Seagraves v. Wallace

• Decision Date: 24 March 1934
• Docket Number: No. 6813.,6813.
• Parties: SEAGRAVES v. WALLACE et al.
• Court: U.S. Court of Appeals — Fifth Circuit

69 F.2d 163 (1934)

SEAGRAVES v. WALLACE et al.

No. 6813.

Circuit Court of Appeals, Fifth Circuit.

February 20, 1934.

Rehearing Denied March 24, 1934.

Clyde A. Sweeten and David T. Searls, both of Houston, Tex., and Jas. W. Wayman, of Galveston, Tex., for appellant.

S. J. Brooks, of San Antonio, Tex., Bryan F. Williams, of Galveston, Tex., and J. D. Williamson, of Waco, Tex., for appellees.

Before BRYAN, FOSTER, and SIBLEY, Circuit Judges.

SIBLEY, Circuit Judge.

In this suit at law the plaintiff, Wallace, sought by virtue of a contract which he made with Seagraves to recover the purchase price of 2,946½ shares of stock in Corpus Christi Gas Company and also the loss in market value of the bonds of the company due to a breach by Seagraves of certain promises in the contract touching the bonds. On the first trial Wallace recovered $56,673 as the balance of the price of the stock, but was adjudged to have no case touching the bonds. On appeal to this court, the judgment was affirmed so far as the stock was concerned, but reversed and remanded for further proceedings so far as the bonds were concerned. 41 F.(2d) 679. Seagraves paid up the affirmed judgment, and filed an amended answer touching the bonds, and on a trial by the court without a jury he was adjudged liable to pay to Wallace $373,633 as principal and interest due on a, face value of $201,500 of bonds deposited in court, on payment of which the bonds were to be delivered to Seagraves; and a further sum of $70,849 as principal and interest due on the remaining bonds of face value $38,500 which had not been deposited, for which execution was to issue upon their deposit, the bonds to be delivered to Seagraves on his paying the execution. Seagraves again appeals.

The contract sued on is set out in the former opinion. That opinion held that part of the contract relating to the bonds not to be an obligation of Corpus Christi Gas Company, which was not a party to the contract, but of Seagraves; that there was a valid consideration for his promises which he would have been in position to carry out had he paid for and taken over the stock that be agreed to buy; and finally that "the evidence showed the existence of rights of action based on breaches of that obligation which were not barred by limitation when the suit was brought." With no further indication of the exact liability, the case as to this branch was reversed for further proceedings. On such proceedings a liability of nearly one-half million dollars has been adjudged in the District Court; but it now seems that no liability exists at all. We are unwilling to be bound by the very general expressions in the former opinion about it. We recognize that, when a case is affirmed on appeal, there is res judicata, and no power exists after the term to alter the decision. Realty Acceptance Corporation v. Montgomery, 284 U. S. 547, 52 S. Ct. 215, 76 L. Ed. 476. Where, on a reversal, a mandate is issued requiring that a specific judgment be entered, there is also final adjudication. In re Dubuque & P. R. Co., 1 Wall. 69, 17 L. Ed. 514. A judgment of general reversal binds the lower court of course as to all that it rules, as being the law of the case. Sibbald v. United States, 12 Pet. 488, 9 L. Ed. 1167. But in the Appellate Court on a second appeal only the questions in terms discussed and decided are within that principle. Wolff Packing Co. v. Court of Industrial Relations, 267 U. S. 552, 45 S. Cf. 441, 69 L. Ed. 785. And even questions which are within the rule of the law of the case, though ordinarily not to be re-examined, are not beyond the power of review. Good practice only and not jurisdiction, is involved. Messenger v. Anderson, 225 U. S. 436, 32 S. Ct. 739, 56 L. Ed. 1152; Southern R. Co. v. Clift, 260 U. S. 319, 43 S. Ct. 126, 67 L. Ed. 283. Because of this power of re-examination, a case controllingly reversed by a state Supreme Court must after a retrial be again carried to it before an appeal will lie to the United States Supreme Court. Great Western Telegraph Co. v. Burnham, 162 U. S. 339, 16 S. Ct. 850, 40 L. Ed. 991. An appellate court, so long as it has jurisdiction over the controversy, ought to have power to do justice according to law, and should be more ready to correct its own previous error, if such clearly appears, than to correct the errors of the District Court. Justice is better than consistency. The court is not bound at the will of litigants to revise its previous holdings, but, when itself convinced that it should, it can. It may say not stare decisis but flat justitia, ruat coelum. Johnson v. Cadillac Motor Car Co. (C. C. A.) 261 F. 878, 879, 8 A. L. R. 1023; Higgins v. California Prune & Apricot Grower (C. C. A.) 3 F.(2d) 896; Luminous Unit Co. v. Freeman-Sweet Co. (C. C. A.) 3 F.(2d) 577. In this case we accept the reasoned and definitely announced previous rulings that the promise is that of Seagraves and not of the company that there was consideration for it, and that his own failure to take the stock and assume control ought not to shield him, and that the action is not wholly barred by limitation. We disagree to the generally expressed conclusion thereupon that Seagraves is liable in some amount.

What did Seagraves promise Wallace touching the bonds, and what under the circumstances was intended? Wallace alone testified in the trial. He was a lawyer and broker. He had sold the stocks and bonds of Corpus Christi Gas Company in Michigan, and himself owned a share of stock and $3,000 of bonds. The company, distributing manufactured gas and pressed by the competition with natural gas in Texas, sought to switch to natural gas, and in March 1923 was enjoined by the city of Corpus Christi which, as afterwards developed, was about to put in its own natural gas plant, claiming that the company's franchise did not cover the distribution of natural gas. Interest on the company's bonds had been in default for five years. Its stock was valued at 25. Wallace, after conferring with and getting the authority of six follow stockholders who also owned some bonds, arranged to sell...