E.I. Du Pont de Nemours & Co. v. Richmond Guano Co.

• Decision Date: 10 March 1924
• Docket Number: 2129.
• Citation: 297 F. 580
• Parties: E.I. DU PONT DE NEMOURS & CO. v. RICHMOND GUANO CO.
• Court: U.S. Court of Appeals — Fourth Circuit

297 F. 580

E.I. DU PONT DE NEMOURS & CO. v. RICHMOND GUANO CO.

No. 2129.

United States Court of Appeals, Fourth Circuit.

March 10, 1924

Edward R. Baird, Jr., of Norfolk, Va., and V. S. Thomas, of Wilmington, Del. (Baird, White & Lanning and R. Clarence Dozier, all of Norfolk, Va., on the brief), for plaintiff in error.

S. S P. Patteson and C. V. Meredith, both of Richmond, Va. (J. H Rives, Jr., of Richmond, Va., on the brief), for defendant in error.

Before WOODS and ROSE, Circuit Judges, and SOPER, District Judge.

SOPER District Judge.

E.I.Du Pont de Nemours & Co., a corporation, brought suit in the District Court of the United States for the Eastern District of Virginia, against the Richmond Guano Company to recover the value of certain nitrate of soda stolen from the plaintiff by one W. B. Tredwell, and sold by him to the defendant. A plea of res adjudicata was interposed by the defendant, in which it was set forth that the plaintiff had previously brought suit against the Tomlinson Guano Company in the United States District Court for the Eastern District of North Carolina, for the conversion of the same nitrate which had been sold and delivered by the Richmond Company to the Tomlinson Company at Wilson, N.C that as soon as said action was instituted the Tomlinson Company notified the Richmond Company of the pendency of the suit; that the sole question submitted to the jury at the trial of the North Carolina suit was whether the plaintiff had any title to the nitrate, so converted; and that the jury, on said issue, found a verdict against the plaintiff, and in favor of the Tomlinson Company. A demurrer to the plea of res adjudicata and a motion to strike out the plea having been overruled, issue was joined and evidence was taken, whereby it was shown that the nitrate in question was purchased by the Richmond Company from Tredwell, and sold by it to the Tomlinson Company, and the identity of the nitrate, which was the subject-matter of both suits, was established. It was also proved that the Richmond Company had notice of the suit brought by the plaintiff against the Tomlinson Company, but the source from which the notice was received and the contents of the notice were not proved, nor was it shown that the Richmond Company was given an opportunity to appear in the North Carolina suit and defend it. The court took the view that the plea of res adjudicata should be sustained, and judgment was accordingly entered for the defendant, from which action an appeal, by writ of error, was taken to this court.

The plaintiff contends that the plea of res adjudicata was not good for the following reasons: That the Richmond Company was not a party to the action in the North Carolina court, and was not in privity with any party thereto; that a plea of res adjudicata applies only in favor of the subsidiary actor (in this case the Tomlinson Company, the purchaser of the nitrate), and not in favor of the principal actor (in this case, the Richmond Guano Company, the seller of the nitrate); that the plea was not available in this case because the title to the nitrate was acquired by the Richmond Company prior to the North Carolina suit, and finally that such a plea may not be taken advantage of unless the right to avail of it is a mutual one, and that, as the said Richmond Company was not a party to the North Carolina suit, and would not have been bound by a verdict in that case in favor of the plaintiff, it cannot take advantage of the verdict therein actually rendered adverse to the plaintiff.

The relationship between the Richmond Company and the Tomlinson Company, as to the nitrate in question, was that of buyer and seller, and the question suggested is whether, when a suit is brought by a third party against a buyer, involving the title to goods, a judgment therein is binding on the seller. It is obvious that in such a case, the objection that the seller obtained title to the goods before the institution of the suit, is not tenable. The rule that a judgment is not binding, when the title to property is involved, upon one who acquired title before the institution of the suit, has reference to suits against purchasers of property, and not sellers thereof. It is well settled that when a person is responsible over to another, either by operation of law or by contract, and has notice of a suit against the other, and an opportunity to appear and defend, he is not afterwards to be regarded as a stranger to the action, but is bound by the judgment therein, whether he appeared or not. A seller of chattels is usually subject to the application of this rule to an action against the buyer, by reason of the express or implied warranty of title involved in the sale. 23 Cyc. 1259, 1270, 1272; Maddocks v. Gushee, 120 Me. 247, 113 A. 300; Veazie v. Penobscot R. Co., 49 Me. 119; Bank v. Holland, 121 Ga. 305, 48 S.E. 912; Damecki v. Bills, 88 W.Va. 246, 106 S.E. 629; 15 R.C.L. 1020; 2 Black on Judgments, Sec. 572.

The plaintiff contends, however, that there was no warranty of title in the sale in this case, and no sufficient notice to the defendant in the Virginia suit to defend the North Carolina action. There was no express warranty of title, and it is urged that, since the seller was not in possession of the goods at the time of the sale, there was no implied warranty. So far as the somewhat meager record in this case discloses, the seller had at least constructive possession of the goods, which would seem to be sufficient in any event. Moreover, there is much authority for the proposition, notwithstanding decisions to the contrary, that a seller warrants the title to goods sold, whether he is in possession or not. Williston on Sales, Sec. 218. The record is unsatisfactory also as to the notice given the defendant of the North Carolina suit. The source and contents of the notice alike are undisclosed. But, as we view the case, it is not necessary to decide either the question of warranty of title or the question of notice, for reasons which hereafter appear.

In our opinion, the facts of the case bring it within an exception to the general rule that the estoppel of a judgment, to be effective, must be mutual.

'An apparent exception to this rule of mutuality has been held to exist where the liability of the defendant is altogether dependent upon the culpability of one exonerated in a prior suit, upon the same facts, when sued by the same plaintiff. See Portland Gold Mining Co. v. Stratton's Independence, 158 F. 63, where the cases are collected. The unilateral character of the estoppel of an adjudication in such cases is justified by the injustice which would result in allowing a recovery against a defendant for conduct of another, when that other has been exonerated in a direct suit. The cases in which it has been enforced are cases where the relation between the defendants in the two suits has been that of principal and agent, master and servant, or indemnitor and indemnitee. ' Bigelow v. Old Dominion Copper Co., 225 U.S. 111, at page 127, 32 Sup.Ct. 641, 642 (56 L.Ed. 1009).

This principle has been applied, not only in negligence cases, where the immediate actor has been held free from blame, but also in cases involving the title to property. See 1 Greenleaf on Evidence (15th Ed.) Sec. 563, where it is said:

'The effect of former recovery has been very much discussed, in the cases where different actions in tort have successively been brought, in regard to the same chattel; as, for example, an action of trover brought after a judgment in trespass. Here, if title to the property was set up by the defendant in the first action, and it was found for him, it is clearly a bar to a second action for the same chattel; even though brought against one not a party to the former suit, but an accomplice in the original taking.'

In a number of cases referred to in the case of the Portland Gold Mining Co. v. Stratton's Independence, 158 F. 63, 85 C.C.A. 393, 16 L.R.A. (N.S.) 677 (cited with approval in Bigelow v. Old Dominion Copper Co., supra), the matter in dispute turned, not upon the negligence of the defendant, but upon the title of the plaintiff to the property in suit, and the same exception to the rule of mutuality of estoppels was recognized. Atkinson v. White, 60 Me. 396; King v. Chase, 15 N.H. 9, 41 Am.Dec. 675; Glaze v. Citizens' Nat. Bank, 116 Ind. 492, 18 N.E. 450.

See, also, 15 R.C.L. 956; Portland Gold Mining Co. v. Stratton's Independence, 158 F. 63, 85 C.C.A. 393, 16 L.R.A. (N.S.) 677; American Express Co. v. Des Moines Nat. Bank, 146 Iowa, 448, 123 N.W. 342, 37 L.R.A. (N.S.) 37.

The case at bar clearly comes within the exception. An essential element of the plaintiff's case, whether it was brought against the buyer or the seller of the goods, was title to the property involved. This matter was in no way concerned with or affected by the actions of the party sued. It was one peculiarly within the knowledge of the plaintiff. Having sued the buyer, and having had an opportunity to establish in court the necessary elements of its case, and having failed, there is manifest propriety and no injustice in holding that the plaintiff is thereby concluded from making the same fact the basis of a right to recover from another who is not responsible unless such fact exists. The plaintiff has had its day in court.

An unusual situation has...