Court Opinion

ID: 8857003
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:33:47.738148+00
Date Added: 2024-06-11T17:05:41.755561
License: Public Domain

JENKINS, Circuit Judge,
after this statement of the facts, delivered the opinion of the court.
The principal question with which we have to deal relates to the effect to be given to the decree of the state court upon the cross bill filed by the Equitable Trust Company. It is insisted for the appellees that that decree is conclusive upon the claims now asserted by the Equitable Trust Company to the certificate of sale in question. On the other hand, it is contended that while issue was joined and evidence heard upon the allegations of the cross bill with respect to the relief therein prayed, and a decree was entered dismissing the cross bill upon the merits, still that occurred simultaneously with the decree in the original suit by Edward G. Smith against the Equitable Trust Company and others, and the court only considered the rights of Smith, and did not in fact determine the questions at issue respecting the rights of the Equitable Trust Company as against Chytraus and Carson. It is not to be doubted that a judgment rendered upon the merits is an absolute bar to a subsequent action, a finality to the demand in controversy, concluding the parties and those in privity with them. Such a judgment in another action between the same parties upon a different demand is said to operate as an estoppel with respect to those matters in issue or points controverted upon the determination of which the finding or verdict was rendered. Cromwell v. County of Sac, 94 U. S. 351. The inquiry in such case must always he with respect to the questions actually litigated and determined, for only upon such matters is the judgment conclusive. Bissell v. Spring Valley Tp., 124 U. S. 225, 231, 8 Sup. Ct. 495: David Bradley Manuffg Co. v. Eagle Manuf'g Co., 18 U. S. App. 349, 6 C. C. A. 661, 57 Fed. 980. And, where the record discloses uncertainty with respect to the particular point decided, that uncertainty may be removed by extrinsic evidence disclosing the particular point involved and determined. Russell v. Place, 94 U. S. 606, 608; De Sollar v. Hanscome, 158 U. S. 216, 221, 15 Sup. Ct. 816
The cross-hill in question asserted the same facts here relied upon to show a want of authority on the part of Mason Bros, to dispose of the certificate of sale, and contains like allegations of failure of duty upon their part to disclose to their client the value of the land to which the certificate related. Edward G. Smith, the complainant in the original suit, was made a party to this cross bill solely on the *682ground'that he claimed some interest in the certificate, which interest was disclosed in his original bill. The prayer of the cross bill was to declare null and void the transfer of the certificate by Mason Bros, to Chytraus, and for its return and reconveyance to the Equitable Trust Company, as the lawful owner, upon repayment by it of the purchase price, or in the alternative that the solicitors might be required to pay to the Equitable Trust Company the difference between the real value of the land and the amount received for the certificate. It will thus be seen that, with respect to the facts asserted and the relief demanded in the cross bill, there was no sort of uncertainty with respect to the issue presented. The answers of the parties interested took direct issue upon the allegations of the cross bill, and the evidence produced went to sustain or disprove the charges asserted. ■ The only decree that could properly be passed in that cross suit, aside from a judgment of dismissal without prejudice, was one which- should- determine the issues which had been presented, and adjudicate the right of the Equitable Trust Company to that certificate in the hands of Chytraus, or its rights against Mason Bros, for the alleged failure of duty by them. The record discloses that this bill was dismissed for want of equity. There is no uncertainty in the record, either with respect to the issues presented or the decree rendered. The decree necessarily involved and clearly determined the rights of the Equitable Trust Company against Mason Bros, and Chytraus. There is no room, as it seems to us, for controversy. It is only when the record itself does not show that the matter was necessarily and directly involved and determined that evidence aliunde may be received to prove the fact. But in such case the evidence must be consistent with the record, and not in antagonism to it. It may be that where a number of issues are involved, and the judgment may have proceeded upon one and not upon the others, it is open to proof, dehors the record which of the questions was in fact determined. But here there was no double issue. The sole question involved went to the right of the Equitable Trust Company to this certificate of sale, and the decree could not have passed without determining that matter. The assertion, therefore, of the Equitable Trust Company that the issues considered and passed upon concern and refer exclusively to the rights of Edward G-. Smith, and that the court did not determine or pass upon the rights or interests of the trust company as against Chytraus and Mason Bros., is in direct contravention of the decree itself, and is in impeachment of the intelligence1 of the court which rendered it. Nor does it affect the question tíiát -in the original bill Smith obtained a decree which found an agreement upon the part of the Equitable Trust Company to sell the certificate tojh'im, and which determined his right, within the time limited, to redeem or pay the purchase price of the certificate. If he should fail to redeem, as in fact resulted, the rights of the parties before us would still be at large with respect to the ownership 'of the certificate of sale, unless they were determined upon the cross bill filed., It will not do to say, in the light of a decree dismissing -the cross’bill'upon the merits, that it did not-enter the mind of the court'that Smith would fail to redeem. There is no uncertainty upon *683the face of the record concerning the action of the court. Nothing seems to have been left at large or omitted upon the possibility of future contingency. The rights of all parties were determined. Indeed, there is an express finding in the decree in the original suit that the Equitable Trust Company authorized the sale and delivery of the certificate by Mason Bros, to Chytraus and Carson. The Equitable Trust Company understood the decree to be conclusive of its rights. The record discloses that it assigned error upon the decree to the effect that the court erred — First, in dismissing its cross-bill; and, second, in not decreeing "that said certificate belonged to said Equitable Trust Company, and did not order Chytraus to surrender the same to said company, upon the payment of the sum paid therefor by Chytraus, with interest.” There was no misconception at the time, on its part, of the effect of the decree. We are constrained to hold that the decree in the cross suit is conclusive between the parties to the record. We should do violence to one of the most wholesome provisions of law touching the sanctity of judicial decrees if, in a case where the record discloses no uncertainty of the issues presented or in the decree passed, we should hold that it was allowable, by way of collateral attack, to show that ¡he court did not mean to do what it in fact did, and that the decree was not intended to determine what it in fact does determine.
It is, however, said by the appellant that the decree in the cross bill should not be controlling, because the issue there was whether the Equitable Trust Company, in a court of equity, was entitled to annul the contract of sale by Mason Bros, to Chytraus; while here the question is whether Chytraus, invoking the aid of equity to obtain the master’s deed upon the certificate of sale, is entitled to the relief demanded. In other words, it is said that a denial of the relief here sought would not be inconsistent with the decree in the cross suit, because that decree rnay have passed upon the. ground of want of equity as respects the Equitable Trust Company; while the relief here demanded should be denied, because the purchaser of the certificate does not come with clean hands; and familiar authorities are urged to our attention, holding that an agreement may not be entitled to be enforced, and yet not be so objectionable as to call for the exercise of equitable jurisdiction to rescind. We will therefore consider whether there is here any such unfairness or wrong to the Equiiable Trust Company that would warrant a court of equity to withhold its hand, and to refuse the present owners of the certificate of sale the usual master’s deed upon foreclosure.
The Equitable Trust Company liad several foreclosure suits of mortgages upon different parcels of land in the vicinity of the land in question. Mason Bros, were solicitors for the company in those suits. It was agreed between the company and its solicitors, at the outset, that in case the certificates of sale of the land should not be redeemed or sold, but a deed thereon should issue to the company, the solicitors should receive in full for their services the sum of $500; but that, if the certificates should be redeemed or sold so that the company would get the money thereon instead of the land, then their solicitors might charge and collect the sum of $2,500. It *684appears that at the time this arrangement was made the solicitors were informed by Mr. Kendal, the Western manager of the company, that the" certificates would be for sale to the first person that would pay their face value and interest, and he suggested to the solicitors that they should purchase the certificates. A similar arrangement seems to have been made with the master in chancery with respect to his fees and commissions. The sale took place on the 24th of June, 1889, and the owner, Edward G-. Smith, had 12 months thereafter in which to redeem* and his judgment creditors had 3 months thereafter in which to redeem. It is manifest that the Equitable Trust Company did not wish to acquire this land, but were anxious that the certificates should be redeemed or sold; that it was foreign to its business to become the owner of or to speculate in real estate, and that it was not desirable for it so to do. It is also true that Mason Bros, had such a contingent interest in the matter that they had the right to demand that the trust company should permit a sale of the certificates if a purchaser could be prbeured in order that they might receive their contingent fee. It was thus to the interest of and within the design of both parties that the certificates of sale should be disposed of. The mortgagor did not redeem within the year, and his rights were forfeited. It is, however, conclusively established by the decree of the state court that, after such failure to redeem, the Equitable Trust Company entered into an agreement with him to, sell to him the certificate upon payment of the amount on or before the expiration of the 15 months allowed io creditors to redeem, and this was without the knowledge of Mason Bros. The trust company, it is true, denied that any such agreement had been made with Smith, but it is manifest that the company was willing and anxious to receive from Smith or any other person the face value of the certificate, with interest, and were desirous that it should be sold.
It is not necessary for us to enter into the details of the allegations and admissions of this record; but it is clear to our minds that there existed the desire on the part of the company to sell, and that it was for the manifest interest of Mason Bros, that the certificate should be sold, and that they had right to demand it should be sold. Neither can we doubt that the trust company authorized a sale by Mason Bros. The controversy upon this point is, to our thinking, unsubstantial. Any hesitancy disclosed upon the part of the company would seem to have been grounded upon a disposition upon its part to allow the owner of the land full opportunity to redeem, in preference to the certificate passing to the possession of a stranger, and not to any desire to obtain the ownership of the lands.
It is said that during the summer of 1890 this land had risen largely in value, without the knowledge of the company, but to the knowledge of Mason Bros.; and that the latter concealed such knowledge from the company, when it was their duty to disclose it. The fact of such ignorance may well be doubted, since the Western manager of the company, Mr. Ivendal, was fully possessed of all information touching the land which Mason Bros, had, and his knowledge must be held to be the knowledge of the company. He and not *685Mason Eros, was (lie one who had charge of the affairs of the company at the West. Primarily it was his duty, not that of Mason Eros., to advise the company touching its interest in the lands. It is further to he observed that the certificate of sale was still subject to redemption, and the company had no absolute right to tin* lands. Tin* greater the value of the land, the more likely was the certificate of sale to he redeemed. The matter thus remained until within a brief period of the expiration of the time of redemption. Mason Eros., having an interest in the certificate of sale and a right to demand its sale upon producing a purchaser for it at its face value and interest, must: needs assist the company to obtain a purchaser, or their interest might he wholly lost. They procured a purchaser through a broker, the purchaser agreeing to pay to the broker his commission of 2-£ per cent., in the contingency that the em-tifíente should not be redeemed. The amount of the certificate and interest, and the commission, was paid by Oar son and Gliytraus to Mason Eros., the amount of the commission to be delivered to the broker only in case of failure of redemption. The amount paid for the certificate was remitted to the Equitable Trust Company, who has since retained, and did nol. make tender back of the amount until December 20, 1892, although it is to lie said that the company filed its cross hill to rescind the- sale in February, 1891. It, however, retained this large amount of money until the decree in the state court of December 14, 1892. Ey that decree Hmitli, by reason of default in compliance with the terms of the former decree, was adjudged to have forfeited all interest in the real ('state or in the certificate of sale. The trust company had permitted Carson and Gliytraus to take upon themselves the burden of the litigation, to defend their right against Smith both in the lower and in the supreme court of the state; and only when Smith’s right seemed extinguished was there a tender of the amount received. If such tender was necessary to discharge the company of an imputation of laches, we think it was too long delayed. It is not necessary to dwell upon this point, however, for we are satisfied that the sale by Mason Eros, was authorized by the company, and that they were guilty of no wrong or unprofessional conduct, in so doing. It cannot be said that in selling the certificate as iliev did, for the face value and ini crest, they were guilty of had faith towards their client in not seeking to obtain a larger sum. The time of redemption had not expired, and no sane man would have given a bonus for a certificate affected by the contingency of redemption. It is true (hat Mason Eros, received from the broker a portion of the commissions paid him by the purchaser. Whether the retention of the same by Mason Bros, may be considered to be in violation of their duty to their client we need not determine. If it was, the trust company has ample remedy in a direct proceeding against them. The fact cannot affect the validity of the sale to Carson and Chytraus. In what we have thus said we have not designed by one jot or tittle to abate the strict rule which the law imposes upon transactions between counsel and client. We should be the last to sanction the slightest act of bad faith towards the client upon the part *686of the solicitor, hut we have not heen able to see in this record, with the possible exception of the reception and retention of a portion of the broker’s commission, a single act which can be attributed to. them as a wrong. We do not mean to say that the reception and retention of a portion of the broker’s commission was a wrong. We do not deem it our present duty to pass judgment upon that.
It may he further observed, with respect to the alleged increase in the value of this land in the summer of 1890, that it was unimproved property in the outskirts of the city of Chicago, añd that its value was largely speculative. Whether any great profit could be realized from it depended upon the growth of the city in that direction, and required the expenditure of large sums of money in the laying out of streets and the construction of such improvements as are common with respect to urban property. These facts were known to Mr. Kendal in the summer of 1890, and before the expiration of the period of redemption. We cannot believe that the trust company, with the like knowledge, — for Kendal’s knowledge was its, —desired to embark in an adventure which required the expenditure of large sums of money, and the success of which was contingent and doubtful. Such a transaction would he wholly foreign to the business in which it was engaged. Upon the whole, we perceive no reason for the application of the doctrine invoked, that relief here should be denied upon the ground that it would be inequitable to grant it. The decree will be affirmed.