Otterson v. Middleton

Mr. Justice Green delivered the opinion of the court, February 5th 1883. The assignment by Samuel S. Noreross of his interest in the ten thousand dollar legacy given by the will of Edward P. Middleton, was executed and delivered to Graham the assignee on April 3d 1877 ; the attachment in execution of George W. Middleton, upon the interest of Norcx-oss in the same legacy was issued on Apx-il 17th 1877. Mi-s. Noreross, upon whose death the legacy was payable, died on the evening of April 4th 1877. The trustees who held the entire legacy of ten thousand dollars for the use of Mrs. Noreross during her life, and of the legatees in remainder after her death, having filed their account, the same was called ■ for audit before Judge Hanna of - the Orphans’ Court, on June 6th 1877. At the hearing, before Judge Hanna, John Gx’aham, the assignee of S. S. Noreross, appeared and claimed all the interest of the latter in the fund in the hands of the accountants by virtxxe of tlie assignment. He had previously filed a petition in the Orphans’’ Court -setting forth Ixis intei'est in the fund and the method of its acquisition, to wit, by means of the assignment from S. S. Norcx-oss. In the petition he aveiTed that he had paid $2,000 to Norcx’oss as the purchase money of his interest in the fund, and that thereby he became the absolute owner of the entire interest of Noxcross in the legacy, axxd he prayed for an order awarding the share of Noreross to him. This petition was sworn to and subscribed on May 22d 1877, and was duly filed in the Orphans’ Court. At the heading before the auditing judge the attaching creditor, George W. Middleton,- also appeared and was represented — 84 — by counsel. Two other attaching creditors also appeared by counsel. The auditing judge reports that, “ the sole question before the court was as to who was entitled to the distributive share of Samuel S. Norcross in the legacy which formed the corpus of the trust estate. On the one hand'it was claimed by John Graham who alleged he was the bona fide purchaser for value of the interest and share ; and on the other hand it was claimed that the amount of the share of Norcross should be directed to remain in the hands of the accountant to await the final determination of certain attachments sur judgment issued by creditors of Norcross against the'accountants as garnishees.” The Judge then reports the facts disclosed by the testimony, and finds that Graham purchased the interest of S. S. Norcross for the sum of $2,000 by agreement in writing on April 2d 1877, giving his note for the amount payable one day after date, and that on the next day he took a regular assignment of the legacy and paid the note by giving his check for the amount of it, on which S. S. Norcross drew the money on the same day. He further reports that Norcross was indebted at the time to various persons, but that Graham was ignorant of this fact. He then mentions the several attaching creditors, and gives the dates at which their respective writs were issued and concludes thus: “ It clearly appeared from the évidence that Mr. Graham became and was the bona fide owner of all the interest and share of Samuel S. Norcross in the said legacy of $10,000 at tire time of the death of Mrs. Norcross, and that his purchase of the same, and payment of the sum of $2,000 therefor was completed prior to the issuing of anj7 or either of the attachments against said Norcross as defendant, and the trustees as garnishees.” He then awards the share of Norcross in the legacy to Graham. The decree was made June 8th 1877 and it does not appear that it was ever excepted to or appealed from, or that any application has ever been made to the Orphans’ Court to have it opened on the ground of fraud or for any other cause. It is therefore-the final decree of a court of competent jurisdiction disposing of the fund in controversy in the present proceeding. Upon.looking at the testimony taken before the Orphans’ Court upon the claim of Graham under his assignment, it appears, that almost the whole of it, after the technical proof of execution of the assignment was given, related to the good faith of the transaction. The first testimony on this subject was brought out on the cross-examination of the subscribing witness Wilkinson. The witness was called by Graham and testified only to the execution of the instrument. He was then cross-examined by the attaching creditors as to the facts within his knowledge relating to the acquisition by Graham of the interest of Nor-cross in the legacy. He testified to what was said and done by — 85 — Graham and Norcross when they came to his office and told him that Graham had purchased the interest of Norcross for $2,000 and that they wanted an assignment drawn. The cross-examination was a clear and proper inquiry into the consideration and good faith of the transaction. After that two more witnesses were called — George Strong, and John Graham the claimant— and the whole of their testimony both upon examination in chief and upon cross-examination related to the manner in which the interest of Norcross was acquired by Graham, and the consideration that was paid for it. Graham, in reply to a question on cross-examination, testified that he.“got enough from the Baring Building Association to make up the money.” His checkbook and bank-book were also given in evidence. All the details of the transaction were fully proved. Now, -while it is true that it does not appear that a distinct allegation was made 'that the transaction was a fraud, yet it is equally true that the validity of the assignment, in respect of the consideration that was paid for it, was at issue, was investigated, and was adjudged. It is also true that Middleton, the attaching creditor in the present proceeding, was a party to that issue, and was heard in regard to the very subject matter of the present inquiry, the validity of the assignment. Testimony was offered and admitted under exception, on the trial of this case, to prove, by the declarations of Graham, that he had not paid the $2,000 for the interest of Norcross in the legacy, and upon this evidence alone the determination of the issue of fraud in the transaction was rested. But on that issue, on the hearing in the Orphans’ Court, testimony was taken, and ample opportunity was afforded for giving whatever additional evidence might have been offered on the same subject. It seems that no more was offered, but now certain additional testimony has been discovered .which, had it been then known, might have been. given in the Orphans’ Court. It is a case of after-discovered evidence for which a court will, in the exercise of its sound discretion, grant a new trial in an ordinary common law action, if satisfied that the party asking it was reasonably diligent in searching for testimony before trial, and failed to discover it. But we do not understand that an issue of fraud, when once actually tried and determined, has any greater sanctity in this respect than any other issue. Undoubtedly, any court which has been induced by fraud to render a false judgment will readily entertain an application to set such judgment aside, and will gladly exercise its power, if satisfied of the truth of the allegation. But it by no means follows that some other tribunal, in a collateral proceeding in which such a judgment is offered as conclusive of the matters determined by it, will disregard the judgment, re-open the issue, and determine it as — 86 — though it had never been adjudged. If the parties are different, especially if the party seeking redress had no participation in the original trial and judgment, and if the issue of fraud was not then raised and decided, it is well settled that such original judgment may be impeached collaterally for fraud. This we understand to be. the import of the rule upon this subject. It seems to be clear that when the person sought to be affected by the former judgment or decree was a party to it, and the same issue of fraud was then heal’d and determined, and he there participated in the trial of that issue, he is bound by that judgment or decree, and cannot impeach it afterwards in a collateral proceeding. His remedy is to apply to the court in which the judgment or decree was rendered to have it opened or vacated. The whole subject was exhaustively discussed by Mr. Justice Sergeant in delivering the opinion of this court in the case of Hoffman v. Coster, 2 Whart. 453. He says on page 472, “ It is contended by the plaintiff that fraud and collusion constitute an exception to the general rule, and that persons to be affected by such fraud and collusion may prove them, and thus avoid the effect of a judgment or decree, otherwise binding. Here, however, it is necessary to distinguish. The general rule is, that wherever a matter comes to be tried in a collateral way, the decree, sentence or judgment of any other court having competent jurisdiction, shall be received as conclusive evidence of the matter so determined. That is to say, when it is legally received in evidence such is its operation and effect — it is conclusive, and evidence is not admissible to contradict it.” . . . “In such cases, if the proceeding were adversary in its character, it is ordinarily binding, and cannot be controverted. It is not permitted a third person to allege that the decree, sentence or judgment of a court of competent jurisdiction was obtained by imposition, fraud or forgery practiced on the court, or by mistake wrong or injustice. The merits cannot be thus overhauled and re-examined in a collateral proceeding, It is either not at all admissible in evidence as to third persons, or if admissible, is conclusive as to everything it' directly decides as (to) the matter in question — though not as to inferences that might be drawn from it.” . . . “ The only exception to the rule which has been allowed of, when such judgment or proceeding is given in evidence against third persons, is, that they may aver and prove that such judgment or proceeding was procured or kept on foot by covin or collusion between the parties to it: and in sueh case, though binding between themselves, its operation as to third persons may be defeated.” . . . “ But the exception does not apply to parties or privies. The record is conclusive evidence against them in a collateral proceeding; and they cannot invalidate it by giving — 87 — evidence of fraud, but must apply to tbe court which pronounced the judgment to vacate it.” A number of authorities in point are cited in the opinion which need not be repeated here. In 2 Whart. Law of Evidence § 798, the rule is stated in the same manner tlnis: “ It must be remembered at the same time that when a party has the opportunity of applying to the court entering the judgment, to open it, he must do so, and cannot resort to a collateral attack. Thus in a case decided in New York in 1876, it is said by a learned judge, ‘ The judgment could not be impeached collaterally, nor could the same facts be retried between the same parties. The offer of the plaintiff was in effect to retry the issue. Judgments may be impeached in equity for fraud, but for no other reason. The remedy of the plaintiff was by application for a retrial in the superior court, or for other relief if the judgment had been procured by false or mistaken testimony, and other evidence had been discovered by which the truth could be established.” Krekeler v. Ritter, 62 N. Y. 872-374-5. In 1 Phill. Evid. 346 (2d edition) the subject is thus presented. “It has been before mentioned that judgments and sentences of courts of justice, or any other judicial act may be impeached by evidence of fraud or collusion. And such evidence was adjudged to be admissible on the part of the prosecution in the case of the Duchess of Kingston, who was tried for polygamy. A distinction in this respect has been made between the case of a stranger (who cannot come in and reverse the judgment and therefore of necessity he must be permitted to aver, that it was fraudulent) and the case of a party to the proceedings ; the party himself cannot give evidence of fraud, but must apply to the court which pronounced the judgment, to vacate it.” In the case of Heller v. Jones, 4 Binn. 61, this court held that where a judgment creditor who had bought the defendant’s lands at sheriff’s sale and conveyed them to A., appeared to a scire facias post aun., &c. by another judgment creditor against the same defendant, gave notice that he should insist upon fraud and combination between plaintiff and defendant as a defence to the scire facias, and in other ways took part in the cause, but did not attend at the trial nor give any evidence, and of course a verdict and judgment were entered for the plaintiff ; A. knew and approved these acts and had a bond of indemnity from the judgment creditor first mentioned against all other claims to the land, it was not competent to A. and the judgment creditor or his representatives afterwards to controvert the judgment upon the ground of fraud. The same doctrine was applied in the case of Benton v. Bergot, 10 S. & R. 240, where fraud- was set up against a foreign judgment in an action on it in this state. It was held that if the party had — 88 — notice and the court had jurisdiction, the foreign judgment could not be impeached for fraud, imposition, mistake or want of consideration, in the trial of the action upon the judgment in this state. Numerous cases might readily be cited to the same effect, but it is unnecessary. They all proceed upon the same idea. If the party who alleges fraud in the original judgment or decree has already been heard or had an opportunity to be heard in that proceeding, upon that same fraud, he is concluded and cannot retry it in a collateral proceeding. The cases cited in opposition will be found on examination not to contain these elements and they are therefore inapplicable. The strongest of them is Jackson v. Summerville, 1 Har. 359. In that case the children of Ruth Summerville were the plaintiffs but they were not parties to the previous action of partition in which the fraud was perpetrated. Their parents were parties in that action but pending the proceeding they conveyed their interest to Jackson, by the deed which was claimed to be procured by fraud. No question was made in the action of partition as to the validity of the deed ; it was accepted and acted upon as a perfectly lawful instrument and on the faith of it the land was adjudged to Jackson. This is expressly stated in the opinion of this court as a reason why the decree in the action of partition might be collaterally impeached. On p. 368 Coulter, J., says, “ But there never was a judgment or decree upon the question whether the deed from Summerville to Jackson was ■obtained by fraud. That decree was rendered upon the faith •of the fact that the Summervilles were legally and honestly ■represented by Jackson.” In the case of Chambers v. Baugh, 2 Oas. 105, referred to in the opinion of the court below, no ■question was raised in the Orphans’ Court as to the validity of ■the assignment, and hence there had been no adjudication, nor ■even any hearing upon that subject in that court. It was •strongly indicated in Commonwealth v. Trout, 26 P. F. S. 379, ■that the mere opportunity to interpose and object to the contfirmation of the sale and the distribution of the proceeds, if not ■embraced and acted upon, would debar the parties alleging fraud therein from setting it up in another proceeding. The question of the power of courts of equity to investigate judgments and decrees obtained by fraud and to give relief in such cases is not before us as this is not such a proceeding. It is therefore unnecessary to consider the extent, or the limitations of the doctrine, or the circumstances in which the power will be exercised or withheld : Cochrane v. Eldridge, 13 Wr. 365, in which it was fully considered, was not a case of that kind, but was an ordinary application to open the fraudulent judgment itself, in which the court had undoubted power to investigate — 89 — the fraud and administer all the relief sought. The conclusive character of decrees of the Orphans’ Court upon subjects within its jurisdiction, and the exclusiveness of its jurisdiction to inquire and determine all matters relating to the distribution of the estates of deceased persons, were so fully discussed and so emphatically declared in Dundas’s Estate, 23 P. F. S. 474 that no further consideration of it is demanded now. It is not at all disputed by the defendant in error in this case. Indeed in Otterson v. Gallagher, 7 Norris 355, the very decree of the Orphans’ Court sought to be impeached in the present case, was considered by this court in an attachment proceeding instituted by another of the attaching creditors. Mr. Justice Pax;son on p. 358 said, “The parties to this contention claimed the same fund, the one by an assignment, the other by virtue of his attachment which is a species of statutory assignment. There can be no doubt of the power of the Orphans’ Court to decide between these conflicting claims.” We have then the case of a decree of a court of competent jurisdiction in a proper proceeding, after hearing, argument and decision, upon the same issue now raised, and between the same parties now contending, and we are clearly of opinion it is conclusive upon those parties until reversed on appeal, or opened and set aside by the court which made it upon application for that'purpose. To hold otherwise would be a wide departure from long and firmly established principles, would introduce a strange confusion in the practice of the courts, and would result in a conflict of jurisdiction which might become very embarrassing in many cases. The assignments of error are all sustained. Judgment reversed.