United States Fidelity & Guaranty Co. v. McCarthy

• Decision Date: 17 June 1929
• Docket Number: No. 8261.,8261.
• Citation: 33 F.2d 7,70 ALR 1447
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. McCARTHY.

70 ALR 1447, 33 F.2d 7 (1929)

UNITED STATES FIDELITY & GUARANTY CO. v. McCARTHY.

No. 8261.

Circuit Court of Appeals, Eighth Circuit.

March 9, 1929.

Rehearing Denied, with Modifications, June 17, 1929.

James C. Davis and Jesse A. Miller, both of Des Moines, Iowa (James C. Davis, Jr., and Frederic M. Miller, both of Des Moines, Iowa, on the brief), for appellant.

C. S. Bradshaw, of Des Moines, Iowa (W. B. Sloan and W. C. Strock, both of Des Moines, Iowa, on the brief), for appellee.

Before KENYON, Circuit Judge, and JOHNSON and McDERMOTT, District Judges.

KENYON, Circuit Judge.

Prior to January 1, 1903, appellee was engaged in the general practice of medicine and surgery, and subsequent thereto exclusively in the practice of surgery in the City of Des Moines, Iowa, and the surrounding country tributary thereto.

On the 15th day of April, 1921, he applied to appellant for an indemnity accident policy, which was issued the same day, and the first annual premium of $741.60 paid. It provided for a weekly accident indemnity of $250 for total disability and a lesser amount for partial disability.

On December 6, 1922, while the policy was in force, the second annual premium on the policy having been paid, appellee was injured by falling on the sidewalk leading from the street to his house. He was carrying a glass jar, which was broken in the fall, and in some manner his right hand and wrist were cut and lacerated, and the median nerve was severed, resulting in serious impairment of the hand.

Appellant paid an indemnity for total disability under the policy at the rate of $250 per week for a period of one year after the injury amounting to $13,000. Thereafter it denied further liability.

In 1924 appellee brought suit on the policy for recovery of accrued indemnity for continuous total disability. This suit was tried in the United States District Court for the Southern District of Iowa, in December, 1925, having been removed from the state court. Judgment was recovered for $26,077.69 based upon continuous total disability for the period from December 6, 1923, to October 22, 1925. Appellant paid this judgment. Appellee continued to file proofs of loss at more or less irregular periods, and appellant continued to deny liability.

The present action was brought in October, 1926, to recover indemnity for alleged total disability accruing under the same policy involved in the first suit. Amendments to the complaint were subsequently filed under which the period of time for which indemnity was sought was from October 22, 1925, to February 23, 1928. Appellee pleaded the proceedings in the former action as an estoppel preventing relitigation of all the issues tried and determined in that suit. Appellant denied the estoppel, and pleaded that appellee's disability was not total, but partial. At the conclusion of the evidence, which consisted on the part of appellee of all the proceedings in the former case (these being introduced and admitted on the question of former adjudication) and also other evidence on the part of both appellee and appellant of physicians, experts, and others, both parties moved the court for an instructed verdict, appellant reserving in its motion the right to submit the case to the jury, if said motion was overruled.

The court instructed a verdict for appellee for the full amount claimed, and judgment was entered on the verdict for $32,641.55.

Appellee's motion to direct verdict was based on the theory that each and every fact essential to his recovery in the case had been so established that reasonable minds could not differ as to his right to recover, and, further, that in the former action he was adjudicated to be totally disabled, as defined by the terms of the insurance contract, and that no evidence had been introduced to warrant a finding of improvement in his condition or any lessening of his disability since the date of the previous adjudication, and that, in the absence of any such showing, appellant was estopped by the former judgment from questioning his total disability.

The main bone of contention in the controversy is apparent and sharp, viz. the effect of the judgment in the former trial.

The complaints in both cases are quite similar. There is one marked difference, in that the period of claimed continuous total disability in the present action covers an entirely distinct period of time.

The answer of appellant in this case is somewhat more extended than in the former one. It attempts to make new issues on the question of continuous total disability. It is more detailed, and there are new matters pleaded relating to the ability of appellee to perform substantial duties of his profession. New witnesses were introduced on the trial, and appellant urges that the present case is based on a new cause of action covering an entirely different period of time than that covered by the first case, and that in this case the "continuous total disability" of the appellee can be litigated without reference to the former action.

Whatever may have been the theory in the trial court as to res judicata or judgment by estoppel, it is admitted in this court that the strict doctrine of res judicata is not applicable, as it is conceded that this action is a different cause of action from the former one. Counsel for appellee say in their printed brief: "The present case involves an entirely new and distinct cause of action from that embraced in the former suit and, therefore, there could not possibly be a strict bar of res adjudicata. It (former judgment) was offered by appellee and treated by the court below simply as an element of evidence." Again: "Appellee has at all times recognized perfectly that the present suit for indemnity, for the period between October 22, 1925, and February 23, 1928, is a distinct cause of action from that embraced in the former suit for the period between December 6, 1923, and October 22, 1925. There is no need of harping on that subject. Counsel agree perfectly, and so did the trial court. It is a distinct cause of action." These statements in appellee's brief that this is a distinct cause of action from that embraced in the former suit accord with our judgment, and the case will be so considered.

The law as to estoppel by judgment is well settled and plain. Difficulty ofttimes arises in its application to particular facts. From the early case of Cromwell v. County of Sac, 94 U. S. 351, 353, 24 L. Ed. 195, where the court said: "But where the second action between the same parties is upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered. In all cases, therefore, where it is sought to apply the estoppel of a judgment rendered upon one cause of action to matters arising in a suit upon a different cause of action, the inquiry must always be as to the point or question actually litigated and determined in the original action, not what might have been thus litigated and determined. Only upon such matters is the judgment conclusive in another action," down to the case of Baltimore Steamship Co. v. Phillips, 274 U. S. 316, 319, 47 S. Ct. 600, 602 (71 L. Ed. 1069), where the court said: "But if the second case be upon a different cause of action, the prior judgment or decree operates as an estoppel only as to matters actually in issue or points controverted, upon the determination of which the judgment or decree was rendered," the enunciations of the Supreme Court on the subject have been clear. We quote from a few of the many cases where tests have been laid down by which to determine what is concluded by a former judgment.

In Radford v. Myers, 231 U. S. 725, 730, 34 S. Ct. 249, 250 (58 L. Ed. 454), the court said: "As the suit in the Michigan court was not upon the identical cause of action litigated in the United States Circuit Court the estoppel operates only as to matters in issue or points controverted and actually decided in that suit."

In Bates v. Bodie, 245 U. S. 520, 526, 38 S. Ct. 182, 184 (62 L. Ed. 444, L. R. A. 1918C, 355), the court said: "And this court has established a test of the thing adjudged and the extent of its estoppel. It is: * * * If the second action was upon a different claim or demand, then the judgment is an estoppel `only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.'"

In United Shoe Machinery Corporation et al. v. United States, 258 U. S. 451, 459, 42 S. Ct. 363, 366 (66 L. Ed. 708) the court said: "In other words, to determine the effect of a former judgment pleaded as an estoppel, two questions must be answered: (1) Was the former judgment rendered on the same cause of action? (2) If not, was some matter litigated in the former suit determinative of the matter in controversy in the second suit? To answer these questions we must look to the pleadings making the issues, and examine the record to determine the questions essential to the decision of the former controversy." See, also, on the general subject of the law Russell v. Place, 94 U. S. 606, 24 L. Ed. 214; Nesbit v. Riverside Independent District, 144 U. S. 610, 12 S. Ct. 746, 36 L. Ed. 562; New Orleans v. Citizens' Bank, 167 U. S. 371, 17 S. Ct. 905, 42 L. Ed. 202; Southern Pacific R. Co. v. United States, 168 U. S. 1, 18 S. Ct. 18, 42 L. Ed. 355; Mitchell v. First National Bank of Chicago, 180 U. S. 471, 21 S. Ct. 418, 45 L. Ed. 627; Fayerweather v. Ritch, 195 U. S. 276, 25 S. Ct. 58, 49 L. Ed. 193; Virginia-Carolina Chemical Co. v. Kirven, 215 U. S. 252, 30 S. Ct. 78, 54 L. Ed. 179; Troxell v. Del., Lack. & West. R. Co., 227 U. S. 434, 33 S. Ct. 274, 57 L. Ed. 586; Hartford Life Ins. Co. v. Ibs, 237 U. S. 662, 35 S. Ct. 692, 59 L. Ed. 1165, L. R. A. 1916A, 765; Myers v. International Trust Co., 263 U. S. 64, 44 S. Ct. 86, 68 L. Ed. 165; ...