Harlow Realty Co. v. Whiting
| Decision Date | 29 January 1941 |
| Parties | HARLOW REALTY COMPANY v. HOWARD E. WHITING. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
October 9, 1940.
Present: FIELD, C.
J., DONAHUE, DOLAN COX, & RONAN, JJ.
Res Judicata. Bankruptcy, Composition, Findings by referee. Evidence Competency. Equity Pleading and Practice, Findings by judge Appeal. The mere facts, that a debtor, in his composition proceedings under Section
74 of the national bankruptcy act, had objected to the allowance of a creditor's claim on the ground that, in a joint venture not connected with that claim, a sum larger than the claim was due him, and that the referee had dismissed the creditor's claim on that ground, did not preclude the debtor from maintaining a suit for a balance still due him in the joint venture.
A finding by a referee in bankruptcy, in composition proceedings by an insolvent debtor under Section 74 of the national bankruptcy act, disallowing a claim by a creditor on the ground that an amount that the creditor owed the debtor as his share of losses in a joint venture far exceeded the creditor's claim, although the referee did not determine the entire amount of the debtor's counterclaim, was res judicata binding upon the creditor as to the existence of the joint venture.
In a suit where the effect of a previous decision by a referee in bankruptcy as res judicata on an issue involved was in question, testimony by the referee, that in passing on that issue he had found certain facts although he had not recorded them in a court document, was admissible.
Upon an appeal from a final decree in a suit in equity where the record included a voluntary statement by the trial judge of subsidiary findings of fact as to an amount due one of the parties but by reason of a waiver by the appellant, did not include the evidence, it could not be ruled that such findings were wrong.
BILL IN EQUITY, filed in the Superior Court on December 2, 1937. The case was heard by Greenhalge, J.
The averments of the bill were in substance that the defendant was indebted to the plaintiff under an agreement to pay it rent for certain premises and a percentage of fees and commissions received by him in his business as real estate broker, and that the defendant had refused to permit examination of his books to disclose what his fees and commissions were; and an accounting was sought.
After the institution, following the filing of the bill, of the proceedings in the bankruptcy court described in the opinion, the plaintiff in this suit filed in those proceedings a "proof of unsecured claim" which the judge who heard this suit found set up its claim alleged in the bill. There was no mention of a joint venture in the proof of claim. To this the debtor therein, defendant in this suit, filed an objection and "a brief in which it was asserted that the debtor and the Harlow Realty Company `were joint adventures in the general contracting business and in the erection of a house in Watertown; that this business was carried on in the name of Howard E. Whiting, the debtor, for the mutual interest of both parties; that the business has resulted in a loss; that the share of the loss which shall fall upon the Harlow Realty Company far exceeds the amount of their alleged claim.'" It was the issue thus raised that was heard by the referee in bankruptcy.
W. E. Bennett, for the plaintiff. J. J. Krohn, for the defendant, submitted a brief.
The plaintiff, on December 2, 1937, brought this bill in equity against the defendant for an accounting. The defendant's answer, filed January 24, 1938, admitted that he and the plaintiff entered into a contract as evidenced by the letters referred to in the bill, and, in addition to denying that anything was due from him thereon, also filed a counterclaim allegedly based upon a joint adventure that was apart from the subject matter of the alleged contract. On January 7, 1938, the defendant filed in the District Court of the United States for the District of
Massachusetts a petition under Section 74 of the bankruptcy act (U. S. C. [1934 ed.] Title 11, Section 202), then in force, for a composition in which the plaintiff was listed as a creditor. (See act of June 22, 1938, c. 575; 52 U.S. Sts. at Large, 840; U. S. C. Title 11, Section 1.) After proceedings in the bankruptcy court, amendments to the defendant's answer and counterclaim were allowed, as was an amendment to the plaintiff's answer to the counterclaim as amended. In substance, the defendant's contentions were that the proceedings in bankruptcy were a "final determination of the same issues raised by the plaintiff's bill and the defendant's answer . . . and such issues are res adjudicata in favor of defendant," and that the issues raised by the counterclaim and heard and determined by the referee in bankruptcy had become res adjudicata except as to the amounts due from the plaintiff to the defendant. The plaintiff's contentions were that there was no joint enterprise, that "liability of the plaintiff to the defendant upon said counterclaim was not determined [in the bankruptcy court] and did not become res adjudicata," and that if it should appear that the issues raised by the counterclaim were heard and determined by the referee in bankruptcy and became res adjudicata, "then the defendant has made an election to use said issues as a defence to the plaintiff's cause of action and cannot now use said matters to establish a cause of action against the plaintiff."
The case was tried by a judge of the Superior Court who filed a statement of his findings, rulings and order for decree. Apparently these findings were made voluntarily and not under G. L. (Ter. Ed.) c. 214, Section 23. It was agreed before him that the claim of the plaintiff was barred by the proceedings in the bankruptcy court, "and the case went forward on the defendant's counterclaim as amended." The judge stated: "Without reporting in detail the evidence offered on the question of joint enterprise, which is to be reported, I am satisfied that the defendant failed to establish his claim and if I am free to do so, I find that there was no joint enterprise and consequently no liability upon the part of the . . . [plaintiff]." From the statement of the judge, it appears that there was a hearing before the referee in bankruptcy on the plaintiff's claim, and also on the defendant's counterclaim, and that on December 28, 1938, the plaintiff's claim was disallowed in full. From the evidence of what took place at that hearing, and the inferences drawn therefrom, the judge found that the referee did decide that there was a joint adventure or enterprise and that his decision or finding was material to the final determination to disallow the claim, although it may not have been the only issue presented to him or considered by him in reaching that decision; that the existence of the joint enterprise was essential to the final conclusion of the referee that the indebtedness of the plaintiff to the defendant exceeded his indebtedness to it "which was the basis of his order," and he ruled that the referee's conclusion "is decisive in this case in favor of the defendant upon that issue"; that the finding of the referee was general; and that he did not determine specifically either "what the joint venture included or how great was the indebtedness of the . . . [plaintiff] which resulted from it." He found that there were three "ventures" included in the "joint adventure," and that the plaintiff was indebted to the defendant for one half of the losses incurred in these three ventures and also for one half of payments to judgment creditors under the composition in the bankruptcy court. He disallowed one claim of the defendant, and a final decree was entered which states the amounts due from the plaintiff to the defendant and dismisses without prejudice two of his claims. The plaintiff appealed from this final decree.
There was an order that the stenographer report the testimony, Rule 76 of the Superior Court (1932), but the plaintiff, in writing, waived the printing of the evidence on its appeal. See Wyness v. Crowley, 292 Mass. 459; Hubbard v. Southbridge National Bank, 297 Mass. 17 , 19. In the circumstances, entry of the decree imports a finding of every fact essential to sustain it and within the scope of the pleadings. Birnbaum v. Pamoukis, 301 Mass. 559 , 561, 562, and cases cited. Council v. Cohen, 303 Mass. 348, 351. See Topor v. Topor, 287 Mass. 473 , 476. The plaintiff, however, is not precluded from contending that the findings specifically stated by the judge are necessarily inconsistent in themselves with the general conclusion reached. Birnbaum v. Pamoukis, 301 Mass. 559 , 562, and cases cited.
The plaintiff contends that the issue in the bankruptcy court was not only whether a joint enterprise existed, but if it did, what was its extent; stated a little differently, that it was the duty of the referee to find the amount of the defendant's debt to the plaintiff and then to consider whether there was a joint enterprise, and if it appeared that there was, then to determine just what, if anything, the plaintiff owed the defendant; in other words, that it was the duty of the referee to state the accounts fully and finally. The plaintiff, however, concedes that the referee's decision disposed of its claim. It is not contended that it was not within the power of the referee to determine the status of the plaintiff's claim. See Sections 38 and 39 of the bankruptcy act, U. S. C. [1934 ed.] Title 11, Sections 66 and 67; Durrance v. Collier, 81 F.2d 4; In re Adamson, 83 F.2d 211, certiorari denied sub nomine Adamson v Adamson, 299 U.S. 554; In re Gunder, 88 F.2d 284, certiorari denied sub nomine 164 East 72nd...
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