Evans v. Horton

• Decision Date: 08 January 1953
• Citation: 251 P.2d 1013,115 Cal.App.2d 281
• Court: California Court of Appeals Court of Appeals
• Parties: EVANS v. HORTON. Civ. 19175.

Page 1013

251 P.2d 1013

115 Cal.App.2d 281

EVANS v. HORTON.

Civ. 19175.

District Court of Appeal, Second District, Division 3, California.

Jan. 8, 1953.

Sanner, Fleming & Irwin, Joseph C. Smith, and John Amos Fleming, Los Angeles, for appellant.

Paul R. Hutchinson, Los Angeles, for respondent.

VALLEE, Justice.

Plaintiff brought this action for damages for fraud. As a special defense to specific paragraphs of the complaint defendant pleaded res judicata. At the instance of plaintiff the court proceeded to the trial of the special defense before the trial of any other issue. The decision on the special defense was in favor of defendant and judgment for him followed. Plaintiff appeals.

Prior to commencing the present action, plaintiff brought four suits against defendant for rescission. Two of these suits, Nos. 549296 and 549297, pertained to the purchase by plaintiff of a building, the investment of funds in The Mothimune Company, and the vesting in defendant by plaintiff of a half interest in the real property and business of that company, referred to as the Mothimune transactions. These suits were tried, resulting in a judgment in each case in favor of defendant. The other two suits, Nos. 549298 and 549299, pertained to the purchase by plaintiff of an interest in Columbia Carpet Service Company, the transfer by plaintiff to defendant of an interest in that company, and the repurchase by plaintiff from defendant of that interest, referred to as the Columbia transactions. The Columbia cases have not been tried.

In this action the complaint alleged that plaintiff was induced to enter into the Mothimune transactions by reason of false and fraudulent representations of defendant respecting the business, its prospects, and future profits. It alleged that the representations were known to defendant to be false, were made to induce plaintiff to purchase the property and invest his money, and that he relied thereon to his damage. It is alleged that at a later time plaintiff was induced to enter into the Columbia transactions by reason of false representations made by defendant, known by him to be false, on which plaintiff relied to his damage. It also alleged that at a later time, by reason of threats made and duress exerted by defendant, plaintiff, to his damage, bought defendant's interest in Columbia.

In his answer, defendant denied the allegations of fraud, threats, and duress, and pleaded affirmatively that all claims of fraud with respect to the Mothimune transactions had been finally adjudicated in the rescission suits Nos. 549296 and 549297, in which judgments for defendant had been rendered and had become final.

The judgment in this action reads as follows: 'It is hereby ordered, adjudged and decreed that the plaintiff is barred from proceeding against the defendant upon any matter adjudicated by this court in proceedings numbered 549,296 and 549,297 in the files of this court; that no trial of the other issues in this action shall be had unless this judgment shall be reversed on appeal or otherwise set aside or vacated.' No trial was had, findings made, or judgment rendered concerning the issues made by the pleadings with respect to the Columbia transactions, or with respect to the purchase by plaintiff of defendant's interest in Columbia.

Plaintiff says his unsuccessful attempt to secure rescission in the Mothimune cases does not bar his present action for damages for fraud, and that, in any event, the judgments in those cases are not res judicata as to the Columbia transactions. Defendant says the former judgments in the Mothimune cases are res judicata of all issues here. The rule is that if, in a suit for rescission, a judgment is rendered after a trial on the merits, such judgment is res judicata not only as to the issues actually raised but as to issues which could have been raised in support of the action. A party claiming to have been defrauded must seek all the relief to which he may be entitled in one action, and he may not, after having failed in an action to rescind a purchase for fraud which has been adjudicated after a trial on the merits, thereafter bring a second action for damages. Wulfjen v. Dolton, 24 Cal.2d 891, 151 P.2d 846.

In Nos. 549296 and 549297 plaintiff sought decrees rescinding the Monthimune transactions. In each of those actions, plaintiff pleaded the same fraud as is alleged in this action. In each of those actions, the court found that plaintiff did not enter into the transactions because of, or relying on, any representations of defendant; that the representations alleged in this action with respect to the Mothimune transactions were not true; that it was not true that any representation made by defendant to plaintiff was false or made for the purpose of inducing plaintiff to enter into the transactions; and that it was not true that 'plaintiff has been damaged in any way by any fraud or misrepresentations or promises on the part of defendant, or that there has been any fraud or misrepresentations or false or unfilled promises.' At the trial of this action, plaintiff's counsel said: 'We will state that we do seek in this case to prove the same material facts as we did in those two cases referred to between the same parties.' He makes the same concession here.

This action, as respects the Mothimune transactions, is on the same claim as the suits for rescission; different relief only is sought. Where either of two remedies is equally available to vindicate the same right, a judgment on the merits in an action seeking one of them bars a resort to the other. Suisun Lumber Co. v. Fairfield School Dist., 19 Cal.App. 587, 593-594, 127 P. 349; Richard v. St. John, 264 Mich. 192, 249 N.W. 501. The prior judgments therefore operate as a complete bar to the present action in so far as damages are sought for fraud as to the Mothimune transactions. See Panos v. Great Western Packing Co., 21 Cal.2d 636, 134 P.2d 242; Detwiler v. Clune, 77 Cal.App. 562, 574-577, 247 P. 264. In Krier v. Krier, 28 Cal.2d 841, at page 843, 172 P.2d 681, at page 682, it is said: 'It is settled, however, that a judgment in a prior action between the same parties on the identical cause of action is res judicata, and a bar to a second suit thereon, not only as to issues actually determined therein but also as to issues necessarily involved. [Citations.] And even though the causes of action be different, the prior determination of an issue is conclusive in a subsequent suit between the same parties as to that issue and every matter which might have been urged to sustain or defeat its determination.' Cases such as McGibbon v. Schmidt, 172 Cal. 70, 75, 155 P. 460, and Herdan v. Hanson, 182 Cal. 538, 189 P. 440, in which the prior judgments claimed to be res judicata were judgments of nonsuit, are not in point. See Keidatz v. Albany, 39 Cal.2d 826, 249 P.2d 264.

Plaintiff argues that because the court, in the prior actions, found he had not taken all necessary steps to rescind the Mothimune transactions the findings of want of fraud were...