Court Opinion

ID: 9455427
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:21:42.258354+00
Date Added: 2024-06-11T17:34:35.689841
License: Public Domain

RIVES, Circuit Judge,
dissenting, with whom WISDOM, GEWIN and AINSWORTH, Circuit Judges, join.
The majority bases its decision on Rule 41(b), Fed.R.Civ.P. In so doing, however, it becomes essential for it to determine that the earlier dismissal is an adjudication upon the merits. That is true because the Supreme Court has made it clear that Rule 41(b) does not “change this common-law principle with respect to dismissals in which the merits could not be reached for failure of the plaintiff to satisfy a precondition.” Costello v. United States, 1961, 365 U.S. 265, 286, 81 S.Ct. 534, 545, 5 L.Ed.2d 551. The majority holds that “An order of dismissal is an adjudication upon the merits unless the order ‘otherwise specifies.’ ”1 With deference, I submit that holding misconceives the effect of the Supreme Court’s decision in Costello, supra. The “common-law principle with respect to dismissals in which the merits could not be reached” was explicitly described by the Court:
“At common law dismissal on a ground, not going to the merits was not ordinarily a bar to a subsequent action on the same claim. In Haldeman v. United States, 91 U.S. 584, 585-586 [23 L.Ed. 433], which concerned a voluntary nonsuit, this Court said, ‘there must be at least one decision on a right between the parties before there can be said to be a termination of the controversy, and before a judgment can avail as a bar to a subsequent suit * * * There must have been a right adjudicated or released in the first suit to make it a bar, and this fact must appear affirmatively.’ A similar view applied to many dismissals on the motion of a defendant. In Hughes v. United States, 4 Wall. 232, 237 [18 L.Ed. 303], it was said: ‘In order that a judgment may constitute a bar to another suit, it must be rendered in a proceeding between the same parties or their privies, and the point of controversy must be the same in both cases, and must be determined on its merits. If the first suit was dismissed for defect of pleadings, or parties, or a misconception of the form of proceeding, or the want of jurisdiction, or was disposed of on any ground which did not go to the merits of the action, the judgment rendered will prove no bar to another suit.’ See also House v. Mullen, 22 Wall. 42, 46, [89 S.Ct. 42, 22 L.Ed. 838]; Swift v. McPherson, 232 U.S. 51, 56 [34 S.Ct. 239, 241, 58 L.Ed. 499]; St. Romes v. Levee Steam Cotton Press Co., 127 U.S. 614, 619 [8 S.Ct. 1335, 1338, 32 L.Ed. 289]; Burgett v. United States [7 Cir.], 80 F.2d 151 [104 A.L.R. 167]; Gardner v. United States [9 Cir.], 71 F.2d 63.
“We do not discern in Rule 41(b) a purpose to change this common-law principle with respect to dismissals in which the merits could not be reached for failure of the plaintiff to satisfy a precondition. All of the dismissals enumerated in Rule 41(b) which operate as adjudications on the merits— failure of the plaintiff to prosecute, or to comply with the Rules of Civil Pro*801cedure, or to comply with an order of the Court, or to present evidence showing a right to the relief on the facts and the law — primarily involve situations in which the defendant must incur the inconvenience of preparing to meet the merits because there is no initial bar to the Court’s reaching them. It is therefore logical that a dismissal on one of these grounds should, unless the Court otherwise specifies, bar a subsequent action. In defining the situations where dismissals ‘not provided for in this rule’ also operate as adjudications on the merits, and are not to be deemed jurisdictional, it seems reasonable to confine them to those situations where the policy behind the enumerated grounds is equally applicable.” (365 U.S. 285-286, 81 S.Ct. 545.)
Rule 41(b) expressly excepts from its operation “a dismissal for lack of jurisdiction.”2 Speaking of that exception the Supreme Court said:
“We regard the exception as encompassing those dismissals which are based on a plaintiff’s failure to comply with a precondition requisite to the Court’s going forward to determine the merits of his substantive claim.” (365 U.S. 285, 81 S.Ct. 545.)
True in Costello the dismissal did not specify that it was without prejudice, while here the dismissal is expressly stated to be “with prejudice.” The majority undertakes to distinguish Costello because of that factual difference.3 The difference does, of course, impose a heavy burden upon the plaintiff to prove that the dismissal was not on the merits. Whether or not the plaintiff meets that burden, however, is not dependent upon Rule 41(b) but upon common-law principles. There is nothing in Rule 41(b) making the use of the words “with prejudiee” conclusive evidence against the plaintiff — indeed those words “with prejudice” nowhere appear in the Rule. The Rule simply and completely excepts from its operation “a dismissal for lack of jurisdiction.” Costello holds that exception to include a dismissal in which the merits could not be reached for failure of the plaintiff to satisfy a precondition and clearly indicates that whether the dismissal was on the merits or for lack of jurisdiction must be determined on common-law principles. Insofar as the operation of Rule 41(b) is concerned, Costello cannot be properly distinguished from this case.
On common-law principles the plaintiff clearly and conclusively met its burden. The judgment itself referred to the court’s “findings of fact and conclusions of law in this cause.” Even without such a reference, the Supreme Court has clearly established that findings of fact and conclusions of law may be used in determining the scope and effect of the Court’s judgment.4
The district court had entered detailed findings of fact and conclusions of law (R. pp. 56-65). As to each of the first ten numbered defenses the court concluded in almost identical language that “the defense is denied.” (R. pp. 62-64). The dismissal was based solely on the eleventh and last defense, as clearly appears from the conclusion quoted verbatim in the panel’s original opinion 423 F.2d 785. There the defense was referred to “as a condition precedent to payment of any amount due under the agreements” and the reason for dismissal was clearly stated in the concluding sentence. “Therefore, the Small Business Administration has failed to comply with the provision requiring a written demand upon the defendant; and the action should be dismissed.” 423 F.2d 785.
*802No question arises as to any possible harassment of the defendant occasioned by the filing of the suit before making demand for payment. Primarily that is true because no such question was presented below or passed on by the district court. The district court declined to follow the holding of this Court in Texas Water Supply Corp. v. R. F. C., 5 Cir.1953, 204 F.2d 190, 193, that the filing of a suit is a sufficient demand in an action on a guaranty of this type. No appeal having been prosecuted from that holding, it is of course binding on the plaintiff under principles of collateral estoppel. Nonetheless, the earlier holding of this Court is practically conclusive of the plaintiff’s good faith in filing suit without making demand for payment. Further the claimed precondition defense could have been raised first by motion, Rule.12(b), Fed.R.Civ.P., and summary judgment could have been sought on the ground that the action was premature. Instead the defendant filed its claimed ten defenses on the merits on September 30, 1964 (R. 46), and waited for more than three months until January 18, 1965 before presenting its “Motion to File Additional Defense” to the effect that no written demand for payment had been made (R. 51, 52). In brief, the district court has made no holding of harassment, the record is conclusive that the plaintiff did not intend to harass the defendant, and, if the alleged precondition had been raised first by the defendant, she probably would not have had to prepare for trial on the merits in the first action.
Any suggestion that demand for payment is not merely a precondition to suit but is an integral part of the merits of the action is not sound for several reasons, inter alia: 1. The district court found the written demand to be a “condition precedent” to payment of any amount under the agreements (R. 65, 66), and did not treat it as any part of the merits of the action. 2. The terms of the guaranty agreements themselves waive notice of default and go no further than to require written demand for payment.5
The prior judgment was truly a dismissal “with prejudice” as to the re-litigation of the questions actually decided. Estevez v. Nabers, 5 Cir.1955, 219 F.2d 321, 324. All that the district court in the first action could properly mean by the words “with prejudice” was that the plaintiff could not again contest the issues of whether a demand was necessary, and, if so, whether one had been made.6 The words “with prejudice”, under the circumstances of this case, do not show that the claim or cause of action is barred. When read in the light of the findings of fact and conclusions *803of law, they show no more than that the plaintiff is precluded from relitigating the issues actually decided against it.
Since the findings of fact and conclusions of law establish that the action was dismissed solely because the plaintiff “failed to comply with the provision requiring a written demand upon the defendant (R. 65),” the addition of the phrase “with prejudice” cannot forever preclude the plaintiff from collecting its debt. That is in accord with the uniform rulings of all previous cases, federal and state, where the phrase “with prejudice” has been added to an order of dismissal which the record showed was made for a reason which did not touch the merits.7
The majority decision is based upon the form of the judgment. Instead, the substance of the matter actually decided should control.
I respectfully dissent.

. Text preceding footnote 4 to majority opinion.

. See the last sentence of Rule 41(b) numbered 5 in the majority opinion, particularly the phrase “other than a dismissal for lack of jurisdiction.”

. See footnote 5 to majority opinion and the related text.

. Great Lakes Dredge & Dock Co. v. Huffman, 1943, 319 U.S. 293, 295, 63 S.Ct. 1070, 87 L.Ed. 1407; Swift v. McPherson, 1914, 232 U.S. 51, 56, 34 S.Ct. 239, 58 L.Ed. 499. See other cases cited in 30A Am.Jur. Judgments, § 457, p. 501; 50 C.J.S. Judgments § 842, p. 409.

. Some of the pertinent provisions read as follows:
“The undersigned waives any notice of the incurring by the Debtor at any time of any of the Liabilities, and waives any and all presentment, demand, protest or notice of dishonor, nonpayment or other default with respect to any of the Liabilities and any obligation of any party at any time comprised in the collateral. * * *
“In case the Debtor shall fail to pay all or any part of the Liabilities when due, whether by acceleration or otherwise, according to the terms of said note, the undersigned, immediately upon the written demand of Reconstruction Finance Corporation, will pay to Reconstruction Finance Corporation the amount due and unpaid by the Debtor as aforesaid, in like manner as if such amount constituted the direct and primary obligation of the undersigned. Reconstruction Finance Corporation shall not be required, prior to any such demand on, or payment by, the undersigned, to make any demand upon or pursue or exhaust any of its rights or remedies against the Debtor or others with respect to the payment of any of the Liabilities, or to pursue or exhaust any of its rights or remedies with respect to any part of the collateral. The undersigned shall have no right of subrogation whatsoever with respect to the Liabilities or the collateral unless and until Reconstruction Finance Corporation shall have received full payment of all the Liabilities.” (R. p. 7.)

. It may be significant that the same district judge caused both judgments to be entered.

. Saylor v. Lindsley, 2 Cir. 1968, 391 F.2d 965, 969; Durham v. Florida East Coast Railway Co., 5 Cir. 1967, 385 F.2d 366, 367; Pueblo de Taos v. Archuleta, 10 Cir. 1933, 64 F.2d 807, 812; Rivers v. Norfolk, Baltimore & Carolina Line, Inc., E.D.Va.1962, 210 F.Supp. 283, 287; Chirelstein v. Chirelstein, 12 N.J.Super. 468, 79 A.2d 884, 888; Hassenteufel v. Howard Johnson, Inc., Fla.1951, 52 So. 2d 810.