The entry of final judgment on demurrer concludes the parties to
it, by way of estoppel, in a subsequent action between the same
parties on a different claim, so far as the new controversy relates
to the matters litigated and determined in the prior action.
A final judgment for defendant in an action against a municipal
corporation to recover on coupons attached to bonds purporting to
have been issued by the corporation, entered on demurrer to an
answer setting up facts showing that the bonds were never executed
by the municipality, concludes the plaintiff in a subsequent action
against the municipality to recover on other coupons cut from the
same bonds.
The following was the case, as stated by the Court.
In October, 1880, Charles R. Bissell, the plaintiff below, who
is also plaintiff in error here, commenced an action in the Circuit
Court of the
Page 124 U. S. 226
United States for the District of Kansas to recover the amount
due on several interest coupons of seventy-three bonds of one
thousand dollars each, purporting to have been issued by Spring
Valley Township, a municipal corporation of Kansas, to aid the
Atlantic & Pacific Railway Company in the construction of a
railroad through the limits of the township. The petition alleged
that pursuant to the act of the legislature of the state entitled
"An act to enable municipal townships to subscribe for stock in any
railroad, and to provide for the payment of the same," approved
February 25, 1879, and in pursuance of an order of the Board of
County Commissioners of the County of Cherokee, in the State of
Kansas, and a vote of more than three-fifths of the qualified
voters of the township voting at an election held for that purpose,
the township issued, among others, seventy-three negotiable bonds,
bearing date December 15, 1871, by each of which it promised to
pay, fifteen years after date, to the railroad company or bearer,
one thousand dollars, with interest at the rate of seven percent
per annum, with coupons for the interest attached; that afterwards
each of the bonds, with the coupons, was put upon the market, and
sold and delivered to
bona fide purchasers for full value;
that in April, 1872, each of the said bonds, with the coupons
attached, was registered in the office of the auditor of the state,
and on each a certificate of such registration was endorsed; that
after the issue and delivery of the bonds, and before their
maturity or the maturity of either of them or of the coupons sued
upon, they were sold and delivered to the plaintiff for the price
of ninety cents on the dollar thereof, and that when said coupons
became due, they were presented for payment at the place where they
were made payable, and payment was refused. The plaintiff therefore
asked judgment for the amount due upon them. Attached to the
petition was a copy of one of the coupons, and of one of the bonds,
the several coupons and bonds being, except in their numbers,
similar to the copies annexed. The bonds were signed "William H.
Clark, Chairman Board of County Commissioners," and "J. G. Dunlavy,
County Clerk." The coupons were signed in the same way, except that
preceding the name of Dunlavy
Page 124 U. S. 227
was the word "attest." The act of Kansas under which the bonds
purported to be issued required that they should "be signed by the
chairman of the board of county commissioners and attested by the
clerk under the seal of the county."
To that petition the defendant answered, setting up various
matters of defense, and, among others, that J. G. Dunlavy, whose
name appeared on the bonds as county clerk, never signed or
authorized his name to be signed to the bonds or to the coupons,
nor did he affix to them, or authorize to be affixed, the seal of
the county. A demurrer was interposed to several of the defenses,
and, among others, to the one containing this allegation respecting
the alleged signature of Dunlavy. The circuit court overruled the
demurrer so far as it related to this defense, holding that the
municipality could not be bound upon an instrument of that
character unless it was executed by the officers named in the
statute; that a purchaser must inquire whether the bonds and
coupons were so executed; that if the instruments were not signed
by the proper officers, but by persons having no authority or color
of authority, they were void, and that the allegation charged this
in substance.
The defendant then filed an amended answer setting up, among
other things, the same matter -- that Dunlavy, whose name appeared
on the bonds as county clerk, never signed or authorized his name
to be signed to said bonds or coupons, nor did he affix or
authorize to be affixed the seal of the county to them. To this
answer the plaintiff replied, admitting that the bonds to which the
interest coupons sued upon belonged were not attested by J. G.
Dunlavy, County Clerk of the County of Cherokee in the State of
Kansas in person, but alleged the fact to be that at the time of
issuing the bonds, Dunlavy was sick and unable to discharge the
duties of his office, and by reason thereof authorized his brother,
John Dunlavy, to attest the bonds for him by signing his name as
county clerk and affixing the seal of the county to them.
Subsequently it was agreed between the parties, and the agreement
was signed by their attorneys and filed as part of the record in
the case, that this reply and the answer of the defendant should be
withdrawn
Page 124 U. S. 228
and that the defendant should file an answer, setting out the
question of defense as to the signature of Dunlavy, and the
affixing of the county seal, and also a plea of the statute of
limitations as to coupons barred, such answer to be verified; that
the plaintiff should forth with file his demurrer to this answer,
and that the whole question should be submitted to the court and
judgment rendered in accordance with the pleadings upon its
sustaining or overruling the demurrer. This stipulation was carried
out. An amended answer, duly verified, setting up those matters was
filed, to which the plaintiff demurred. The court overruled the
demurrer, but the plaintiff refused further to plead, and stood
upon it. Final judgment was thereupon entered for the defendant. On
appeal to this Court, this judgment was affirmed.
See Bissell
v. Spring Valley Township, 110 U. S. 162.
In April, 1885, the plaintiff brought the present action in the
circuit court against the township on certain other of the coupons
attached to the same seventy-three bonds, alleging an execution of
the bonds and coupons and a complete registration in the office of
the auditor of the state. To this petition the defendant answered
as follows:
"1st. As a first defense, said defendant says that it ought not
to be charged with the said supposed debt by virtue of said
supposed bonds and coupons because it, by its attorneys, says that
J. G. Dunlavy, whose name appears on said bonds and coupons as
county clerk, never signed his name thereto or thereon, nor ever
authorized any party or parties to sign his name thereto or
thereon, and that said signature is not his signature, nor did he
affix or authorize to be affixed the seal of said County of
Cherokee to said bonds or coupons."
"2d. Said defendant, further answering and pleading in bar of
this action, says that said plaintiff ought not to maintain his
said action herein because on the thirteenth day of October, 1880,
the said plaintiff, Charles R. Bissell, filed his certain petition
against this defendant in this court in debt, wherein and whereby
he sought to charge this defendant with liability upon certain of
the pretended bonds and coupons attached thereto, claimed by said
plaintiff to have been issued by this defendant
Page 124 U. S. 229
and to recover judgment against this defendant thereon. Said
pretended bonds so sued upon in said action begun in 1880 were the
identical pretended bonds sued upon in this present action, and the
said pretended coupons declared upon in this action were of the
same series and detached from the identical pretended bonds sued
upon in the said action begun in 1880, as aforesaid, said action
being No. 3,242, to the record of which reference is hereby
made."
"That said defendant appeared and answered to the said
first-mentioned petition in substance and effect as it has answered
herein, to which answer said plaintiff, admitting the same to be
true, demurred, and thereupon the said cause was tried upon its
merits, and by the consideration of said court said defendant
obtained a judgment in said action against said plaintiff, which,
on appeal to the Supreme Court of the United States, was duly
affirmed."
"Wherefore said defendant prays judgment and its costs herein
expended."
To the first defense set up in this answer the plaintiff
demurred, and the demurrer was sustained, on the ground that a
complete registration alleged in the petition was conclusive of the
validity of the bonds on the authority of
Lewis v.
Commissioners, 105 U. S. 739, the
question of
res adjudicata, presented in the second count,
being unaffected. To the second defense the plaintiff replied by a
general denial. Afterwards a trial by jury was waived, and the
plaintiff withdrew from his petition the allegation concerning
registration, thus leaving the issue to be tried on the plea of
res adjudicata. In support of this plea on the part of the
defendant, the record of the former action was introduced against
the objection of the plaintiff. Testimony was also offered by the
plaintiff to prove the due execution of the bonds and their
purchase by him before maturity without notice of any defense to
them by the township, but it was excluded against his objection.
The court thereupon rendered judgment for the defendant, giving
full effect to the evidence sustaining the plea of
res
adjudicata. To review this judgment the case is brought to
this Court.
Page 124 U. S. 230
MR. JUSTICE FIELD, after stating the facts as above, delivered
the opinion of the Court.
The plaintiff was defeated in his former action against the
municipality because the coupons, upon which its liability was
asserted, were adjudged to be invalid instruments. It appears from
the record of that action, as well as from the opinion of the
circuit court in passing upon the demurrer and of this Court in
reviewing its decision, that their invalidity was adjudged because
the seventy-three bonds to which they were attached were themselves
void instruments, the county clerk, whose signature appears upon
them, never having signed them or authorized anyone to sign his
name to them and never having affixed or authorized anyone to affix
the seal of the county. By stipulation of the parties, the
pleadings in that action were so amended and arranged as to present
this defense and obtain the decision of the court thereon. The new
answer, as agreed, was verified, it evidently being designated by
the parties to obtain the judgment of the court upon the validity
of the bonds, notwithstanding the fact which existed that they were
not in truth signed by the county clerk or by anyone authorized by
him. The judgment of the court sustaining the demurrer to this
answer was therefore an adjudication that the bonds thus
defectively executed were not binding obligations of the
municipality. The circuit court held that the allegation of the
defendant was in substance that the bonds were not signed by the
proper officers of the county, and, if so, that they were void.
This Court, in affirming the judgment of the circuit court, held
that the township had no power to bind itself for the purpose of
aiding in the construction of a railroad by subscription to its
capital stock and the issue of bonds to pay for the same except as
authorized by the statute of the state; that the board of
Page 124 U. S. 231
county commissioners did not represent the township for any
other purpose, and could not execute its power to issue bonds by
instruments not conforming to the substantial requirements of the
law; that the law required the bonds to be executed in a particular
manner, and that the signature of the clerk was essential to the
valid execution of them, even though he had no discretion to
withhold it.
The final judgment entered upon that demurrer is a bar to any
further action upon the specific coupons in suit. This is conceded;
their validity cannot be again litigated in any form between the
parties. The question for determination in this case relates to the
effect of the former judgment upon the present action, which is
upon different coupons, though attached to the same series of
bonds. Does that judgment preclude any inquiry as to the validity
of these latter coupons -- that is, of the bonds to which they are
attached? In
Cromwell v. County of Sac, 94 U. S.
351, we drew a distinction between the effect of a
judgment as a bar or estoppel against the prosecution of a second
action upon the same claim or demand, and its effect as an estoppel
in another action between the same parties upon a different claim
or demand. In the latter case, which is the one now before us, we
held, following numerous decisions to that effect, that the
judgment in the prior action operates as an estoppel only as to
those matters in issue, or points controverted, upon the
determination of which the finding or verdict was rendered. The
inquiry in such case, therefore, we said, must always be as to the
point or question actually litigated and determined in the original
action, for only upon such matters is the judgment conclusive in
another action between the parties upon a different demand.
Lumber Co. v. Buchtel, 101 U. S. 638;
Wilson's Executor v. Deen, 121 U.
S. 525.
If the fact admitted by the demurrer in the former action --
that the signature of the county clerk appearing on the bonds of
the township was not signed by him or by anyone authorized by him
-- had been found by a jury, or been admitted in open court by the
plaintiff, there is no doubt that the judgment thereon would have
been conclusive in any other action
Page 124 U. S. 232
between the same parties in which the validity of those bonds
was drawn in question. It would have been an adjudication, both
upon the fact established and upon the law applicable to the fact,
concluding future litigation upon those matters. Is the litigation
any the less concluded because the fact upon which the judgment
rested was established by the demurrer? There are undoubtedly many
cases where a final judgment upon a demurrer will not conclude as
to a future action. The demurrer may go to the form of the action,
to a defect of pleading, or to the jurisdiction of the court. In
all such instances, the judgment thereon will not preclude future
litigation on the merits of the controversy in a court of competent
jurisdiction upon proper pleadings. And it has been held that where
a demurrer goes both to defects of form and also to the merits, a
judgment thereon not designating between the two grounds will be
presumed to rest on the former. But where the demurrer is to a
pleading setting forth distinctly specific facts touching the
merits of the action or defense, and final judgment is rendered
thereon, it would be difficult to find any reason in principle why
the facts thus admitted should not be considered for all purposes
as fully established as if found by a jury or admitted in open
court. If the party against whom a ruling is made on a demurrer
wishes to avoid the effect of the demurrer as an admission of the
facts in the pleading demurred to, he should seek to amend his
pleading or answer, as the case may be. Leave for that purpose will
seldom be refused by the court upon a statement that he can
controvert the facts by evidence which he can produce. If he does
not ask for such permission, the inference may justly be drawn that
he is unable to produce the evidence and that the fact is as
alleged in the pleading. Courts are not established to determine
what the law might be upon possible facts, but to adjudge the
rights of parties upon existing facts, and when their jurisdiction
is invoked, parties will be presumed to represent in their
pleadings the actual, and not supposable, facts touching the
matters in controversy.
The law on this subject is well stated in Gould's Treatise on
Pleading, a work of recognized merit in this country, as
follows:
Page 124 U. S. 233
"A judgment rendered upon demurrer is equally conclusive (by way
of estoppel) of the facts confessed by the demurrer as a verdict
finding the same facts would have been, since they are established
as well in the former case as in the latter by way of record. And
facts thus established can never afterwards be contested between
the same parties or those in privity with them."
Chapter IX, part 1, sec. 43.
The case of
Bouchaud v. Dias, 3 Denio 239, decided by
the Supreme Court of New York, is an authority upon this point. It
appears from the statement in the report of that case that in 1822,
one Castro had executed two bonds to the United States for payment
of duties in which the testator and the defendant were sureties,
and bound themselves jointly and severally. The bonds were alike in
penalty and condition, but were payable at different periods within
the year. In 1838, the plaintiff, as executor of one of the
sureties, paid to the United States one of the bonds, and brought
an action to recover one-half of that sum from the defendant, as
co-surety with the testator. The defense was that the defendant,
with the consent of the plaintiff, had been released from his
obligation by the Secretary of the Treasury pursuant to acts for
the relief of certain insolvent debtors of the United States, and
on the trial he produced a release under the hand of the Secretary.
He also gave in evidence a judgment record from which it appeared
that the plaintiff had sued the defendant for contribution in the
Superior Court of the City of New York, the declaration in the case
being like that in the second case except that the other bond was
set out as a part of the ground of action. In that case, the
defendant pleaded in bar the foregoing release and consent. The
plaintiff demurred to the plea, and the court rendered judgment
thereon for the defendant. The plaintiff in the second case
objected to the introduction of this record because the bonds were
not the same in both suits, but the court admitted the record and
charged the jury that the judgment of the superior court upon the
same matter, being on a bond for duties on the same importation
with that which was in question in the second case, was a bar to
the action. The case being taken to the
Page 124 U. S. 234
supreme court of the state, the judgment was affirmed, that
court holding that although there was a difference in the actions,
as they were upon different bonds, yet as those bonds were parts of
the same transaction, and the principal question in controversy was
the same in the two cases, the matter which the plaintiff attempted
to agitate in the second case was
res adjudicata. A
distinction was suggested between the cases on the ground that the
former judgment between the parties was rendered on a demurrer to
the defendant's plea. But the court answered that
"It can make no difference in principle whether the facts upon
which the court proceeded were proved by deeds and witnesses or
whether they were admitted by the parties. And an admission by way
of demurrer to a pleading in which the facts are alleged must be
just as available to the opposite party as though the admission had
been made
ore tenus before a jury. If the plaintiff
demurred for want of form, or if for any other reason he wished to
controvert the facts alleged in the plea, he might, after learning
the opinion of the court, have asked leave to withdraw the demurrer
and reply. But he suffered a final judgment to be entered against
him. He probably thought that the facts were truly alleged in the
plea, and therefore did not wish to amend. But however that may be,
the judgment is a bar to this action."
See also Coffin v. Knott, 2 G. Greene, 582;
Birckhead v. Brown, 5 Sandf. 134.
The plaintiff seems to consider the case of
Cromwell v.
County of Sac as authority for his contention that in the
present action he is at liberty to show that the bonds issued were
valid obligations of the municipality, notwithstanding the former
adjudication against their validity. That case was brought on four
bonds of the County of Sac, issued for the erection of a
courthouse, and coupons for interest attached to them. To defeat
the action, the county relied upon the estoppel of a judgment
rendered in its favor in a prior action brought by one Smith upon
certain earlier maturing coupons upon the same bonds, accompanied
with proof that the plaintiff Cromwell was at the time the owner of
the coupons in that
Page 124 U. S. 235
action, and that the action was prosecuted for his sole use and
benefit. It appeared on the trial in that action, and it was so
found, that there were such fraudulent proceedings in the issue of
the bonds to which the coupons were attached, followed by the
failure of the contractor to whom the bonds were delivered to
construct the courthouse as, in the opinion of the court, to render
them void as against the county, and there was no finding that the
plaintiff had given any value for the coupons, although he had
become their holder before maturity. Judgment therefore was given
for the county, and on appeal it was affirmed, this Court holding
that the fraud and illegality in the inception of the bonds
disclosed by the findings were sufficient to call upon the
plaintiff to show that he had given value for the coupons; that the
bonds were void as against the county in the hands of parties who
did not acquire them before maturity and give value for them; that
the plaintiff, not having proved that he gave such value for the
coupons, was not entitled to recover on them, for whatever
illegality or fraud there was in the issue and delivery of the
bonds equally affected those coupons. It was therefore adjudged
that the finding and judgment in that case upon the invalidity of
the bonds as against the county estopped the plaintiff in the
second case from averring to the contrary unless he obtained them
for value before maturity. But the bonds being negotiable
instruments, and their issue being authorized by a vote of the
county, and they reciting on their face a compliance with the law
providing for their issue, they were valid obligations against the
county in the hands of a
bona fide holder, taking them for
value before maturity, and so this Court said that if the plaintiff
received the bonds and coupons in suit in the second case before
maturity for value, as he offered to prove, he should have been
permitted to show that fact, and that there was nothing adjudged in
the former action in the finding that the plaintiff had not made
such proof in that case which could preclude him from making such
proof in the second case. The fact that a party may not have shown
that he gave value for certain coupons before their maturity
plainly was not conclusive evidence that he may not have given
value before maturity for other coupons of the same bonds, or that
he
Page 124 U. S. 236
may not have given value for the bonds before they came due.
There is nothing in that decision which can be made to support
the contention of the plaintiff in this case. In the former action
against the present defendant, the adjudication was that the bonds
themselves were never signed by the proper officers required by the
statute of the state to sign them, and therefore they were not
legal obligations of the township. Their invalidity equally
affected the coupons attached to them, and not merely those in
suit, but all others. If the plaintiff could give any evidence
consistent with that adjudication, there would be no objection to
his doing so, and the former action would not estop him; but the
bonds being found to be invalid and void, he is precluded from
attempting to show the contrary, either of the fact of their
wanting the signature of the county clerk or of the law that for
that reason they were not binding obligations of the municipality.
The fact and the law are adjudged matters between the parties, and
not open therefore to any further contest.
Judgment affirmed.
