Ouida J. WEISSINGER a/k/a Ouida Boyd and Mrs. George Boyd, Appellants, v. UNITED STATES of America, Appellee.
No. 24639.
United States Court of Appeals, Fifth Circuit.
March 10, 1970.
423 F.2d 795
The result reached by the majority violates the substantive law of res judicata and both the provisions and the policy of
T. Paine Kelly, Jr., Charles W. Pittman, Tampa, Fla., for appellants.
John C. Eldridge, Jack H. Weiner, Stephen R. Felson, Attys., Dept. of Justice, Washington, D. C., for appellee.
a situation calling for application of the policy making dismissals operative as adjudications on the merits.” 365 U.S. at 287, 81 S.Ct. at 546, 5 L.Ed.2d at 556. She had to prepare her defense, defended, and won. The government sought to win on the facts—demand by letter, and on the law—suit as a demand. It lost on both theories, and neglecting to take the appeal which it asserts to us that it surely would have won put the defendant to trial a second time.
GODBOLD, Circuit Judge:
The court sitting en banc recedes from and overrules the decision of the majority of the panel in this case. The judgment of affirmance is vacated, and the judgment of the lower court is reversed with direction to enter judgment for the appellant.
We base our decision on
In the first trial of this case, at the conclusion of the government‘s evidence, the defendant moved to dismiss the case for failure of the government to prove its cause of action. The trial judge denied the motion and asked that the defendant put on her evidence, and she did so. At the conclusion of that full-blown trial, and after filing of briefs, the court entered lengthy and detailed findings of fact and conclusions of law on numerous issues, some of fact, some of law and some mixed.1 The trial judge
(1) For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against him. (2) After the plaintiff, in an action tried by the court without a jury, has completed the presentation of his evidence, the defendant, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. (3) The court as trier of the facts may then determine them and render judgment against the plaintiff or may decline to render any judgment until the close of all the evidence. (4) If the court renders judgment on the merits against the plaintiff, the court shall make findings as provided in
Rule 52(a) . (5) Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication upon the merits.
The procedure followed by counsel and the trial judge in this case is that contemplated and provided by the second and third sentences of
“The second sentence of
The trial judge may conclude, as occurred in this case, that it is inadvisable to sustain the defendant‘s motion midway in the trial and that the trial should be completed. The denial amounts to no more than a refusal to enter judgment at that time, a tentative and inconclusive ruling on the question of the plaintiff‘s proof. It does not pre-
When the defendant makes a
The findings of fact thus required, and made in this case, are like any other findings of fact—they are not to be set aside on appeal unless clearly erroneous. Trask v. Susskind, supra; Benton v. Blair, supra. They cannot be supported by evidence not admitted at the time defendant‘s motion was sustained. Charles v. Judge & Dolph, Ltd., 263 F.2d 864 (7th Cir. 1959); Moore, supra, ¶ 41.13[4], at 1160.
The full-blown trial in this case, the lengthy and careful findings of fact and conclusions of law, followed immediately by a judgment entry of dismissal with prejudice, all done in accordance with the structured procedure of
The fifth sentence of
[I]n view of the unequivocal language of
Rule 41(b) , and the absence [from the dismissal order] of the words “without prejudice,” we must and do decide that the dismissal was on the merits and that it was intended to be on the merits.
303 F.2d at 340. The scheme of the Rules to give full effect to unambiguous dismissal orders which specify that they are “with prejudice” or “without prejudice,” and to eliminate argument over
The fifth sentence does not make the involuntary dismissal, entered pursuant to the second, third and fourth sentences, with findings and conclusions entered as required, and stated to be with prejudice, any less than what it is. The fifth sentence sets out exceptions to its “operative effect” rule—dismissals for lack of jurisdiction, or for improper venue, or for lack of an indispensable party. But in trying to determine after the event what a dismissal order means one never reaches the “operative effect” rule if the order says on its face what it means, i.e., “otherwise specifies.”
Thus, the last sentence of
Cases such as Costello v. United States, 365 U.S. 265, 81 S.Ct. 534, 5 L.Ed.2d 551 (1961), are concerned with non-specifying orders, and, for such orders of uncertain meaning, seek to determine the scope of the “lack of jurisdiction” exception to the “operative effect” principle of the fifth sentence.5
The first sentence of
The judgment of affirmance is vacated and remanded with instructions to enter judgment for the defendant.
RIVES, Circuit Judge, dissenting, with whom WISDOM, GEWIN and AINSWORTH, Circuit Judges, join.
The majority bases its decision on
“At common law dismissal on a ground, not going to the merits was not ordinarily a bar to a subsequent action on the same claim. In Haldeman v. United States, 91 U.S. 584, 585-586 [23 L.Ed. 433], which concerned a voluntary nonsuit, this Court
sidered. The defendant had not been put to the inconvenience of defending. Also the record did not even make clear that the cost bond, in default of which the dismissal had occurred, had validly been required. None of those factors is present in the case before us.
said, ‘there must be at least one decision on a right between the parties before there can be said to be a termination of the controversy, and before a judgment can avail as a bar to a subsequent suit * * * There must have been a right adjudicated or released in the first suit to make it a bar, and this fact must appear affirmatively.’ A similar view applied to many dismissals on the motion of a defendant. In Hughes v. United States, 4 Wall. 232, 237 [18 L.Ed. 303], it was said: ‘In order that a judgment may constitute a bar to another suit, it must be rendered in a proceeding between the same parties or their privies, and the point of controversy must be the same in both cases, and must be determined on its merits. If the first suit was dismissed for defect of pleadings, or parties, or a misconception of the form of proceeding, 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.’ See also House v. Mullen, 22 Wall. 42, 46, [89 S.Ct. 42, 22 L.Ed. 838]; Swift v. McPherson, 232 U.S. 51, 56 [34 S. Ct. 239, 241, 58 L.Ed. 499]; St. Romes v. Levee Steam Cotton Press Co., 127 U.S. 614, 619 [8 S.Ct. 1335, 1338, 32 L.Ed. 289]; Burgett v. United States [7 Cir.], 80 F.2d 151 [104 A.L.R. 167]; Gardner v. United States [9 Cir.], 71 F.2d 63.
“We do not discern in
Rule 41(b) a purpose to change this common-law principle with respect to dismissals in which the merits could not be reached for failure of the plaintiff to satisfy a precondition. All of the dismissals enumerated inRule 41(b) which operate as adjudications on the merits—failure of the plaintiff to prosecute, or to comply with the Rules of Civil Pro-
cedure, or to comply with an order of the Court, or to present evidence showing a right to the relief on the facts and the law—primarily involve situations in which the defendant must incur the inconvenience of preparing to meet the merits because there is no initial bar to the Court‘s reaching them. It is therefore logical that a dismissal on one of these grounds should, unless the Court otherwise specifies, bar a subsequent action. In defining the situations where dismissals ‘not provided for in this rule’ also operate as adjudications on the merits, and are not to be deemed jurisdictional, it seems reasonable to confine them to those situations where the policy behind the enumerated grounds is equally applicable.” (365 U.S. 285-286, 81 S.Ct. 545.)
“We regard the exception as encompassing those dismissals which are based on a plaintiff‘s failure to comply with a precondition requisite to the Court‘s going forward to determine the merits of his substantive claim.” (365 U.S. 285, 81 S.Ct. 545.)
True in Costello the dismissal did not specify that it was without prejudice, while here the dismissal is expressly stated to be “with prejudice.” The majority undertakes to distinguish Costello because of that factual difference.3 The difference does, of course, impose a heavy burden upon the plaintiff to prove that the dismissal was not on the merits. Whether or not the plaintiff meets that burden, however, is not dependent upon
udice” conclusive evidence against the plaintiff—indeed those words “with prejudice” nowhere appear in the Rule. The Rule simply and completely excepts from its operation “a dismissal for lack of jurisdiction.” Costello holds that exception to include a dismissal in which the merits could not be reached for failure of the plaintiff to satisfy a precondition and clearly indicates that whether the dismissal was on the merits or for lack of jurisdiction must be determined on common-law principles. Insofar as the operation of
On common-law principles the plaintiff clearly and conclusively met its burden. The judgment itself referred to the court‘s “findings of fact and conclusions of law in this cause.” Even without such a reference, the Supreme Court has clearly established that findings of fact and conclusions of law may be used in determining the scope and effect of the Court‘s judgment.4
The district court had entered detailed findings of fact and conclusions of law (R. pp. 56-65). As to each of the first ten numbered defenses the court concluded in almost identical language that “the defense is denied.” (R. pp. 62-64). The dismissal was based solely on the eleventh and last defense, as clearly appears from the conclusion quoted verbatim in the panel‘s original opinion 423 F.2d 785. There the defense was referred to “as a condition precedent to payment of any amount due under the agreements” and the reason for dismissal was clearly stated in the concluding sentence. “Therefore, the Small Business Administration has failed to comply with the provision requiring a written demand upon the defendant; and the action should be dismissed.” 423 F.2d 785.
Any suggestion that demand for payment is not merely a precondition to suit but is an integral part of the merits of the action is not sound for several reasons, inter alia: 1. The district court found the written demand to be a “condition precedent” to payment of any amount under the agreements (R. 65, 66), and did not treat it as any part of the merits of the action. 2. The terms of the guaranty agreements themselves waive notice of default and go no further than to require written demand for payment.5
The prior judgment was truly a dismissal “with prejudice” as to the re-litigation of the questions actually decided. Estevez v. Nabers, 5 Cir. 1955, 219 F.2d 321, 324. All that the district court in the first action could properly mean by the words “with prejudice” was that the plaintiff could not again contest the issues of whether a demand was necessary, and, if so, whether one had been made.6 The words “with prejudice“, under the circumstances of this case, do not show that the claim or cause of action is barred. When read in the light of the findings of fact and conclusions
Since the findings of fact and conclusions of law establish that the action was dismissed solely because the plaintiff “failed to comply with the provision requiring a written demand upon the defendant (R. 65),” the addition of the phrase “with prejudice” cannot forever preclude the plaintiff from collecting its debt. That is in accord with the uniform rulings of all previous cases, federal and state, where the phrase “with prejudice” has been added to an order of dismissal which the record showed was made for a reason which did not touch the merits.7
The majority decision is based upon the form of the judgment. Instead, the substance of the matter actually decided should control.
I respectfully dissent.
Notes
(1) Whether defendant was a minor when she executed either or both guaranty agreements. The court found she executed one when a minor, the other after she reached majority.
(2) As to the guaranty signed during minority, whether defendant had a failed to disaffirm upon reaching majority or within a reasonable time thereafter. The court found she had failed to seasonably disaffirm.
(3) Whether statutes of limitations of Georgia, and laches under Georgia law, barred the government‘s claim. The court held they did not.
(4) Whether the United States was a proper party plaintiff or whether the action had to be brought on behalf of the payee (Reconstruction Finance Corporation) or the Small Business Administration as its successor or assign. This issue was found in favor of the government.
(5) Whether demand had to be made on defendant. The court found that demand was necessary.
(6) Whether demand had been made by letter. The court found that it had not been made.
(7) Whether service of the complaint was a demand. The court found it was not.
(8) Whether the defendant had hidden out so as to obviate the necessity for written notice of demand. The court held she had not.
(9) Whether, under the terms of the guaranty agreements, the fact that the government had obtained a judgment against another guarantor for the full amount of the debt discharged the defendant in the absence of evidence that the judgment had been paid. The court held defendant was not discharged.
(10) Whether several extensions of time for payment of the notes, granted without notice to or consent of the defendant, discharged the defendant. The court construed the guaranty agreements and concluded that, under the agreements as construed, the defendant was not discharged.
(11) Based on a stipulation the principal and interest due on each note was found. Presumably this removed from the case a defense (not referred to by the court in its findings) that the RFC had failed to realize upon collateral.
Text preceding footnote 4 to majority opinion.“All of the dismissals enumerated in
“The undersigned waives any notice of the incurring by the Debtor at any time of any of the Liabilities, and waives any and all presentment, demand, protest or notice of dishonor, nonpayment or other default with respect to any of the Liabilities and any obligation of any party at any time comprised in the collateral. * * *
“In case the Debtor shall fail to pay all or any part of the Liabilities when due, whether by acceleration or otherwise, according to the terms of said note, the undersigned, immediately upon the written demand of Reconstruction Finance Corporation, will pay to Reconstruction Finance Corporation the amount due and unpaid by the Debtor as aforesaid, in like manner as if such amount constituted the direct and primary obligation of the undersigned. Reconstruction Finance Corporation shall not be required, prior to any such demand on, or payment by, the undersigned, to make any demand upon or pursue or exhaust any of its rights or remedies against the Debtor or others with respect to the payment of any of the Liabilities, or to pursue or exhaust any of its rights or remedies with respect to any part of the collateral. The undersigned shall have no right of subrogation whatsoever with respect to the Liabilities or the collateral unless and until Reconstruction Finance Corporation shall have received full payment of all the Liabilities.” (R. p. 7.)
Saylor v. Lindsley, 391 F.2d 965 (2d Cir. 1968) dealt with the res judicata effect, in a stockholder derivative suit, of such a dismissal order entered in an earlier derivative suit by a different stockholder and stating that it was with prejudice. The order had been granted for failure of the stockholder to file a $50,000 bond as security for costs. The court held the order did not bar maintenance of a second suit. The merits had never been reached, and the stockholder class had never had an opportunity to present their claims, in fact not even the most preliminary aspects of the case had been con-
It may be significant that the same district judge caused both judgments to be entered.