Gulling v. Washoe County Bank

By the Court, Noroross, J.: This court in its former opinion (28 Nev. 450) held with the trial court that because of the fact that the answer of the defendant Washoe County Bank was not served on its codefendant, Martin Gulling, in the suit of the Farmers’ and Mechanics’ Savings Bank v. Paniel Powell et al., and because of the further fact that the said answer of the Washoe County Bank did not mention Martin Gulling in the title of the action, or in specific terms set up a cross-complaint or cross-bill against him, and because of the further fact that in the answers of both Gulling and the Washoe County Bank in said action it was set out that each defendant appeared in response to the summons and in answer to the summons and complaint of the plaintiff, and because of the further fact that Gulling did not demur, answer, or otherwise plead to the said answer of the Washoe County Bank, — 259 — that no issue was raised between tbe said codefendants Martin Gulling and Wasboe County Bank in said action, and therefore the decree entered therein in favor of the defendant Washoe County Bank and against the defendant Gulling'was without jurisdiction and void, and hence does not constitute an estoppel in the present action. A further examination of this case convinces me that we were in error upon the intricate legal questions here presented. It does not seem to be seriously disputed in this case that had the answer of the Washoe County Bank, in the former action, set up its allegations by way of a cross-complaint or cross-bill against Gulling, and he had been served with the same, and that Gulling had, without objection, gone to trial upon issues thus raised, that he would have been bound by the decree in question. The error that this court, and I think the trial court, also, fell into, was in taking substantially the view that an issue between codefendants could not be raised and determined in a proceeding so as to be binding upon the parties, unless such issue was presented upon the face of the pleadings, and the pleadings’ duly served or a "waiver of service shown, and that in this case there was no issue raised upon the face of the pleadings, and the court found that no service between the said codefendants was made. It may safely, I think, be said that the judgment roll alone in the ease of the Farmers’ and Mechanics’ Savings Bank v. Powell et al. does not show upon its face a joinder of any issue between the said codefendants Gulling and Washoe County Bank. We shall, at least, for the purposes of this opinion concede that it does not. The principle, however, I believe is well settled in reason and authority that where the pleadings do not upon their face show the issue, if any, tried and determined between parties to an action, the same may be shown by extrinsic evidence. Black on Judgments, vol. 2, 614, p. 738, says: "The doctrine of res judicata does not rest upon the fact that a particular proposition has been affirmed and denied in the pleading, but upon the fact that it has been fully and fairly investigated and tried; that the parties have had an adequate opportunity to say and prove all that they can in relation to it; that the minds of the court and jury — 260 — have been brought to bear upon it, and so it has been solemnly and finally adjudicated. Now, these conditions are fully met when any question, though foreign to the original issue, becomes the decisive question, the turning point in the case. In that event it will receive just as full and exhaustive an examination as if it were the sole subject-matter of a distinct and independent suit, and therefore should be considered as much settled by the judgment as if it stood alone as the issue in the case. For these reasons, the more correct doctrine is that the estoppel covers the point which was actually litigated and which actually determined the verdict or finding, whether it was statedly and technically in issue or' not. Numerous cases incline to this view, and many attempts have been made to formulate a satisfactory statement of the true rule. Thus it has been said that the matter in issue or point in controversy is that ultimate fact or state of facts in dispute upon which the verdict or finding is predicated. Again, it has been held that, if a particular matter which was not necessarily involved in the issue, but which th§ issue was broad enough to cover, actually arose and was determined, it may be connected with the record by evidence aliunde. In a well-considered case in Nevada the court thought it was not necessary that the particular point 'should have been directly and specifically put in issue by the pleadings, but it is sufficient if it is shown that the question which was tried in the former action between the same parties is again to be tried and settled in the suit in which the former judgment is offered in evidence. But, when the fact is not directly put in issue by the pleadings, and it was not a fact necessarily to be passed upon before judgment could be rendered, then parol evidence is admissible to show that the same fact was submitted to and passed upon by the jury in the former action. If this be not done, the. judgment would, as evidence, be conclusive of nothing but the material facts directly put in issue by the pleadings, or such as it was necessary to pass upon in finding the verdict or rendering the judgment.’ (Sherman v. Dilley, 3 Nev. 21.) * * * In all cases, therefore, where it is sought to apply the estoppel of a judgment — 261 — rendered upon one cause of action to matters arising in a suit upon a different cause of action, the inquiry must always be as to the point or question actually litigated and determined in tbe original action, not what might have been thus litigated and determined. Only upon such matters is the judgment conclusive in another action.” Again, in section 624, the same author says: "It is now fully settled upon the authorities that extrinsic evidence, when not inconsistent with the record and not impugning its verity, is admissible for the purpose of identifying the points litigated and decided in a former action between the same parties, when the judgment therein is set up as a bar or estoppel in the case on trial. * * * The record must show that the same matter might have come in question on the former trial, and then the fact that it did come in question may be shown by extrinsic proof.” See, also, Freeman on Judgments, vol. 1, 272, 273; Van Fleet’s Former Adjudication, vol. 2, 413; 24 Am. & Eng. Enc. Law, p. 732; 23 Cyc. 1304. . The reasons supporting the foregoing rule will certainly apply as strongly to a case where parties to an action have, in their pleadings, set up allegations of fact which would have raised an issue between them, providing the same had been set up with the due formalities of pleading and service of the same been made, and it is simply a question whether the parties, regardless of such lack of formality in pleading and want of service, have, nevertheless, appeared in court and actually treated the pleadings as raising issues between them, and, without objection, have tried, argued, and submitted such issues for the determination of the court. In the light of the foregoing rule, is there proof in this case showing that, regardless of the fact that the answer of the Washoe County Bank was not served upon Gulling and that an issue was not strictly raised upon the pleadings, the decision of the trial court was, nevertheless, based upon issues actually litigated between the said parties to the former action? A careful investigation of the record in this case, with the view of the application of the rule stated, convinces me that there is undisputed evidence in the record that the two codefend262 ants, Gulling and Washoe County Bank, treated each other as adverse parties and actually litigated the issues which the decree in that case purports to determine. In the trial of the present cause, appellant offered in evidence, in support of his plea of res judicata, the papers filed in the former case, and the record shows that' they were admitted without objection. In the complaint of the Farmers’ and Mechanics’ Savings Bank, a decree of sale of the premises covered by the trust deed was prayed for "in case the same is not sold by said trustees prior to the entry of judgment herein.” Before the case came on for. trial the trustees did sell the property under the provisions in the trust deed, and the plaintiff from the proceeds of such sale received the amount of the indebtedness due it. It then filed in the action a disclaimer of any further interest in the action, and prayed that its complaint be dismissed. When Culling filed his answer to the plaintiff’s complaint, he admitted all the allegations of the complaint, and that his mortgage was subsequent to and subject to the trust deed of the plaintiff, and alleged that it was "presented for the pur pose of having the same adjudicated in this action and finally determined by the court in said action.” He further included in his answer the following allegations: "And the defendant, Martin Culling, avers that in addition to the plaintiff, corporation, certain others, to wit, Thomas E. Haydon, Henry Anderson, B. N. Steinman, C. H. Cummings, and others, whose real names are unknown to this defendant, have, or claim to have, some interest or claim upon said premises as purchasers, mortgagors, judgment creditors, or otherwise, which interest or claims are subsequent to and subject to the lien of this defendant.” He then prayed for the usual decree of foreclosure and sale, and "that the proceeds of said sale be applied, first, to the payment and satisfaction of any judgment, the plaintiff, Farmers’ and Mechanics’ Savings Bank, a corporation, may secure in said action; and, second, in payment and satisfaction of any judgment this defendant may obtain herein.” When the plaintiff in said action filed its disclaimer and prayed that its complaint be dismissed, none of the numerous defendants appeared to have asked that — 263 — the action be dismissed, but, upon the contrary, the cause came on for trial and each sought to have his rights adjudicated. There never was any real issue or controversy between the defendant Gulling and the plaintiff in said action. When Gulling elected to remain in the action after the plaintiff had disclaimed and prayed to be dismissed, he, in effect, assumed the character of plaintiff. That he sought to have his mortgage foreclosed in that action is indicated by the fact that "h.e submitted evidence and proofs.” He could not properly seek to have his mortgage foreclosed without the holder of the legal title to the land being brought into the action, and, as to him, made a defendant. Begardless of the form of Gulling’s pleading, its allegations were essentially directed against the holder of the legal title to the mortgaged premises. The Washoe County Bank, at the time of the trial, held the legal title to the land in question, and, in any action in which Gulling sought a foreclosure of his mortgage, was a necessary party, and, in effect, would constitute a defendant as against Gulling. There is evidence which goes to show that both Gulling and the Washoe County Bank recognized this as the situation of the case. Gulling had been served with notice that the trustees, Steinman and Cummings, were proceeding to sell the premises under the trust deed. Even if Gulling had not been served with the answer of the Washoe County Bank, it cannot be said that he did not have knowledge that the defendant bank had filed an answer of some sort, for he stipulated with the said bank for the taking of testimony of witnesses at Sacramento for the purpose of proving the trustees’ sale, and he was advised of the nature of the testimony sought to be adduced, for he acknowledged service of copies of the interrogatories to be propounded. This stipulation was entered into nearly four months after the plaintiff had filed its disclaimer and prayed to be dismissed. The evidence sought to be obtained by the Washoe County Bank can scarcely be said to have been obtained for the purpose of establishing any issue between it and the plaintiff. With the complaint of the plaintiff practically out of the case, the answer of the Washoe County Bank could have no — 264 — function in the proceeding other than as a defense in the nature of an answer or cross-bill to the defendant Gulling’s cause of action. If not before, Gulling was at the time of the trial advised of the purport of the Washoe County Bank’s pleading. If, without objection, he went to trial, seeking upon his part a foreclosure of his mortgage, with the Washoe County Bank, upon the other hand, setting up the ownership of the legal title to the land in controversy, and alleging facts which it claimed cut off Gulling’s right to a foreclosure, it is difficult to see how Gulling did not consent to a trial of. the issues of fact and law thus presented, irrespective of the form and character of the pleadings, or the nature of the service in the action. If he did so consent and did so proceed to try the issues thus presented, he is as much bound by the decree as he would be under the most formal pleadings and service, for the court would then unquestionably have jurisdiction of both the parties and the subject-matter. In addition to the fact that it appears that Gulling proceeded with the trial of the case, there is evidence in the record, admitted without objection and standing without contradiction, tending' to prove that the codefendants Gulling and Washoe County Bank proceeded to try and did try the issues actually determined and set forth in the decree. In the opinion of Judge Cheney, rendered in the cause in question, we find the following: "There is no serious controversy concerning the facts of this ease. The real issue is one of law between the defendants, the Washoe County Bank, as purchaser under the trustees’ sale, and Martin Gulling, as mortgagee, under a mortgage made subsequent and subject to the conveyance called a 'trust deed,’ and by virtue of which the sale was made. * * * Something was said upon the argument about the price for which this property sold being inadequate, and the place of sale being unfair and oppressive. Several sufficient answers may be made .to this. * * * It is further urged that a great hardship will be wrought upon the second mortgagee if the defendant bank is held to have acquired the legal title to this property,” etc. These extracts from the opinion of the trial judge indicate most strongly that both counsel for Gulling and the Washoe — 265 — County Bank must have entered into an argument of the legal questions presented' from the proofs offered by Gulling on the one hand, and the bank upon the other. If the parties were not trying those issues, I cannot see upon what theory they were arguing their legal effect to the court, unless the argument was subject to some reservation not disclosed by the record. After the decision was rendered the defendant bank submitted findings, to which the. defendant Gulling interposed certain objections and amendments, and these objections and amendments came on regularly for settlement, and counsel for Gulling participated in such settlement, but it nowhere appears in the record disclosed in this case that the defendant Gulling ever raised a question that the trial court rendered a decision upon issues not presented to the court for determination. No appeal was ever taken from the judgment, and, so far as the record here shows, no attempt was ever made to have it set aside or its regularity questioned in any particular. Whether the court would have been authorized to have proceeded with the trial of the cause, after the plaintiff had withdrawn from the ease, over the objection of any of the other parties to the suit, is not before us for consideration, nor is the question of the character of the pleadings filed, for the record does not disclose that any objection thereto was ever made. It has been very strenuously contended by counsel for respondents upon this appeal that Martin Gulling in the former action was in court for certain purposes, but not for the purpose of trying the issues which the court in fact determined. This point was given great weight by this court in its former opinion, but further examination and consideration convinces me that the undisputed evidence shows that he remained in the case for the purpose of trying, and that he actually did try, the issues which the decree of the court determined. As I now view this case, the record shows that the pleadings were in such shape that, without objection and by the consent of the parties, the issues determined'by the trial court in the former proceeding might have come in question, and the uncontradicted proof offered shows that such issues, by the consent of the parties, did come in — 266 — question, were litigated, and determined. There may be evidence, not offered upon the trial of this case, contradictory to that presented in the present record, which would show, or tend to show, that the questions determined by the trial court in the case of Farmers’ and Mechanics’ Savings Bank v. Powell et al. were not, in fact, litigated by the parties to this action, or that, if such questions were presented, argued, and submitted, it was subject to some objection or reservation which might not make the decision binding. However, unless the evidence contained in the present record is overcome, I think it cannot be said that the plaintiff herein is not estopped by the ' decree entered in the said suit instituted by the Farmers' and Mechanics’ Savings Bank. No proposition of law is more thoroughly settled than that, when issues between parties to an action have once been tried and finally determined, whether such determination is erroneous or not, the same questions cannot again be litigated by such parties or their privies. As this case now appears, the matters now sought to be litigated were tried and determined in the case of Farmers’ and Mechanics’ Savings Bank v. Powell et al., in which case the parties to this proceeding were codefendants. For the reasons given, the judgment and the order of the trial court are reversed, and the cause is remanded for a new trial. FITZGERALD, O. J.: I concur.