Opinion ID: 2341546
Heading Depth: 1
Heading Rank: 2

Heading: Medley's Liability as Affected by Collateral Estoppel

Text: The doctrine of collateral estoppel bears a close relationship to res judicata. In his able opinion the trial judge said: The doctrine of collateral estoppel might be explained by first describing the two basic effects of a judgment. They are first, that of deciding the rights and liabilities of the parties and second, that of pronouncing a sentence of law on the ultimate facts admitted by the pleadings or proved by the findings. It is to the first effect that the doctrine of res judicata applies, barring a suit to relitigate a cause of action already decided by a Court. It is to the second effect that the doctrine of collateral estoppel applies, rendering a sentence of law conclusive as to those issues of ultimate fact determined by the Court; and no attempt may be made to relitigate such issues by the same parties or their privies in any subsequent action. Although the case of Ugast v. LaFontaine, 189 Md. 227, 231, 55 A.2d 705, 707 [1947], involved application of res judicata rather than collateral estoppel, the language used therein by this Court at page 231 is equally applicable to the latter doctrine: Public policy dictates that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered settled as between the parties. In State of Maryland v. Capital Airlines, Inc., 267 F. Supp. 298, Judge Northrop of the United States District Court for the District of Maryland, in an opinion declaring Maryland law, said at page 304: It would seem to this court that as long as the party against whom the judgment was sought to be used had a full and fair opportunity to be heard on the issue there would be no constitutional impediment to the application of the doctrine of collateral estoppel where there was no mutuality. All that due process requires is that `the thing to be litigated was actually litigated in a previous suit, final judgment entered and the party against whom the doctrine is to be invoked had full opportunity to litigate the matter and did actually litigate it.' He further declared at page 304 that applicability of the doctrine of collateral estoppel is established, if affirmative answers are compelled to the following questions: Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication? Was the party against whom the plea is asserted given a fair opportunity to be heard on the issue? In Pat Perusse Realty v. Lingo, 249 Md. 33, 45, 238 A.2d 100, 107 [1968], this Court, after citing State of Maryland v. Capital Airlines, Inc., supra , said: We have concluded that Judge Northrop was clairvoyant in his prediction as to the view this Court would take on mutuality of estoppel in a proper case. We later, in Greenwell v. American Guaranty Corporation, 262 Md. 102, 114, 277 A.2d 70, 76 [1971], adopted fully the questions he posed as determinative of the issue if affirmatively answered. The liability of the receivership to Coppage on the note here sued upon was finally litigated in Coppage v. Maryland Thrift, supra. We said at page 251: Medley urges that the trial court's finding of fact that Medley was led to believe that the entire obligation of Security had been paid should not be reversed and at page 253 said: We are not obliged in this opinion to work out the mechanics to be followed by Medley and the chancellor. We are obliged to pass on the propriety of the action of the chancellor in sustaining Medley's exceptions to the Coppage claim on behalf of Security. We hold the chancellor to have been in error.  [Italics supplied] The following defenses are here attempted to be reasserted by Medley, and Aetna as to Coppage: 1. That they were misled by Coppage or his attorney. 2. That they were justified in the belief that Maryland Thrift's obligation to Security had been paid in full. 3. That they were entitled to rely on their possession of a facsimile promissory note as indicia of its payment. Each such defense had been interposed, and was considered and rejected by this Court at page 251 of the earlier decision. Thus it plainly appears as to Medley that the identical issue of liability was decided in the prior action; there was final judgment on the merits, and he was given a fair opportunity to be heard on that issue. Neither Coppage nor Medley were actual parties to the original action against Maryland Thrift. Medley was, however, the receiver appointed to manage the wind-up of the affairs of Maryland Thrift and was the active participant in seeking rejection of the Coppage claim in the prior action. Coppage, Receiver, was there a claimant to the monies now again in controversy. This relationship brings both within the rule announced in Ugast v. LaFontaine, supra, at page 232: So, where persons, although not formal parties of record, have a direct interest in the suit, and in the advancement of their interest take open and substantial control of its prosecution, or they are so far represented by another that their interests receive actual and efficient protection, any judgment recovered therein is conclusive upon them to the same extent as if they had been formal parties. Accordingly, the trial judge quite properly applied the doctrine of collateral estoppel as prohibiting relitigation of the issue. Thus Medley's personal liability to Coppage for his default as receiver is established in the prior proceeding.