Boyd v. Jamaica Plain Co-op. Bank

• Decision Date: 12 March 1979
• Docket Number: CO-OPERATIVE
• Parties: Andrew W. BOYD et al., Trustees, v. JAMAICA PLAINBANK.
• Court: Appeals Court of Massachusetts

Page 775

386 N.E.2d 775

7 Mass.App.Ct. 153

Andrew W. BOYD et al., Trustees, v. JAMAICA PLAIN CO-OPERATIVE BANK.

Appeals Court of Massachusetts, Suffolk.

Argued Jan. 12, 1979.

Decided March 12, 1979.

Joseph M. Cohen, Boston, for plaintiffs.

John J. McCarthy, Boston (Stanley V. Ragalevsky, Boston, with him), for defendant.

Before KEVILLE, BROWN and GREANEY, JJ.

GREANEY, Justice.

The plaintiffs appeal from the dismissal of their complaint seeking declaratory relief under G.L. c. 231A, on the ground of estoppel by judgment. ¹ We affirm the judgment of dismissal.

The procedural history necessary to put the issues in proper perspective is this. The claims arise out of a continuing controversy between certain mortgagors and their mortgagee banks regarding payment of interest on advance real estate tax payments required by the banks under one of the terms of the mortgages. The Boyds in 1973 as two of several claimants bringing claims against several banks, and in conjunction with the Carpenter cases, ² sued the Jamaica Plain Cooperative Bank (bank) to compel it to pay, or otherwise account for, earnings realized from investment of tax payments made by the plaintiffs. (Boyd I ). The original 1973 complaint in Boyd I paralleled the complaint in the original Carpenter case (Carpenter I ) in every material respect and alleged that the bank had commingled the tax payments with its other assets, had invested the pooled assets, had profited thereby, and had neglected and refused to pay the plaintiffs some or all of the fruits of the investment. The complaint predicated liability on assertions that the bank held the funds as an "escrowee and fiduciary." Boyd I and the other cases filed with it were subsumed into Carpenter I, with the latter designed as the pilot case for trial purposes. ³ Carpenter I was dismissed by the trial judge for "failure to state any basis for granting the declaratory relief requested," but, on appeal, the Supreme Judicial Court reversed that dismissal, holding that the bill adequately stated a controversy appropriate for declaratory relief. 362 Mass. at 771, 781, 291 N.E.2d 609, 611. The case was remanded to the Superior Court and, following certain amendments to the bill, the action was fully tried on all the liability issues it raised and resulted in a lengthy statement of findings of fact and rulings of law disposing of those issues. The case was again appealed to the Supreme Judicial Court which, in Carpenter II, determined (affirming the decision of the trial judge) that certain causes of action had not been made out by the mortgagors, nor had specific circumstances been established which would require the imposition of restitutionary remedies. Specifically ruled out by the trial judge, and by the Supreme Judicial Court in Carpenter II, were claims that express trusts had been created and that the nature of the transactions between the mortgagors and their bank had given rise to a fiduciary relationship or indicated the presence of fraud or unjust enrichment so as to occasion the imposition of a constructive trust or warrant a finding that a resulting trust existed. Following the receipt of the rescript in Carpenter II, Boyd I was dismissed with prejudice without objection by the plaintiffs.

The Boyds, following these events, proceeded along two lines. They sought first to amend the dismissed Boyd I complaint to assert new claims against the bank, and they filed the present action (Boyd II ). Both the proposed amendment to the original complaint and the new pleading sought a judicial declaration under G.L. c. 231A (since the Boyds were not within the coverage of legislation requiring banks in their discretion to pay interest ⁴), that the bank had been unjustly enriched because its "leave" to mingle the advance payments with its own funds was due to "coercive force inherent in the (bank's) position as a lender," and sought interest to be paid on the monthly real estate tax payments which had been made to the bank after July 1, 1975, the effective date of G.L. c. 183, § 61. The trial judge (the same judge involved throughout Carpenter ) ⁵ in an extensive memorandum denied the motion to amend Boyd I ⁶ and allowed the bank's motion to dismiss the new action on the basis of "res judicata and collateral estoppel." He ruled in effect that the issues raised by Boyd II had been raised, tried, and decided adversely to the Boyds in the Carpenter decisions. He also sought to exercise his discretion under G.L. c. 231A, § 3, by ruling, as an alternative ground for dismissal, that judicial resolution of the issues in Boyd II would not "terminate the controversy." We find that the dismissal on the basis of "res judicata and collateral estoppel" was correct ⁷ and, as a result, need not review the discretionary ground for dismissal.

1. The nub of the plaintiffs' argument with regard to the judge's preclusion rulings (res judicata collateral estoppel) is to the effect that the Carpenter decisions are not decisive of Boyd II since they dealt only with the issue of the bank's liability as an "escrowee." The plaintiffs' claim that the judgment in Carpenter II expressly left open their right to seek an accounting from the bank on the basis of a theory that the bank's acquisition and use of the money in the accounts amounted to unjust enrichment.

As a first point, we note the circumstances manifest in the records, that the Boyds cast their lot with the plaintiffs in the Carpenter cases as to the litigation of all the liability issues that were presented by that action and which were finally determined and were essential to the judgment. This identity of interests is revealed in part by the Boyds' acquiescence in the trial and appeal of the Carpenter cases, the dismissal of Boyd I with prejudice, ⁸ and in the main through the Boyds' admission before us that "Carpenter is dispositive of all claims stated in (the) original pleadings, and it established the rights and obligations of mortgagees and mortgagors in respect to advance deposits for real estate taxes prior to July 1, 1975." The records support the conclusion that despite possible factual differences in the content of the tax clauses in the mortgages, and differences in the events surrounding agreement to the clauses, the Boyds were content to treat their circumstances as sufficiently similar to that of the Carpenters to permit the Carpenter actions to control the factual premises of the Boyds' first action.

This causes the Boyds to be sufficiently identified with the Carpenters in the first litigation for purposes of the application of a preclusion analysis, either because they were "privies" with them, Pan Am. Match, Inc. v. Sears, Roebuck & Co., 454 F.2d 871, 874 (1st Cir.), cert. denied, 409 U.S. 892, 93 S.Ct. 113, 34 L.Ed.2d 149 (1972), or because the Carpenters were permitted to act as their "virtual representative(s)," ⁹ Aerojet General Corp. v. Askew, 511 F.2d 710, 719 (5th Cir. 1975). And though the unique facts in these cases do not fit squarely within the categories suggested by the Restatement of Judgments for party identification, we also find general support in that authority for our view that the Boyds have an identity of interests with the Carpenters. Thus, "(a) person who expressly or impliedly agrees to be bound by the determination of issues in an action between others is bound in accordance with the terms of his agreement," Restatement (Second) of Judgments § 84 (Tent.Draft No. 2, 1975), and "(a) person who is not a party to an action but who is represented by a party is bound by and entitled to the benefits of the rules of res judicata as though he were a party," Id. § 85(1); representation occurring when the person invests the party "with authority to represent him in an action," Id. § 86(1)(b). Since both the Boyds and the bank chose to treat the Carpenter action as the target case for the litigation of all the issues raised in that action and actually litigated, the Boyds become bound by, and the bank becomes entitled to, the benefits of the rules as to issue preclusion even though neither party was an actual litigant in the action. ¹⁰

2. Boyd I sought a declaration as to a variety of issues relating to the status of the tax accounts centering on prototype claims that the banks held the funds as an "escrowee" or under a fiduciary relationship. For adjudication purposes it is recognized that "(a) judgment in an action brought to declare rights or other legal relations of the parties is conclusive in a subsequent action between them as to the matters declared, and, in accordance with the rules of issue preclusion, as to any issues actually litigated by them and determined in the action." Restatement (Second) of Judgments § 76 (Tent.Draft No. 1, 1973). See also Developments in the Law Res Judicata, 65 Harv.L.Rev. 818, 881 (1952); Developments in the Law Declaratory Judgments, 1941-1949, 62 Harv.L.Rev. 787, 843 (1949). The rules of issue preclusion foreclose further litigation of an issue when "an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment." Restatement (Second) of Judgments § 68 (Tent.Draft No. 4, 1977). See also Cambria v. Jeffery, 307 Mass. 49, 29 N.E.2d 555 (1940); Wayland v Lee, 325 Mass. 637, 641, 91 N.E.2d 835 (1950); Henchey v. Cox, 348 Mass. 742, 746-747, 205 N.E.2d 715 (1965); Rudow v. Fogel, --- Mass. --- ^A, 382 N.E.2d 1046 (1978).

To apply these rules in this case, we look to the entire record (both trial and appellate) in the Carpenter cases, including extrinsic evidence, ¹¹ to ascertain what issues were tried and determined and were essential to the judgment (hence preclusive), with a view to comparing the adjudicated issues with the issues sought to be raised by Boyd II. In so doing we keep in mind that "(t)he statement of a different form of liability is not a different cause of action, provided it...