Louisville Trust Company v. Smith

• Decision Date: 17 April 1964
• Docket Number: No. 15246.,15246.
• Citation: 330 F.2d 483
• Parties: The LOUISVILLE TRUST COMPANY, et al., Plaintiffs-Appellees, v. Patricia R. SMITH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

330 F.2d 483 (1964)

The LOUISVILLE TRUST COMPANY, et al., Plaintiffs-Appellees, v. Patricia R. SMITH, Defendant-Appellant.

No. 15246.

United States Court of Appeals Sixth Circuit.

April 17, 1964.

Robert G. McIntosh, Cincinnati, Ohio (Walter B. Smith, Louisville, Ky., on the brief), for appellant.

Lee Blackwell, Louisville, Ky. (Irvin Marcus, Louisville, Ky., for the Louisville Trust Co.; R. Lee Blackwell, Louisville, Ky., for Citizens Fidelity Bank & Trust Co., Joint Administrators of the Estate of John A. O'Brien, deceased, on the brief; Bullitt, Dawson & Tarrant, Louisville, Ky., of counsel for Citizens Fidelity Bank & Trust Co.), for appellees.

Before O'SULLIVAN, PHILLIPS and EDWARDS, Circuit Judges.

PHILLIPS, Circuit Judge.

This appeal is another step in protracted litigation involving the estate of the late John A. O'Brien of Louisville, Kentucky, who died January 1, 1934. Appellant is the widow of said decedent, and has since remarried. Appellees are the joint administrators with the will annexed.

The joint administrators filed this action against the widow in the Circuit Court for Jefferson County, Kentucky, chancery branch, alleging, among other things, that distributions have been made to her, or at her direction, in the amount of $432,708.22; that at the time of these payments, the joint administrators believed that the balance of the estate would be adequate to pay all liabilities; but that upon the making of the final settlement the residue has proved to be insufficient to pay all the obligations now owed by the estate. A recovery of $42,968.12 in overdistributions was sought under K.R.S. § 396.140.¹

The case was removed to the United States District Court by petition of the widow, upon the ground of diversity of citizenship. The widow thereupon filed a counterclaim demanding judgment against the joint administrators in the sum of $822,035.04, alleging that she had suffered losses in this amount as a result of the negligence, misconduct, disloyalty and fraud of the joint administrators. Thereafter the widow undertook to file an amended counterclaim and a second amended counterclaim.

The District Judge, the Honorable W. Wallace Kent, sitting by designation, rendered a comprehensive opinion which is reported at 192 F.Supp. 396. Summary judgment was entered against the widow for $42,968.12, with interest thereon at the rate of six per cent per annum from March 5, 1952, the date of the approval of the final settlement. A motion by the joint administrators to dismiss the widow's original counterclaim was sustained on the ground that the counterclaim was barred by limitations and by application of the rule of res judicata. Filing of the first and second amended counterclaims was denied because they involved probate matters upon which a final settlement had been made from which the widow had not perfected an appeal in the state courts. The pertinent facts concerning this case and previous litigation involving this estate are recited fully in the opinion of the District Court and will not be repeated here except to the extent necessary to dispose of this appeal.

In support of her appeal the widow has filed a printed appendix comprising 2174 pages, setting forth details concerning the administration of this estate and the extensive litigation between appellant and appellees over a period of more than a quarter century.²

We first consider the action of the District Court in dismissing appellant's counterclaim under the rule of res judicata. This rule was stated by the Court of Appeals of Kentucky in Vaughn's Adm'r v. Louisville & N. R. R., 297 Ky. 309, 314, 179 S.W.2d 441, 444, 152 A.L.R. 1060, 1063, as follows:

"As a plea, a former adjudication is a bar to subsequent suits for the same cause; * * *. The rule of res judicata means that when a court of competent jurisdiction has determined a fact or question which was actually and directly in issue in a former suit, the judgment until reversed or modified, is final and conclusive in respect to such fact or question as between the parties to the suit and their privies."

In Hays v. Sturgill, 302 Ky. 31, 34, 193 S.W.2d 648, 650, 164 A.L.R. 868, 871, the Court said: "The rule that issues which have been once litigated cannot be the subject matter of later action is not only salutary but necessary in the administration of justice." To the same effect this Court said in Davis v. McKinnon & Mooney, 266 F.2d 870, 872 (C.A. 6):

"It is a fundamental principle of jurisprudence that material facts or questions which were in issue in a former action, and were there admitted or judicially determined, are conclusively settled by a judgment rendered therein, and that such facts or questions become res judicata and may not again be litigated in a subsequent action between the same parties or their privies, regardless of the form the issue may take in the subsequent action, whether the subsequent action involves the same or a different form of proceeding, or whether the second action is upon the same or a different cause of action, subject matter, claim, or demand, as the earlier action."

Included among the numerous suits between the parties arising out of the administration of this estate was an action filed by the widow in the Circuit Court of Jefferson County on March 10, 1937, against the joint administrators and other parties, referred to in the record as "the recession suit." This case was decided adversely to the widow by the Court of Appeals of Kentucky on June 19, 1942. O'Brien v. O'Brien, et al., 294 Ky. 793, 172 S.W.2d 595, cert. denied, 321 U.S. 767, 64 S.Ct. 518, 88 L.Ed. 1063, rehearing denied, 322 U.S. 769. We agree with the District Judge that the claims of fraud asserted by the widow in her counterclaim in the instant case were adjudicated by the Kentucky courts in O'Brien v. O'Brien et al., supra. We hold that this adjudication, together with the final settlement of the accounts of the joint administrators which is discussed below, is a complete bar to the right of action asserted in the counterclaim.

Appellant contends that the rule of res judicata is not controlling in this case because the joint administrators were only nominal parties in O'Brien v. O'Brien et al., supra, that no affirmative relief was sought against them in that litigation, and that the counterclaim contains averments that go beyond the precise issues adjudicated in that case. In Eversole v. Webb, 243 S.W.2d 490, 492, the Kentucky Court of Appeals said:

"When a matter is in litigation the parties to it are required to bring forward their whole case. The plea of res judicata applies not only to the points placed in issue by the parties upon which the court is required to pronounce judgment but to every point which properly belonged to the subject of litigation and which the parties by reasonable diligence might have brought forward at the time. Res judicata is binding upon privies as well as parties to the former action."

To like effect see Warring v. Munson, 335 S.W.2d 920, 922 (Ky.).

Appellant further contends that the settlement of the joint administrators is not "final" and therefore is not a bar to her counterclaim. This question is disposed of later in this opinion.

Upon the basis of these authorities we affirm the action of the District Court in applying the rule of res judicata and in dismissing the counterclaim on that ground.

As an additional basis for dismissing the counterclaim, the District Court held that the right of action asserted therein was barred by limitations. In view of our holding on the question of res judicata, we do not find it necessary to discuss in this opinion the question of the statute of limitations.

Next we consider the action of the District Court in denying the motions of appellant to file her first and second amended answers and counterclaims.

The first amended answer and counterclaim consists of 47 printed pages plus six exhibits. It attacks and seeks a review in many particulars of the final settlement of the joint administrators and demands that said settlement be surcharged and various items disallowed. The second amended answer and counterclaim consists of 30 printed pages and 35 exhibits. It prays, among other things, that the widow be credited with various expenditures and expenses connected with the administration of the estate and the litigation ensuing therefrom; that the allowance of fees to the joint administrators and their attorneys as determined in the final settlement be readjudicated and that the District Court adjudge that the joint administrators and their attorneys are not entitled to any fees for their services in any of the lawsuits that have been filed and prosecuted in said estate; and that an attorney's fee for appellant's attorney be allowed and fixed by the District Court. The effect of the two amended counterclaims, if permitted to be filed, would be to reopen the administration of said estate and have the District Court sit as a probate court on various questions involved in this administration.

It is well settled, as held by the District Court, that district courts have no jurisdiction over probate matters. See Sutton v. English, 246 U.S. 199, 205, 38 S.Ct. 254, 62 L.Ed. 664; Farrell v. O'Brien, 199 U.S. 89, 25 S.Ct. 727, 50 L.Ed. 101; Byers v. McAuley, 149 U.S. 608, 615, 13 S.Ct. 906, 37 L.Ed. 867; Broderick's Will, 88 U.S. (21 Wall.) 503, 22 L.Ed. 599; Moore's Federal Practice, Vol. 1, p. 604; and authorities cited by District Court, 192 F.Supp. at 402.

As a further ground for refusing to permit the filing of the amended answers and counterclaims, the District Court held that the order of the County Court of Jefferson County, Kentucky, entered March 5, 1952, and amended May 1, 1952, approving the final settlement of the joint administrators, was a final order from which appellant did not perfect an appeal in the state courts, and, therefore, could not be reopened or reviewed by the District...