Hudson v. Layton

12 Del. Ch. 106 | New York Court of Chancery | 1919

The Chancellor.

The issue before this court is whether the plea of res adjudicata has been proved. In general a plea that another court having" jurisdiction of the parties and subject-matter had determined the issues between the parties is, if sustained, a bar to any judicial determination of the same matters by another court other than an appellate court.' Worknot v. Millen's Adm’r., 1 Har. 139; Cochran v. Couper, 2 Del. Ch. 27; Jones v. Warner, 2 Boyce, 567, 83 Atl. 131; Sill v. Kentucky, etc., Co., 11 Del. Ch. 93, 97 Atl. 617.

It is urged for the complainant that there were two grounds urged before the Superior Court for setting aside the judgment by default: (1) The mistake made by the complainant when the summons was read to him by the sheriff; and (2) the statement, or promise, of Elizabeth A. Layton made to the complainant which misled him to believe that he had been sued by Landreth L. Layton, when in fact he had been sued by her; that the Superior Court had by statute jurisdiction to decide the first ground, and as to it the decision of the Superior Court was final, so far as this court is concerned; but that the second ground was not properly cognizable .in a court of law, being purely an equitable right enforceable only in an equity court, and hence whether adjudicated in the Superior Court, or not, this court still has jurisdiction to hear and decide the matter, viz.: whether the complainant was then entitled to have annulled the judgment obtained against him by default and be let into a defense because he was misled by the statements or promises of Elizabeth A. Layton.

To support the view that even if the Superior Court did have, and take, jurisdiction of the second ground, the equitable one, still a court of equity may hear and determine the same matter, it is urged that being a summary proceeding the decision there would not be binding here, and several forcible decisions are cited. Simson v. Hart, 14 Johns. (N. Y.) 63; Arden v. Patterson, 5 Johns. Ch. (N. Y.) 44; Fanning v. Dunham, 5 Johns. Ch. (N. Y.) 122, 9 Am. Dec. 283; Murray v. Murray, 5 Johns. Ch. (N. Y.) 73; Pollock v. Gilbert, 16 Ga. 398, 60 Am. Dec. 732; Hughes v. Nelson, 29 N. J. Eq. 547; Ferriday v. Selcer, 1 Freem. Ch. (Miss.) 258; Buchanan v. Banks, 203 Pa. 599, 53 Atl. 500; Johnson v. Stockham, 89 Md. 368, 43 Atl. 943. But it is not necessary to take this view, even if it be a sound one.

It certainly is not clear from the record that the Superior Court in discharging the rule passed on the equitable question. No reason was in fact stated in the order discharging the rule, and no opinion, or official statement by the court, was filed. There were produced in this court notes taken by the official stenographer of some of the statements of the judges and of the attorneys at the hearing of the rule. But it is admittedly incomplete and, therefore, not entirely authoritative as to what reasons the court had for discharging the rule.

It may safely be assumed that if the jurisdiction to vacate the judgment be vested in the Court of Chancery, then it may also be assumed that the Superior Court did not decide the equitable question raised, even though depositions were taken and presented at the hearing on the equitable grounds alleged, for if it did not have jurisdiction the depositions would not be considered by it.

The line between the powers which a court of law has to relieve against the misuse of its processes by litigants and the powers of a court of equity for the same purpose is very clearly defined and established, so far as this case is concerned. The rule is this: When in a court of law all the issues are legal, and the defense is legal and not an equitable one unavailable at law, still a court of equity has jurisdiction to set aside a judgment obtained in the suit in case there be some equitable ground arising out of, or connected with, the trial itself. A typical instance is where the defendant having a valid legal defense on the merits was prevented from maintaining it by fraud on the part of the adversary, or by mistake resulting from conduct of the adversary. The rationale of this doctrine is stated in 5 Pomeroy’s Equity Jurisprudence, (2d. Ed.) § 648:

“The ground for the exercise of this jurisdiction is that there has been no fair adversary trial at law. Consequently a distinction is made between fraud, accident, mistake and the like relating to the subject-matter of the action and similar elements relating to the conduct of the suit. Fraud relating to the subject-matter is not of itself sufficient ground for relief. Where it relates to the conduct of the suit, as where it prevents a party from asserting his rights, there is no fair adversary proceeding, and equity will interfere. The courts commonly speak of the former class as intrinsic and of the latter as extrinsic, fraud, etc. Thus, it is generally said that it is extrinsic fraud, mistake and the like which are grounds for relief."

This statement is supported by many authorities cited by the author. In Crouse v. McVickar, 207 N. Y. 213, 100 N. E. 697, 45 L. R. A. (N. S.)1159, the court said that the fraud for which a judgment can be impeached in equity is “in some matter other than the issue in controversy in the action.” In Whitcomb v. Schultz, 223 Fed. 268, 274, 138 C. C. A. 510, 516, it was said: “The fraud must relate to the procuring of the judgment or decree, and not the transaction which was the basis of the decree;” and the court in Boulton v. Scott, 3 N. J. Eq. 231, 236, said that this “has been the practice of this court from the earliest periods of its history.”

Applied to this case, this principle gives to the Court of Chancery jurisdiction to vacate the judgment based on the conduct of the plaintiff in the action at law, whereby, as is alleged, the complainant here, the defendant there, failed to make his defense there, relying on the representations or promises of the plaintiff. The fraud was related not to the subject-matter of the action at law, but was extrinsic thereto, and was related to the procuring of the judgment in that action.

The law courts in Delaware have not uniformly observed the line of demarkation between their powers and those of the Court of Chancery. It was done in Woodward v. Arlington, etc., Co., 2 Pennewill, 188, 44 Atl. 620, where the Superior Court refused to vacate a judgment against a corporation, though it had been alleged that the suit was not defended because of fraudulent collusion between the plaintiff in the suit and other officers of the corporation. '-It was declared that the subject-matter was cognizable in equity. On the other hand, in Townsend v. Townsend, 5 Harr. 20, the court of law refused to open a judgment entered on a bond, though it was alleged that fraud and imposition were practiced on the obligor in the making of the bond, and said it was ground for relief in equity. So also in Duncan v. Richardson, 1 Marvel, 372, 41 Atl. 75, the Superior Court held that the Court of Chancery had jurisdiction to give relief against a judgment entered on a bond obtained by fraudulent representations.

The Chancellors of Delaware have kept within the limits of their powers to vacate a judgment at law (Conner v. Pennington, 1 Del. Ch. 177; Kersey v. Rash, 3 Del. Ch. 321; and Plunkett v. Dillon, 3 Del .Ch. 496); but not so clearly so in Whitaker v. Wickersham, 5 Del. Ch. 187.

In the case of Kersey v. Rash, 3 Del. Ch. 321,Chancellor Bates, after a full consideration of numerous decisions, pointed out the difference between the powers and duties of the Court of Chancery to relieve a defendant in an action at law against whom there has been entered a judgment at law, (1) where a defendant has an equitable defense not cognizable at law, and (2) where he has a defense available at law. In the former case he found that equity-will always give relief against the judgment, but in the latter case will not grant relief unless it appear that the grounds of defense or evidence cognizable at law were not used at the trial there because the defendant was prevented from availing himself of such grounds of defense or evidence either by fraud, or surprise, or what in the sense of courts of equity is termed accident, and without any neglect or default on the part of himself, or his agents.

Whatever may have been the deviations therefrom, it is well to stand firmly by a long established rule, clearly defined and easily applicable.

Applying this rule here, the conclusion is that the plea does not show a prior adjudication in the Superior Court of the equitable ground alleged in the bill for vacating the judgment. Of course no opinion is expressed as to the sufficiency of the ground.

Therefore the plea will be overruled, and the defendants required to answer the bill.