Metcalf v. Gilmore , 63 N.H. 174 ( 1884 )

Gilmore, without authority, loaned $3,000 of Metcalf's money to Horsman at 15 per cent. interest. Metcalf subsequently ratified the loan, the full amount of which was ultimately paid to Gilmore, who remitted to Metcalf a little more than the principal sum with 10 per cent. interest. The present suit is brought to recover the difference. In 1870, Gilmore, claiming that Metcalf had not ratified the loan to Horsman, and was therefore entitled to receive only the sum of $3,000 with interest at 10 per cent., brought a suit against Metcalf in Illinois to recover back about $38 which he had paid to him by mistake, as he alleged, over and above that amount. In his specification he credited Metcalf with $3,000, and charged him with the sums remitted. Metcalf filed a set-off, charging Gilmore with the moneys received of Horsman, and crediting his payments, but subsequently withdrew it, and the case was tried upon the general issue. At the trial Metcalf contended that he had ratified the loan, set up by way of recoupment all the items of money paid by Horsman to Gilmore on account of the loan except the first item in his specification in this suit, and introduced evidence in support of them. Gilmore conceded that if he was liable for the moneys received of Horsman, he was not entitled to recover. The court instructed the jury that if Metcalf did ratify the Horsman loan, or elect to treat it as his own, Gilmore was liable to him for the moneys received of Horsman; otherwise, he was not. The jury returned a verdict for Gilmore, upon which judgment was rendered. In Illinois, under the general issue the defendant may recoup or show matters in defence sufficient to overcome the plaintiff's cause of action, but cannot have any affirmative verdict or judgment in his favor.

Setting up a claim by way of recoupment in answer to an action has substantially the same legal effect as a set-off in jurisdictions where under the statutes of set-off the defendant cannot have judgment for the balance which may be found due to him, as, for example, in England. There, if the judgment is against the set-off, it is a bar to any subsequent suit upon it (Eastmure v. Laws, 5 Bing. N.C. 444); but if it is in favor of the set-off, the defendant may in a subsequent suit recover the remainder of his demand, if it is divisible, and possibly even though it is indivisible in its nature. Hennell v. Fairlamb, 3 Esp. 104; Britton v. Turner,6 N.H. 495. However this may be, if the defendant's demand is divisible, he may plead as a set-off or set up in recoupment so much of it as may be requisite to overbalance his indebtedness to the plaintiff, and maintain an action for the remainder. Bailey v. O'Connor, 19 N.H. 202; Secor v. Sturgis, 16 N.Y. 548; Millard v. Missouri, K. T. Railroad, 86 N.Y. 441.

Metcalf's claim for the moneys received of Horsman was divisible. Upon the payment by Horsman of each item, a distinct cause of action arose in favor of Metcalf and against Gilmore for the amount of that item. The judgment obtained in Illinois is conclusive that Gilmore does not owe Metcalf the several items which Metcalf in that suit set up in recoupment; but upon the question whether he owes to Metcalf the item not so set up, it is neither conclusive nor evidence. That part only of Metcalf's claim which he presented and asked to have allowed to him was adjudicated It is not material that the remainder of his demand depends upon the same evidence which he introduced in that suit. Although a ratification of the Horsman loan, or the want of it, was the evidence upon which the parties respectively relied to maintain the issue whether Gilmore did or did not owe the moneys set up in recoupment by Metcalf, and the validity of the remainder of Metcalf's claim depends upon the same evidence, it was not the matter in issue within the meaning of the rule as established in this state. The judgment, therefore, does not conclude the parties upon the question of ratification. King v. Chase, 15 N.H. 9. The distinction is between facts, which, being alleged in pleading, constitute a good cause of action or a good defence, and facts which are merely evidence — between facts which upon the fact of the pleadings are essential to be established by one party or the other, and facts which upon the face of the pleadings are immaterial, and become material only by the course of the evidence. A judgment is conclusive upon the parties and privies of such of the former class of facts as are actually tried, but never of any of the latter class of facts, although they may be the only questions litigated. In an action of trover, under a plea of not guilty, the plaintiff's title to the property and its conversion by the defendant are the only facts material upon the face of the pleadings to be established by the plaintiff or to be refuted by the defendant, and of one or both of these facts alone will a judgment in the cause be conclusive upon the parties in a subsequent suit between them upon a different cause of action. If, for example, the action is for the conversion of a horse, nothing could be more immaterial upon the face of the record than whether the defendant was upon the day of the alleged conversion in the village of B; but upon the introduction of evidence by the plaintiff that the defendant hired the horse to drive to A, it becomes apparent that whether or not the defendant drove the horse to B is a question of vital importance, which may turn upon the further question whether or not the defendant was upon that day in the village of B. To establish the fact that he was, the plaintiff may produce as evidence a promissory note, payable to a stranger and indorsed to him, bearing date upon the day in question, and purporting to be signed by the defendant, together with testimony that it was signed by the defendant in the village of B on the day of its date. To this the defendant may answer that the note is a forgery. And so it may happen, much to the surprise of both parties, that at the end of a long trial the only controverted question is whether the note is genuine or a forgery, insomuch that instructions to the jury to return a verdict for the plaintiff or for the defendant, according as they may find that the note is or is not genuine, would be entirely correct, and all that the case called for. Should the defendant prevail, and the plaintiff subsequently bring a suit against him upon the note, the judgment in the former suit would not be a bar, or conclusive that the note was a forgery.

Wendell v. Moulton, 26 N.H. 41, was a writ of entry. The defendant claimed title by adverse possession, and prevailed. Upon the trial he introduced as his principal witness the party under whom he claimed, who testified that he entered upon and took possession of the demanded premises in the fall after he became twenty-one years of age; that he was born in 1795; and that he therefore knew that he made the entry in the fall of 1816, nearly twenty-one years prior to an interruption of the possession by the plaintiff. The time of the entry by this witness was the principal question in dispute; — if it was made in 1816 the defendant, if in 1817 the plaintiff, was entitled to the verdict. The witness was mistaken: he was born in 1796, and made his entry in 1817. Had the age of the witness been the sole question upon which the issue ultimately turned, and the only one submitted to the jury, as it might have been, the judgment would not have concluded the plaintiff, in a subsequent suit for the possession of other lands claimed by the defendant under the same title and by virtue of the same entry, from proving that the witness was born in 1796, as the record of his birth, afterwards discovered, showed was the fact, nor from otherwise proving that the entry was made in 1817.

These examples serve as illustrations, both of the rule as it prevails in this state, and of the reason for it. The doctrine of the conclusiveness of a judgment rests upon the consideration that the parties have once had a full and fair trial of the matter sought to be drawn a second time in question. One of the elements essential to such a trial is, that they have reasonable notice of the question to be tried, and an opportunity to obtain and present all the evidence bearing upon it. Under the rules of pleading and practice, framed to the end that the final investigation of the issues may result in the exposure of error and in the ascertainment of truth, the parties have such notice of all questions which arise upon the face of the pleadings, and ample time to search for and to produce the evidence respecting them. It is not so with matters of evidence: they may not, and from the nature of the case often cannot, receive that searching and exhaustive scrutiny which is given to matters directly in issue. A party may not be, and ordinarily is not, informed in advance of the testimony of his adversary, and hence may not foresee the effect of his own evidence when it comes to be collated with it. Evidence which when introduced is conceded to be true, and seems decisive, may be met and overturned by other evidence in the nature of a confession and avoidance, which in like manner may in its turn be met and overthrown. Had the plaintiff, in Wendell v. Moulton, seasonably discovered the record of the witness's birth and put it in evidence, the defendant might have replied that it was a forgery. It happens not unfrequently that a cause finally turns upon the existence or non-existence of a particular fact of which neither party at the outset had any knowledge or suspicion. The plaintiff, in the first case used as an illustration, might not anticipate that the defendant would assert the note to be a forgery; nor the defendant, in the other case, that the plaintiff could, had time been given him, demonstrate by the record of the witness's birth that he was mistaken. In neither case could time or opportunity be given during the progress of the trial to investigate those matters: upon them there was not and could not be that full and fair trial which lies at the foundation of the doctrine that a judgment is conclusive between the parties of the facts adjudicated by it. It would be unjust to hold that the plaintiff in the one case was forever precluded from showing that the note was genuine, or the defendant in the other from showing the actual date of the entry by the witness. If they were the only questions of fact ultimately in controversy and submitted to the jury, they were not the questions which the parties set out to try, or which in a legal sense they did try. 1 Gr. Ev., s. 528.

There are doubtless many cases where each party knows in advance the evidence to be adduced by the other, and that the cause must turn upon the effect or validity of that evidence. In King v. Chase both parties probably understood from the beginning that; their rights depended upon the validity of the mortgage. In such cases no wrong would be done by holding the judgment conclusive upon the question actually tried. But a rule that a judgment is conclusive of a fact, in case it appears clearly that the cause turned exclusively upon it, and that it was after due notice to the parties fully tried, would be impracticable of application. In many instances it would be more difficult to ascertain whether the case fell within the rule, than to determine the principal cause on trial. For these reasons, among others, it was that the court in King v. Chase (which has become a leading case, and is believed to be in accord with the weight of authority) established the doctrine, for this state at least, that a judgment is conclusive only upon the matter which was directly in issue upon the former trial, and that. the matter in issue within the meaning of the rule is that matter upon which the plaintiff proceeds by his action, and which the defendant controverts by his pleadings. This rule is recommended by its simplicity, definiteness, and comparative case of application, as well as by the justice of its operation.

There is a difference sometimes overlooked between the effect of a judgment as a bar to the prosecution of a second action for the same cause, and its effect as an estoppel in another suit between the same parties upon a different cause of action. In the former case, a judgment on the merits is an absolute bar to a subsequent action: it concludes the parties, not only as to every matter which was offered and received to sustain or to defeat the suit, but also as to any other matter which might have been offered for that purpose. But in the latter case, the judgment in the prior action operates as an estoppel only as to those matters which were then directly in issue, and either admitted by the pleadings or actually tried. Cromwell v. County of Sac, 94 U.S. 351; Howlett v. Tarte, 10 C. B. N. S. 813.

The position, that the effect of the judgment must be determined by the laws of Illinois, has not been pressed, and cannot be sustained. Congress, if it has the power to do so, has not provided that a judgment, when offered in evidence or pleaded in bar in a suit between the same parties, but upon a different cause of action. in another state, shall have the same effect as would be given it in the state where it was rendered. U.S. Rev. St., s. 905; Sto. Const., s. 1307; Sto. Conf. Law, s. 609; M'Elmoyle v. Cohen, 13 Pet. 312; Bank v. Dalton, 9 How. 522, 528; Wilbur v. Abbot,60 N.H. 40.

The plaintiff is entitled to judgment for the amount due upon the first item of his specification, $98.33, with interest at 6 per cent. from April 24, 1855.

Judgment for the plaintiff.

SMITH, J., did not sit: the others concurred.