Demarest v. . Darg

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 283 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 284 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 285 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 286 The court admitted in evidence on the trial, the minutes of the testimony taken before the referee on the hearing of the matters referred to him, notwithstanding the objection and exception of plaintiff. I do not see any sound objection to their admissibility. They were taken from the files of the Supreme Court and were a part of the report of the referee upon which, with other documents and papers, that court based its final order of confirmation. They were a part of the record, and there was no reason for eliminating them from it. They showed that, in pointof fact, the question of fraud in obtaining the receipt and covenant on which this action is based, was litigated before the referee and before the court, on the motion for confirmation, and passed upon by both tribunals. And they were the best evidence of that fact. The points of counsel used on the argument before the Supreme Court were not admissible in evidence for any purpose; but they were wholly immaterial and under the direction given to the case by the court, could by no possibility have worked any harm to the plaintiff. I think, therefore, there was no error in the admission of evidence, calling for our interference with the verdict. The only other question for consideration is, whether the proceedings before the referee and in the Supreme Court, are to be regarded as res adjudicata of the right of the plaintiff to recover on the receipt and covenant in suit. The Supreme Court, pending the litigation of the question whether John Darg died intestate, appointed the plaintiff's assignor special receiver of the note which Mrs. Darg, as administratrix of John Darg's estate, had received of Ira Burge. It was finally determined that John Darg did die intestate, and Mrs. Darg was reinstated to all her rights as *Page 288 administratrix. In that character she was undoubtedly entitled to receive, for distribution, the proceeds of the Burge note, then in plaintiff's hands. The proper course of getting them would, undoubtedly, have been through the action and order of the court, which appointed the special receiver, and to whom only, in strictness, he was liable to account. But the receiver and Mrs. Darg, as administratrix, undertook to settle the matter between themselves, and in so doing, instead of paying to her the money, he turned out the bonds of a coal company in which he claimed to have invested it, and took from her the receipt and bond of indemnity on which this suit is brought. It was subsequently discovered, as claimed by Mrs. Darg, that the coal company's bonds were worthless, and that the receiver's representations, by which she was induced to take them, were false and fraudulent, and, therefore, as she insisted, the accounting and settlement between the receiver and herself was wholly ineffective. By the proceedings in, and orders of the Supreme Court, the whole question of the plaintiff's accounting, both as receiver of the rents and profits of Darg's lands, and as special receiver of the Burge note, were referred to referee Hobart in such manner that all parties interested, including Mrs. Darg, the administratrix, were entitled to, and did appear and contest the rights and liabilities of the receiver before such referee. In respect to the Burge note it was not disputed by the plaintiff but that he had received the full amount of it in money, but he insisted that he had fully accounted for it to the administratrix, and taken her receipt in discharge of all liability with her obligation to indemnify him. On the part of the administratrix, Mrs. Darg, and of some other interested parties, the settlement and receipt were attacked for the alleged fraud. The finding of the referee was in their favor, and the Supreme Court, after a contested litigation before it based on the referee's report and the evidence taken before him, confirmed the report of the referee in toto, so far as it related to this question. Under that confirmation Mrs. Darg was entitled to receive for her distributive share a large portion of the proceeds of the Burge note. By a subsequent *Page 289 order made in proceedings to punish the receiver for contempt, her proportion was ordered to be paid into the trust company, to abide the result of any action in respect to it to be commenced within thirty days; but this order expressly declared that it was not to be treated or considered as an adjudication of the rights, either of the receiver or of Mrs. Darg. To the action now brought upon the covenant of indemnity contained in her receipt, Mrs. Darg sets up in defense the same fraud which was litigated in the proceeding above mentioned, and also sets up those proceedings as res adjudicata of the question. I am at a loss to see any ground upon which it can be held that the issues of this suit were not finally determined in the proceedings referred to. Those proceedings were clearly within the jurisdiction of the court; and ultimately they embraced all the parties and all the questions that should have been brought before it. The receiver was an officer of the court, entitled to its protection and under its direction, but not subject to be prosecuted by action without its leave, but, according to its regular practice, to be brought to an accounting by a summary proceeding, in which the court would adjudicate upon and protect the equities of all parties. The court had ample power to protect the receiver in the settlement with, and payment to, the administratrix, of the proceeds of the Burge note, because she was the proper channel through which the proceeds were to be distributed; and there is no room, I think, for question but that for the fraudulent practices of the receiver he would have been protected against any further claim, although his act of making the settlement was not in accordance with the technical mode of relieving himself from liability. The point of controversy between the parties was the alleged fraud in obtaining the covenant and receipt now in suit. Upon that issue the parties contested the liability, and the receiver neither made nor had any other ground of contest. It may be true that the proceedings might have been so conducted as not to have involved that question, but they were not, and on the contrary they were so conducted as to *Page 290 involve no other so far as concerned the accounting for the Burge note. By this suit the same question is again put directly in issue. The judgment of a court of competent jurisdiction upon a point litigated between the parties is conclusive in all subsequent controversies when the same matter comes directly in question. (Embury v. Connor, 3 Comst., 522, and cases there cited;Doty v. Brown, 4 Comst., 71; White v. Coats-worth, 2 Seld., 137.) In the last cited case, EDMONDS, J., says: "I suppose it to be well settled that the judgment of a court of concurrent jurisdiction directly on the point is as a plea, a bar, or as evidence, conclusive between the same parties upon the same matter directly in question in another cause, or in other words, that the decision of a court of competent jurisdiction directly upon the same point is conclusive when the same point comes again in controversy between the same parties directly or collaterally." (See authorities cited by him at page 143.) There is no difference in the application of this rule whether the first adjudication be in a formal action or in a proceeding summary in its character. (Supervisors of Onondaga v. Briggs, 2 Denio, 33, and cases there cited; St. John v. Dwight, Court of Appeals, not reported.) The judgment in this case ought to be affirmed.