First Nat. Bank v. Edwards

• Citation: 132 S.E. 824,134 S.C. 348
• Decision Date: 26 April 1926
• Docket Number: 11964.
• Parties: FIRST NAT. BANK OF FLORENCE v. EDWARDS et al.
• Court: South Carolina Supreme Court

132 S.E. 824

134 S.C. 348

FIRST NAT. BANK OF FLORENCE v. EDWARDS et al.

No. 11964.

Supreme Court of South Carolina

April 26, 1926

Cothran J., dissenting.

Appeal from Common Pleas Circuit Court of Darlington County; C. C Featherstone, Judge.

Action by the First National Bank of Florence against C. B. Edwards in his own right and as trustee for Mary R. Edwards, and others. Judgment for plaintiff, and defendants appeal. Affirmed.

The judgment of the circuit court is as follows:

"Motion heard by me, at Darlington, to strike out a certain paragraph of defendant's answer, as constituting no defense to this action; it being agreed at the hearing that I should also pass upon the question on the merits, as to whether or not the judgment of the court in the case of Dunlop Milling Company et al., against the same defendants, is a bar to this action.

The facts, briefly stated, are as follows:

Certain creditors of Edwards obtained judgments against him. Failing to realize on their executions, two of them, Dunlop Milling Company, and one other, brought action against the judgment debtor and his grantee, to set aside certain deeds on the ground that they were voluntary, for fraud, under the Statute of Elizabeth, and that they were obnoxious to the Assignment Act. That action resulted in a decree sustaining the deed.

The plaintiff, in this action, was not made a party of record to that action, but his judgment was recovered prior to its institution.

In the former action, the plaintiffs who sought to set aside the deeds prayed that, after they were vacated, the lands embraced therein be applied to the payment of the debts of the grantor according to their legal rank and priority. The plaintiff in this action, so far as the facts before me show, had no notice of the pendency of the former action, nor was it invited in, nor did it take any part therein.

The contention of the defendants is that, the former action being in the nature of a creditor's bill and brought by creditors who belonged to the same class as the plaintiff, who, if the deeds had been set aside, would have shared in the fruits of the victory, the judgments in the former action are a bar to the present action, and that plaintiff is bound thereby.

It is true that there is a class of actions which can be brought by one or more, for the benefit of all, in which actions all who belong to that class are bound by the result. The case of State v. C. & L. N. G. R. R. Co., 13 S.C. 290, relied upon by defendants, is a typical illustration of that class of cases. There an action was brought by certain taxpayers of a county, against the county commissioners, to enjoin them from issuing certain railroad-aid bonds, upon the ground that the county was without constitutional authority to issue the same. The action was dismissed and the bonds sustained. Later another action was brought by the state ex relatione Brown against the railroad and the bondholders, asking that the same bonds be declared a nullity upon the same constitutional ground. The court held that the judgment in the first action was a bar to the second.

But the court in that case, in making the statement that the doctrine of estoppel will be applied where a creditor's bill is brought, for the benefit of all of a class, uses this language: 'This right of representation is, however, from its nature subject to the restriction that the door of the controversy must be opened to all of the class represented who may, on certain conditions, unite in exercising control over the prosecution of the remedy.'

The case is not controlling here, for two reasons: First, the facts are not the same, there the only question before the court, in both actions, was the power of the county to issue the bonds under the Constitution, a question of law pure and simple; and, second, there the persons first bringing the action had rights identical in interest with the parties to the second action, the court holding that the fact that the second action was brought in the name of the state did not affect the rule.

Here, in this case, each of the judgment creditors had a right to institute his action and go to trial upon the facts in his possession. It is true that, if the plaintiff had been invited into the former action and had gone and participated therein, it would have been bound by the result, or, if the court had enjoined all creditors from proceeding except in that action or had taken possession of the funds and called in the creditors, and plaintiff had had notice thereof, it would have been bound. See Ex parte Spragins, 44 S.C. 76, 21 S.E. 543. But I know of no case which holds, nor can I conceive of any principle of justice or right which will enable any court to hold, that a man is bound by the judgment in a case to which he was not a party and over which he had no control.

'The principle is as old as the law, and is of universal justice, that no one shall be personally bound until he has had his day in court, which means until citations is issued to him, and opportunity to be heard is afforded.' Mason v. Eldred, 6 Wall. 231, 18 L.Ed. 783.

"One creditor or member of a class, may sue for the benefit of all, but the others are not bound unless they participate in the proceedings, prove their claims, or otherwise join in the proceeding. 34 C.J. p. 1002; note to Goldberg v. Loan Co., 140 Am. St. Rep. 787; note to Hill v. Bain, 2 Am. St. Rep. 877.

"The plaintiff in the former action could have made the plaintiff here a party, or, no doubt, the defendants could have had it made a party, in which event, it would, of course, have been bound by the judgment, but this was not done.

"Again in 34 C.J. p. 1013, we find the following statement, in the text, which is abundantly supported by the cases cited: 'There is, in general, no such privity between several creditors of the same debtor, that proceedings taken by one against the fund, estate, or specific property to which all must look for satisfaction will raise an estoppel as regards the others, unless such others were made parties to the action or were adequately represented therein.'

"Again this case is practically settled or ruled by Clyburn v. Reynolds, 31 S.C. 91, 9 S.E. 973, and Sartor v. Land Co., 104 S.C. 187, 88 S.E. 467. The judgment in former case was not one in rem. See 34 C.J. note 89 B, and note 90, p. 1171. Kenmore Shoe Co. Case, 50 S.C. 140, 27 S.E. 682, not in point. There, in a creditor's bill, the court took possession of the res, called in creditors, and the corporation held to be conceived in fraud was before the court.

"It can be said that it is hard on the defendants to be made to defend another action which has for its object the same purpose, but that is not so harsh as it would be to deprive the plaintiff of its day in court. It is therefore ordered that so much of the answer of defendants as sets up the judgment of the court in the former action by way of bar to this action, be stricken out, and it is ordered, adjudged, and decreed that the plaintiff in this action is not precluded from maintaining this action by reason of the said judgment in the said former action."

George H. Edwards, of Darlington, for appellants.

Philip H. Arrowsmith, of Florence, for respondent.

STABLER, J.

We have made a careful examination of the authorities applicable to the questions involved in this case, and the reasons stated by his honor, Judge Featherstone, in his order, for his conclusions, are entirely satisfactory to this court.

The judgment of this court is that the judgment of the circuit court be affirmed.

GARY, C.J., and WATTS and BLEASE, JJ., concur.

COTHRAN J., dissents.

BLEASE, J. (concurring).

While the dissenting opinion of Mr. Justice COTHRAN presents some interesting questions, I concur in the opinion of Mr. Justice STABLER, that the order of Hon. C. C. Featherstone, circuit judge, should be affirmed, and desire to express, briefly, some reasons therefor.

It appears from the order of the court that, in the hearing on the motion to strike out paragraph IX of the answer of the defendants, the parties agreed that the judge should also pass upon the merits of the question as to whether or not the judgment of the court in the case of Dunlop Milling Company et al. against the defendants in this case is a bar to this action.

Apparently, as the record seems to disclose, the defendants in their plea of res adjudicata cannot show more than they alleged in their answer. It will be observed, too, that the circuit judge concluded, so far as the facts before him showed, that the plaintiff "had no notice of the pendency of the former action, nor was it invited in, nor did it take any part therein." And there has been no appeal from that particular determination.

In the case of Newell v. Blankenship, 130 S.C. 131, 125 S.E. 420, cited by Mr. Justice Cothran, this rule was laid down:

"So that, in order to invoke the principle of res adjudicata against one not a party to the action in which the judgment was obtained, it must appear, in the action in which that principle is invoked: (1) That such person was legally bound to, at least partially, indemnify the defendant in the first action against the recovery suffered by him therein. (2) That he was seasonably notified of the nature and pendency of the action, and of the time and place of trial."

In that case, this court held that the plea of res adjudicata, claimed there, was not established because "the duty of the plaintiff to give reasonable notice to Blankenship was scantily performed," since it appeared that the only information given was simply a statement that "a lawsuit was pending between" the other parties.

It seems clear to me, from a reading of the case of Robbins v. Chicago, 4 Wall. 657, 18 L.Ed....