Ballard v. First National Bank of Birmingham, 17104.

• Decision Date: 08 October 1958
• Docket Number: No. 17104.,17104.
• Citation: 259 F.2d 681
• Parties: Sam C. BALLARD, Appellant, v. The FIRST NATIONAL BANK OF BIRMINGHAM, a National Banking Association, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

259 F.2d 681 (1958)

Sam C. BALLARD, Appellant, v. The FIRST NATIONAL BANK OF BIRMINGHAM, a National Banking Association, Appellee.

No. 17104.

United States Court of Appeals Fifth Circuit.

October 8, 1958.

D. N. Hamilton, Clifford J. Durr, Montgomery, Ala., for appellant.

Lucien D. Gardner, Jr., Birmingham, Ala., Cabaniss & Johnston, Birmingham, Ala., of counsel, for appellee.

Before RIVES, CAMERON and BROWN, Circuit Judges.

CAMERON, Circuit Judge.

The question upon which this appeal will be decided is whether appellant Ballard is estopped to maintain this action by the judgment of a court of Alabama rendered in a suit between the same parties and involving the same subject matter. Appellant sued appellee in this action to recover twice the amount of usurious interest claimed to have been knowingly charged by the Bank in violation of 12 U.S.C.A. §§ 85 and 86 and actually paid by him.

Appellee answered denying the usury, alleging that this action was not brought within two years of its accrual, a condition precedent contained in the statutory action created by said two Code sections, and alleging further that appellant was estopped to maintain this action by a judgment rendered in a suit between the parties by the Circuit Court of Montgomery County, Alabama, and affirmed by the Supreme Court of Alabama.

The subject matter of that suit and this action was an arrangement under which appellant purchased from Baggett Transportation Company and Aluminum Trailer Sales Company a tractor and trailer for a "net time price" of $16,211.55 including principal and interest, a written instrument nominated "Conditional Sale Contract" being executed by appellant covering said transaction. Appellee Bank became the owner of said indebtedness and contract. We do not find it necessary to decide the exact character of this written instrument.

After appellant had made ten monthly installment payments of $680, he defaulted on the payment due April 30, 1953, the entire balance then remaining due being $9,411.55. May 18, 1953, appellee Bank began, in the Circuit Court of Montgomery County, Alabama, a detinue suit, which is the suit whose judgment is pled by the Bank as res judicata of this action. The property appellant had purchased was seized and, upon failure of appellant to take possession of it under Alabama statutes by giving bond, the Bank gave bond and took possession on or about May 26, 1953.

After Ballard's demurrer had been overruled, he pled in that suit, besides the general issue, that:

"1. The instrument upon which the action if sic founded is usurious and void for the interest thereon. Said interest has been included in the principal of said instrument in the amount of approximately $1,736.85.

"2. Defendant suggests that plaintiff\'s claim is based upon a chattel mortgage or conditional sales contract, and therefore prays that the jury be required to ascertain the balance, if any, of the purchase price of the equipment described in the complaint as provided in Title 7, § 929 of the Code of Alabama, as amended."

After an extended hearing the Alabama Circuit Court gave the Bank the affirmative charge without hypothesis upon which the jury returned its verdict; and judgment was entered awarding recovery of the property sued on to the Bank, and ascertaining "the balance of the mortgage debt to be $10,161.55," assessing the value of the property at $11,000, and ordering recovery by the Bank from Ballard of the costs and providing for execution therefor.

Ballard appealed to the Supreme Court of Alabama, which affirmed the judgment of the Circuit Court,¹ this being a portion of the language of its opinion (75 So.2d at pages 486, 487-488):

"The defendant pleaded the general issue, a special plea of usury and made the statutory suggestion under § 929, Title 7, Code of 1940 that the jury ascertain the amount of debt due by the defendant. * * *

"* * * This contention as to usury could obviously only apply to an ascertainment of the balance of the indebtedness under the contract. According to the stipulations of counsel, as shown by the charge of the court which has been hereinabove referred to, that balance was ascertained to be $10,161.55. There was no exception or objection to the charge of the court. We could well rest our opinion on this stipulation which was recognized by the court but we go on to point out that this is not a case involving usury. The plaintiff bank purchased the conditional sales contract and the indebtedness evidenced thereby. There was no increase in the burden of the maker of the notes. In other words, the bank did not make a loan or advance of money, but merely purchased a negotiable security. Commercial Credit Co. v. Tarwater, 215 Ala. 123, 110 So. 39, 48 A.L.R. 1437. The fact that this is a detinue suit resting upon a conditional sale contract and not a suit upon the notes evidencing the indebtedness secured thereby, does not affect the principle which we have stated. Commercial Credit Co. v. Parks, 215 Ala. 648, 112 So. 237."²

Appellee Bank pled in this action and claims that the question of whether the written instrument called for the payment of usurious interest, or whether usurious interest was paid, was a direct issue in that litigation and cannot be relitigated in this action. We agree.³ It was Ballard who, by his special pleas in the state suit, put in issue the question whether usurious interest was included in the total amount which he promised to pay in said sales contract. The balance of the debt due was found by the jury to be $10,161.55,⁴ which was made up of the unpaid balance of $9,411.55 principal and interest called for by the sales contract, plus attorney's fee of $750.

It is clear, therefore, that the judgment entered by that court upon the jury verdict fixed the balance due at an amount which included the $1,736.85 interest which appellant claimed there and repeats here was usurious. If the court and jury had found merit in Ballard's plea of usurious interest, this amount would have been eliminated. The fixing of the balance, therefore, at an amount which included interest was necessarily an adjudication that the interest was not forfeited because usurious. The importance of this is emphasized by the fact that the judgment of the Alabama Circuit Court gave Ballard the statutory thirty days within which to redeem the property sued for by the payment of $10,161.55. If that court had been convinced that the interest was usurious, the amount fixed in the judgment to be paid by Ballard to redeem the property would have been less by the total of the usurious interest.

The issue being, therefore, squarely presented to the trial court and its judgment having been affirmed by the court of last resort of Alabama under the language quoted supra, said judgment is res judicata of the issue of usurious interest, which is the only issue presented by this action.

The efficacy of that judgment as a bar to this action does not depend upon its correctness. This principle was well stated by this Court in Bennett v. Commissioner of Internal Revenue, 5 Cir., 1940, 113 F.2d 837, 840 (citing Reed v. Allen, 1932, 286 U.S. 191, 52 S.Ct. 532, 76 L.Ed. 1054):

"* * * For, the rule of res judicata does not go on whether the judgment relied on was a right or a wrong decision. It rests on the finality of judgments in the interest of the end of litigation and it requires that the fact or issue adjudicated remain adjudicated. It, in short, is that one, who has permitted a final judgment to go against him, is estopped, by that judgment, from contending elsewhere, against the parties to it and their privies that the fact or issue is otherwise than as there adjudged."

In Rubens v. Ellis, 5 Cir., 1953, 202 F. 2d 415, 418, we repeated the same idea in these words: "The doctrine of res judicata does not depend upon whether or not the prior judgment was right. It rests upon the finality of judgments as a matter of public policy, to the end that controversies once decided shall remain in repose."

We went into the matter fully and applied the same principles in support of the doctrine of collateral estoppel by judgment to a case in which a different cause of action was involved, but where "the evidence * * * shows that certain basic issues on which this cause of action depends have been litigated at least once."⁵ We quoted copiously from the Restatement of Judgments, and from Freeman on Judgments, and cited many cases and set forth the language of 30 A American Jurisprudence, Judgments, § 371, as stating the general rule:

"It is a fundamental principle of jurisprudence that material facts or questions which were in issue in a former action, and were there admitted or judicially determined, are conclusively settled by a judgment rendered therein, and that such facts or questions become res judicata and may not again be litigated in a subsequent action between the

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