Reidy v. O'Malley Lumber Co., 6871

• Decision Date: 03 October 1962
• Docket Number: No. 6871,6871
• Citation: 92 Ariz. 130,374 P.2d 882
• Parties: James B. REIDY, as Executor of the Estate of John Menehan, deceased, Appellant, v. O'MALLEY LUMBER COMPANY, a corporation, and Arizona Lumber & Supply Co., a corporation, Appellees, Emmitt Newland and Sarah Jane Newland, husband and wife, et al, Appellees, Edward A. Suska and Joyce M. Suska, husband and wife, Appellees.
• Court: Arizona Supreme Court

Page 882

374 P.2d 882

92 Ariz. 130

James B. REIDY, as Executor of the Estate of John Menehan, deceased, Appellant, v. O'MALLEY LUMBER COMPANY, a corporation, and Arizona Lumber & Supply Co., a corporation, Appellees Emmitt Newland and Sarah Jane Newland, husband and wife, et al, Appellees Edward A. Suska and Joyce M. Suska, husband and wife, Appellees.

No. 6871.

Supreme Court of Arizona, In Banc.

Oct. 3, 1962.

Riley & Riley, Tucson, for appellant.

Richard N. Roylston, Tucson, for appellees Newland.

JENNINGS, Justice.

James B. Reidy, Executor of the estate of John L. Menehan, deceased, (hereinafter called appellant) appeals from that part of the judgment in an action for specific performance of a contract of sale of real estate which provided for the distribution of the proceeds.

In 1954 John L. Menehan owned forty acres of vacant, unencumbered land in Pima County which he desired to subdivide into lots and parcels for homesites. He entered into a written agreement with Emmitt A. Newland and his wife (hereinafter called appellees) on May 30, 1954, whereby appellees agreed to subdivide the land, install and operate a water system and to sell the lots and parcels. The agreement provided that appellees were to receive one-half the 'profits' from the sale of each lot or parcel.

Shortly after entering into the written agreement, Menehan and appellees entered into an oral agreement to build houses upon the lots. The construction of these houses was to be financed by Menehan, Menehan's mother and appellees. Any additional capital required was to be borrowed. To enable appellees to borrow money Menehan transferred title to the lots to them. After the sale of each house the building costs were to be paid from the proceeds of the sale. Menehan and appellees were then to divide the remainder of the proceeds equally between them. In September, 1955, appellees reconveyed the lots to Menehan pursuant to an oral agreement entered into at that time.

A suit to foreclose mechanic's liens on a certain house and lot within the subdivision was filed against Menehan and appellees. Shortly thereafter Menehan and appellees contracted to sell this house and lot to Edward A. Suska and his wife. Thereafter, Menehan brought suit against appellees and others to foreclose a mortgage on this same house and lot. ¹ These two suits were consolidated for trial. ²

The judgment rendered in the consolidated action decreed, among other things, that the title to the property was in Menehan and that the note and mortgage sought to be foreclosed by Menehan had been satisfied. ³ In addition, the mechanic's liens were foreclosed in the judgment and the sheriff ordered to sell the property, pay the mechanic's liens and distribute any proceeds of the sale over and above the sums required to satisfy the liens, half to appellant and half to appellees. No appeal was taken from this judgment.

In March, 1958, a suit for specific performance was filed by Edward A. Suska and his wife against appellant and appellees to compel them to convey the house and lot to them. The trial court granted the Suskas' for summary judgment, took judicial notice of the judgment entered in the consolidated action, and in reliance thereon, insofar as a distribution of the proceeds from the Suska sale was concerned, decreed that after appellant was repaid the sums he had expended in paying off the mechanic's liens, the balance should them be divided equally between appellant and appellees. In addition, the trial court entered in the prior consolidated action an 'Order After Judgment' to the same effect as the judgment. Appellant appeals from that part of the judgment which provides for the distribution of the proceeds and also from the order after judgment.

There are some twelve assignments of error. We will not restate them, but will discuss the issues raised in what seems to us to be the logical order. The first question is whether the court erred in relying on the judgment entered in the trial of the consolidated action in distributing the proceeds resulting from the suit for specific performance.

A court may take judicial notice of the record in another action tried in the same court. Regan v. First Nat. Bank of Arizona, 55 Ariz. 320, 101 P.2d 214 (1940); Clifford v. White, 54 Ariz. 252, 94 P.2d 875 (1939); Stewart v. Phoenix Nat. Bank, 49 Ariz. 34, 64 P.2d 101 (1937). Although the action of which the court, in the case at bar, took judicial notice involved foreclosure of mechanic's liens, the court was there confronted with the question of who was entitled to the surplus resulting from a sheriff's sale. In the instant case the court was confronted with the identical question of who was entitled to the proceeds from this same property resulting from the suit for specific performance. In deciding the question the court properly considered the determination made by the court in the prior action. Nothing had occurred since that judgment which would change the respective rights of the parties to the proceeds received from a sale of the property other than that appellant had paid the mechanic's liens rather than to suffer the property to be sold at sheriff's sale. This, in substance, disposes of appellant's fifth and sixth assignments of error.

The second question is whether the judgment rendered in the consolidated action is res judicata upon the issue which is the subject of this appeal, to wit: who was entitled to the proceeds resulting from the suit for specific performance?

Appellant contends that even if paragraph 8 of the second amended judgment ⁴ can be read as giving appellees a one-half interest in the property, it is not binding or res judicata because such a finding was outside the issues that were tried and because it is ambiguous on its face when read with the rest of the amended judgment. It is his position that when the court decreed, in the second amended judgment, that appellees' note was satisfied by the conveyance of the property to Menehan, appellees' interest in the property ceased; that appellant's voluntary payment of the mechanic's liens left nothing for the sheriff to distribute and therefore, that part of the judgment directing surplus proceeds from the sale be distributed half to appellant and half to appellees became functus officio. He argues that to allow payment to appellees of one-half the proceeds of the Suska sale is to pay appellees twice.

Appellees contend that the appellant, by taking the position that he is entitled to all of the proceeds from the property, is attempting to avoid, evade, and deny the force and effect of the judgment rendered in the consolidated action on this exact point. He argues that this Court should not be concerned with whether it was right or wrong since that matter should have been decided on appeal from that judgment.

We are satisfied, on examining the record, that the issue involved in this appeal was determined in the prior action and is therefore res judicata. Although a judgment or decree adjudicating that excess proceeds of a sale made to satisfy a lien be paid to the defendants is not conclusive as to their various interests in the fund if no issue was made as to their respective rights, Clark v. Taylor, (Tex.Civ.App.) 212 S.W. 231 (1919), the judgment or decree is conclusive if, in fact, such issue was raised and determined between them. Bank of America Nat Trust & Savings Ass'n v. McLaughlin, 22 Cal.App.2d 411, 71 P.2d 291, 72 P.2d 554 (1937). It appears from the record that the respective rights of the appellant and the appellees in the property were put in issue in the consolidated action although not raised in the pleadings. Evidence was received on the matter and it was extensively argued to the court. Rule 15(b) of the Rules of Civil Procedure, 16 A.R.S. provides:

'When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. * * *'

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