Caley v. Weyerhaeuser State Bank

Vinje, C. J. The appeal presents two questions: (1) Did the trial court err in ovterruling the plea in bar? and (2) Did [378] it err in finding that the defendant knew of the insolvency of Gobeli at the time it acquired its mortgage ? The rule is almost of universal application that, in order to constitute a former judgment res judicata in a subsequent action, the issues made by the pleadings in the former action must be substantially the same as the issues made in the latter action touching the matters claimed to be res judicata. Rowell v. Smith, 123 Wis. 510 (102 N. W. 1) and cases cited on p. 516; Rahr v. Wittmann, 147 Wis. 195, 132 N. W. 1107; Estate of Ryan, 157 Wis. 576, 147 N. W. 993. In the foreclosure action the plaintiff in this action did not appear though made a party. Hence he presented no issue in-that case to be tried. The foreclosure of a valid mortgage constituted the cause of action in that case and the only issues presented were the priorities of the several mortgages. The plaintiff here presented no issue in that case and the validity of defendant’s mortgage as to any attack upon it by the plaintiff was not in issue. Plaintiff has not had his day in court upon that issue. He might perhaps have raised the issue in the foreclosure action by a cross-complaint, but he was not compelled to do so and did not do so. As was said in Estate of Ryan, 157 Wis. 576, at p. 578 (147 N. W. 993) : “No issue of this kind was raised or tried in that case, and when it is claimed that the judgment in one case determines the rights of the parties in another case upon a different cause of action, it must appear that the questions were actually litigated and decided in the former case.” If the judgment in the former case does not actually decide the matters claimed to be res judicata, the question whether the issues as made up by the pleadings necessarily called for an adjudication thereon must be determined. If they did, then the judgment may constructively be held to have adjudged the matter; but if they did not, then the •former judgment is not res judicata. Here we have a dif [379] ferent cause of action than in the former case, and no pleadings in the former action requiring any adjudication upon the issue now presented. In such case there is no bar to the maintenance of the pending action on the ground of res judicata. The rule as to when one judgment bars another action is thus stated in 15 Ruling' Case Law, 964: “It does not extend to matters which have been litigated under issues formed by additional pleadings.” We therefore come to the conclusion that the trial court properly overruled the plea in bar. There is evidence to sustain the finding that the mortgage and deed were executed May 6th instead of February 19th. The bankrupt testified to that effect and so did his wife. She recalls that it was May 6th because the transaction took place just about the time of her birthday. Whether it wa§ made in February or May is not very material, because in any event it was made within four months of the bankruptcy. The fact, however, that it was made in May and not in February is a significant circumstance, which, together with the other testimony, warrants the court in finding that the defendant had notice of the insolvency of Gobeli. The evidence shows quite conclusively that the real value of the estate of the bankrupt in February and from then on till May did not exceed $8,000 in real estate and $1,500 in personal property. At the time of the execution' of the mortgage the defendant knew of the existence of the Ruefner mortgage for $3,500; of the debt of $1,000 to the Bank of Bruce; of the Winzig mortgage amounting to $3,000, and of smaller debts aggregating about $1,000. These debts added to the debt to the bank of $5,000 made an amount considerably in excess of the assets of the bankrupt. Gobeli also testified that at the time the mortgage was executed he told the cashier of the defendant bank that he was pretty much in debt and in bad shape. After this note and mortgage were executed there still remained an overdraft of $200 in the defendant bank. From this evi [380] dence the trial court is justified in reaching the conclusion that the defendant had reasonable grounds to believe that Gobeli was insolvent. Indeed, the evidence is so conclusive that it can be said that the bank must have known such fact at the time the mortgage was executed. The case comes well within the facts and rule of law stated in Roys v. First Nat. Bank, 183 Wis. 10, 197 N. W. 237. By the Court. — Judgment and order affirmed.