Court Opinion

ID: 3881301
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:12:42.421105+00
Date Added: 2024-06-11T07:41:56.535868
License: Public Domain

I think that the order of his Honor, Judge Featherstone, should be reversed for the following reasons:
The action is for the purpose of setting aside certain deeds executed by the defendant, C.B. Edwards, to various *Page 356 
parties, upon the ground that they are fraudulent and void under the Statute of Elizabeth and under the Assignment Act. The defendants in their answers denied the material allegations of the complaint, and set up the following separate defense:
"IX. That for a further defense, these defendants allege that, on the 5th day of December, A.D. 1923, in the Court of Common Pleas for Darlington County, in an action brought in the said Court by the Dunlop Milling Company, a corporation, against C.B. Edwards, in his own right, and as Trustee for Mary R. Edwards et al., for the benefit of said plaintiff, the Dunlop Milling Company, and all other judgment creditors of said C.B. Edwards, including the plaintiff herein, who was one of said judgment creditors at the time of the commencement of said action, for the same cause of action as that set forth in the complaint herein, a final decree was rendered therein which was duly filed in the office of the Clerk of this Court, on the 5th day of January, A.D. 1924, whereby the defendants in said action, who were also the defendants in this action, recovered judgment duly given, upon the merits thereof, against the plaintiff therein and the other judgment creditors of said C.B. Edwards, and all the transactions, transfers, deeds, conveyances, assignments, and mortgages, constituting the causes of action therein and also the causes of action in this case, were adjudged and decreed to have been made upon and for good and valuable consideration and bona fide in all respects; and that the defendants herein plead the said judgment and decree in bar of this action."
After the service of the answers, the plaintiff gave notice of a motion for an order striking out the defense above stated, upon the ground that it is "irrelevant, redundant,and prejudicial to the rights of the plaintiff," which motion was noticed to be made upon the complaint, the answers, and the judgment roll in the case of Dunlop Milling Companyagainst C.B. Edwards et al. *Page 357 
The motion was heard by his Honor, Judge Featherstone, who signed an order striking out so much of the answer as sets up the judgment of the Court in the former action by way of bar to the present action, and holding that the plaintiff in this action is not precluded from maintaining it by reason of the former judgment. From this order the defendants have appealed.
The decree is founded upon the idea that one is not bound by a judgment to which he is not a party. The general rule is that, of course. But there are exceptions to it. The rational rule is thus stated:
In 34 C.J., 992, it is said:
"In the strict sense of the term only those are parties to an action within the doctrine of res judicata, whose names appear on the record as such, and who have continued in the case without being dismissed or stricken out, including those who intervene or connect themselves with the record by entering an appearance or filing an answer or other pleading. But in the larger sense the term `parties' includes all persons who have a direct interest in the subject matter of the action and have a right to control the proceedings, make defense, examine witnesses, and appeal if any appeal lies; and, if a person who has such an interest in the subject matter as would be injuriously affected by the judgment, or is in privity with, or bound to indemnify, one of the parties, has notice of the pending of the action and refuses or neglects to appear and avail himself of his rights, he will be concluded by the judgment although not named as a party to the action."
It is said in the case of Goldberg v. Sisseton Co.,24 S.D., 49; 123 N.W., 266; 140 Am. St. Rep., 775:
"The rule as thus stated is calculated to prevent unnecessary litigation by practically a retrial of the action, in which though not nominally parties to the action, are interested in the result and have an opportunity in the one action to protect themselves, and to bring before the Court in the *Page 358 
one action all defenses that might be made in the second action, and thus prevent unnecessary litigation."
While the rule stated in C.J. above is sustained by many authorities, there are a few which hold that mere knowledge on the part of the stranger to the record is not sufficient. See Whitesides v. Barber, 24 S.C. 373, and the succeeding paragraph in C.J. See, also, Newell v. Blankenship, 130 S.C. 131;125 S.E., 420.
In Robbins v. Chicago, 4 Wall., 657; 18 L.Ed., 427, quoted with approval in Newell v. Blankenship, supra, the Court said:
"Parties in that connection include all who are directly interested in the subject matter, and who had a right to make defense, control the proceedings, examine and cross-examine witnesses, and appeal from the judgment. Persons not having those rights substantially are regarded as strangers to the cause, but all who are directly interested in the suit and have knowledge of its pendency, and who refuse or neglect to appear and avail themselves of those rights, are equally concluded by the proceedings."
I do not consider it essential in this appeal to decide whether the simple knowledge of the plaintiff bank that the Dunlop Company had instituted an action for the benefit of all judgment creditors would be sufficient to bind it to the adjudication in which that case resulted, although strongly inclined to that view. It does not seem fair, if the banks knew of the Dunlop suit and its purpose, for it to lie by until that case should be decided; and if favorably to the judgment creditors to come in and share in the fruits, but, if unfavorably, to institute a suit in its own behalf, raising precisely the same questions, with the benefit of a full disclosure of the defendant's case. If the decision in the Dunlop Case had been in favor of the judgment creditors, undoubtedly the bank would have been ready with its piggin to receive its share of the proceeds; it would quickly have been informed of that proceeding and its result. I do not *Page 359 
think that it is entitled to occupy the position of accepting a favorable result or of repudiating an unfavorable one.
To sustain the present proceeding would result in the anomalous situation that, if the plaintiff should succeed, the property would be subject to the existing liens upon it, including the Dunlop judgment and those of the other creditors parties, against which it has been adjudicated that the transfers were valid. See Curlee v. Rembert, 37 S.C. 214;15 S.E., 954. Younger v. Massey, 39 S.C. 115; 17 S.E., 711.Ryttenberg v. Keels, 39 S.C. 203; 17 S.E., 441.Belknap v. Greene, 56 S.C. 119; 34 S.E., 26. Mann v.Poole, 44 S.C. 65; 21 S.E., 543.
I do not think that it can be questioned but that, if the plaintiff bank had been formally notified of the institution and purpose of the Dunlop suit, and had refused to come in to it, the bank would be concluded by the adjudication in that suit. It certainly is true that, although not a formal party, if it had participated in that suit, it would be likewise concluded. It may be questioned, as I have stated, whether simple knowledge of the suit would have concluded it.
In order then for the defendants to have availed themselves of the plea of res judicata, they should have alleged either that the bank was formally notified or that it participated, or possibly that it had actual notice. The defense which has been stricken contains no allegation of any one of these conditions, and, was subject to a demurrer, and, upon sustaining it, the Court would doubtless have permitted an amendment curing the defective statement. But a motion to strike out a defectively stated defense, and thereby to cut the defendant off from all possibility of getting before the Court a perfect defense, is not the remedy. It is possible that the defendants may allege and prove formal notice to the bank, or that it had participated in the preparation and conduct of the case, or that it had full knowledge of its institution and purpose; I do not know. In any event, the defense, though defectively stated, cannot be considered irrelevant *Page 360 
or redundant. As is said by the Court in GermofertCo. v. Castles, 97 S.C. 389; 81 S.E., 665:
"It cannot be successfully contended that the allegations of the defense which the plaintiffs made a motion to strike out have no connection with, nor effect upon, the plaintiff's cause of action."
The worst that can be said about them is that they constitute a defective statement of what may be a complete defense, the remedy to correct which is a demurrer and not a motion to strike; they certainly are not irrelevant or redundant. As is said of sham and frivolous pleading, in the case of Boylston v. Crews, 2 S.C. 422:
"It is not the purpose of such a motion to enable the plaintiff to take advantage of defects or inadvertences in the form of pleading, to meet the charge of frivolousness [and I may add irrelevancy], the pleading must be of that character in its entire scope and bearing and not merely througha formal defect that might be cured by amendment."
"Any insufficiency of the allegations of a plea, which manifestly are not irrelevant or frivolous, should be availed of by demurrer and not by motion to strike." Bank v. Bank,5 Ala. App. 363; 59 So., 348.
In American Co. v. Insurance Co. (D.C.), 199 F., 195, it is held that, if the defendant's plea fails to show a substantial cause of defense, the plaintiff's remedy is by demurrer and not by motion to strike.
In Sloss Co. v. Webb, 184 Ala., 452; 63 So., 518, it is held:
"Where a plea could be amended so as to properly state a defense without a departure, plaintiff's remedy was * * * not by motion to strike."
"A merely defective plea, wanting in fullness or otherwise subject to demurrer cannot be tested by a motion to strike from the files." Hammond v. A. Vetsburg Co.,56 Fla., 369; 48 So., 419. Insurance Co. v. Putnal,57 Fla., 199; 49 So., 922. *Page 361 
Inasmuch as the Circuit Judge states in his order that the parties had agreed that he should decide the matter of the defense upon its merits, his order might be considered as an order sustaining a demurrer to the defense, and the case remanded to the Circuit Court with leave to the defendants to amend their answer by perfecting the defense. In no wise can it be sustained as an order striking out the imperfectly stated defense.