FEDERAL'

vol. 60.

BILLING etl!-l. v. GILMER. .(Olrcult Court of Appeals;. Circuit. J annary SO; 1894.) No. 188.
1. RES

as tln!llly made up, asserted,· on complainant's part, a pledge of the stock in . a continuill,J pledge in 1876, Defendant denied the pledge ,eitllti;rc1lSe, and claimed to be. tile owner of the stock from 1871. The materia11,ssue involved was the nature of the transaction had in 1875 in relAtion'to the stock. There was a hearing on the pleadings and the testimoD)r' as noted, whleh reSulted In a tinal decree dismissing the bill. was atIirmed by the state supreme cour1;.i]Jeld., that the to· thtil ownership of the stocltwas res .judicata, and comp4dtiilllt could . not. thereafter maintaI.D a sliit in a federal court to ,, compel &'oonveyance to h i m . ' '
2: SAl1tE;"'i,""

OF CAU8E$OF AC'l'ION. '. . Ai 'bUI 'Wll$ brought ,to redeem certain corPorate stock, and the pleadings,

M a::lilq1t in a federal court" o.· decree of an AlAbama chancery court, dis.mfll.\lill,J.a blll j)etWej:1nthe. sawe, .parties,was setup in bar. This de. ,rendered in. rac/!-t1(}n"a,!t1l ,it Is settled Al4bama that a decree ill vacation dismissing o....b111 on. demurrer without giving opportunityto amend Is erro:neous.'.l:h1s decree, however, had been affirmed py thesta.tesnpreine court. Be'lIJ., that the, atftrmance necessarily, involved an /-I,djud1ca1;1on that thltdecree was rendered on issues.of fact; and thereas res judicata could not be avoided by claiming that it was demurrer·
·1

,

Appeal from the Circuit Court of the United States for the Middle District:of A1a;bama. This was'a bill in equity, brought by James N. Gilmer against Josiah:M0rril!l and F. M. Billing, to compel a transfer of certain corporate stock, and an accounting for dividends thereon. Morris having.died,his executors, B. J. Baldwin, Hulit Baldwin, and F. M. Billing,were substituted as defendants. An opinion was rendered ona-plea setting' up a prior adjudication (46 Fed. 333), and afterwardfll there was a decree for complainant (55 Fed. 775), from which this appeal is taken. Thomas' Semmes, H. O. Tompkins, and Alex. Troy, for appellants. W. A. Gunter, E. H. Farrar, and E. B. Kruttschnitt, for appellee. Judge, and LOCKE all;4;l TOULMIN, District Ju4;lges. District Judge. This was a bill filed by appellee, J. M. QUll\er, <lJl the 9th day of January, 1890, against Josiah Morris andll'· to compel the transfer of 60 shares of the capital oftil,a Elyton Land ,Company, a corporation under ,the laws of Alabapla, wNel;l.stock appeUee alleges, he had pledged with Morris; q,nd; to compel}forris to account to him for· the dividends thereon. The the .that in 1870 the appellee, being·the owner of certain stock of the Elyton Land Company, and being indebted to appellant Josiah Morris for money paid for him on account of the su'bscription to said the same with Morris, to hold as a pledge for the debt, and transferred by indorsement the certifi·

BILLING ". GILMER.

883

cate to him. Thus matters stood until March, 1875, when Gilmer became further indebted to Morris for moneys paid for and loaned to him, and when, as the bill avers, GiJ.Iher made an agreement with Morris that the stock should be transferred to hini on the books of the company, and thereafter held by him as a pledge for the payment of all his past indebtedness, and for all indebtedness which Gilmer and his firms might incur in the future to Morris, or the banking firm of Josiah Morris & Co., composed of the appellants Josiah Moms and F. M. Billing. The bill prays that Morris be decreed to account for and pay over to appellee (complainant below) all dividends that may have been paid on said stock since the same had been in Morris' hands, after deducting all of the indebtedness due him and his firm by appellee, and that said stock be decreed to be transferred by Morris to him. To the bill a plea is filed, setting up, in substance, that complainant had on the 7th July, 1884, filed in the state chancery court of the state of Alabama a bill against these ,defendants to redeem the identical shares of stock for the redemption of which the bill in this case is filed. That he alleged in said,billthat the stock had been pledged to Morris as security for a debt due by him to Morris and to his firm, and for advances that might thereafter be made to him (complainant), or to any firm of which he might be a member; and praying that Morris might be decreed to account for all dividends received on said stock, and to transfer said stock to him, as is now prayed in this bill. That Morris answered that bill, denying that the stock was the property of complainant, and that he had any right to it, or any part of it. And the plea avers that, upon the issue made by the pleadings, testimony was taken by the respective parties to the cause, and at the April term, 1885, of the said chancery court the cause was submitted on the pleadings and testimony for decree on the merits, and was argued by counsel, and upon consideration thereof it was ordered, adjudged, and decreed that complainant was not entitled to relief in said cause, and the bill was dismissed absolutely out of court. That from this decree the complainant appealed to the supreme court of the state of Alabama, and at the December term, 1885, thereof, the cause was submitted and argued by counsel for the respective parties on its merits, and that the supreme court in all things affirmed the decree of the chancery court. The plea further avers that the stock sued for in the two suits was identically the same, and that the relief prayed in the two suits was for the same matters, and to the same effect. To the plea were attached, and made parts thereof, copies of the record in the chancery court, referred to, and {)f the opinion and decree of the chancellor; also copies of the opinions and judgment of the supreme conrt. There are many assignments of error in this case, but the counsel for appellants, in their argument, insist only on those which involve the ruling of the lower court on the plea of res adjudicata filed to the bill, and which the court adjudged and decreed to be insufficient, and to be overruled. The record of the cause in the state court is specially pleaded, and is· also offered in evidence in support of' the answer. It is conceded that, if the judgment of the· state

FEllElU.Il ,BEl'ORTER,vol.

60.

determined thequestibDs bow litigated' in this suif, it would L'becOl\dusive on the federal'C0,U,rtsi ,and ,would be an end of this case. If,Otthe four conditions to, render 'tamatter,res adjudicata,.thttee; ofthem:are admittedtorexist in .this The of the cause of action--+tis contro"lverted.Torender thedec1'eeJn the former suit available as a bar ,An. this suit the. cause ofaetionmust ,be the same, and the former deCtelHllust have bee:p upon,the merits. "The doctrine of res ad,judie., does not rest 'upon the fact that a particular proposition ,has,: been,tttllrmed and denied in the, pleadings, but" upon '. the fact that .it, ooetbeen fully and fai17ly investigated and tried, that the parties1l:ave had adeqnate opportunity; to' say andprove:all that.they can inil1elation to it, that the::mi,nd · the court has been brought M:bear::npon it, and so, it has be,en solemnly and finally adjudicated." 2 § 614; 1 Freem."Judgm.,§ 256. "The decree in the conc!ushe"not:<mlyas ito every matter which was offered,,and l'eceived to, sustain ,or defeat, the claim or demand, but as ,.toanyuother'adxnissible matter which: might have been offered for that ,purpQse/' iCrornwellv;Sac 00., 94 U. S. 351; 1 Freem. J udgm. § 249; ',CankersIy v. Pettis, 171 Ala. 179.. In the last case. the court says that .((a.:Judgment isconclpsi\'l'l of 'the entire subject-matter of con, trove1'8Y, ,::Of'J.all that properly belongs to it, of all that might and . ought litigated.and decided;" '.l'he,Cl1usn'of action, is- said '. to .he the same wheh the: evidence nec. essarylWTsustain a judgment f'Or the plaintiff in the present suit judgment fOl'him in the former. 1 Freem. Judgll}',oIl§,299:; 2 :B1ack, . J udgm. §726. ,Whatls a cause of action? .one of the learned counS.elfor appellee':.' "A cause of , actioni!Wdtheexistence of those facts which give a party a right to lnterference in his behalf;l' .The. facts' alleged, which give the' cOmpllitinant a right to judicial in.terference are ,that he is the owner of,certain 'stock in the Elyton Land Company,which the de,fendant Rlitapled'ge from and in trust for him; that he has a."right to reco",er the stock, and that the defendants deny h1$ right and,title .to it.\.The facts a:verred in the suit in the state court were! that complaillant was the owner of the identical stock ,which heilluLd a right, to-recover from. defendants; that Morris acquired, of it nnder such circumstances as made him a same; that he was to hold it as security for certain him by complainant, and that in the hands' of Morris and was a basis of, credit for money." The matters ditElctlyin iasue intb.at,suit, and necessarily involved in it, were the the stouk, and how Morris held it,-i-whether as pledgee or otherwise. UntUit was established that Morris did hold l'.!I$, and under:. icircumstances as gave Gilmer a rigM!W·it, no suit tQ; rreeaverit. could :be maintained. '.Phe bUl in tlle, :state '(lourt nvas to redeem the stock from made: in March, by transfer to Morris, to , an'd &n-aldson to defendant, and account of.tbe dividends:'l'(;)ceived on it, and,upon paythe debt, to have tbe, tl'anliferred to GilIDer.Morris.
')(;Qt'U1

I

BILLING V. GILMER.

335

answering, denies that the stock was transferred to him for any such 'purpose, sets out the circumstances under which the stock was transferred to him,· and claws that the stock was his own property, and so had been as against Gilmer from December 30, 1871, and as against the whole world since March 30, 1875. The amended bill in the state court set up the original purchase of the stock in Gilmer's name, and the payment of. the purchase money for it by Morris, and the transfer of it to Morris as security for its repayment, and that Gilmer allowed the stock to remain with :Morris "as a basis of credit for money," and until he should pay to said Morris and to his firm all balances of money due him and theme by Gilmer; that, after such transfer, he became liable to Morris and to his firm for various small sums of money, besides the balance due on account of the original purchase of the stock, and Gilmer offers to pay to Morris and to his firm whatever sums of money may be found due them by him, and prays an account· for dividends, etc. Morris, in his amended answer, denies that Gil· mer was the true owner of the stoek, and sayS, if he ever was the true owner; that he, on March 30, 1875, transferred the same to him· (Moms) on the books of the Elyton Land Company, and had the certificate for the stock issued to him in ,his own name; that Gilmer was indebted to him and to his firm, Josiah Morris & Co., in a large amount, which he was bound to pay before demanding a reconveyance of said stock to him; and that Gilmer had not de· manded oi<claimed said stock until more than nine years after said transfer, but had ablindoned and lost all claim thereto, and that the same was barred by the statute of limitations. The com· plainant, Gilmer,had the right and the opportunity to file any replication, general or special, to this answer; or, if he wished to set up matter in confession and avoidance of the facts averred in the answer, he· could have done so by amending his bill. Failing to adopt either the one or the other course, the effect of the statute of Alabama, which provides that "no replication is necassa'l'y to an answer," is to make up an issue upon the facts alleged in the answer. Code Ala. § 3444. The cause being at issue, the respective parties took testimony thereon, and subsequently submitted the cause to the court for decree on the pleadings and testimony as noted. 'There was a note of testimony taken. The particular cause of action or controversy in that suit was the ownership of certain stock, and a pledge of it in 1871, and a continuing pledge of it in 1875, and subsequent to that time. The material, if not the real, issue involved was the transaction between the parties relative to the stock in 1875; what that transaction was, and how the stock was afterwards held by Morris,-whether as pledgee or absolute owner. This issue was presented in the pleadings, and presumably on the testimony, in that action. The particular cause of action or controvevsy in this suit is the ownership of the same stock, and a pledge of it in 1875, which Gilmer avers Morris held as a security for debts. due him and to become due, and which were,' from· time: to time, subsequently incurred. It is clear that this assertion of owneI'Shipofthestock by Gilmer, and the a pledge of'

336

;REPORTER,

vol. 60.

it to ¥qrris in 1875, raii$ethe lI3sue as to what was'the real transthe parties relative to the stock in 1875,-a mateaction as Wl! .,hl,tve seeIl."Walf: necessarily involved in the We.. think 'tl)at the issues in the former suit were broad enough to have cOll1prehended.,a:p.d did comprehend, all that is suit., there is· another 'rule of law, to which we adyertedin this opinion, by ,which to determine whethEi!ri thecatise oiacti0;ll is the Stl.me in the. two suits. That rule l " that, "wb,en :th.e eyidence to suataina judgment ylaintiff in the would have authorized a judgfor Kor, him, i:t;l the fOl'nlfil;f su,it,the. cause of actiOn .is said to be the Qanit be doubted, if the proof to f!\ustaiu, a judgme;ntfqr,plaintiff in this suit had been ,made in. the ,sJll.t,. that it would. have authorized a judgroent 'for' plaintiff? of form.,81' suit shows that thepledge,l'eferred to as 1,$75, Was. a subject ,of controversy"and must .have of proof, I in· :that suit., Doubtless it. was proven or, to be provep,as a recognition by. iMorris .of Gilmer's ell,ti.JJffli .;:PIel,trly, it by-the court jnrdeciding the .case, a:q9f '[email protected] necessadly determined by the court to exist or, li()t, to fact" Tlle ,cov5·may have found pledge $imed it. may have fonnd that such pledge the tjoD;Lplainant'lJ r,ight to redeem it had. been lost QY:; the stat'llte of limitations. Suffice it to I¥W,Jpe court adjlldge(\, and qecreed I that the complainant was :to,reUef; an4that ,his bill be dismissed out of court. It rPJ'l absolute and ·uncollditionaldismissal. This decree walJ s,upreme.pl?urt: Was"the decree ,rendered. upon;llie meM Qf the case? ,.If, it was rendered, as by the appell,eej},solely. on thepleadings,-wasrendered On ,demurrer, and ;the bill stated DQ, good CaUl:le of action,-.the judgment is "The dism.il3Sulof a bill in chancery will be ·pre· to be a final and .conclusive adjudication on the merits, were or welle not heard and deter:rnined,unless the apparent op:tijeface of the pleadings. or in the decree of the.:QQurt." 1 270; 2 Black, Judgm.§ ,722; Durant ;V; Essex Co., 7 Wall. 107; House v. Mullen, 22 Walk 42; Lyon v! Manufacturing Co., ,125 U. S. 698, 8 Snp. Ct. 1024; Tank· :7l,Ala. 179. .In last cited case tll-e court saya: ''When the de.cree of dismissal is unqu1¥ified, :it.is to be an adjudication on the merits adversely to the a bar to fnrther litigation (,)f! saDie matters between.the partieS/' . And in the case of Lyqn v. Manufacturing Co., Iilupra, the court uses this lan,plea ill a of a former bill, iaconelusive lJ.gain!jt anew brU, if the diSJ,Il.issal wasupQu,hearing, and that direct tel'il;ll.S, 'without prejudice.''' .The of appellee!il t4at the dismissal wason demurrer, and that it was .of ,some defect in the pleadings, .01' because the 3,vermentsof the. bill did not a .case for relief. It is not apParent in the of the court thattbe dismillsalWas on demur-

BILLING tI. GILMER.

837

rer. Every presumption is in favor of its correctness, and that it is free from error. It was rendered in vacation. Now, the wellsettled law in Alabama is that, if the chancellor renders a decree in vacation dismissing a bill on demurrer, or dismissing it when the proof shows complainant is entitled to relief, but because of defects or insufficiency of averments in his bill he could not get it under the bill without giving him an opportunity to amend, he com· mits an error, for which the case must be reversed. Kingsbury v. Milner, 69 Ala. 502; Stoudenmire v. De Bardelapen, 72 Ala. 30u; Yonge v. Hooper, 73 Ala. 119; Gilmer v. Wallace, 75 Ala. 220. If the contention of the appellee should prevail, then we would find that the supreme court of Alabama itself committed an error when ,it affirmed the decree of the chancellor. We cannot so hold. It necessarily follows,. then, that in affirming the decree of the chancellor the supreme court adjudged that he had decided the case on issues of fact, and not on demurrer. Furthermore, as there was no specific reference made to the demurrer in the submission, or in the decree, the inference is that it was waived. Walker v. Cuthbert, 10 Ala. 213; Corbitt v. Carroll, 50 Ala. 316; Daughdrill v. Helms, 53 Ala. 65. . The contention of appellee's counsel further is that the only issue submitted to the chancery court was in reference to recognitions by defendant Morris of the complainant's (Gilmer's) claim to the stock, and whether it was necessary to aver such recognitions, and that this issue was raised and decided on a demurrer to the bill. We think the counsel are entirely in error as to this. We find no such issue raised by the demurrers.. There was no demurrer to the bill for want of equity, or because the complainant had not shown a case entitling him to relief. There was a demurrer on the ground of staleness, and also of the statute of limitations. But it cannot be said that the bill was dismissed for want of equity, as shown on the face of the bill, or because the complainant's averments were not sufficient to entitle him to relief, in that he failed to aver recognition of his right by defendant. Again, it is contended that the decree of the chancery court rested on the defense of the statute of limitations,--one of the grounds of demurrer. This defense was presented, as is allowable under the practice in Alabama, both by demurrer and by the answer. But the question of limitation involves the question of adverse possession, and the latter could not have been determined on the demurrer to the bill, because it does not appear from the bill that the defendant held the stock adversely. On the contrary, it appears therefrom that he held it permissively by, and in trust for, complainant. The evidence must have been considered by the court in order to determine the question of limitations, as well as that of staleness. The court could not have properly determined these questions from the averments of the bill. If it appears at the hearing of a case that it is liable to the objection of laches on the part of complainant, relief will be refused on that ground. Richards v.Mackall, 124 U. So 183, 8 Sup. Ct. 437. V .60F.no.3-22

338

.vo!.

60.

·W edo not think that the· opiniohs of .the'chnMe:UQr"and 'of the snprelmh'.ourt, which are'set buthndmade parts ,oftheplea;hre any,paDt of the judgment'i'oll;nor do we deem it necessary tollook at"thetipinions to ascertain the gr01lnd or reason for ,the judgment renderedc;ih the cases in which theY were pronounced, even if admisslble:forsuch purpose. But the ,supreme court doe'S, in effect, , hold thD,tiiby the staleness of the complainant's claim,and its' com" ibar.:by the statute ·of limitations, the title to ,the stock in qu:estioilr'YeSted abSolutely 'in the defendant. Gilmer 'v. Morris, 80 Ala. 1 & : / " " Our opinion is that tlle record discloses that the dismissal of the bill inl!the state courtiwlis, not on-demurrer, or: 'fori' an;y' defects in t1+e pleadings,but"wtl\SJ'upon 'the .merits of the cause;' and that the mattE:rsnow alleged and involved in this litigation were actually presented and determined by the courts of the state of Ala· bama,and,are not now ,open to appellee. "It is obvious that the good orilell' of, society'requires that· a 'cause once fairly heard on the merits Ishouldbe conclusive. between' ,the parties; hence' the plea of res. ad§nflicata finds « place iIi every jUrisprudence;" .' " " Decree reversed, and cause remanded to thecircuit;court, with directions to dismiss the bill, with, 'costs. ' ':, I
I

J}Rtl'MM()ND'

v; 'AL'l'El\1US.

23,

1894.)

'.

No."25.,!

,,'

PuBLIOATI()N---INJtrNOTION.

havin;g del1verel1 ,of of theD;l to. In 1:\,' CiPpied. and incor, the published rei>br1:/l, and Boll1" them in book form under a title ,imporll1!lk' that the whole seriesot ilett\1res was there presented In the author:'s · that ontb,ese. facts complainant, was entitled to atemp?;Jlary injunctlon, o,f the

'fhis is a bill by Henry Dru:rmhobdagainst E:enry Altemus to en· join the puMicittionarid sale of aliool: purporting to contain certain by oomplainant. . Eleardon' 'application for a temporary injnnction. ' . \.. ' ' ' , Biddle'&; Wtlrd, ,for phiintiff. J <>siab' 1t:'SyPlier,. for DALL.AS11Cil'cuit Judge., From the facts as' lIeveloped on the hearing motion for an interlocutory injunction it appears that the,:defebdant has published, and to a considerable' extent has sold, aiboom,purporting tocontain.certain lectures delivered by plaintiff,Ewb,ich,in fact, does notp:resent those lectures'correctly, butwith additioqs andomissibns which ,essentially alter the productions of the alltho& This is BOught to ,be, jnstified by thellVerment that the question had not'bee'ilcopyrighted,.and':that their au· thor JuJ.d,dedicated thelllitu,the -pubue.:·, The Bubjept lof copyright is not directly involved. The complainant does not ibasehis claim to
, , : , " ) ! . ' ·

,,'