A judgment recovered in a circuit court of the United States in
favor of the plaintiff by the owner of a patent right in an action
against a licensee to recover royalties on sales of the patented
article, where the sole defense set up was that the articles
manufactured and sold by the defendant were not covered by the
patent, in which the amount recovered was not sufficient to permit
a review by this Court, is a bar to an action in the same circuit
court by the same plaintiff against the same defendant, to recover
like royalties on other like sales where the same defense is set
up, and no other, and the amount involved is sufficient to
authorize a review here.
By written agreement executed November 24, 1885, between William
Wharton, Jr. & Co., a limited partnership association, and the
Johnson Steel Street Rail Company, a corporation -- to be hereafter
referred to as the Wharton and Johnson Companies -- the latter
acquired the right to make and sell, upon certain conditions, guard
rails constructed according to the specifications attached to
letters patent granted to William Wharton, Jr., for an improved
guard rail.
The present action was brought upon this agreement of license,
to recover the stipulated royalties or fees for guard rails sold
and delivered by the Johnson Company between January 10, 1888, and
June 4, 1889.
In its statement of demand, the Wharton Company averred that the
Johnson Company commenced and continued the sale of guard rails,
and voluntarily rendered statements and paid
Page 152 U. S. 253
the stipulated fees, down to January 1, 1887, but refused to pay
those due between January 1, 1887, and January 10, 1888, on the
ground that the rails made and sold by it were not covered by the
Wharton patent; that, in a suit brought by the present plaintiff
against the Johnson Company in the Circuit Court of the United
States for the Eastern District of Pennsylvania, it was adjudged
that the rails sold by the defendant were covered by the Wharton
patent, and judgment was entered for the amount of royalties to
January 10, 1888; that from and after the latter date down to the
expiration of the patent, June 4, 1889, the defendant continued to
sell, under the agreement, rails of the same character as those
that had been adjudged to be covered by the above patent.
The Johnson Company, admitting the manufacture and sale by it
between January 10, 1888, and June 4, 1889, of certain girder guard
rails of steel, averred that those manufactured by it were not such
rails as were covered by the Wharton patent. It also admitted that
the suit mentioned in the plaintiff's statement was brought and
decided as set forth, but insisted that the decision was not
binding in the present case,
"because the amount involved in the former suit was so small as
not to entitle the defendant to a writ of error on the said
judgment to the Supreme Court of the United States, whereas the
amount involved in this suit is sufficient to so entitle the
defendant,"
and
"that the right of the defendant to have the issues involved in
this case adjudicated by the Supreme Court of the United States, if
a decision adverse to it is rendered by this [the circuit] court,
cannot be taken away from it by reason of a former trial and
judgment between the same parties, where the amount involved did
not entitle the defendant to a review of the same."
The court below held the affidavit of defense to be
insufficient, and, the damages sustained by the defendant having
been assessed at the sum of $6,306, judgment was rendered for that
sum.
Page 152 U. S. 256
MR. JUSTICE HARLAN, after stating the facts, delivered the
opinion of the Court.
The question upon the merits which the defendant's affidavit of
defense presented was whether the girder guard rails manufactured
and sold by it were covered by the Wharton patent, and by the
license granted by the agreement of November 24, 1885. But that
precise question, it is admitted, was presented and determined in
the former suit between the same parties. And we are to inquire on
this writ of error whether the court below erred in holding that
the judgment in the former suit concluded that question between the
parties. The learned counsel for the defendant insists that it did
not, and bases his contention solely upon the ground that the
former judgment was not, by reason of the limited amount involved,
subject to review by this Court.
Is it true that a defeated suitor in a court of general
jurisdiction is at liberty, in a subsequent suit between himself
and his adversary in the same or in any other court, to relitigate
a matter directly put in issue and actually determined in the first
suit upon its appearing that the judgment in the first suit, by
reason of the small amount in dispute, could not be reviewed by a
court of appellate jurisdiction? Does the principle of
res
judicata, in its application to the judgments of courts of
general jurisdiction, depend in any degree upon the inquiry whether
the law subjects such judgments to reexamination by some other
court? Upon principle and authority,
Page 152 U. S. 257
these questions must be answered in the negative. We have not
been referred to, nor are we aware of, any adjudged case that would
justify a different conclusion.
The object in establishing judicial tribunals is that
controversies between parties which may be the subject of
litigation shall be finally determined. The peace and order of
society demand that matters distinctly put in issue and determined
by a court of competent jurisdiction, as to parties and subject
matter, shall not be retried between the same parties in any
subsequent suit in any court. The exceptions to this rule that are
recognized in cases of judgments obtained by fraud or collusion
have no application to the present suit.
In
Hopkins v.
Lee, 6 Wheat. 109,
19 U. S. 113,
it was held that a fact directly presented and determined by a
court of competent jurisdiction cannot be contested again between
the same parties in the same or any other court. "In this," the
Court said,
"there is and ought to be no difference between a verdict and
judgment in a court of common law and a decree of a court of
equity. They both stand on the same footing, and may be offered in
evidence under the same limitations, and it would be difficult to
assign a reason why it should be otherwise. The rule has found its
way into every system of jurisprudence, not only from its obvious
fitness and propriety, but because, without it, an end could never
be put to litigation. It is therefore not confined, in England or
in this country, to judgments of the same court, or to the
decisions of courts of concurrent jurisdiction, but extends to
matters litigated before competent tribunals in foreign countries.
. . . On a reference to the proceedings at law and in chancery, in
the case now before us, the court is satisfied that the question
which arose on the trial of the action of covenant was precisely
the same, if not exclusively so (although that was not necessary),
as the one which had already been directly decided by the Court of
Chancery."
And in
Smith v.
Kernochen, 7 How. 178,
48 U. S.
217:
"The case therefore falls within the general rule that a
judgment of a court of concurrent jurisdiction directly upon the
point is, as a plea, a bar, or, as evidence, conclusive between the
same parties or privies upon the same matters when
Page 152 U. S. 258
directly in question in another court."
To the same effect are
Pennington v.
Gilbson, 16 How. 65,
57 U. S. 77;
Stockton v.
Ford, 18 How. 418, and
Lessee of
Parrish v. Ferris, 2 Black 606,
67 U. S.
609.
The whole subject was carefully considered in
Cromwell v.
County of Sac, 94 U. S. 351,
94 U. S. 352,
where it was said:
"There is a difference 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 cause of
action. In the former case, the judgment, if rendered upon the
merits, constitutes an absolute bar to a subsequent action. It is a
finality as to the claim or demand in controversy, concluding
parties and those in privity with them not only as to every matter
which was offered and received to sustain or defeat the claim or
demand, but as to any other admissible matter which might have been
offered for that purpose. Thus, for example, a judgment rendered
upon a promissory note is conclusive as to the validity of the
instrument and the amount due upon it, although it be subsequently
alleged that perfect defenses actually existed, of which no proof
was offered, such as forgery, want of consideration, or payment. If
such defenses were not presented in the action, and established by
competent evidence, the subsequent allegation of their existence is
of no legal consequence. The judgment is as conclusive, so far as
future proceedings at law are concerned, as though the defenses
never existed."
The doctrines of the latter case were applied in
Lumber Co.
v. Buchtel, 101 U. S. 638,
101 U. S. 639,
which case is like this in some respects. That was an action for
the recovery of the last installments of money due on a contract
for the purchase of timber lands, the plaintiff having, in a
previous action against the same defendant, obtained a judgment for
the first installment. In the first action, the sole defense was
that the defendant had been induced to make the contract of
guaranty by false and fraudulent representations. The same defense
was made in the second action, and an additional one was interposed
to the effect that the representations made as to the quantity of
timber, and which induced the execution of
Page 152 U. S. 259
the contract, amounted to a warranty, upon which defendant could
sue for damages. Both grounds of defense relied on in the second
action were held to be concluded by the judgment in the prior
action. In respect to the second ground, it was said:
"The finding of the referee, upon which the judgment [in the
first action] was rendered -- and this finding, like the verdict of
a jury, constitutes an essential part of the record of a case --
shows that no representations as to the quantity of timber on the
land sold were made to the defendant by the plaintiff, or in his
hearing, to induce the execution of the contract of guaranty. This
finding, having gone into the judgment, is conclusive as to the
facts found in all subsequent controversies between the parties on
the contract. Every defense requiring the negation of this fact is
met and overthrown by that adjudication."
In
Stout v. Lye, 103 U. S. 66,
103 U. S. 71, in
which one of the questions was as to the conclusiveness of a
judgment in a state court upon the same parties to a suit in the
federal court -- the two suits involving the same subject matter,
and the suit in the state court having been first commenced -- this
Court, observing that the parties instituting the suit in the
federal court, being represented in the state suit, could not
deprive the latter court of the jurisdiction it had acquired,
said:
"The two suits related to the same subject matter, and were in
fact pending at the same time in two courts of concurrent
jurisdiction. The parties also were, in legal effect, the same,
because in the state court the mortgagor represented all who,
pending the suit, acquired any interest through him in the property
about which the controversy arose. By electing to bring a separate
suit, the Stouts voluntarily took the risk of getting a decision in
the circuit court before the state court settled the rights of the
parties by a judgment in the suit which was pending there. Failing
in this, they must submit to the same judgment that has already
been rendered against their representative in the state court. That
was a judgment on the merits of the identical matter now in
question, and it concluded the"
"parties and those in privity with them, not only as to every
matter which was offered and
Page 152 U. S. 260
received to sustain or defeat the claim or demand, but as to any
other admissible matter which might have been offered for that
purpose."
Cromwell v. County of Sac, 94 U. S.
351,
94 U. S. 352.
It is true the mortgagor did not set up as a defense that the bank
had no right to take the mortgage, or that he was entitled to
certain credits because of payments of usurious interest, but he
was at liberty to do so. Not having done so, he is now concluded as
to all such defenses, and so are his privies.
In all of these cases, it will be observed, the question
considered was as to the effect to be given by the court of
original jurisdiction to the judgment in a previous case between
the same parties or their representatives, and involving the same
matters brought up in a subsequent suit. In no one of them is there
a suggestion that the determination of that question by the court
to which it was presented should be controlled by the inquiry
whether the judgment in the first action could be reviewed upon
appeal or writ of error.
The counsel for the plaintiff in error, in support of his
position, referred to the clause of the Constitution declaring that
the judicial power of the United States shall be vested in one
supreme court, and in such inferior courts as the Congress may from
time to time ordain and establish, and to the clause providing that
the judicial power of the United States shall extend to all cases
in law or equity mentioned in that instrument. But, except in the
cases specially enumerated in the Constitution, and of which this
Court may take cognizance without an Enabling Act of Congress, the
distribution of the judicial power of the United States among the
courts of the United States is a matter entirely within the control
of the legislative branch of the government. And it has never been
supposed that Congress, when making this distribution, intended to
change or modify the general rule, having its foundation in a wise
public policy, and deeply imbedded in the jurisprudence of all
civilized countries, that the final judgment of a court -- at
least, one of superior jurisdiction -- competent, under the law of
its creation, to deal with the parties and the subject matter, and
having acquired jurisdiction of the parties,
Page 152 U. S. 261
concludes those parties and their privies in respect to every
matter put in issue by the pleadings and determined by such court.
This rule, so essential to an orderly and effective administration
of justice, would lose much of its value if it were held to be
inapplicable to those judgments in the circuit courts of the United
States which, by reason of the limited amount involved, could not
be reviewed by this Court.
The inquiry as to the conclusiveness of a judgment in a prior
suit between the same parties can only be whether the court
rendering such judgment -- whatever the nature of the question
decided, or the value of the matter in dispute -- had jurisdiction
of the parties and the subject matter, and whether the question
sought to be raised in the subsequent suit was covered by the
pleadings, and actually determined, in the former suit. The
existence or nonexistence of a right in either party to have the
judgment in the prior suit reexamined upon appeal or writ of error
cannot in any case control this inquiry. Nor can the possibility
that a party may legitimately or properly divide his causes of
action so as to have the matter in dispute between him and his
adversary adjudged in a suit that cannot, after judgment, and by
reason of the limited amount involved, be carried to a higher
court, affect the application of the general rule. Whatever
mischiefs or injustice may result from such a condition of things
must be remedied by legislation regulating the jurisdiction of the
courts and prescribing the rules of evidence applicable to
judgments. Looking at the reasons upon which the rule rests, its
operation cannot be restricted to those cases which, after final
judgment or decree, may be taken by appeal or writ of error to a
court of appellate jurisdiction.
We are of opinion that the question whether the rails
manufactured by the Johnson Company were covered by the Wharton
patent, having been made and determined in the prior action between
the same parties -- which judgment remains in full force -- could
not be relitigated in this subsequent action.
There is no error in the judgment, and it is
Affirmed.