American Nat. Bank and Trust Co. of Chattanooga v. Clark
| Decision Date | 20 August 1979 |
| Citation | 586 S.W.2d 825 |
| Parties | AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHATTANOOGA, Petitioner-Defendant, v. Norman Frances Raoul CLARK and Ann Elizabeth Raoul, Respondents-Plaintiffs. 586 S.W.2d 825 |
| Court | Tennessee Supreme Court |
Jere T. Tipton, Miller & Martin, John P. Gaither, Witt, Gaither & Whitaker, Chattanooga, for petitioner-defendant.
Leonard R. Tanner, Jr., Richard P. Jahn, Chattanooga, for respondents-plaintiffs.
In this action the beneficiaries of an inter vivos trust, created in 1949, sued the trustee for damages. They alleged that the trustee breached its fiduciary duty to advise them fully concerning transactions in 1944 involving shares of corporate stock which the beneficiaries transferred to the trust in 1956. This suit was begun in 1977. It is a sequel to and an outgrowth of earlier litigation between the same parties concerning the same general subject matter. See Clark v. American National Bank & Trust Co. of Chattanooga, 531 S.W.2d 563 (Tenn.App.1974), Cert. denied, by Supreme Court of Tennessee, July 7, 1975, Cert. denied, 423 U.S. 1053, 96 S.Ct. 786, 46 L.Ed.2d 644 (1976).
It is conceded by the plaintiffs, respondents here, that most, if not all, of the issues raised in the present proceeding and sought here to be litigated were involved, though not necessarily finally determined, in the previous suit. In their briefs and arguments, all parties rely heavily upon portions of the judgments and decrees in the previous litigation favorable to them and by closely reasoned arguments seek to avoid those portions of the previous adjudications unfavorable to them.
It is conceded by the respondents that they seek to recover in the present case the identical damages sought in the earlier litigation, arising from an alleged wrongful exchange in 1944 by the trustee of no-par common stock of the Cavalier Corporation, then being held in two earlier trusts, for one hundred dollar par value shares in the same corporation, having a dividend preferential. The two trusts which were being administered by the trustee in 1944 terminated in 1956. The prior litigation was commenced in 1964 and was ultimately held to be time-barred in some respects and without merit in others. It was extremely protracted and complex, spanning some twelve years. The case was tried on its merits and a voluminous evidentiary record compiled. The various claims and theories of the parties and the holding of the Court of Appeals thereon are discussed in the reported opinion cited above.
After this Court had denied the petition for certiorari filed on behalf of respondents in the earlier case, and after the Supreme Court of the United States had likewise declined to review the decision of the Court of Appeals, the present suit was brought. In it, the same trust beneficiaries charged the trustee of the 1949 trust with failure to advise them adequately at any time prior to their filing of the first suit of the adverse consequences to the trust corpus of the 1944 stock exchange. They transferred their stock to the present trust when the earlier trusts terminated in 1956.
To the present action the trustee filed a motion for summary judgment, relying upon principles of res judicata as well as the statute of limitations and laches. The Chancellor sustained the motion, finding that all of the issues had been fully adjudicated and determined in the prior suit. The Court of Appeals reversed, holding that the cause of action now asserted against the trustee was different from that involved in the previous litigation and stating that the gravamen of the present suit, "failure to communicate, was not an issue" in the former suit.
In this regard, even the respondents admit that the Court of Appeals was incorrect. They assert, in their reply to the trustee's petition for certiorari, that the issue was raised, and was in fact litigated, but they allege that they raised it simply in response to the affirmative defense of the statute of limitations asserted by the trustee in the first case. They further state:
1
The opinions and judgments in the prior case make it clear that alleged failure of the trustee properly to communicate with and advise the beneficiaries was a central issue in that litigation, and the Court of Appeals was in error in holding otherwise.
It is the insistence of the respondents that the principle of res judicata applies only to issues actually raised and finally adjudicated in prior litigation. Their complaint refers to and repeats a number of allegations and claims allegedly raised in the former suit but asserts that these are not foreclosed here because they were not finally determined therein.
This, in our opinion, is too narrow a view of the principle involved. It has long been the rule in this state that not only issues which were actually determined, but all claims and issues which were relevant and which could reasonably have been litigated in a prior action, are foreclosed by the judgment therein. See Jordan v. Johns, 168 Tenn. 525, 79 S.W.2d 798 (1935).
This principle was illustrated in the case of Henegar v. International Minerals & Chemical Corp., 209 Tenn. 355, 354 S.W.2d 69 (1962), in which a plaintiff undertook to "split" his cause of action and litigate only a portion thereof. The suit involved an alleged recurring nuisance. In the first action the plaintiff tried and pursued to judgment claims for property damage for a specified period of time....
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