Hauser v. Mealey

• Decision Date: 17 February 1978
• Docket Number: No. 47192,47192
• Citation: 263 N.W.2d 803
• Parties: Paul HAUSER, Individually and as Co-Executor of the Estate of Cleo Mealey, Deceased, Appellant, v. William MEALEY, Respondent.
• Court: Minnesota Supreme Court

Page 803

263 N.W.2d 803

Paul HAUSER, Individually and as Co-Executor of the Estate of Cleo Mealey, Deceased, Appellant, v. William MEALEY, Respondent.

No. 47192.

Supreme Court of Minnesota.

Feb. 17, 1978.

Syllabus by the Court

County court decisions do not have the effect of res judicata in subsequent district court actions where the issues involved do not fall within the jurisdiction of the county court.

The doctrine of collateral estoppel will not preclude the relitigation of issues in district court where the county court's judgment did not unequivocally decide the issues.

Dickel, Johannson, Wall & Taylor and Kenneth F. Johannson, Crookston, for appellant.

Lundrigan, Hendricks & Lundrigan and Don D. Lundrigan, Pine River, for respondent.

Heard before TODD, SCOTT and IVERSON, JJ., and considered and decided by the court en banc.

IRVING C. IVERSON, Justice. ^*

This appeal involves an action for reformation of deeds conveying real property in Hardin County, Iowa, for damages for breach of contract for failure to restore real estate owned prior to coverture, and for damages based upon the alleged fraudulent conduct of defendant.

The facts and procedural history of this case are somewhat involved and confusing, and a thorough understanding of them is required before a proper determination of this case can be made. ¹

Defendant, William Mealey, married Cleo Hauser (Cleo Mealey) on June 3, 1961, in Walker, Minnesota. At the time of their marriage, defendant was 57 and his wife was 51 years of age. Prior to their marriage, Cleo Mealey owned 120 acres of land in Hardin County, Iowa. William Mealey owned two parcels of rural property in Wright County, Minnesota. On or about October 16, 1962, Cleo and William Mealey transferred these parcels to each other by "conduit" deeds, thereby becoming owners of all of the land as joint tenants.

Prior to July 1972, an action for divorce was commenced by Cleo Mealey praying for an absolute divorce from William Mealey and asking that the property that she owned prior to her marriage be restored to her. For reasons that are unclear, the divorce action was dropped by both parties. On July 11, 1972, the parties orally agreed that each would restore to the other party the property each had owned prior to their marriage. To implement this agreement, Cleo Mealey's attorneys prepared "conduit" deeds for conveyance of the Iowa land. The deeds described the real estate to be conveyed as follows:

"An undivided half of the following:

"The north half of the southeast quarter and the northeast quarter of the southwest Quarter (N 1/2 SE 1/4) and NE 1/4 SW 1/4), (except the C. & N. W. Railway Company right-of-way), all in Section Eleven (11), Township Eighty-six (86) North, Range nineteen (19) West of the 5th P. M., Hardin County, Iowa."

Cleo and William Mealey both signed a deed bearing this description and transferred that deed to a third-party strawman who then reconveyed the interest to Cleo Mealey. Plaintiff alleges that the intended result was that Cleo Mealey would obtain the entire fee simple interest in the Iowa property. The above described transaction clearly failed to achieve that purpose. In fact, defendant has retained a 1/4 undivided interest in the 120-acre tract of Iowa land.

In 1973, a second divorce action was begun and was heard in Cass County Court. A default decree based on the parties' earlier agreement that each should transfer back to the other the land each had owned prior to their marriage was entered. Again, the Iowa land was improperly described as a "1/2 interest in N 1/2 SE 1/4, Sec. 11-86-19, Hardin County, Iowa." ²

From July 15, 1972, until her death in Walker, Minnesota, on April 1, 1974, Cleo Mealey had been in quiet possession of the entire 120 acres of Iowa land. The alleged error in the descriptions of the Iowa land was not discovered until probate proceedings were commenced in Minnesota and in Iowa. ³

In order to eliminate the errors in the deeds and divorce decree, plaintiff brought an action in Cass County Court to amend the divorce findings and decree based on Rule 60.01, Rules of Civil Procedure. Plaintiff's motion was denied on March 18, 1975, and no appeal was taken from that order.

On June 18, 1975, a second action was brought in Cass County Court, asking for the same relief as before, this time alleging Rule 60.02, Rules of Civil Procedure, as an additional basis for relief. Defendant argued this action on its merits and asserted that the doctrine of res judicata prevented the county court from granting the requested relief. The matter was fully litigated and on August 5, 1975, the motion to amend the divorce decree was again denied.

On November 28, 1975, plaintiff appealed the August 5, 1975, county court order to district court. On January 7, 1976, the district court granted defendant's motion for a summary judgment and dismissed plaintiff's appeal.

On April 13, 1976, leave to appeal to the Supreme Court from the district court's decision was denied by this court, and plaintiff's petition for rehearing was denied on July 9, 1976. ⁴

Plaintiff brought the present action in district court on February 2, 1976, attacking the two "conduit" deeds rather than the divorce decree. Plaintiff is seeking reformation of those deeds and further claims damages for breach of contract and for fraud. Plaintiff claims that by reason of an alleged mistake in the "conduit" deeds and divorce decree, defendant retained an undivided interest in the 120-acre tract of Iowa land.

Following a hearing, the district court on September 8, 1976, granted defendant's motion for summary judgment. The district court found that plaintiff's claims were precluded by the earlier county court decisions which are thus res judicata.

The issue on appeal in this case is whether two judicial orders denying plaintiff's motion to amend a divorce decree make his separate action for reformation of the deeds, and damages for breach of contract and fraud subject to the defense of res judicata. ⁵

The effect of res judicata on a judgment or final order has at least two distinct and important aspects: (1) merger or bar; and (2) collateral estoppel. The principles of merger and bar operate where a subsequent action or suit is predicated on the same cause of action which has been determined by a judgment, no matter what issues were raised or litigated in the original cause of action. 10B Dunnell, Dig. (3 ed.) § 5163. On the other hand, the principle of collateral estoppel operates as to matters which were actually litigated and determined by, and essential to, a previous judgment, irrespective of whether the subsequent action is predicated upon the same or a different cause of action. Id. § 5162. In short, one stands for claim preclusion, the other for issue preclusion. It is essential to bear this distinction in mind in determining the issue in this case.

In considering this case, we must determine whether the previous county court orders act as a bar to plaintiff's present district court suit. If they do, this case must be settled in favor of defendant and the question of whether the county court orders also operate by way of collateral estoppel to preclude the issues actually litigated and determined becomes immaterial. On the other hand, if the county court orders do not operate as a bar to plaintiff's present suit, they still may preclude the present suit by way of collateral estoppel if the issues actually litigated and determined by the county court orders were essential to plaintiff's subsequent district court action.

1. Merger and Bar. It is well established in Minnesota that a party "should not be twice vexed for the same cause, and that it is for the public good that there be an end to litigation." Shimp v. Sederstrom, 305 Minn. 267, 270, 233 N.W.2d 292, 294 (1975). To that end, a plaintiff may not split his cause of action and bring successive suits involving the same set of factual circumstances. In The Youngstown Mines Corp. v. Prout, 266 Minn. 450, 466, 124 N.W.2d 328, 340 (1963), we stated:

" 'A judgment on the merits constitutes an absolute bar to a second suit for the same cause of action, and is conclusive between parties and privies, not only as to every matter which was actually litigated, but also as to every matter which might have been litigated therein.' "

The actions brought by plaintiff both in county court and in district court appear to arise out of the same set of factual circumstances the parties' agreement to return to each other the land owned by each of them prior to their marriage and the errors in the deeds resulting in a failure to carry out the intended agreement. Defendant argues that when plaintiff brought his original action in county court, he could have, or should have, asserted all of his claims arising out of this factual situation at that time. Thus, it is contended that plaintiff should be barred from asserting his claims for reformation of the deeds and for damages for breach of contract and fraud in this action because these matters "might have been litigated" in the earlier action. Sheets v. Ramer, 125 Minn. 98, 145 N.W. 787 (1914); Klinkert v. Streissguth, 155 Minn. 388, 193 N.W. 687 (1923).

Although this argument is ostensibly sound, it is erroneous for several reasons. Defendant fails to consider that the county court is a court of limited jurisdiction. ⁶ Plaintiff's original actions in county court sought to amend a divorce decree under Rules 60.01 and 60.02. The county court had the power to hear those actions. ⁷ Plaintiff's instant case involves an action for reformation of deeds and damages for breach of contract and fraud in amounts greater than $5,000. Because of the limitation on the county court's power to hear and decide cases, plaintiff could not have brought this action at the county court level. Furthermore, it is the general rule that a judgment rendered by a court which lacks jurisdiction to hear a case...