United States v. Wooten

• Citation: 343 F.2d 214
• Decision Date: 22 March 1965
• Docket Number: No. 21570.,21570.
• Parties: UNITED STATES of America, Appellant, v. J. J. WOOTEN, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

343 F.2d 214 (1965)

UNITED STATES of America, Appellant, v. J. J. WOOTEN, Appellee.

No. 21570.

United States Court of Appeals Fifth Circuit.

March 22, 1965.

Kathryn H. Baldwin, Alan S. Rosenthal, Attys., Dept. of Justice, Washington, D. C., Gus L. Woods, Asst. U. S. Atty., Atlanta, Ga., John W. Douglas, Asst. Atty. Gen., Charles S. Goodson, U. S. Atty., for appellant.

Alan E. Serby, Paul M. Daniell, Atlanta, Ga., for appellee, Watkins & Daniell, Atlanta, Ga., of counsel.

Before TUTTLE, Chief Judge, MOORE,^* Circuit Judge, and SLOAN, District Judge.

MOORE, Circuit Judge:

Appellant, United States of America (the Government), appeals from a final judgment entered against it (January 7, 1964), dismissing upon defendant's (appellee's) motion its complaint. Defendant's motion to dismiss was based "on the grounds that the cause of action is res judicata." The prior adjudication is claimed to be "the action taken by this Court the trial court here in United States of America, Plaintiff, v. J. J. Wooten, d/b/a Atlanta-Alabama Motor Lines, Inc., Defendant, Civil Action No. 8142, United States District Court, Northern District of Georgia, Atlanta, Division." To determine whether there has been an actual adjudication in the former action, a review of the pleadings, proceedings and judgment therein must be made. In short, what, if anything, was adjudicated?

The complaint in No. 8142 sought to recover freight overcharges as set forth in a Certificate of Indebtedness of the General Accounting Office (GAO), dated June 7, 1960, and addressed to Atlanta-Alabama Motor Lines, Inc. However, the defendant in the complaint filed November 13, 1962, was named as "J. J. Wooten D/B/A Atlanta-Alabama Motor Lines, Inc." (the "corporation") and Wooten was alleged to be the debtor.

In Wooten's answer for one of its defenses, he denied that he had ever done business as the corporation but admitted that at one time he had been a stockholder therein. He then alleged that in 1955 all of the corporation's stock had been transferred to B&M Express, Inc. and that in 1959 the stock of B&M had been transferred to Transcon Line, Wooten then sought judgment on the pleadings. His memorandum in support thereof relied solely upon the legal principle that "stockholders, except in special circumstances, are not liable for the debts of the corporation" and cited Williams v. Appliances, Inc., 91 Ga.App. 608, 86 S.E.2d 632 (1955) in support thereof.

The court, citing the Williams case and other relevant Georgia decisions upheld this principle and granted judgment in Wooten's favor. By motion, filed April 2, 1963, the Government upon the grounds that it had "uncovered newly discovered evidence" and "excusable neglect" in that it had made a "mistake in assuming that defendant operated the Atlanta-Alabama Motor Lines, Inc., as a proprietorship" sought to amend its complaint. In the proposed amendment, it alleged both new facts and new theory, namely, that Wooten when selling his stock had agreed "to personally pay all claims against Atlanta-Albama Motor Lines Inc., which arose before the consummation of the sale on March 25, 1955." A new Certificate of Indebtedness was annexed to the proposed amendment which, in addition to the overcharge, stated:

"Subsequently you accepted the assets and obligations, including overcharges, of Atlanta-Alabama Motor Lines, Inc."

The court denied the motion giving as reasons "no excusable neglect," that the amendment "would not warrant any different result," that there was no showing that with due diligence the "newly discovered evidence" could not have been found earlier and that it was not "material to the issues" in any event.

Thereafter in new action No. 8634 (complaint filed October 30, 1963) against "J. J. Wooten" the government sought to recover the freight overcharges as stated in a Certificate dated March 26, 1963, and upon the facts and theory that Wooten in his sale contract had "agreed to pay all overcharges incurred by Atlanta-Alabama Motor Lines, Inc." An answer pleading res judicata and a motion to dismiss on this ground followed. The court, referring to its decision in No. 8142 denying the motion to amend, granted the motion to dismiss. The government appeals.

Three facts fundamental to the proper decision here are clear.¹ (1) There has been no determination on the merits as to whether there were any freight overcharges. (2) There has been no determination that Wooten was not liable under his stock sale contract as a third-party beneficiary because that question was never before the court. (3) The original judgment of dismissal was based upon the ground that Wooten was not individually liable as a stockholder for the corporation's debts. The foundation, therefore, essential to a valid defense of res judicata is lacking.

Wooten argues (a) that the government has been "dilatory and negligent"; (b) that it has had "its day in Court"; (c) that the "third party beneficiary theory is not available" to the government; (d) that the action is barred because of res judicata; and (e) that "justice and public tranquillity require an affirmance."

These arguments may be...