Henderson v. Ryan, 40566

• Citation: 233 N.E.2d 506,13 Ohio St.2d 31
• Decision Date: 17 January 1968
• Docket Number: No. 40566,40566
• Parties: , 42 O.O.2d 65 HENDERSON, Appellee, v. RYAN, Appellant.
• Court: United States State Supreme Court of Ohio

Page 31

13 Ohio St.2d 31

233 N.E.2d 506, 42 O.O.2d 65

HENDERSON, Appellee, v. RYAN, Appellant.

No. 40566.

Supreme Court of Ohio.

Jan. 17, 1968.

Syllabus by the Court

Under former Section 2309.06, Revised Code (repealed July 20, 1965), which prevented the joinder of causes not affecting all the parties to the action, and prior to the enactment of Section 2307.191, Revised Code (effective August 26, 1963), a judgment in favor of multiple defendants in an action for fraud and deceit is not res judicata of a cause of action for professional malpractice separately asserted by the same plaintiff against one of the prior defendants, notwithstanding both actions arose out of the same transaction, occurrence or series of transactions or occurrences.

Dudnik, Komito, Nurenberg, Plevin, Dempsey & Jacobson, Robert M. Dudnik and Riegler, Spohn & Sanislo, Cleveland, for appellee.

Marble & Vordenberg and John H. Marble, Cincinnati, for appellant.

SCHNEIDER, Judge.

Upon the solicitation and advice of defendant Ryan, plaintiff Henderson embarked upon an investment scheme involving receivables of Goldendale Pine Company (later Interlakes-Gulf Lumber Company, Inc.) of which Ryan was an officer, director and attorney. He also was, and for a number of years had been, attorney for Henderson, his family and his plumbing business.

It appears that over a considerable period of time Henderson purchased, at an uncommonly high discount rate, accounts receivable due Goldendale supported by sales invoices, which in turn were secured by railroad bills of lading. A substantial number of the accounts, invoices and bills of ladings were forgeries and the security therefor nonexistent. Henderson's total losses from the nonpayment of the accounts receivables due to the subsequent insolvency of Goldendale amounted to $84,478.57.

In an attempt to recoup, Henderson simultaneously filed two actions in the Common Pleas Court of Cuyahoga County. One suit claimed fraud and deceit against Ryan and some 50 others (Henderson v. Prentke et al.). In the instant suit, Henderson alleged that Ryan, the sole defendant, was negligent in performing his duties as Henderson's attorney with respect to the delinquent accounts. Both cases were assigned for trial on the same day. Henderson v. Prentke et al., proceeded to trial and upon its conclusion the court entered judgment for all the defendants upon finding that the proofs showed neither knowledge of false representations nor utter disregard as to thteir truth or falsity on the part of the defendants. The Court of Appeals affirmed that judgment and a motion to certify the record was overruled by this court on March 18, 1964, 37 Ohio Bar 280.

Thereafter, the instant case was tried. The trial court sitting without a jury found that Ryan's 'failure to fully disclose and to effectively act (as Henderson's attorney in prosecuting the latter's claims against Goldendale) was negligence' which proximately caused the plaintiff's damages to the extent of $36,205.48. Plaintiff's recovery was limited to the amount of the transactions during August 1957, after Ryan had learned of Goldendale's insolvency and that certain loans were overdue. The Court of Appeals likewise affirmed.

The ultimate question in this appeal from that judgment is whether the judgment in Henderson v. Prentke et al. is res judicata of the issues herein. The rule of law heretofore adopted by this court is that a judgment or decree in a former action does not bar a subsequent action where the causes of action are dissimilar, even though each action relates to the same subject matter. Norwood v. McDonald, 142 Ohio St. 299, 52 N.E.2d 67, paragraph two of the syllabus.

In Restatement of the Law, Judgments 159, appears the following:

'* * * Where the judgment is in favor of the defendant on the merits, the plaintiff cannot avail himself of grounds for recovery which he might have relied upon in the original action. Where, therefore, the second action is based upon the same cause of action as that upon which the first action was based, the judgment is conclusive as to all matters which were litigated or might have been litigated in the first action.

'Where, however, the subsequent action is based upon a different cause of action from that upon which the prior action was based, the effect of the judgment is more limited. The judgment is conclusive between the parties in such a case only as to matters actually litigated and determined by the judgment. The judgment is not conclusive as to matters which might have been but were not litigated and determined in the prior action.' (Emphasis supplied.)

What then constitutes a cause of action? Although the meaning given the term may vary according to the purpose for which it is sought (United States v. Memphis Cotton Oil Co., 288 U.S. 62, 67, 68, 53 S.Ct. 278, 280, 77 L.Ed. 619, 623), legal writers have categorized three general views: ¹

1. A cause of action is identical with a remedial, or secondary, right. This definition, reminiscent of the common-law forms of action, equates a cause of action with each legal theory a plaintiff may have to redress an injury even though arising from a single wrongful act. This view has found disfavor with most courts and authorities because it perpetuates the pleading of legal theories instead of 'a statement of facts constituting a cause of action in ordinary and concise language.' See Section 2309.04, Revised Code.

2. '(T)he facts from which the plaintiff's primary right and the defendants corresponding primary duty have arisen, together with the facts which constitute the defendant's delict or act of wrong' ² give rise to a cause of action. This concept omits the remedial right and duty of the first definition, thereby emphasizing substantive rights as distinct from procedural rights. It is concerned with the wrongful act and not with the theory of recovery.

3. A cause of action is a group or aggregate of operative facts, limited 'to a single occurrence or affair, without particular reference to the resulting legal right or rights.' ³ This so-called 'factual unit' theory places the emphasis upon the breadth of the transaction or occurrence rather than the particular right of the plaintiff which has been infringed. The broadest in scope, this definition compels the pleader to include in his petition all elements of the transaction or occurrence at the risk of splitting his cause of action.

The operative effect of these three concepts may be illustrated as follows: If the defendant wrongfully takes plaintiff's chattel and in the ensuing struggle strikes him, the 'secondary right' concept would allow a cause of action in replevin followed by one in trover for the conversion, the second suit being barred only by recovery in the first. Thereafter, plaintiff could proceed on his cause of action in battery.

Under the second concept, defendant committed two wrongful acts, each constituting a cause of action. Applying the third, but one cause of action results, since both acts took place during a single occurrence.

This court has previously adhered to the 'primary right-primary duty' concept, looking to the defendant's wrongful act. Fielder v. Ohio Edison Co., 158 Ohio St. 375, 382-383, 109 N.E.2d 855, 856. The rule of that case that 'an administrator's cause of action for pain and suffering of his decedent may not be joined with a cause of action for the wrongful death of the same decedent' has been overturned by the inclusion of paragraph (K) in Section 2309.05, Revised Code, effective September 22, 1955. Nevertheless, the reasoning of the case, that two duties were breached, one owed to the decedent and the other to his widow and next of kin, is still valid.

However, multifold aspects of the same wrongful act, i. e., negligence consisting of several concurrent acts, do not permit multiple suits. Schweinfurth v. C., C., C. & St. L. Ry. Co., 60 Ohio St. 215, 54 N.E. 89; Cohen v. Bucey, 158 Ohio St. 159, 107 N.E.2d 333. Consonant with the same theory, this court has held that 'where a person suffers both personal injuries and property damage as a result of the same wrongful act, only a single cause of action arises, the different injuries occasioned thereby being separate items of damage from such act.' Rush v. City of Maple Heights, 167 Ohio St. 221, 147 N.E.2d 599. The rationale is that 'as the defendant's wrongful act is single, the cause of action must be single.' (Emphasis supplied.) Rush v. City of Maple Heights, supra, 230, 147 N.E.2d 604.

We are obliged, then, to determine whether the case now before us involves the same wrongful act as that from which the defendant was exonerated by the former judgment between these parties. Prior to the admission of evidence in Henderson v. Prentke et al., the trial judge announced: 'Let the record show that following a conference in chambers with counsel for the active defendants here present, counsel for plaintiff states positively that he makes no claim of liability based upon negligence on the part of any of the defendants.' Thereupon, that trial proceeded as an action for fraud and deceit. The court considered only whether defendant made a false representation with knowledge or with utter lisregard as to its truth or falsity. ⁴

In this action, the trial court found Ryan to have been negligent as Henderson's attorney in failing to inform Henderson of Goldendale's insolvency after becoming aware of it. The court further held that Ryan should have investigated the reasons for the unpaid and overdue accounts receivable. These acts of negligence are distinct from the fraud alleged in the prior case and occurred at a different time. Here, Ryan was found to have failed in the performance of his professional duties as Henderson's attorney. The acts for which the prior suit was brought were not alleged to have been committed in furtherance of his professional duties.

Both Henderson v. Prentke et al., and this case...