Bruns Foods of Morrilton, Inc. v. Hawkins

BRUNS FOODS of MORRILTON, INC. v. Marlin
HAWKINS, et al.

97-17                                              ___ S.W.2d ___

                    Supreme Court of Arkansas
                  Opinion delivered May 5, 1997


1.   Judgment -- doctrine of res judicata discussed -- privity of
     parties defined. -- Under the doctrine of res judicata, a
     valid and final judgment rendered on the merits by a court of
     competent jurisdiction bars another action by the plaintiff or
     his privies against the defendant or his privies on the same
     claim or cause of action; privity of parties within the
     meaning of res judicata means "a person so identified in
     interest with another that he represents the same legal
     right."  

2.   Property -- lessee holds only temporary possession of land --
     trial court correct in finding lessee had inferior interest to
     that of lessor. -- It is well settled that a lessee only holds
     temporary possession of the land while the ownership rights
     remain in the lessor; hence, the trial court was correct when
     it found that appellant, as lessee, had an inferior interest
     to that of its lessor. 

3.   Landlord & tenant -- when landowner is barred by statute of
     limitations tenant is also barred -- judgment that determines
     interest in real property against landlord bars relitigation
     of same matter by tenant. -- When a landowner is barred by the
     statute of limitations, then so too is the tenant; therefore,
     a tenant is in privity with his or her landlord such that a
     judgment that determines interests in real property against
     the landlord will bar relitigation of the matter by the
     tenant.

4.   Judgment -- decree entered by default is as conclusive as any
     other judgment -- an issue previously resolved by default
     judgment is barred from relitigation under doctrine of res
     judicata. -- With regard to the doctrine of res judicata, a
     decree entered by default is as conclusive as any other
     judgment or decree and it is not to be discredited or regarded
     lightly because of the manner in which it was acquired; a
     default judgment determines a plaintiff's right to recover and
     a defendant's liability just as any conventional judgment or
     decree; an issue previously resolved by default judgment is
     barred from relitigation under the doctrine of res judicata.

5.   Judgment -- res judicata barred appellant's action -- trial
     court's ruling affirmed.-- Because the supreme court found
     that res judicata bared the appellant's action against the
     appellees, the appellant's attempt to resurrect the stricken
     restrictive covenant was unsuccessful, and the trial court's
     ruling was affirmed.


     Appeal from Conway Chancery Court; Van Taylor, Chancellor;
affirmed.
     Chisenhall, Nestrud & Julian, P.A., by:  Jim L. Julian and
Jamie W. McFarlin, for appellant.
     Mark Cambiano and Phil Stratton, for appellees.
                
     Annabelle Clinton Imber, Justice.
     The appellant, Bruns Foods of Morrilton, Inc., appeals from a
dismissal entered in favor of the appellees, Marlin and Marvine
Hawkins.  The sole issue on appeal is whether a previous decision
in a lawsuit between the Hawkinses and a third party bars Bruns
Foods's action against the Hawkinses.  We find that it does, and
thus we affirm. 
     On August 9, 1982, Marlin and Marvine Hawkins conveyed a 1.69
acre lot located in Morrilton to the McDonald's Corporation.  The
deed contained a twenty-year restrictive covenant whereby the
Hawkinses agreed not to use the adjoining land for restaurant
purposes except for a "sit down restaurant connected with a hotel
or motel."  Subsequently, McDonald's conveyed a franchise and lease
to Bruns Foods for the operation of a McDonald's restaurant on the
lot.
     Ten years later, the Hawkinses filed a petition to abrogate
the restrictive covenant as void against public policy.  Bruns
Foods was not a named defendant nor did it move to intervene in the
Hawkinses's action.  The trial court entered a default judgment
against McDonald's for its failure to timely answer the complaint.
We initially dismissed the appeal in McDonald's Corp. v. Hawkins,
315 Ark. 487, 868 S.W.2d 78 (1994), and, in a second appeal, we
affirmed the trial court in two separate opinions. McDonald's Corp.
v. Hawkins, 319 Ark. 1, 888 S.W.2d 649 (1994); McDonald's Corp. v.
Hawkins, 319 Ark. 2-A, 894 S.W.2d 136 (1995) (supplemental opinion
denying rehearing).  Bruns Foods moved to intervene in McDonald's
second appeal, and we summarily denied the motion.     
     While the second appeal was pending before this court, Bruns
Foods filed a separate action against the Hawkinses in the Conway
County Chancery Court.  In their complaint, Bruns Foods asked the
court to declare that the restrictive covenant between the
Hawkinses and McDonald's was enforceable and ran in the favor of
Bruns Foods as the franchisee and lessee of McDonald's.  The trial
court held that the prior judgment against McDonald's voided the
restrictive covenant and removed it as a cloud on the Hawkinses's
title, which judgment withstood appellate challenges in McDonald's
I, II, & III.  The trial court further found that Bruns Foods had
no greater interest than its franchisor, McDonald's, and therefore,
Bruns Foods's action was barred by the prior judgment. 
Accordingly, the court dismissed the action, and Bruns Foods appeals.
     For its sole argument on appeal, Bruns Foods argues that the
trial court erred when it found that the prior judgment affirmed in
McDonald's II, & III barred Bruns Foods's lawsuit against the
Hawkinses.  As we have stated numerous times in the past, under the
doctrine of res judicata, a valid and final judgment rendered on
the merits by a court of competent jurisdiction bars another action
by the plaintiff or his privies against the defendant or his
privies on the same claim or cause of action.  Robinson v. Buie,
307 Ark. 112, 817 S.W.2d 431 (1991); Toran v. Provident Life &
Accident Ins. Co., 297 Ark. 415, 764 S.W.2d 40 (1989).  Privity of
parties within the meaning of res judicata means "a person so
identified in interest with another that he represents the same
legal right."  Robinson, supra; Spears v. State Farm Fire &
Casualty Ins., 291 Ark. 465, 725 S.W.2d 835 (1987).
     On appeal, Bruns Foods argues that res judicata does not bar
its action because it was not in privity with McDonald's.  We
disagree with this assertion.  It is well settled that a lessee
only holds temporary possession of the land while the ownership
rights remain in the lessor. Chastain v. Hall, 182 Ark. 920, 33 S.W.2d 45 (1930).  Hence, the trial court was correct when it found
that Bruns Foods, as lessee, had an inferior interest to that of
McDonald's, its lessor.  Likewise, we have also held that when a
landowner is barred by the statute of limitations, then so too is
the tenant. Chicago, Rock Island & Pacific Railway Co. v.
Humphreys, 107 Ark. 330, 155 S.W.2d 127 (1913).  Therefore, we hold
that a tenant is in privity with his or her landlord such that a
judgment that determines interests in real property against the
landlord will bar relitigation of the matter by the tenant.  See
also, Ward v. Davis, 298 Ark. 48, 765 S.W.2d 5 (1989); Phelps v.
Justiss Oil Co., 291 Ark. 538, 776 S.W.2d 662 (1987) (holding that
a successor in interest in land is in privity with its grantor such
that a prior ruling against the grantor is also binding against the
successor).
     We realize that the Hawkinses prevailed over McDonald's by
default judgment and not by an adjudication on the merits.  We,
however, have previously recognized with regard to the doctrine of
res judicata that a decree entered by default is as conclusive as
any other judgment or decree.  Lewis v. Bank of Kensett, 220 Ark.
273, 247 S.W.2d 354 (1952). The Court of Appeals has also held that
for the purposes of res judicata:
          A judgment by default is just as binding and
     forceful as a judgment entered after a trial on the
     merits in a case; and it is not to be discredited or
     regarded lightly because of the manner in which it was
     acquired.   A default judgment determines a plaintiff's
     right to recover and a defendant's liability just as any
     conventional judgment or decree.
Williams v. Connecticut Gen. Life Ins. Co., 26 Ark. App. 59, 759 S.W.2d 815 (1988) (citing Meisch v. Brady, 270 Ark. 652, 606 S.W.2d 112 (Ark. App. 1980)).  This reasoning is sound because res
judicata applies not only to issues which were actually litigated,
but also to those issues which could have been litigated in the
prior lawsuit.  Lemon v. Laws. 305 Ark. 143, 806 S.W.2d 1 (1991);
Swofford v. Stafford, 295 Ark. 433, 748 S.W.2d 660 (1988). 
Accordingly, we hold that an issue previously resolved by default
judgment is barred from relitigation under the doctrine of res
judicata.
     Because we find that res judicata bars Bruns Foods's action
against the Hawkinses, we need not address appellant's argument
that this case is not barred by the law-of-the-case doctrine.  For
these reasons, we find that Bruns Foods's attempt to resurrect the
stricken restrictive covenant must fail, and thus we affirm the
trial court's ruling.
     Affirmed.
     Glaze, J., not participating.