these elementary principles to which we have referred, we are forced to deduce the conclusion that, the moment the judgment was recovered in Minnesota, the plaintiff’s causes of action on the notes sued upon were utterly extinguished. This judgment would, if pleaded, by the defendants, constitute a complete bar to the further prosecution of the action. 15 Am. and Eng. Enc. Law, 341, note 5; Rogers v. Odell, 39 N. H. 452; McGilvray v. Avery, 30 Vt. 538; Bank v. Wheeler, 28 Conn. 433; Child v. Powder Works, 45 N. H. 547; Bank of U. S. v. Merchants’ Bank of Baltimore, 7 Gill, 415.

How the plaintiff can gain any advantage by setting forth in its own pleading facts which, if averred in the answer, would constitute a perfect defense to the further prosecution of the suit,, is beyond our comprehension The office of a supplemental bill in. equity was to bring into a case, by a new pleading, facts which had occurred or become for the first time known to the plaintiff subsequently to the commencement of the action, and which related to the case set forth in the original bill. Just how far the courts of chancery will go in permitting new facts to be brought by supplemental bill into a pending suit in equity has never been stated with the utmost precision. But there are two general classes of cases with respect to which the law on this subject has been for many decades very clearly settled. If the original bill is not defective in substance, new facts may, by supplemental bill, be incorporated into the cause of action, although they necessitate an. enlargement or change in the character of the relief originally sought. But in every decision on this point the qualification is stated or plainly to be inferred from the opinion that a new cause of action cannot be substituted for the one set forth in the original pleading. Jacob v. Lorenz, (Cal.) 33 Pac. Rep. 119-121; Candler v. Pettit, 1 Paige, 168; Jaques v. Hall, 3 Gray, 194; Winn v. Albert, 2 Md. Ch. 42; Edgar v. Clevenger, 3 N. J. Eq. 258. But in the case at bar the plaintiff does not seek to enlarge its relief, or to alter the character thereof. It merely asks that it be. allowed to obviate a perfect defense to its causes of action on the notes, and recover the same money judgment upon an entirely distinct cause of action, not in existence when it brought the suit, but arising subsequently to its commencement. No adjudication, no statute, no principle of law or equity, can be found to sustain its contention in this behalf. In interpreting our statute permitting the filing of supplemental complaints, we must fall back upon the settled practice in chancery before the adoption of the code. The statute embodies the rule of procedure ip equity. It has merely made applicable to actions at law, as well as suits in equity, the rules prevailing in chancery with respect to supplemental pleadings. Counsel for plaintiff does not claim that our statute has any wider scope; and he could not successfully make such contention in view of the language of the statute that the new facts must be material to the case, and the fact that in other states similar provisions have been uniformly treated as merely voicing the existing rule of practice in equity. Prouty v. Railroad Co., 85 N. Y. 272-275; Buchanan v. Comstock, 57 Barb. 583; Wattson v. Thibou, 17 Abb. Prac. 184; Bank v. Duryee, 74 N. Y. 491-495; Gleason v. Gleason, 54 Cal. 135, 136; Jacob v. Lorenz, (Cal.) 33 Pac. Rep. 119-121; Eastman v. Power Co., 17 Minn 48, (Gil. 31;) Bull v. Rothschild, (Sup.) 4 N. Y. Supp. 826; Tiffany v. Bowerman, 2 Hun. 643-646; Cohn v. Husson, 67 How. Prac. 461. In this connection it is well to state the other general rule on the subject of supplemental bills in equity. It is a rule -of limitation of power. The plaintiff cannot, by supplemental pleading, bring into the action a distinct cause of action arising since the beginning of the suit. Every one of the decisions last above cited recognizes this rule. And in most of these cases it is enforced under a statute identical in its language with ours. . If the original bill is defective in substance, the plaintiff cannot, by supplemental bill, bring into the case new facts constituting a distinct cause of action, which has arisen since the suit was instituted. Milner v. Milner, 2 Edw. Ch. 114; Putney v. Whitmire, 66 Fed. 388; Bernard v. Toplitz, (Mass.) 35 N. E. Rep. 673; Fahs v. Roberts, 54 Ill. 195; Patten v. Stewart, 24 Ind. 332-343; Orton v. Noonan, 29 Wis. 547; Story Eq. Pl. § 339.

The groundwork of this doctrine is that the plaintiff cannot recover on a cause’of action which does not exist when he sues. He must dismiss his action, and plead-anew. It follows from this that the rule that a new cause of action, which had not accrued when the writ was served, cannot be bimught into the case by supplemental complaint, applies not only to cases where no cause of action existed at all when the suit was brought, but also to cases whei'e a cause of action was in existence, and was set forth in the original complaint, and the plaintiff seeks to abandon that cause of action, and inject into the suit an entirely different cause of action; and the authorities cited below fully sustain this proposition. Indeed, this practice of changing the cause of action has never been sustained even in a case where the new cause of action was in existence when the suit was commenced. Much less should this be allowed when the cause of action sought to be made the basis of the suit by supplemental complaint arose during the pendency of the case. Milner v. Milner, 2 Edw. Ch. 114; Eastman v. Water Power Co., 17 Minn. 48, (Gil. 31;) Prouty v. Railroad Co., 85 N. Y. 272-275; Buchanan v. Comstock, 57 Barb. 583; Wattson v. Thibou, 17 Abb Prac. 184; Cohn v. Husson, 67 How. Prac. 461, 462; Gleason v. Gleason, 54 Cal. 135; Bull v. Rothschild, (Sup.) 4 N. Y. Supp. 826; Tiffany v. Bowerman, 2 Hun. 643-646. In this last case the court said: “It seems only necessary to state the facts, in order to show that the motion for leave to file this supplemental complaint for such a purpose should have been at once denied. A supplemental complaint must be consistent with, and in aid of, the case made by the original complaint. A new and substantive cause of action cannot be set up, by way of supplemental complaint, as a ground of recovery; more especially a cause of action to which the plaintiff was not entitled when he commenced the action.” In Prouty v. Railway Co., 85 N. Y. 272, the court said: “The principle invoked by the appellant to sustain this theory is the well established doctrine that the plaintiff cannot file a supplemental bill to introduce new facts which have occurred since the filing of the original bill, and upon which a decree can be had without reference to the original bill; and in such case the original bill should be dismissed and a new one filed.” In Gleason v. Gleason, 54 Cal. 135, the court said: “This is, therefore, a new controversy between them, — a new and independent cause of action about the title to property acquired since the judgment; and it is not allowable to substitute a new and distinct cause of action by way of supplemental complaint.” In Eastman v. Water Power Co., 17 Minn. 48 (Gil 31,) the court states the rule to be that “a supplemental complaint must be for the same substantive cause of action as that set out in the original complaint.” The doctrine as it was enunciated by the vice chancellor in Milner v. Milner, 2 Edw. Ch. 114, has never been questioned, and is undoubtedly sound! The .vice chancellor said: “The question to my mind is whether the complainant, upon her intending to rely upon the new facts, must hot file an .entirely new bill. I consider it not a case for amendment or súpplementál. bill. The latter is generally filed to continue the original suit, or is in its matter, directly connected with, it, and because of the original bill being somewhat defective. But here there is a new substantive cause of action, upon which a decree can be had without connecting it with the original bill. The complainant is here wanting to go upon entirely new ground; in fact, to make a new case. If this is to be done, it must be by a dismissal of the present bill, and filing' of a new one. I ’must refuse this • motion.” The decision of the court in Barnes v. Gibbs, 31 N. J. Law, 31 is directly in point. The court was called upon to decide whether a supplemental complaint could be filed setting up the recovery of a judgment upon the claim sued upon, and the ruling of that tribunal was that this' could not be done. Chief Justice Beasley, speaking for the full bench said: “The case certified calls for the ojpinion of this court on a second point, viz. whether, upon the assumption of a merger having taken place, the writ and pleadings in this case .can be so amended as to transform the action from assumpsit to debt, and to permit the judgment obtained in New York to become the foundation of the suit? Allowing the utmost amplitude to the power of this court to alter forms and correct errors, the present application seems to be much beyond the scope of such power. It is obvious that the proposition is not to amend defects, but to substitute one cause of action for another. Besides, even if the court should' permit the proposed commutation to be made, it tyould not avail the plaintiffs, because the ground of action sought to be substituted has arisen- since the commencement of this suit.”

But it is urged that there is authority for the proposition that a supplemental complaint may embrace such matters'as are sought to be incorporated in the complaint in the case at bar, and that such authority should'- be followed. To sustain this claim, the case of Jenkins v. Bank, 127 U. S. 484, 8 Sup. Ct. 1196, is cited. But, in our opinion, that case is plainly distinguishable from the case now before us. That action was instituted to foreclose a lien upon certain property pledged as collateral to a debt. Pending this action, a decree was rendered in another case which so adjudicated the amount due upon the claim to secure which the collateral security had been given as to preclude the relitigation of that question in the pending suit. The Supreme Court of Illinois and the Supreme Court of the United States both held that it was proper to incorporate in a supplemental bill .the fact of the rendition of this decree. But it is obvious that there is no parallel between that case and the action which is before us. The cause of action in that case was not the indebtedness, but the lien. The object of the action was to foreclose that lien. The plaintiff did not seek to change the object of the action, nor did he attempt to incorporate in his supplemental bill a new cause of action. The lien constituted his sole cause of action before the supplemental bill was filed and it still remained his sole cause of action after the decree had been rendered, and after the fact that it had been rendered was brought into the case by' the supplemental bill. The action was not originally brought upon the indebtedness, but it was founded upon the lien; and this continued to be the cause of action after the supplemental bill had been filed. The lien was not divested by the decree which conclusively established the amount due. 2 Freem. Judgm. § § 229, 230, and cases cited. In both of these courts the distinction was made which we here outline. Had the action been, not to foreclose a lien, but to recover a money judgment on the indebtedness, it is apparent from the language of both these tribunals that' their decisions wotild have been different. ' The Illinois Supreme Court said on this point at pages 470 and 471, in Ill. (Jenkins v. Bank.) “We do not consider the supplemental bill as introducing a new cause of action. The indebtedness is the same. The evidence of it at the time of filing the original bill in this case consisted in notes from Walker to the bank. The notes have since, as said, become merged in the Wilshire decree. There has been, then, a change in the evidence of the indebtedness, — from notes to a decree upon them. That is all. The collaterals sought to be foreclosed by sale of them were pledged for the payment of the indebtedness. A decree upon the notes, and the running of the statute of limitations against the decree, is not any payment of the indebtedness. The simple effect is that the statute is a bar to a suit upon the decree. The collaterals may be held until the indebtedness is paid according to the terms of the pledge. We do not consider that there has been any new suit brought upon the decree, but that there is, under the supplemental bill, the assertion of the right to claim the benefit of the Wilshire decree as res ajudicata, and that the statute of limitations set up is not a bar to that right.” And in the Federal Supreme Court the same distinction is stated in the following language: “In support of this proposition, it is argued, on behalf of the plaintiff in error, that the supplemental bill set out, and sought a recovery upon, a cause of action distinct from that stated in the original bill. The original bill prayed for a decree against Walker upon his notes held by the bank, and, for the satisfaction thereof, a sale of the property held as security therefor. During the pendency of that bill, precisely the same matters were put in issue in the Wilshire suit between Walker and the bank, and in that suit a decree was rendered finding the amount due. That decree in the Wilshire suit stands unreversed, and operates as an estoppel by way of res adjudicata between the parties. By way-of proof or in pleading, it would be good as a bar in any subsequent suit between the same parties upon the same issues. Having been rendered after the institution of the present suit, it was competent for the complainant to bring it forward, by a supplemental bill, as conclusive evidence of the-amount due, for which it was entitled to take a decree, and as a complete answer to the defense set up by the plaintiff in error, as the assignee of the bankrupt, to the relief prayed for in the original bill, and to the relief sought by the cross bill. It was strictly new matter arising after the filing of the bill, properly set up by way of supplemental bill, in support of the relief originally prayed for. It can in no sense be considered as a new cause of action. It was not a bill to enforce the decree, nor was the complainant obliged to rely upon it as the sole ground of recovery, on the ground that the original cause of action had become merged in it. If the notes were merged in the decree, it was simply a change in the nature of the evidence to support the complainant’s titlé to relief. The indebtedness remained the same, and the equity of the complainant to a foreclosure and. sale of the securities remained unchanged.” In fact, the courts in that case were but applying the familiar rule that the holder of collateral security may, in the absence of a statute to the contrary, recover a personal judgment upon his claim, and thereafter foreclose his lien notwithstanding such judgment. See I Freem. Judgm. § § 229, 230; Bank v. Brown, 112 Ind. 474, 481, 482, 14 N. E. Rep. 358. The cause of action in such a foreclosure suit being the lien, the recovery of a judgment on the debt before or after the commencement of the foreclosure action does not create a new cause of action; does not extinguish the old. The original lien continues in existence,' securing the new evidence of the debt the same as it did the old. By the recovery of a judgment, the cause of action is not wiped out. The only effect is to conclusively establish the amount which the lien secures. It is a significant fact that in New York the legislature has, in express terms, incorporated into the statute regulating the filing of a supplemental complaint a provision that the plaintiff may in this way bring into the case “the judgment or decree of a competent court, rendered after the commencement of the action determining the matters in controversy or a part thereof.” Code Civ. Proc. N. Y. § 544. It is evident that in New York the law was considered to be settled the other way, in the absence of an explicit statute on the point. Our code merely permits the plaintiff to set up in his supplemental bill “facts material to the case.” Rev. Codes, § 5301. What in this action is “the case” of the plaintiff as his suit was originally brought? The answer is obvious. It is the cause of action set up in his complaint. That constitutes his * case. Another' and entirely distinct cause of action does not constitute his case, as it appears in his original pleading. As we have already seen, the decisions are unanimous to the effect that, under just such a statute as ours, the plaintiff cannot, by supplemental complaint, introduce a new and distinct cause of action.

The argument of hardship does not appeal to us with any force. It is true that in this case — and it will likewise be true in many other cases — a refusal to allow the subsequent recovery of the judgment to be set up in a supplemental complaint will result in the loss of priority of lien upon property secured by an attachment in the action, because the plaintiff will be compelled to dismiss his action upon the claim, and bring a new suit upon the judgment itself. This same argument was advanced in Bank v. Wheeler, 28 Conn. 433, against the proposition that the effect of the recovery of a judgment in one state was to extinguish the original cause of action in every other state. It will be observed that the precise question here presented was there involved, for if the judgment extinguishes the original cause of action, and creates a new cause of action, there is no logical escape from the conclusion that the suit cannot be kept alive by supplemental complaint. On this point of hardship the court says: “The plaintiffs urge the inconvenience arising from holding the judgin New York to be a defense in the present suit, in consequence of the loss of the security obtained by attachment in the latter. We are not, however, at liberty to impair the effect which the constitution and laws of the United States give to judgments rendered in the several states, although it may be attended with inconvenience, or even apparently unjust consequences. The remedy is elsewhere. When suits are pending in different states upon the same cause of action, the plaintiff must elect in which he will proceed to final judgment.” And in two other cases, in which it was held that the recovery of a judgment upon the claim sued for was fatal to the further prosecution of the action, it appears that the attachments had been issued and levied, and that, of course, the liens secured thereby would be lost. Bank of U. S. v. Merchants’ Bank of Baltimore, 7 Gill, 415; Child v. Powder Works, 45 N. H. 547. (see 549, 550.)

The recovery of the judgment in Minnesota was the result of the voluntary act of the plaintiff. It could have kept alive this action by refraining from entering judgment in the Minnesota suit, and in this way it could have preserved its lien. But it did not see fit to do so. It frequently happens that the judgment rendered is not a personal judgment in more than one state, jurisdiction being acquired in other state solely over property by attachment or garnishment. A judgment .purely in rem would not merge the cause of action on the original claim, and therefore would not constitute a bar to an action thereon in another jurisdiction. Whittier v. Wendell, 7 N. H. 257; Fritzsimmons v. Marks, 66 Barb. 333; Rangeley v. Webster, 11 N. H. 299; 1 Freem. Judgm. § § 218, 219. In many cases there will therefore be no hardship to the creditor. In many others he will hold in his own hands the power to prevent a merger. And, over against the loss of priority of lien which may in a few cases result from this doctrine, it is proper to set the moral right of the debtor not to be harassed by numerous suits upon the same demand at the same time. The rule being settled that the pendency of an action in a foreign state or country does not constitute a good plea in abatement, the debtor has no legal protection against the institution of any number of actions against him in different jurisdictions upon the same claim. It would therefore seem to us not a matter for regret that his moral right to be exempt from undue harassment should receive some slight legal sanction. If, however, it be thought that a different rule should prevail, the arguments in that behalf should be addressed to that body whose province it is to make, and not to the department whose duty it is to declare, the law.

The order and judgment of the District Court are in all things affirmed.

All concur.