Towle v. Boeing Airplane Company

• Decision Date: 26 August 1966
• Docket Number: No. 18191.,18191.
• Citation: 364 F.2d 590
• Parties: Robert E. TOWLE et al., Appellants, v. BOEING AIRPLANE COMPANY, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

364 F.2d 590 (1966)

Robert E. TOWLE et al., Appellants, v. BOEING AIRPLANE COMPANY, a Corporation, Appellee.

No. 18191.

United States Court of Appeals Eighth Circuit.

August 26, 1966.

Harding A. Orren of Robins, Davis & Lyons, Minneapolis, Minn., for appellants. S. Robins and John F. Eisberg, of Robins, Davis & Lyons, Minneapolis, Minn., were with him on the brief.

William P. O'Brien, of Sullivan, McMillan, Hanft & Hastings, Duluth, Minn., for appellee.

Before VAN OOSTERHOUT and BLACKMUN, Circuit Judges, and HARPER, District Judge.

VAN OOSTERHOUT, Circuit Judge.

This is an appeal by eight named individual plaintiffs and Como Oil Company, hereinafter collectively called appellants, from summary judgment dismissing their complaint against defendant Boeing Airplane Company on the ground of res judicata.

Appellants and John A. O'Malley and V. J. Pedrizetti, Trustees in Dissolution of Atlas Helicopter Service Inc., had joined in bringing an action against defendant Boeing seeking damages for fraud and breach of implied warranty by Vertol Aircraft Corporation in the sale of a helicopter. Vertol was merged into Boeing with Boeing assuming all liabilities of Vertol. In the first count of the amended complaint, which is the complaint here dismissed, the individual appellants sought damages for fraud and breach of warranty. In three subsequent counts, the liquidating trustees of Atlas in the alternative sought recovery for breach of warranty and fraud in connection with the purchase of the same helicopter.

Prior to the trial of Atlas trustees' suit, the court granted severance of the individual claims and the corporate claims. The trial court in the case now before us states: "That ruling did not pass on the issue of whether the two sets of claims were independent or duplicitous." We agree.

After severance and trial to a jury, the Atlas trustees were awarded a judgment for $180,295.23. We affirmed. Boeing Airplane Co. v. O'Malley, 8 Cir., 329 F.2d 585. Our opinion sets forth the factual background of this litigation in detail. The trial court in our present case as a basis for dismissing appellants' complaint states:

"Simply put, the transactions between Vertol and the plaintiffs may be viewed in two ways. The plaintiffs may be considered as the promoters of Atlas entering an agreement subsequently ratified by Atlas, or they may be treated as a group of individuals who purchased the helicopter (or invested in the corporation established for that purpose).

"The choice of theories determines the technically proper plaintiff, but the real parties in interest and the cause of action are identical under both theories. The two causes of action could only be pleaded in the alternative, as the amended complaint did.

"All matters now pressed were litigated in the earlier lawsuit and the plaintiffs are bound by that judgment as to the amount of recoverable damages. Further action is barred by the doctrine of res judicata, since the current plaintiffs were obviously privies to Atlas with respect to this cause of action. The defendant\'s motion for summary judgment must, therefore, be granted."

The term res judicata is frequently used to cover merger, bar, collateral estoppel and direct estoppel. See Lawlor v. National Screen Service, 349 U.S. 322, 326, n. 6, 75 S.Ct. 865, 99 L. Ed. 1122. Here, as in Engelhardt v. Bell & Howell Co., 8 Cir., 327 F.2d 30, we adopt Professor Vestal's more precise and helpful descriptive words of claim preclusion and issue preclusion, which he defines thusly:

"The concept of res judicata, which is not at all a simple one, encompasses at least two distinct facets. For the sake of clarity it is desirable to distinguish the foreclosing of further litigation on a cause of action (which may be called claim preclusion) from the preclusion of further litigation of an issue (which may properly be called issue preclusion)." Vestal, Preclusion/Res Judicata Variables, April 1965 issue Washington University Law Quarterly, p. 158.

A reading of the trial court's opinion makes it entirely clear that the decision is based upon the claim preclusion type of res judicata. With respect to such type of res judicata, the Supreme Court in Lawlor v. National Screen Service states: "Thus, under the doctrine of res judicata, a judgment `on the merits' in a prior suit involving the same parties or their privies bars a second suit based on the same cause of action." 349 U.S. 322, 326, 75 S.Ct. 865, 867.

The law of res judicata/claim preclusion is well established. Whenever a court having jurisdiction has rendered a final judgment upon the merits of a cause of action, that judgment is binding upon the parties and their privies not only as to every matter that was litigated but also to every matter which could have been litigated. In event of subsequent litigation upon the same cause of action, the parties and their privies are precluded from receiving relief. Tait v. Western Md. Ry. Co., 289 U.S. 620, 623, 53 S.Ct. 706, 77 L.Ed. 1405; Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 319, 47 S.Ct. 600, 71 L.Ed. 1069; Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L.Ed. 195; Engelhardt v. Bell & Howell Co., 8 Cir., 327 F.2d 30, 32; Rhodes v. Meyer, 8 Cir., 334 F.2d 709, 712; Guettel v. United States, 8 Cir., 95 F.2d 229, 230, 118 A.L.R. 1060.

In Engelhardt, supra, we cited and discussed numerous cases dealing with the problem of what constitutes a cause of action and the tests for comparing causes of action. We there stated: "The primary test for comparing causes of action has long been whether or not the primary right and duty, and the delict or wrong combined are the same in each action." 327 F.2d 30, 32. We also held that the same evidence test may well be valid as a positive test but that it is not conclusive as a negative test.

It is well settled that a litigant cannot split his claim and have two trials upon the same alleged breach of duty. Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 320, 47 S.Ct. 600, 71 L.Ed. 1069; Engelhardt v. Bell & Howell Co., supra; Norman Tobacco & Candy Co. v. Gillette Safety Razor Co., 5 Cir., 295 F. 2d 362, 363.

The asserted wrong in our present case is the injury caused individual plaintiffs by Vertol's fraud and breach of warranty in the sale of the helicopter. In the prior action in which the trustees prevailed, the cause of action was based upon fraud and breach of warranty in connection with the same helicopter sale. The Atlas corporation was not formed until after the purchase of the helicopter had been arranged. As observed by the trial court, there may be considerable...