116 F. 100 | U.S. Circuit Court for the District of South Carolina | 1902
The facts of this case are fully set out in the opinion of this court filed 25th July, 1900. 103 Eed. 352. When that opinion was filed a writ of error was pending to a judgment of the supreme court of South Carolina in a cause of Welling and Bonnoitt against the Eastern Building & Loan Association of Syracuse, N. Y. This judgment had been pleaded in bar of the relief asked in the bill as res judicata. The court was of the opinion that the judgment could not be pleaded as res judicata so long as the decision of the supreme court had not been had on the writ of error. It now appears that the writ of error has been dismissed by the supreme court upon the ground that no federal question was involved in the case. So the judgment of the supreme court of South Carolina is final. The defendants have now filed a plea in bar supplemental to the former, setting forth the action of the supreme court so sustaining their plea of res judicata. This is the question in this case.
Rev. St. S. C. 1893, § 1895, provides that any mortgagor who has paid in full his mortgage may tender to the mortgagee the fees for entering satisfaction thereon, and thereupon demand that satisfaction be so entered; that any mortgagee, after such payment and tender, who shall not repair to the office of record within three months thereafter and enter satisfaction as demanded, shall forfeit and pay to the party aggrieved a sum of money not exceeding one-half of the amount of the debt secured by such mortgage, to be recovered in any court of competent jurisdiction. Welling and Bonnoitt had made application to the Eastern Building & Loan Association of Syracuse, N. Y., for 50 shares of its capital stock. Their application had been granted and the certificates issued to them, making them stockholders, expressly subject to all the rules and by-laws of the corporation. Subsequently they made application for a loan of $5,000 under the rules and by-laws of the association. This application was granted and the loan made, they receiving in cash $4,500. Before completing the loan Welling and Bonnoitt executed 78 notes, payable from month to month, and
“This grant is intended as a security for the payment of the sum of sixty-one hundred seventy-seven and eo/100 dollars, the same being the principal, interest, and premium of a loan from said association, which said loan was made pursuant to and accepted under the provisions of the bylaws of said association, and which said by-laws have been read by the mortgagors, and are hereby made a part of this contract, which said loan is evidenced and secured to be paid by seventy-eight (78) certain promissory notes of even date herewith, executed by the said Lawrence S. Welling and Marion Bonnoitt, payable to the said association, at its office in Syracuse, as follows: One of each of said notes is to be paid on or before .the last Saturday of each and every month until all of the seventy-eight notes are fully paid, together with interest on each of said notes after maturity at the rate of six (6) per cent, per annum, payable semiannually until said notes are fully paid.”
Then follow the covenants:
“And the said mortgagors, for themselves, and their heirs, executors, administrators, and assigns, hereby covenant and agree with the party of the second part, its successors and assigns, to pay said principal, interest, and premiums at maturity, and the interest accruing on said notes after maturity, and all fines and penalties that may be imposed pursuant to the provisions of the constitution and by-laws of said association, and also keep and perform- all promises and engagements made and entered into with said association according to the true intent and meaning of its by-laws and articles of association.”
—With the usual insurance clause. Then the default clause in these words:
“And it is hereby expressly agreed, by and between the parties to these presents, that if default be made in the payment of any one of said notes, or any part thereof, as herein provided, or in case of waste, or nonpayment of taxes, assessments, or impositions on said premises, or in case of neglect or refusal to keep the premises insured, as herein provided, or in ease the improvements thereon shall not be kept in good order or repair, or in case of a breach of any of the covenants or agreements contained herein, or in case of a failure to duly observe and keep the by-laws of the said association, and in either or any of such cases,, the whole of the said principal sum, interest, premiums, fines, dues, and costs, shall at once become due and payable, at the option of said association, its successors or assigns; and it shall be lawful for said ássociation, or its successors or assigns, at any time thereafter, to sell the premises hereby granted, or any part thereof, in the manner prescribed by law, and out of all moneys arising from such sale to retain the amount due and unpaid for principal, interest, premiums, fines, dues, and costs thereof, taxes, assessments, impositions, insurance, and other advances, together with the costs and charges of making such sale, and the overplus, if any there be, shall be paid by the party making such sale, on demand, to the said Lawrence S. Welling and Marion Bonnoitt, or their heirs or assigns. And this conveyance shall be void if full payment of the aforesaid moneys, both principal and interest, be made as hereinbefore specified, • and if the aforesaid covenants, and each of them, be well and truly kept and performed, as herein specified and provided.”
The mortgagors paid all of the notes but the last. When that became due they tendered the full sum of it, and the costs of entry of
Meanwhile the Eastern Building & Doan Association of New York, pending the writ of error from the supreme court of the United States, filed its bill of complaint in this court against Welling and Bonnoitt, the same parties who were plaintiffs in the action at law in the state court. This bill sought the foreclosure of the mortgage, the subject-matter of the suit in the state court. It set forth in elaborate detail the facts connected with the application for subscription by the defendants to the capital stock of the complainant association, the granting of this application, the issue of the certificates of stock, upon each of which was printed the by-laws of the association as part of the contract of subscription, the application by defendants of the loan in advance, all made subject to the by-laws of the association, the granting of the loan, the execution of the 78 notes, and the execution and delivery of the mortgage. The bill avers that this mortgage, construed in connection with the charter and by-laws of the association, the declarations of the defendants in applying for the stock, and subsequently for the loan thereon, and under the decisions of the courts of New York, the lex loci contractus, was intended not only to secure the sum of money advanced, but also the full performance by the borrowing stockholders of all their contracts of subscription and loan with the associa
“Tliat by the mistake and inadvertence of the parties complainant and respondents, and by the mistake and inadvertence of counsel of complainant, and of the officers and board of directors of complainant, the mortgage indenture hereinbefore recited and exhibited was made and executed by respondents in manner and form as hereinbefore set forth, but not in full compliance with the contract obligations between the respondents and the complainant, and the articles of incorporation and by-laws of the complainant, and by such inadvertence and mistake said mortgage, as finally executed and delivered by the respondents to the complainant, does not fully and correctly show the contract or agreement between the respondents and the complainant in the respects above stated, and is not in full compliance with the agreements and understandings of the parties and the contract between them, and as to this complainant asks that said mortgage be construed in accordance with the real contract and understanding between the parties, as hereinbefore set forth, and in accordance with the articles of incorporation and by-laws of the complainant, and the laws of the state of New York, and that any defects in or omissions from said mortgage may be remedied, and said mortgage be made to conform to the real agreement of the parties in the premises, and that specific performance of the obligation of the respondents as to the terms and conditions of said mortgage may be by this honorable court ordered and decreed, and that respondents may be required to now execute and deliver to complainant, if the court shall deem that the equities between the parties so require, and that it is necessary to the relief to which the complainant is entitled upon the facts aforesaid, a mortgage iu lieu of the mortgage hereinbefore set forth and exhibited, such new mortgage to be in strict accordance with the contract obligations of the respondents to the complainant, and in reformation of the mortgage executed as aforesaid, if such reformation be deemed necessary.”
The prayer of the bill is that said mortgage indenture described and exhibited in the bill be reformed, and the errors, omissions, and mistakes therein corrected, so that the same shall express the true mean
To this bill the defendants filed the plea of res judicata, and afterward a supplemental plea of the same nature, reciting the action of the supreme court of the United States. Can this plea be sustained?
The law in respect to estoppel by judgment is well settled. _ The only difficulty lies in the application of the facts to the law. City of New Orleans v. Citizens’ Bank of Louisiana, 167 U. S. 397, 17 Sup. Ct. 905, 42 L. Ed. 202.
In Davis v. Brown, 94 U. S. 423, 24 L. Ed. 204, Mr. Justice Field says:
“The judgment is not only conclusive as to what was actually determined' respecting such demand, but as to every matter which might have been brought forward and determined respecting it.”
This is elucidated still farther in McCall v. Carpenter, 18 How. 297, 15 L. Ed. 389:
“A judgment is conclusive only upon a matter within the issue necessarily involved in the decision.”
In City of New Orleans v. Citizens’ Bank of Louisiana, 167 U. S-397, 17 Sup. Ct. 913, 42 L- Ed. 202, it is said:
“When the judgment pleaded was on the same cause of action between the same parties or their privies, the first judgment is an absolute bar, 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. When the second action is between the same parties, but upon a different claim or demand, the judgment in the former action operates as an estoppel only as to those matters in issue or points controverted upon the determination of which the finding or verdict is rendered. Cromwell v. Sac Co., 94 U. S. 351, 24 L. Ed. 395.”
In City of Aurora v. West, 7 Wall. 82, 19 L. Ed. 42:
“When the parties are the same, the legal effect of the former judgment as a bar is not impaired, because the subject-matter of the second suit is-different, provided the second suit involves the same title and depends upon the same questions.”
In Werlein v. City of New Orleans, 177 U. S. 397, 20 Sup. Ct. 685, 44 L. Ed. 817, quoting and approving City of New Orleans v. Citizens’ Bank of Louisiana, supra, the court says:
“The estoppel resulting from the thing adjudged does not depend upon whether there is the same demand in both cases, but it exists even although •there be different demands, when the question upon which the recovery of the second demand depends has, under identical circumstances and conditions, been previously concluded by a judgment between the same parties and their privies.”
In the case before us, the parties to the former action and to this action are precisely the same. The controlling question in the former action was whether the mortgage had been satisfied, the defendant in' that action holding that it was not satisfied. The plaintiff could not possibly recover unless it was satisfied. The present bill proceeds upon the idea that the mortgage has not been satisfied. This is the
During the reconstruction period in South Carolina the legislature adopted the New York Code. It was adopted in ipsissimis verbis. It was a complete change from the system of pleading and practice theretofore prevailing, and in many respects was unsuited to the character and traditions of the people of the state. Gradually it was amended from time to time by the legislature and by judicial decisions, so that now the civil procedure in South Carolina has peculiarities of its own.. One of the earliest cases under the Code (Barber v. McAliley, 4 S. C. 45) established this rule:
“The proper practice, when a defendant has rights upon grounds that formerly authorized the filing of a bill to restrain an action at law, which lie desires to oppose to a recovery in an action against him, is to interpose such rights by way of answer or counterclaim. He may in this way not only take advantage of them by way of defeating the plaintiff’s judgment, but may seek and obtain affirmative relief appropriate to the case thus made by him.”
In Rice v. Mahaffey, 9 S. C. 281:
“A defendant in an action must plead all his defenses, whether legal or equitable. He. cannot allow judgment to be entered against him, and then commence a separate action against plaintiff, alleging an equitable defense and praying an injunction. The judgment estops him from setting up any matter which could have been pleaded in the first action.”
In Sale v. Meggett, 25 S. C. 81, this system is applauded. In Beattie v. Latimer, 42 S. C. 319, 20 S. E. 53, and Phillips v. Anthony, 47 S. C. 460, 25 S. E. 294, it was decided that one defendant could obtain relief against a codefendant simply by so framing his answer as to ask affirmative relief. Nor is the practice in South Carolina anomalous.
This being the case, the judgment in the state court is res judicata.