Court Opinion

ID: 9530345
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:59:15.799032+00
Date Added: 2024-06-11T13:28:05.150029
License: Public Domain

MAUGHAN, Justice:
Plaintiff Edwin 0. Gossner filed an inter-pleader action to determine whether respondents, E. Odell Summers and Orval E. Petersen, or appellant Berkeley Bank for Cooperatives was entitled to $31,635.29, which Gossner admittedly owed to one or the other of them. Upon a trial to a jury and the jury’s answers to interrogatories, the court entered a judgment in favor of respondents Summers and Petersen, for $12,000 plus each and the balance to Berkeley Bank. The judgment is affirmed. Costs to Summers and Petersen.1
As a matter of convenience this opinion will refer to plaintiff Edwin 0. Gossner, an individual, as Gossner; the Gossner Cheese Company, a corporation, as the Cheese Company; Dairymen Associates, Inc., as Dairymen; E. Odell Summers and Orval E. Petersen, as the Farmers; and Berkeley Bank For Cooperatives, as the Bank.
The Farmers, who are engaged in dairy farming in Box Elder County, entered into a marketing agreement with a dairy cooperative, Dairymen, in March 1974. It provided, Dairymen would market all milk delivered to them by the Farmers, and in turn would pay them monthly for the milk so delivered. Gossner, the president of the Cheese Company, purchased milk from Dairymen, which was posted on the latter’s books as an “account receivable.”
In January, 1975, Dairymen began to experience financial difficulties. This fact became known to the Farmers, who told Dairymen of their desire to terminate the contract. Dairymen objected and stated it would not agree to a termination of the agreement because respondents had not given written notice, as required by the terms of the contract, viz., notice of termination could not be given before “any subsequent anniversary date following the first anniversary date of the agreement”, which would be in March 1976.
In March 1975, Dairymen executed large promissory notes to the Bank. As security, Dairymen granted the Bank a security interest (Chattel Mortgage) in its personal property, including its accounts receivable, which was duly filed in accordance with the Commercial Code.2
On April 9, 1975, the Farmers’ counsel sent a letter to Dairymen announcing their intention to terminate their relationship with Dairymen. The milk hauler, George Thornley, continued to go to the Farmers’ dairies until July of 1975 to pick up milk, take it to Dairymen facilities and then deliver it to Gossner. In July 1975, Summers and Petersen instructed the trucker, George Thornley, to cease delivering their milk to Dairymen, and to deliver their milk thereafter directly to Gossner. At that time both Gossner and Dairymen were so notified. And thereafter Thornley followed that direction, delivering the Farmers’ milk directly to Gossner until November 1975. From July to November 1975, Thornley followed that plan. Notwithstanding the foregoing, Dairymen continued to send checks to the Farmers through the summer and until November 1975. The checks sent to them for September failed to clear the bank; and this again occurred for the checks sent in October and November. Meanwhile, Gossner withheld payment after September 1975, which is the fund here in dispute.
In November 1975, the Farmers filed actions in Weber County against both Gossner Cheese Co. and Dairymen for the $24,000 plus owed them for milk delivered in September, October, and November of 1975. Dairymen failed to answer the complaint and default judgments were entered *715against it. The Cheese Company, which denied any indebtedness was dismissed. Gossner, who was not a party to the Weber County action, filed this interpleader action.
Upon the trial to the jury the court submitted interrogatories as to the disputed issues of fact; and the jury answered them favorably to the contentions of the Farmers. These included a question concerning whether the Farmers had terminated their agreement with Dairymen before delivering the milk to Gossner, the source of the fund before the court, to which the jury answered, “yes.” And as to the amount owed each of them, as to Summers, the jury found $12,127.67, as to Petersen, $12,467.13.
This Court assumes the jury believed those aspects of the evidence which sustain the findings and the judgment, and therefore makes its analysis of the case and draws its conclusions on the basis of the facts so found.3
One of the arguments made by Berkeley is the not unusual one, viz., the claims of the Farmers to receive payment from their milk directly from Gossner is not supported by the evidence. The response made to this seems adequate: the testimony of both Farmers as to the facts recited herein, the letters written, their directions to the trucker, George Thornley, and his corroborating testimony, and the records of their milk so delivered during September, October and November 1975; and the fact Gossner, acting upon such directions withheld any further payments to Dairymen.
The Farmers’ obligation to Dairymen was not unconditional. Their contract to deliver milk to that company was conditioned upon its monthly payments therefor. After the Farmers knew that Dairymen was insolvent, and especially after its checks proved worthless, it was their right and privilege to send their milk directly to Gossner, or to anyone else they might have desired. The jury was neither obliged to believe, nor are we required to accept, that their obligation compelled them to keep sending milk to Dairymen when they knew the latter was insolvent, and would not pay for it.
There is no legal concept, which would compel the conclusion that under such circumstances, the milk thereafter delivered directly to Gossner must be deemed to belong to Dairymen. The incongruity and the unfairness of such a conclusion is clearly revealed by examination of the converse: What would have been the result if Dairymen had sued the Farmers to compel them to continue delivering milk it could not pay for, and incidentally, for which the checks actually issued were dishonored? Since the Bank’s position is derivative, it could have no better right than Dairymen. Accordingly, we hold there is ample credible and competent evidence to justify the trial court’s submission of the interrogatories to the jury and to support the jury’s findings, as to the $12,000 plus, that each of the defendants was entitled to of the funds held by Gossner. The trial court’s approval thereof should be regarded by this Court as adding credence to the correctness of that conclusion.4
On appeal, the Bank, which has a security interest in the accounts receivable of Dairymen, contends the judgment in this action cannot be sustained on the ground the Farmers were precluded from litigating issues which had been or could have been determined in a prior action in Weber County. In this first action the Farmers alleged Dairymen was indebted to them for milk purchased and delivered from the Farmers to Dairymen during September, October, and November 1975. The Cheese Company was joined in this action, the Farmers alleged the Cheese Company had received the milk the Farmers had delivered to Dairymen. The Farmers pleaded for a restraining order to prevent the Cheese Company from delivering monies, in the amount owed to them, for the milk delivered through Dairymen.
Dairymen defaulted and the Farmers took a default judgment. On the same day, *716a writ of garnishment was issued, directed to the Cheese Company. In response thereto, the Cheese Company denied it was indebted to Dairymen. The Cheese Company responded it knew of another person who owed a debt to Dairymen, viz., Edwin 0. Gossner, in the amount of $31,635.29.
Subsequently, Gossner filed this present interpleader action to determine to whom the monies he held should be paid. The first action against the Cheese Company was, by stipulation, dismissed with prejudice. In their initial answer to the inter-pleader the Farmers claimed their entitlement to the money by virtue of their judgments awarded in Weber County.
Subsequently, during the course of the trial, in response to a motion by the Bank to strike the testimony concerning the Farmers’ termination of their marketing agreement with Dairymen, and their demand for payment directly from Gossner; the court permitted an amendment of the pleadings to conform to the evidence. Specifically, the Farmers’ original pleadings set forth a different basis for recovery (their prior judgments) than the one upon which they presented evidence and pursued recovery at the trial.
Briefly, the Farmers’ evidence (which the jury believed, as reflected in their findings), showed the Farmers had terminated their marketing agreement with Dairymen. They instructed their contract milk hauler, Thornley, to deliver the milk directly to Gossner. Both Dairymen and Gossner were apprised of the Farmers’ directions to Thornley. The Farmers met with Gossner and informed him they wanted payment from him. Gossner was concerned with the validity of the marketing agreement between the Farmers and Dairymen and wanted the matter resolved legally before he paid the Farmers directly. According to the Farmers, Dairymen insisted the marketing agreement was valid and submitted bills to Gossner, which in spite of his knowledge of the Farmers’ claims, Gossner paid to Dairymen. Dairymen, in turn, sent checks to the Farmers. The checks for September, October, and November were returned for insufficient funds, which the Farmers sought to recover in the first action in Weber County.
The Farmers computed their claims based on the milk receipts they received from the milk hauler, Thornley. The Bank claimed the money as an account receivable based on two statements submitted by Dairymen to Gossner. Each recited merely the poundage of milk and butterfat and the total sum due. One recited it was a statement for October 1975. The others recited it was the total due for milk delivered in November. There were no supporting documents submitted to determine any of the particulars about the milk, such as, its source, the time delivered. The tickets by which Gossner substantiated the amount of milk which had been received were not available at the trial. Gossner submitted to the court in this interpleader action the sum of the two statements submitted by Dairymen minus $775.50, an amount he deducted for bad checks he had received from Dairymen.
There are two issues which the Bank urges on this appeal the Farmers were precluded from litigating in the second action on the grounds of res judicata and collateral estoppel. First, under the doctrine of res judicata, the Farmers had an opportunity and failed to raise their claim against Goss-ner for payment for the milk in the Weber County action. Second, and interrelated to the first, the Farmers were bound by the judgment in Weber County, which was based on the fact that Dairymen owed the Farmers for milk delivered to Dairymen. This latter claim is predicated on the doctrine of collateral estoppel.
The claim Gossner owed the Farmers directly could not have been litigated in the first action; he was not a party. The first action was against a corporation, the Cheese Company, which denied any indebtedness to Dairymen in its answers to the writ of garnishment. At the trial of the second action, a representative of the Cheese Company testified it was Edwin 0. Gossner, acting as an individual and not the Cheese Company, who purchased milk from Dairymen. Furthermore, it was Gossner, *717the individual, who filed the interpleader action. The Bank cites no authority to sustain the claim, viz., if a party sues the wrong person, he is thereafter precluded from filing an action against the one who is liable; and including therein claims not asserted in the abortive action.
The judgment of the Farmers against Dairymen in Weber County was a default judgment, wherein the Farmers alleged the milk was purchased by and delivered to Dairymen. By the amendment to their pleadings in the interpleader action, the Farmers asserted a different claim, viz., a claim Gossner was indebted directly to the Farmers for milk delivered and received:
“(2) A judgment on one cause of action is not conclusive in a subsequent action on a different cause of action as to questions of fact not actually litigated and determined in the first action.5
“Where an action is brought against the defendant and although he is duly served with process he fails to appear or answer, and judgment by default is rendered against him, the judgment is conclusive as to the cause of action upon which the action was based. But in a subsequent suit based upon a different cause of action the judgment is not conclusive as to the truth of the allegations in the plaintiff’s complaint. . . ”6
Thus, the Farmers were not precluded in this second suit from litigating the issue of whether Gossner was indebted to them for milk delivered to him.
The jury was clearly and specifically instructed, if they found the Farmers’ only claim to the money was through their default judgments against Dairymen, they must find for the Bank. The jury was further instructed, if they found from the evidence the Farmers at all times looked solely to Dairymen for payment for the milk delivered in September, October, and November then they must find the Farmers did not look to Gossner for payment of the same monies for the same milk delivered.
From the evidence adduced at the trial, the jury found the Farmers had terminated their marketing agreement with Dairymen on April 9, 1975. The money tendered into court was not an account receivable of Dairymen and was not owed by Gossner to Dairymen. The money was owed to the Farmers by Gossner for milk delivered directly to Gossner by the Farmers. There is substantial, credible evidence in the record to sustain the jury verdict.
CROCKETT, C. J., and WILKINS and STEWART, JJ., concur.

. 45 Am.Jur.2d, Interpleader, Sec. 41.

. Title 70A, U.C.A.1953.

. Memmott v. United States Fuel Company, 22 Utah 2d 356, 453 P.2d 155.

. See Prince v. Peterson, Utah, 538 P.2d 1325, citing Geary v. Cain, 69 Utah 340, 255 P. 416.

. Restatement, Judgments, Sec. 68, p. 293.

. Id., Sec. 68, Comment f., p. 302.