Opinion ID: 1658206
Heading Depth: 1
Heading Rank: 2

Heading: Bjornson Appeal

Text: The Bjornsons contend that the district court erred in granting summary judgment against them because genuine issues of material fact exist. Viewing the evidence in the light most favorable to the Bjornsons [ First Nat'l Bank of Hettinger v. Clark, 332 N.W.2d 264 (N.D.1983)], we believe that Douglas' affidavit sets forth specific facts establishing that there was a genuine issue of material fact regarding whether or not Great Plains, through its agents, made misrepresentations to the Bjornsons to induce them into executing the note and mortgage on their homestead. Nevertheless, Great Plains asserts that those factual issues were decided in the Erickson case and that the doctrines of collateral estoppel and res judicata preclude the Bjornsons from raising those issues. Great Plains contends that both the Ericksons and the Bjornsons executed notes and mortgages on their respective residences to give security to Great Plains on the overdue accounts with Tri-Quality; that the notes and mortgages were executed in the same amount and near the same time; that both couples retained the same attorney to defend them and interposed identical answers, affirmative defenses, and counterclaims; and that Douglas participated in the Erickson action as a witness for the Ericksons and corroborated Clifford's testimony regarding Great Plains' alleged misrepresentation. Thus, Great Plains contends that the issues are so similar that there was no reason for the court to deny judgment against Bjornson based on the findings in the Erickson case. We disagree. In Armstrong v. Miller, 200 N.W.2d 282, 285 (N.D.1972) we quoted with approval the following discussion of res judicata: `Upon established principles, a judgment binds and is admissible against parties to the suit in which it is rendered; and privies are, of course, bound, as they are the representatives of the real parties; but beyond these a judgment in personam is evidence only of the fact of its own rendition; it may not be introduced to establish the facts upon which it has been rendered. It is an axiom of the law that no man shall be affected by proceedings to which he is a strangerto which, if he is a party, he must be bound. He must have been directly interested in the subject-matter of the proceedings, with the right to make defense, to adduce testimony, to cross-examine the witnesses on the opposite side, to control in some degree the proceedings, and to appeal from the judgment. Persons not having these rights are regarded as strangers to the cause.'       `In order to make a man a privy to an action he must have acquired an interest in the subject matter of the action either by inheritance, succession, or purchase from a party subsequently to the action, or he must hold property subordinately.' In Boyd v. Wallace, 10 N.D. 78, 84 N.W. 760 (1900) at syllabus ¶ 1, we said: One who is not a party defendant on the record in an action, but who participates in the defense, and has an interest in the matter in controversy in the action, and participates in the defense for the protection of such interest, and not as representing the interest of the defendant of record, and where it is known to the plaintiff that such party so participates for the protection of his own interest, is bound by the decree rendered in the action. The factual situations involved in the Erickson case and the Bjornson case are similar; however, neither the parties nor the facts are identical. The two actions are based on different notes and mortgages executed at different times and involve different homestead property. The named defendants in each action are different. Although Douglas testified in the Erickson case, his testimony reaffirmed Clifford's testimony about the Erickson note, mortgage, and residence. Douglas did not testify concerning the execution of the Bjornson note. The Bjornsons were not a privy to the Erickson action, and Douglas' testimony does not evidence a participation by him in the Erickson defense for the protection of the interests involved in the Bjornson note. Compare Boyd v. Wallace, supra . Furthermore, although the trial court specifically found that Great Plains did not mislead the Ericksons or make misrepresentations to them regarding their legal rights, the trial court made no finding in the Erickson action that Great Plains did not mislead the Bjornsons or make misrepresentations to them. We conclude that the decision in the Erickson case was not res judicata as to the Bjornson case, and, because there are unresolved factual issues in the Bjornson case, we reverse the summary judgment. For reasons stated herein, the judgment against the Ericksons is affirmed, and the summary judgment against the Bjornsons is reversed and remanded for trial. VANDE WALLE and LEVINE, JJ., and PEDERSON and ILVEDSON, Surrogate Justices, concur. PEDERSON and ILVEDSON, Surrogate Justices, sitting in place of ERICKSTAD, C.J., and MESCHKE, J., disqualified.