Tomiyasu v. Golden

OPINION By the Court, Badt, J.: In 1959 appellants executed a second deed of trust to Nevada Title Company to secure the payment of $13,564 — 141 — to certain persons who then assigned the note and deed of trust to The First National Bank. Such deed of trust was subject and subordinate to a first deed of trust in the sum of $38,968.29. Appellants being in default of required payments under the second deed of trust, The First National Bank, beneficiary, instructed the trustee to proceed to sell the property under the powers of the second deed of trust. At the public sale, held pursuant to the required notice, the respondent Goldens bid in the property for $18,025.73. The actual amount owing The First National Bank at that time was $18,024.73. Appellants filed action in the lower court to set aside the foreclosure sale and to cancel and annul the deed executed pursuant thereto. Respondents answered with general denials, and also pleaded as a special defense judgment in their favor in a prior action and alleged that such prior judgment was res judicata to the second action. The trial court granted a motion for summary judgment in favor of the Goldens, and the Tomiyasus appealed. No other persons are parties to the present appeal. This matter was before this court in Golden v. Tomiyasu, 79 Nev. 503, 387 P.2d 989, decided December 23, 1963. In that action we reversed the judgment of the trial court which set aside the foreclosure sale. The purport of our opinion there was simply that mere inadequacy of price without proof of some element of fraud, unfairness, or oppression that could account for and bring about the inadequacy of price was not sufficient to warrant the setting aside of the trustee’s sale on foreclosure of a deed of trust. The Goldens and the Tomiyasus on this appeal are represented by the same counsel that represented them in the former appeal. In the former case Nanyu Tomiyasu had been an additional party to the three Tomiyasus who are the plaintiffs and appellants here. The Goldens were the sole defendants and the successful appellants in the first suit. In addition to the two Goldens, the following were defendants in the present case in the court below: Nevada Title Company, United Mortgage Company, — 142 — Lester H. Berkson, Hector J. St. Pierre, Merle P. Adams, David P. Boyer, and sundry fictitious defendants. Appellants assign as error (1) the granting of the summary judgment because the defense of res judicata does not apply, as the present complaint involves a different cause of action than was sued on and litigated in the former suit; (2) that the bar of res judicata does not apply to the present complaint because of lack of identity of parties; (3) because there are genuine issues of material fact to be determined, including the issues as to the scope and coverage of the former case; (4) because respondents are estopped from raising the bar of res judicata. In these assertions appellants clarify their position by arguing that the cause of action in the first case was in equity to set aside a foreclosure sale because of irregularities in that sale and was not based upon fraud, while the complaint in the second action is for damages based entirely upon fraud. They assert that under such circumstances res judicata cannot exist by reason of numerous decisions of this court, particularly Bond v. Thruston, 60 Nev. 19, 98 P.2d 343, 100 P.2d 74; Casey v. Musgrave, 72 Nev. 31, 292 P.2d 1066; Reno Club, Inc. v. Harrah, 70 Nev. 125, 260 P.2d 304, and other cases. In Bankers Trust Co. v. Pacific Employers Ins. Co., 282 F.2d 106, the United States Circuit Court of Appeals for the Ninth Circuit had occasion to consider the Nevada cases involving the plea of res judicata. Curiously enough, the opinion was written by Judge Orr, formerly a chief justice of this court, and concurred in by Judge Merrill, likewise a former chief justice of this court, and the author of the opinion in Reno Club, Inc. v. Harrah, 70 Nev. 125, 260 P.2d 304, and of the opinion in Casey v. Musgrave, supra. Appellants do not question the general rule as there stated: “A judgment on the merits by a proper court operates as a bar not only as to every matter offered and received to sustain or defeat the claim, but as to every other matter which might, with propriety, have been litigated and determined in that action. Wolford v. Wolford, 1948, 65 Nev. 710, 200 P.2d 988. However, res judicata requires — 143 — identical causes of action. Reno Club, Inc. v. Harrah, 1953, 70 Nev. 125, 260 P.2d 304; Weisheyer v. Weisheyer, 1932, 54 Nev. 76, 6 P.2d 439; Silverman v. Silverman, 1930, 52 Nev. 152, 283 P. 593; Smith v. Gray, 1926, 50 Nev. 56, 250 P. 369. The test of a cause of action for res judicata purposes is the identity of facts essential to maintaining the two suits; if the facts show only one right of the plaintiff and one wrong by the defendant involving that right, there is only one cause of action. The narrow bounds within which the Nevada Supreme Court has applied the doctrine of res judicata appear in Casey v. Musgrave, 1956, 72 Nev. 31, 292 P.2d 1066.” Appellants contend that under Casey v. Musgrave, supra, it is clear that res judicata could not apply, as their first cause of action was in equity and their second cause of action was for damages based on fraud. We think there is no analogy between the two cases. Mus-grave lost his first suit against Casey because he could not prove a partnership or a joint venture as alleged. His second suit was for the recovery of the value of his services rendered to the defendant. This case simply indicates that this court will not only consider whether the facts are identical in both actions, but also whether these facts show only one right of the plaintiff and one wrong by the defendant involving that right. An examination of the pleadings in the two actions involved here casts light upon the situation. The allegations of the complaint in the first suit were that the foreclosure sale was “fraudulent, wrongful, illegal, void and unconscionable”; the appellants alleged (1) a number of procedural irregularities, including a defective notice of sale, defective pronouncements of postponements of the sale, and the manner in which such sale was conducted, (2) a grossly inadequate price secured, and (3) that the officers of the Nevada Title Insurance Company and the Goldens “conspired and confederated together to sell said land at a grossly inadequate price * * * and knowing full well that there would be no public bidders present * * * and that there would be no competition in bidding, solicited the Goldens to be — 144 — present and bid the exact amount due and owing on said obligation, which the Goldens did,” and knowing that the value of the property was in excess of $200,000, “did give further aid, comfort and assistance to said conspiracy.” Appellants quote our language in Golden v. Tomiyasu, appearing at 79 Nev. 513, 387 P.2d at 994, reciting: “In the present case counsel for respondents, in oral argument, stated that he did not claim fraud or conspiracy but only collusion between the trustee and the high bidder. This did not exist.” (Emphasis supplied.) We quoted Schroeder v. Young, 161 U.S. 334, 16 S.Ct. 512, 40 L.Ed. 721, referring to mere inadequacy of price as being insufficient in itself to justify setting aside a judicial sale but that it may be set aside if one of a number of conditions exist, one being “if the sale has been collusively, or in any other manner, conducted for the benefit of the purchaser.” Finally, we held: “Nothing in the case warrants a conclusion of collusion to defraud the Tomiyasus.” 79 Nev. at 517, 387 P.2d at 996. Webster defines “collusion” as “1. A secret agreement and cooperation for a fraudulent or deceitful purpose ; deceit; fraud. 2. Law. An agreement between two or more persons to defraud a person of his rights by the forms of law, or to obtain an object forbidden by law.” We are then asked to distinguish the present action as one for damages growing out of fraud from the first action which was simply one to set aside a foreclosure sale because of irregularities. In effect plaintiffs are saying that in the first suit they alleged only once that the foreclosure sale was fraudulent, wrongful, illegal, void, and unconscionable, and that the Goldens and the Nevada Title Insurance Company conspired and confederated together to sell the land at a grossly inadequate price and that the trustee gave further aid and comfort and assistance to the conspiracy, and that the court below held only that the actions of the trustee in advising the successful bidders and by reason of their conduct and relationship with the bidders were such as to indicate a breach of the trustee’s duty. As against this, appellants apparently feel that because in the present — 145 — complaint they have alleged fraud, conspiracy, unlawful combination, fraud, fraudulent acts, and similar terms, some 40-odd times in their complaint, they have alleged such a tremendous fraud as did not appear in their first complaint. We are asked, as it were, to distinguish the present action from the first one because, if we place in the scales the allegations of fraud in the second complaint as against the allegations of fraud in the first complaint, the second one greatly outweighs the first. We cannot avoid the conclusion that in both actions fraud was the basis of the relief sought. As noted above, this court’s holding in the first case was that nothing in the case warrants a conclusion of collusion to defraud the Tomiyasus. This included the allegation of the trustee’s breach of its trust. If we turn to the facts we find the same result. In the second case below the plaintiffs had secured a temporary restraining order and a temporary amended restraining order restraining interference by the defendants with the plaintiffs’ possession of the property. In its ruling on the motion of defendants Golden to dissolve the amended temporary restraining order, the court reviewed the history of the first case and of the posture of the second case then before it, and said: “There is no gainsaying that the Defendants Golden have now twice been charged with conspiracy, the first time with having conspired with the trustee and here with several other persons, including that trustee. The issue then is this. Are the Causes of Action identical, in the sense that the ‘same evidence supports both the present and the former Cause of Action?’ Vindication becomes a Sisyphean task if by adding conspirators the Cause of Action loses its identity when in fact the Goldens’ role in the conspiracy is no wise altered in this second Complaint.” We are entirely in accord, and are in accord with its further conclusion: “The conclusion here is that the Cause of Action against the Defendants Golden, and [them] only, has once been litigated and the bar of res judicata obtains.” The facts relied on in the first case were that the — 146 — trustee, under the deed of trust, had fraudulently colluded with the Goldens to let them purchase the property at an inadequate price. By adding six more defendants in the second suit, the plaintiffs sought simply to magnify the extent of the fraud. So far as the Goldens are concerned however, the facts implicating them under the first action would be the same that implicate them in the second action. In both actions there is but one right asserted and one wrong alleged. The right was the Tomiyasus’ ownership of their property which they sought to protect. The wrong was the unlawful conspiracy to defraud them of this property. The duty which the Goldens are said to have violated was to act in good faith in bidding for the property at the foreclosure sale and avoid any acts of conspiracy to defraud. Cf. Reno Club, Inc. v. Harrah, 70 Nev. 125, 132, 260 P.2d 304, 307, in which this court said: “In that regard the primary right of Reno Club was its right to possession of the premises; the primary duty of Harrah was his duty to surrender possession and his delict or act of wrong was his refusal to do so. The facts from which these matters arose constituted the cause of action in the former suit. It is clear that the same right, duty and delict, supported by the same facts give rise to Reno Club’s present claim for damages. It is not, then, a new cause of action which is presented * * Thus the situation meets all tests as applied by this court and by other courts in determining whether the cause of action was the same in the two suits. There was one right in the plaintiffs and one wrong involving that right on the part of the defendants. There was an identity of facts essential to maintaining the two suits. The asserted aggravation of the fraud by alleging additional facts does not alter the existence of the same facts essential to the two suits. Nor does the bringing in of additional parties who contributed additionally to the alleged fraud of the Goldens violate the requirement for identity of parties. If this were so, and if in a second suit against the Goldens for the same fraud, res judicata as a defense could be avoided by adding six additional defendants, — 147 — then if the Goldens were again successful they could be subjected to a third suit by the addition of two or three more defendants, and so on ad infinitum. Restatement of Judgments § 79 (i). See also 30A Am.Jur., Judgments § 397. In view of the foregoing, and of our conclusion that the judgment in the first action operated as res judicata in the second action, it is unnecessary for us to pursue the argument of respondents that in any event the action is barred by collateral estoppel. Our brother Gabrielli disagrees and is filing a dissenting opinion which he has submitted to us. It is patent that he has misread the court’s opinion in the first case. Our holding in that case was simply that mere inadequacy of price, without proof of some element of fraud, unfairness, or oppression that could account for and bring about inadequacy of price was not sufficient to warrant the setting aside of the trustee’s sale on foreclosure of the deed of trust. We held that nothing in the record suggested fraud, conspiracy, collusion, or other fault, and we reversed the judgment setting aside the sale. The converse of that holding is equally clear, namely, that had there been fraud, conspiracy, collusion, or other fault resulting in the inadequacy of price the judgment of the trial court would have been affirmed. The dissenting opinion entirely misses the significance of the foregoing. The summary judgment is affirmed with costs. Thompson, J., concurs. McNamee, C. J., being unable to act by reason of his hospitalization, the Governor commissioned Honorable John E. Gabrielli, Judge of the Second Judicial District, to sit in his place.