Intermountain Food Equipment Co. v. Waller

• Decision Date: 28 June 1963
• Docket Number: No. 9108,9108
• Parties: INTERMOUNTAIN FOOD EQUIPMENT CO., Inc., a corporation, Plaintiff-Respondent, v. John A. WALLER, Jr., Jerry C. Wray, as Receiver, and Steve Cooper, Defendants-Appellant.
• Court: Idaho Supreme Court

Page 612

383 P.2d 612

86 Idaho 94

INTERMOUNTAIN FOOD EQUIPMENT CO., Inc., a corporation, Plaintiff-Respondent, v. John A. WALLER, Jr., Jerry C. Wray, as Receiver, and Steve Cooper, Defendants-Appellant.

No. 9108.

Supreme Court of Idaho.

June 28, 1963.

Rehearing Denied July 22, 1963.

Donart, Gunn & Weston Weiser, for appellant Jerry C. Wray, receiver.

Martin & Martin, Boise, for respondent.

McFADDEN, Justice.

Plaintiff-respondent, instituted this action in July, 1959 to secure possession of articles of personal property sold John A. Waller, Jr., under a conditional sales contract dated February 1, 1957, and recorded pursuant to I.C. § 64-801. This contract was breached by the purchaser in failing to make the periodic payments required. The personal property consisted of restaurant and kitchen equipment for use in the Hotel Washington, at Weiser. During the pendency of this action, appellant Jerry C. Wray, Receiver, who had been receiver in another action, wherein real estate and chattel mortgage on the Hotel Washington was foreclosed, posted a re-delivery bond under the provisions of I.C. § 8-306 and retained possession of the subject property, which property was later sold by the sheriff in the mortgage foreclosure action.

After trial to the court, without a jury, findings of fact, conclusions of law and judgment were entered for respondent, and against appellant, in his official capacity as receiver, and not in his individual capacity. The judgment was for $6,000, which sum included the value of the property and attorneys fees. No monetary judgment was allowed against John A. Waller, Jr., he being served outside the state, and no judgment was entered against defendant Cooper, whose status was that of tenant of appellant. Mr. Wray, appealed from this judgment.

The allegations of respondent's complaint, in customary form for claim and delivery, were generally denied by appellant's answer. Subsequently appellant sought to file a supplemental answer setting forth the defense of res judicata based on the judgment in the mortgage foreclosure action, wherein he was appointed receiver. This supplemental answer also alleged that appellant Wray had sold the subject property under court authority which sale had been confirmed by the court in settlement of his accounts and in discharging him from his duties as such receiver. The mortgage foreclosure action was in the same court and before the same judge as the instant action. The trial court refused to allow appellant to file his supplemental answer, and the case was tried on the issues as presented by the first answer. During the course of the trial appellant offered in evidence the files of two Washington County cases, i. e., Lloyd v. Barton, et al., No. 5531 (being the mortgage foreclosure action previously mentioned), and Kitts v. Waller, No. 5564, an action on promissory notes and assigned accounts. Appellant's theory in offering these files in evidence was to establish the defense of res judicata. The trial court refused admission of these files, and appellant specifies such refusal as error, as well as error in refusing to file the supplemental answer.

These two specifications of error pertain to the same issue as to whether the doctrine of res judicata was available to appellant as a defense in the instant action. In order to fully understand this issue, a brief recitation of the factual background leading to this litigation is in order.

At the time of execution of the conditional sales contract, defendant Waller was operating the Hotel Washington. Previously in 1948 the owners of the hotel had mortgaged it to the Connecticut Mutual Life Insurance Company, executing both real and chattel mortgages to secure the payment of a promissory note. The Insurance company assigned the note and mortgages to John B. Lloyd who instituted the mortgage foreclosure action of (Lloyd v. Barton, No. 5531), after default in payments. During the pendency of that action appellant Wray, was appointed receiver and after qualifying assumed possession of the real and personal property including the property subject to respondent's conditional sales contract.

Examination of the files in the mortgage foreclosure action discloses the mortgagors, Waller and others, including respondent Intermountain Food Equipment Company, Inc., were named as parties defendants and served with process. In the complaint, the interest of each defendant was specifically alleged and it was further alleged that respondent herein 'has obtained a Judgment against the defendant John A. Waller, Jr., and caused a Writ of Execution to be issued on said Judgment and the bank account of the said John A. Waller, Jr., was attached and garnished and applied on said Judgment but said judgment is not satisfied in full;' The complaint also alleged that the defendants (including respondent) 'claim some right, title or interest in or lien upon the above described lands and personal property, either as purchasers, encumbrancers, lien holders or otherwise, but all such right, title or interest, * * * is inferior and subordinate in right to the lien of plaintiff's mortgage and chattel mortgage thereon.' The prayer for relief was for judgment of foreclosure of the mortgages, and that the lien of plaintiffs real estate and chattel mortgages be adjudged as 'superior to any right, title, interest, claim or lien of the defendants. * * *' Respondent made no appearance, and interposed no answer in the mortgage foreclosure action and its default was entered. In October, 1959, decree of foreclosure and sale was entered, and the real and personal property sold.

It is claimed that respondent, being a party to the foreclosure action is barred in claiming the personal property involved in the instant action. In Joyce v. Murphy Land & Irrigation Co., 35 Idaho 549, 208 P. 241, it was stated:

'We think the correct rule to be that in an action between the same parties upon the same claim or demand, the former adjudication concludes parties and privies not only as to every matter offered and received to sustain or defeat the claim, but also as to every matter which might and should have been litigated in the first suit.'

In further discussing this doctrine, it was stated in Marshall v. Underwood, 38 Idaho 464, 221 P. 1105:

'The doctrine of res judicata, or estoppel by judgment, as it is sometimes termed, it a rule of law founded on the soundest consideration of public policy. If an action is brought and the merits of the question are discussed between the parties in open court and considered by the trial court, and a final judgment is obtained by either, the parties are then concluded and cannot again canvass the same question in another suit. The great preponderance of authority sustains the rule that the estoppel of a judgment covers all points which were actually litigated and which actually determined the judgment or finding, whether or not they were technically in issue on the face of the pleadings. * * *

'The true test is identity of issues. If a particular point or question is in issue in the second action, and the judgment will depend upon its determination, a former judgment between the same parties will be final and conclusive in the second action if that same point or question was in issue and adjudicated in the first suit; otherwise not. And in order that this rule should apply, it must clearly and positively appear, either from the record itself or by the aid of competent extrinsic evidence, that the precise point or question in issue in the second suit was involved and decided in the first.'

In the instant action we are dealing with specific chattels sold under a...