Brief for Petittioner — Titus v. Wallick

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SUPREME COURT OF THE UNITED conned is ie

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OCTOBER TERM, 1938

No. 188

EDWARD H. TITUS,

Petitioner.

LOU (C. WALLICK.

N WRIT OF CERTIORARI TO THE SUPREME COURT UF THE STATE

OF OHIO.

BRIEF FOR PETITIONER.

Tuomas L. SHenrtpas.

Aarox FRANK.

“ounse! for Petitrones

OS ee eee

te

INDEX.

-. Sussect Iwpex.

- Vage

minary statement 1

opinions of the courts below “ 2

ement of the case / 3

iment x P, ll

Summary of argument 11

Point I—Fraud in obtaining a ‘aiminent fur-

nishes no ground for collateral attack s 7

Point Il—The judgment remains unimpgached

and unimpeachable in New York and it is there-

fore not subject to collateral attack in Ohio 16

Point I1]—Petitioner was the real party in in-

terest in the New York suit 19

Point IV—The New York judgment is conclusive

upon whether petitioner is real party in in- .

terest 27

Point V—The absence of extrinsic fraud 29

Point VI—The findings, conclusions and judg-

ment» rendered in the Ohio courts are contrary

to the evidence and contrary to law 33

lusion _ 36

Taste or Cases Crrep.

ham French v. Marz,8 XN. ¥. Mise. Rep. 490 28

| ¥. Brown, 44 N. Y. 228 22, 24, 25

man ¥. Hausman, 241 N.Y. App. Div. 153 24

aC.1, Trust Co. ¥. Clarkson, 274 NX. ¥. 69 23

in ¥. Moore, 8 NX. H. 362 71

bill v. Koufman, 85 U.S. 161 22

ll v. Read, 188 N.Y. App. Div. 46 22

os ¥. Price, 140 X. Y. Mise. Rep. 287 32

md Me. R.Co.v. D.& H. Co.. 268 XN. Y. 382 18

» ¥. Ginn, 66 O. 8. 316 25

m ©. Powers,53 N.Y. App. Div. 251 22

dy v. Scott, 40 Idaho 137 4

iwell v. City.of New York, 252 X. ¥. App. Div.

); aff'd 278 N. Y.7 (Mem.) 28

-—9183

ii INDEX

Christmas v. Russell, 72 U. 8. 290

Cole v. Cunningham, 133 U. 8. 107

Corley v. N.Y. & H. Rail Co., 12 N. Y. App. Div.

409

Cummings v. Morris, 25 N. Y. 625

Dockery v. Central, 45 Arizona 434 “

Donlin v. Carlow, 120 N. Y. Mise. Rep. 698

Elmquist v. Markoe, 45 Minn. 305

Farrell v. Kingshighway Bridge Co., 117 8. W. (2d)

693 |

Fauntleroy v. Lum, 210 U. 8. 230

Fiske v. Kansas, 274 U. 8. 380

Gray v. Richmond, 167 N. Y. 348

Hanley v. Donoghue, 116 U. 8. 1

Harrington v. Denny, 3 Fed. Supp. 584; appeal dis-

missed, 68 F. (2d) 1004

Hentschel v. Fidelity, etc., 87 F. (2d) 833

Hoffman vy. Foote, 172 N. Y. 348

Holden, Matter of, 271 N. Y. 212

Horne v. McGinley, 252 N. Y. App. Div. 296

Hunter v. Allen, 106 N. Y. App. Div. 557

Jacobowitz v. Herson, 268 N. Y. 130

Johnson v. Petty, 118 Okla. 178

Kalb v. Leff, 138 N. Y. Mise. Rep. 830

Kansas City So. Rwy. v. Albers Comm. Co., 223 U.S. °

BY ‘

Lentz v. Oreqon, 116 Oreg. 683 =

Los Robles Water Co. v. Stoneman, 146 Cal. 203 2

Marwell y. Stewart, 89 U. 8. 77 4

Mayor v. Brady, 115 N. Y. 599 18, 3

Meeker v. Claghorn, 44 N.Y. 349 =

Melgaard’s Will, 200 Minn. 493 13

Meyers v. Credit Lyonnais, 259 N. Y. 399 r= 4

Miele v. City of Niagara Falls, 21 Fed. Supp. +42 =

Milwaukee Cty. v. White Co., 296 U. S. 268 14, 16, 19

Moffett +. Robbins, 81 F. (2d) 431 2

McCandless ¥. Furland, 293 U.S. 67 13.%

McCauley v. Georgia R. R. Bank, 239 N.Y. 514 p=

MecNitt v. Turner, 83 U. 8. 352 )

People v. Ladew, 237 N.Y. 413 24

eeerk ueeee snd

&

&

SReRRRRR

eee” —LUlU

Page

Prtrolewm Auditors Assoc. Vv. Landers, 182 Okla. 297 12,13

Phillips v. Griffin, 236 N. Y. App. Div. 209 12, 17,28

teed ¥. Futrall, 115 8. W. (2d) S42 + 12

Roby v. Rainsberger, 27 O. 8. 674 28

Roche v. McDonald, 275 U.S. 449 16

scarborough v. Long, 197 8S. E. 796 12

Schwartz v. Fletcher, 238 N. Y. App. Div. 554 22

y. Grand Forks, 5 N. D. 4 22

Sheridan v. The Mayor, 68 N. Y. 30 22

Simmons v. Saul, 138 U. 8. 439 12

Smead v. Fay, 1 Disney (Ohio) 531 28

Spencer v. Standard Corp., 237 N. Y. 479, 143 N. E.

61 . 22, 26

Stricks v. Siegel, 135 N. Y. Mise. Rep. 608: aff'd ax

modified, 138 N. Y. Mise. Rep. 266 25

Thompson v. Whitman, 85 U.S. 457 12

Tioga v. Tidd, 164 N. Y. Mise. Rep. 273 22

Toledo Co. v. Computing Co., 261 U. 8. 39 29

Toole y. Fite, 57 Utah 1 28, 32

U.S. ¥. Atkins, 260 U. 8. 220 14

U. S. v. California & Oregon Land Co., 192 U.S. 355 2s

U.S. ¥. Throckmorton, 98 U.S. 61 13, 30)

Ward v. Southfield, 102 N. Y. 287 18, 52

Warshauer v. Webb, 9 N. Y. St. Rep. 529 26

Webster v. Reid, 52 U. 8. 437 15

Weott vy. Hillman, 23 N. Y. Mise. Rep. 459 25

Wright v. Saltmarsh, 174 Okla. 226 31

Sratore Crrep.

Section 210, New York Civil Practice Act 23

Texrsooxs axp Excyciorepias (ite.

Carmody’s New York Practice, Vol. 2, pp. 804 to 1, 24

Freeman on Judgments (5th Ed.), pp. 653, 66-5 ”

Preeman on Judgments (5th Ed.), pp. 753-796 of"

Freeman on Judgments (5th Ed.), p. 2569 32

Williston on Contracts, Rev. Ed., pp. 1166-1170) 24

Williston on Contracts, Rev. Ed., p. 1294 pe

Williston on Contracts, Rev. Ed., p. 1296 21

23 Cyelopedia 964 oF

44 Corpus Juris, Section 859 | 28

REME COURT OF THE UNITED STATES

OCTOBER TERM, 1938

No. 188

EDWARD H. TITUS,

Petitioner,

vs.

LOU C. WALLICK.

’ OF CERTIORARI TO THE SUPREME COURT OF THE STATE

OF OHIO.

BRIEF FOR PETITIONER.

Preliminary Statement.

case is in this Court on certiorari to the Supreme

f Ohio. Petitioner prayed for the writ on the ground

| faith and credit was denied by that Court to a final

nt recovered by the petitioner against respondent

iupreme Court of the State of New York.

lay 1, 1934, petitioner recovered a judgment in the

« Court of the State of New York against the re-

it in the sum of $389,103.21 (R. 18-21). In August,

Ps

1934, petitioner instituted an action in the Common Pleas

Court, Franklin County, Ohio (hereinafter referred to as

the Common Pleas Court) for the purpose of making the

judgment of the Supreme Court of the State of New York

a judgment in the State of Ohio (R. 1, 7).

Petitioner’s action in the State of New York was insti.

tuted on December 22, 1925 (R. 133) and was bitterly con-

tested by respondent. The action was tried twice in the

Supreme Court of the State of New York (R. 106; 118) and

it was submitted upon five occasions to the Appellate Divi-

sion of the Supreme Court of the State of New York, First

Department (R. 93, 132, 121, 134, 77, 78) and once to the

Court of Appeals before final judgment was obtained by

petitioner (R. 80, 81). In addition, three references were

had (R. 91, 101, 102; 18-20). The Ohio courts have predi-

cated refusal to recognize the New York judgment on the

ground of fraud (R. 156, 186, 190).

The Opinions of the Courts Below.

The written opinion dated April 21, 1936, rendered in the

Common Pleas Court, is not reported, but it is set forth at

length in the record on pages 148-156. The written opinion,

dated November 30, 1937, of the Court of Appeals, Franklin

County, Ohio (hereinafter referred to as the Court of Ap-

peals) is not reported, but it is set forth at length in the

record on pages 178-190. The per curiam opinion rendered

by the Supreme Court of Ohio is reported in 133 O. 8S. 612.

The written opinion dated December 2, 1927, of the Ap-

pellate Division of the Supreme Court of the State of New

York, First Department, after the first trial, in the origina!

action, and by virtue of which it was held that petitioner wa*

entitled to recover from respondent 250 shares of stock of

the Secor Hotel Company, is reported in 222 N. Y. App.

Div. 17; and the written opinion rendered by said Appellate

Division of the Supreme Court of the State of New York

ae |

3

after a second trial, granted upon newly discovered evi-

dence, pursuant to which that court’s original determination

was adhered to, is reported in 235 N. Y. App. Div. 662. The

afirmance thereof by the Court of Appeals of the State of

New York was rendered without written opinion and a re-

port thereof appears in 260 N. Y. 519.

No written opinion was rendered by the Appellate Divi-

sion of the Supreme Court of the State of New York when

said court affirmed an order granting a second trial on the

ground of newly discovered evidence; nor did said court

render written opinions when it vacated the second referee’s

report and appointed Honorable Jeremiah T. Mahoney as

referee and when it affirmed the judgment in favor of peti-

tioner and against respondent in the sum of $389,103.21.

Said decisions are reported in 227 N. Y. App. Div. 789;

“4 N. Y. App. Div. 818; and 244°N. Y. App. Div. 789,

respectively. ie

Statement‘of the Case.

The action in the State of New York was instituted by

petitioner, by reason of a fraud perpetrated by respond-

ent, to impress a trust on 250 shares of the Secor Hotel

Company, an Ohio corporation, representing a one-quarter

interest therein (R. 9, 11-13). The action was one in equity

and the relief demanded in the complaint contemplated the

return of petitioner’s 250 shares of stock in the corpora-

tion, together with an accounting of the earnings of the

Secor Hotel Company since its inception and of the sums

received by respondent as dividends or otherwise, with re-

spect to the moneys applicable to petitioner's one-quarter

interest (R.13). Petitioner’s complaint set forth the fraud-

went conduct of respondent in connection with said stock

ind the resultant injury to petitioner (R. 10-13). In decid-

ng that petitioner was entitled to the return of the stock

he Appellate Division of the Supreme Court of the State

4

of New York stated that petitioner’s version as to re-

spondent’s fraud was amply supported by the documen-

tary evidence in the case (222 N. Y. App. Div. 17); and

when said Appellate Division of the Supreme Court of

the State of New York again recognized petitioner’s owner-

ship of said stock, after a new trial had been granted on

the ground of newly discovered evidence, that court stated

that the additional testimony was not of sufficient weight ;

to cause the court to change the determination, in favor of

petitioner, reached on the original appeal and for the see-

ond time rendered judgment for petitioner (235 N. Y. App.

Div. 662). This judgment was affirmed by the Court of

Appeals of the State of New York on July 19, 1932 (260

N. Y. 519), and thereafter a reference was had which re-

sulted in the award to petitioner in the sum of $389,103.21

(R. 18-21, 78).

At the time of the institution of the action by petitioner,

as plaintiff, in the Common Pleas Court, and at the present

time, the judgment in the State of New York in favor of

the petitioner and against respondent was and is a final

judgment in said State of New York (R. 45, 55, 56). The

jurisdiction of the Supreme Court of the State of New

York has been conceded by respondent (R. 149, 133, 134,

34) and no attempt has been made by him to impeach or

set aside said judgment on any ground in the State of New

Yori: (R. 46, 49).

The petition filed by petitioner in the Common Pleas

Court, on August 20, 1934, alleged the recovery of the afore-

said judgment and attached to said petition was a tran-

seript of the judgment recovered in the State of New York,

authenticated as required by the Act of Congress (R. &,

18-22).

Respondent’s amended answer thereto averred three de-

fenses: (1) that the judgment sued upon was not respon-

sive to the issues made by the pleadings; (2) that peti-

5

tioner was not the real party in interest; and (3) that the

judgment in the State of New York was procured by fraud

practiced upon the Supreme Court of that State and upon

the respondent, in that petitioner was not the real party

in interest and suppressed and withheld this fact from the

Supreme Court of the State of New York (R. 40, 41). The

defenses were predicated, presumably, upon exceptions to

the rule that full faith and credit shall be given by each

State to the judgments of a sister State. By further amend-

ment respondent’s answer set up Section 210 of the Civil

Practice Act of the State of New York requiring, with cer-

tain exceptions, that every action must be prosecuted in

the name of the real party in interest (R. 41, 42).

Petitioner and respondent waived a trial by jury in the

Common Pleas Court (R. 44). The evidence in the case

was largely documentary and petitioner relied wholly upon

the judgment recovered by him in the Supreme Court of

the State of New York, duly objecting and taking exception

to the introduction of any evidence by respondent in dero-

gation of said judgment (R. 52, 55-58). The trial court

found against the respondent on the first defense (R. 149)

but in favor of respondent on the second and third defenses,

thereupon entering judgment for the respondent on De-

cember 3, 1936 (R. 149, 156, 157, 166). The judgment of

the Common Pleas Court was affirmed by the Court of Ap-

peals and judgment was entered, with respect thereto, on

the 14th day of February, 1938 (R. 190). Petitioner then

appealed to the Supreme Court of Ohio (R. 193, 195) under

Article IV, Section 2 of the Constitution of Ohio, which

gives that court jurisdiction as « matter of right in cases,

among other things, involving questions arising under the

Constitution of the United States; and petitioner further

moved said Supreme Court of Ohio for an order directing

the Court of Appeals to certify to the Supreme Court of

Ohfo its record for review (R. 198, 199). On April 2i,

1938, the Supreme Court of Ohio dismissed petitioner’s

appeal as of right and granted respondent’s motion to dis-

miss the appeal as of right, so ordering and adjudging on

the ground that no debatable constitutional question was

involved (R. 195). The Supreme Court of Ohio likewise

denied petitioner’s motion for an order directing the Court

of Appeals to certify to the Supreme Court of Ohio its ree-

ord for review (R. 195). Five of the seven Judges sitting

in the Supreme Court of Ohio rendered the aforementioned

decision without opinion, 133 O. S. 612.

A brief summary of the facts leading up to the rendition

of the judgment in the Supreme Court of the State of New

York and the subsequent judgment in the Common Pleas

Court, gives full expression to petitioner’s claim that the

Ohio courts failed to give full faith and credit to the judg-

ment of the Supreme Court of the State of New York.

Prior to 1924 petitioner had a substantial claim against

respondent based upon respondent’s fraud in connection

with petitioner’s 250 shares of stock of the Secor Hotel

Company of Toledo, Ohio, which had been withheld from

him by respondent for many years (R. 9-13). On or about

March 31, 1924, petitioner assigned said claim to his

brother, Walter Titus, under an oral understanding with

regard to the use of any funds which might be derived there-

from in part to pay off and discharge certain indebtedness

of petitioner and in part for the benefit of petitioner’s wife

(R. 147, 83-85). The assignment was in writing and abso-

lute upon its face.

Approximately three weeks before the commencement of

the New York action and on or about December 1, 1925, an

instrument (R. 83-85, 85-88; Petitioner’s Exhibits D, E)

was executed by Walter Titus in order to define more effec-

tively the rights of the various interested parties in said

— ADEE ON

7

daim and in order that suit might be brought thereon. This

instrument, after referring to the prior assignment and the

oral understanding pursuant to which it was made, as-

signed said claim to petitioner by appropriate words and

appointed petitioner as attorney-in-fact to effectuate collec-

tion of the claim. It then provided that any money or other

property collected upon said claim should be turned over

to Walter Titus to be held and used by him, first, toward

the payment of the expenses incurred in the collection of

the claim, second, to the payment of one-half thereof to the

wife of petitioner, third, to the payment or discharge of

certain indebtedness of petitioner, and fourth, the balance

remaining, if any, to be paid to petitioner. Shortly after

said reassignment, suit was instituted by petitioner on this

claim in the Supreme Court of the State of New York, and

said suit resulted in the judgment hereinbefore referred to

(R. 133).

. After petitioner recovered judgment in the Supreme

Court of the State of New York, one London I. Wallick, the

brother of respondent, made claim against petitioner for a

share in the proceeds, if any, to be realized from said judg-

ment. (Respondent’s Exhibit 7; R. 137-146.) London 1.

Wallick claimed that an agreement to that effect was miade

with petitioner on or about November 23, 1925 (R. 141, 93).

Petitioner and London I. Wallick were in sharp conflict over

whether any such agreement had been made und as to the

validity and effect of any writing as evidence of such agree-

ment. Approximately nine years after the institution of

suit in the State of New York by petitioner against respond-

ent, said London I. Wallick filed suit against petitioner in

the Supreme Court of the State of New York, in which he

asked for an injunction pendente lite, restraining petitioner

from disposing of any of the moneys received or collected

upon said judgment recovered by petitioner against re-

8

spondent (R. 137, 138). Petitioner defended said suit and

submitted therein an affidavit, dated August 17, 1934, in

opposition to the prayer for said injunction. Said affidavit

set out at considerable length the history of the transactions

between petitioner and respondent and London I. Wallick,

relative to the subject matter of the action upou which judg-

ment had been entered for petitioner and, among other

things, petitioner’s affidavit (R. 141, 145, 146; Respondent’s

Exhibit 7) set forth the following: ‘‘I told him (London L

Wallick) at that time (November 23, 1925) that I had al-

ready assigned any interest in the proceeds of said action

against Lou C. Wallick to Walter L. Titus and Emilie F.

Titus. * * * The plaintiff’s application for an injunction

pendente lite should be denied. Prior to my execution of the

instrument of November 23, 1925 (between plaintiff and

London I. Wallick), I assigned my interest in my claim

against Lou C. Wallick to Walter L. Titus, my brother, and

Emilie F. Titus, my wife. The plaintiff herein knew of this

assignment before the instrument of November 23, 1920.

was executed. It is respectfully submitted that it does not

lie within the jurisdiction of this court to now enjoin what

has already been accomplished.’’ The words within paren-

thesis are petitioner’s, submitted, presently, for explanatory

purposes.

The affidavit was directed specifically to occurrences on

and the status as of November 23, 1925 (R. 181, i184, 185).

In opposing the motion for the all-inclusive, temporary in-

junction, petitioner, being entitled to every possible, proper.

legal objection, contended, in effect, that London I. Wallick

was not entitled to the temporary injunction because he

knew of the prior assignment made by petitioner to his

brother on March 31, 1924 (R. 95-101, 141), and that said

London I. Wallick was not entitled to more than the alleged

contract itself contemplated, that is, an interest subject to a

known prior assignment. Specifically, whatever occurred

9

after November 23, 1925, did not concern London I. Wallick,

and as far as the latter was concerned, petitioner was en-

titled to assert such facts as would reveal to the Supreine

Court of the State of New York that London I. Wallick,

based upon his alleged contract of November 23, 1925, was

not entitled to the unusual remedy of an injunction. The

substance of petitioner’s affidavit was that London I. Wal-

lick could not enjoin what he knew and contemplated could

not be enjoined as of November 23, 1925. His proper rem-

edy, if any, was indicated to him in said affidavit interposed

by petitioner, to wit, an action to set aside the assignment

under the Debtor and Creditor Law of the State of New

York (R. 146).

The Court of Common Pleas seized upon the language

contained in the affidavit, to assert that petitioner was not

the real party in interest in the New York suit, that he had

withheld that fact from the New York court and that he was,

therefore, not the real party in interest in the suit com-

menced in Ohio (R. 153-156).

The Court of Appeals characterized the statements, upon

which the Court of Common Pleas relied, as mere conclu-

sions with respect to a status prior to the commencement of

the New York action (R. 181, 184, 185); but althougi: it

adopted reasoning other than that adhered to by the Com-

mon Pleas Court (R. 184, 185) it held that petitioner was

not the real party in interest in the State of New York under

the written reassignment of December 1, 1925, because that

instrument constituted petitioner an attorney-in-fact only

(R. 182)—a holding contrary to the decisions of the State

of New York and to the general principles as enunciated by

other courts as to what constitutes a person the real party

in interest.

The Court of Appeals, having found by its interpretation

of the reassignment of December 1, 1925, that the petitioner

was not the real pai _ in interest, then held that he had sup-

2s

|

10

prest@l and concealed this fact from the New York court,

as evidenced by the statements contained in the affidavit

(R. 186, 189, 190). While characterizing the statements »

which certain matter is set forth with regard to an assign-

ment by petitioner to Walter L. Titus and to petitioner's

wife (R. 190, 95-101). Respondent possessed knowledge wm

March, 1929, of a prior assignment made by petitioner, and

respondent made inquiry with regard thereto om the second

trial held in 1930 (R. 119, 120). At that time petitioner tes-

tified, on cross-examination, with regard to the axsignment.

Petitioner testified that he did have an agreement with bis

brother, Walter Titus, and that it had always been « matter

between them. Respondent's counsel proceeded to interro-

gate petitioner with regard thereto but did not press the

point, in his cross-examination, to the extent of ascertain-

ing the exact character of said assignment ; and despite said

/

ll

evidence, putting the respondent on inquiry as to a prior

assignment of petitioner's claim, respondent made no effort

to amend his pleading for the purpose of setting forth a de-

fense with respect thereto.

Summary of the Argument. /

Powwt 1—The controlling authorities in this Court indi-

cate that parties to an action cannot, in a collateral proceed-

ing, impeach a judgment for fraud in the obtaining thereof.

Powxt I1—Petitioner’s judgment remains unimpeached

and unimpeachable in the State of New York and, therefore,

it was not properly subject to collateral attack in the Ohio

courts.

Por 11]—Petitioner was the real party in interest in the

suit commenced by him in the Supreme Court of the State

of New York by virtue of his legal ownership of the claim

against the respondent ax well asx his beneficial interest

therein.

Post IV—The judgment recovered by petitioner in the

State of New York is conclusive upon whether petitioner is

the real party in interest.

Poixt V—Petitioner was not guilty of any fraud on the

New York court and even if he was, it did not constitute

extrinsic fraud and it did not justify a denial of full faith

and credit to the New York judgment.

Poixt VI—The findings, conclusions and judgments ren-

dered in the Courts of the State of Ohio are contrary to the

evidence and contrary to law.

12

Port L

Fraud in Obtaining a Judgment Furnishes no Ground for

Collateral Attack.

In Freeman on Judgments (Sth Ed.), pages 633 and 63,

the view is expressed that parties to an action, as distin

guished from third parties, may not attack a judgment col

laterally for fraud, except possibly such fraud which goes

to the question of jurisdiction.

See:

Christmas +. Russell, 72 U. 8. 290, W4A-W7;

Petroleum Auditors Assoc. +. Landers, 182 Okla. 297;

Johnaon ¥. Petty, 118 Okla. 178.

This Court has stated, clearly and unequivocally, that

fraud in procuring a judgment cannot be set up, by way of

collateral attack, to bar recovery thereon. The principle

may be expressed by the statement that a judgment may be

assailed for want of jurisdiction, bat not otherwise.

Christmas +. Russell, 72 U. 8. 290, 203-206; cited in

Pauntleroy +. Lum, 210 U. 8. 2, 236, 237 ;

Hanley v. Donoghue, 116 U. 8.1, 4;

Simmons +. Saul, 138 U. 8. 439, 458;

Thompson ¥. Whitman, 8 U. 8. 457;

Maxwell v. Stewart, 89 U. 8. 77, 81.

The view enunciated in Christmas v. Russell, supra, #a*

reiterated in Phillips v. Griffin, 236 N. Y. App. Div. 209, at

page 211, wherein the court stated that ‘‘to raise an issue of

fraud, recourse must be had to a suit in equity.”’

See also:

Scarborough +. Long, reported in 197 8. E. 796 (Su-

preme Court of Georgia, June 14, 1938) ;

Farrell v. Kingshighway Bridge Co., reported in 117

S. W. (2d) 693 (St. Loui« Court of Appeals, Missouri,

June 7, 1938);

Reed +. Futrall, reported in 115 8. W. (2d) 542 (Sx-

preme Court of Arkansas, April 11, 1938).

EE ————————lUlUlr~—

13

In the New York action by petitioner—an equity suit—

all that the court required was jurisdiction over the person

of the respondent. It acquired that jurisdiction, con-

cededly (R. 149, 133, 134, 54). The failure to recognize the

Kew York judgment in Ohio was based, essentially, on the

diction of the court.

McCandless v. Furland, 293 U. 8. 67, 75.

It follows, therefore, that any claim with respect to lack

of capacity to sue om the part of petitioner could not pos-

sibly involve fraud as to jurisdictional facts. Fraud as to

jarisdictional facts ean relate only to such facts as induce

the court to assume jurisdiction.

Petroleum Auditors Assoc. +. Landers, 182 Okla. 297.

In United States ¥. Throckmorton, on U. S. 61, it was

pointed out that extrinsic fraud, as distinguished from in-

neta iy be wed fo Oe rnn freed a rea

a but the opinion defines extrinsic fraud as relat-

it prevents an adversary trial and a disposition of the merits

of the cause. It should be noted that the Throckmorton case

involved an attack upon a judgment by way of a direct pro-

ceeding, ax distinguished from a collateral proceeding.

ter for its operation. In order to be open to collateral

attack a judgment must be void on the face of the rec-

ord, ax for want of jurisdiction.””

14

In Milwaukee County v. White Co., 296 U. S. 268, this

Court stated the following on page 275:

“‘A cause of action on a judgment is different from

that upon which the judgment was entered. In a suit

upon a money judgment for a civil cause of action the

validity of the claim upon which it was founded is not

open to inquiry, whatever its genesis. Regardless of

the nature of the right which gave rise to it, the judg.

ment is an obligation to pay money in the nature of

a debt upon a speciality. Recovery upon it can be re

sisted only on the grounds that the court which rendered

it was without jurisdiction, Pennoyer v. Neff, 95 U.S.

714; D'Arcy v. Ketchum, 11 How. 165: Tilt v. Kelsey,

207 U.S. 43; or that it has ceased to be obligatory be-

cause of payment or other discharge: Anderson ¥.

Clark, 70 Ga. 362; Haggerty v. Amory, 7 Allen (Mass)

458; First Nat. Bank v. Hahu, 197 Mo. App. 593; 1%

S. W. 489; Revere Copper Co. v. Dimock, 9) N. Y. 233:

or that it is a cause of action for which the state of

the forum has not provided a court, Anglo-American

Provision Co. v. Davis Provision Co. (No. 1), 191

U.S. 373; ompare Kenney v. Supreme Lodge, 252 U.S.

411, unless it is compelled to do so by the privileges and

immunities clause; compare Douglas v. N. ¥., N. ¥.

€ H. R. Co., 279 U. 8. 377; McK nett v. St. Louis & S. F.

Ry. Co., 292 U. S. 230, and Broderick v. Rosner. supra;

or possibly because procured by fraud, compare Christ-

mas Vv. Russell, 5 Wall. 290; Marwell v. Stewart, 22 Wall.

77; Hanley v. Donoghue, 116 U. S. 1; Simmons v. Saul.

138 U. 8. 439, with Webster v. Reid, 11 How. 437: Mc.

Nitt v. Turner, 16 Wall. 352: Cole v. Cunningham, 133

U. 8S. 107, 112."’

It is, however, extremely important to observe that in

cases such as United States v. Throckmorton, 98 U.S. 61:

Cole v. Cunningham, 133 U. S. 107, 112, and United States

v. Atkins, 260 U.S. 220, when this Court discussed the ques-

tion as to whether extrinsic fraud will bar enforcement of

a judgment, a direct proceeding, attacking the judgment, was

15

under consideration; while in Webster v. Reid, 52 U.S. 437,

and McNitt v. Turner, 83 U. 8. 352, suit was brought not to

enforce a judgment, but to recover land purchased either un-

der an execution sale or a court decree. In the two latter

cases vacation of a judgment was not an objective in the

action; the judgment was brought collaterally before the

court as evidence and it was held therefore that, similarly,

consideration might possibly be given, collaterally, to the

subject of extrinsic fraud. The judgment in both the

Webster case and the McNitt case was asserted against one

sho had no opportunity to contest the matter in the original

action and the judgment recovered could not, therefore,

serve as an estoppel against the party alleging the fraud.

The judgment was offered as ordinary evidence to sub-

stantiate a title; and the judgment was subject to ordinary

rules of evidence. Neither the Webster nor McNitt case in-

volved a suit on the judgment itself against the judgment-

debtor.

It may be added that Webster v. Reid, supra, referred to

a fraud which ran to the question as to whether jurisdiction

was acquired and that McNitt v. Turner, supra, was « case

which upheld the judgment and mentioned, incidentally, that

fraud may be asserted collaterally. The opinion in the Mc-

Nitt case does not, however, describe the type of fraud that

may he asserted, but the statement follows reference to the

matter of jurisdiction and there is clear indication that the

fraud which the court had in mind, at that time, wax fraud

which goes to the question of jurisdiction. In this respect

both the McNitt and Webster cases are completely recon-

cilable with the doctrine enanciated in Christmas v. Russell,

supra.

Respondent has, in the past, relied upon a number of

cases in various State courts to show that fraud may he

utilized for the purpose of attacking a judgment. It ix sie

nificant that an examination of such authorities will revea!

16

that they may be classified in the following manner: (1)s

number of cases involve fraud in obtaining jurisdiction; (2)

other opinions uphold a judgment and go on to state, gener.

ally, that the judgment is not conclusive if fraud is estab

lished, but they do not indicate whether they mean thereby

that the fraud shal! be utilized in a direct attack or that

it may be utilized by way of collateral attack; and (3) some

cases relate to instances in which no adversary trial was

had.

It is noteworthy that respondent's answer, interposed in

the Ohio suit, did not seek to vacate the judgment recovered

by petitioner in the State of New York and that the judg

ment in the Ohio suit did not set aside the New York judg.

ment. The proceedings in Ohio did not involve a direct at-

tack upon the New York judgment.

In the light of the very definite distinction that is drawn

between direct attack and collateral attack the statement

Milwaukee County v. White Co., 296 U. 8. 268, 276, that re

covery on a judgment may be resisted ‘‘possibly because

procured by fraud’’, is entirely clear and completely recon-

cilable with the earlier authorities. It is expressive of the

recognized distinction between direct attack, which may be

countenanced and collateral attack, such as the instant case.

which will not be countenanced.

Porst IL

The Judgment Remains Unimpeached and Unimpeachabie

in New York and it is Therefore Not Subject to Collateral

Attack in Ohio.

The law i« well-settled that a judgment of a State court,

which bad jurisdiction, i« entitled in the court« of other

States to the same credit, validity and effect which it hax in

the State in which it was rendered.

Roche v. McDonald, 275 U.S. 449, 451, 452.

—————EeE_——

17

It follows, therefore, that the New York judgment could

be set aside in Ohio for extrinsic fraud only if it could be

shown, first, that New York would characterize knowledge

of lack of capacity to sue, as one form of extrinsic fraud and,

second, that New York would recognize that extrinsic fraud

is a proper ground for collateral attack.

Just as respondent would have had the burden in estab-

lishing affirmative defenses, such as payment, release, stat-

ate of limitations or assignment of the judgment, so he had

the burden of proving that the New York judgment was im-

peachable in that State for extrinsic fraud, if petitioner was

not the real party in interest. This burden the respondent

failed to meet. No authority whatsoever was furnished on

this point by the respondent or by either of the lower courts

in Ohio.

Assumptions by a foreign court as to what the New York

court should regard as extrinsic fraud are completely un-

warranted. Ap Ohio court cannot assert that a New York

court should consider itself ax having been subjected to ex-

trinsic fraud. To disregard petitioner's judgment it was

absolutely necessary for respondent to establish that a New

York court would consider itself as having been subjected

to extrinsic fraud—and only adjudication on this point can

be regarded ax conclusive. In summary, it ix for the New

York court—and only the New York court—to state whether

its judicial process has been outraged. That statement mus

he found in the litigated case or in cases of similar nature

Respondent failed completely in his efforts to meet thix test

The New York viewpoint with regard to the effectivenes

of a judgment i« well stated in Phillips v. Griffin, 236 ee

App. Div. 209, at p. 211:

‘The question involyes consideration of the full faith

and credit clause of the Federal Constitation. (Art. 4,

Sec. 1.) A judgment of a sister state may be assailed

for want of jurisdiction over either the person or the

18

subject-matter but not otherwise. (Andrews v. An

drews, 188 U. S. 14; Clarke v. Clarke, 178 id. 186).

°° * If it was mtended by defendant to raise an

issue of fraud, recourse must be had to a suit in equity.

(Ferguson v. Crawford, 70 N. Y. 253; Mayor, etc. of

New York v. Brady, 115 id. 599, 617.)’’ (Italics ours)

See also:

Boston & Maine R. Co. v. D. d H. Co., 268 N. Y. 382, 391.

The recent case of Matter of Holden, 271 N. Y 212 is ab-

solutely conclusive upon the point that petitioner's judg-

ment would not be impeached in New York.

As in the Holden case no one may question the validity

of the reassignment to petitioner except the assignor and,

possibly, petitioner’s wife and London I. Wallick, who com-

menced suit in the State of New York against the petitioner,

requesting therein a temporary injunction. As in the

Holden case the respondent is obligated to make payment

to the party who appears to be the legal owner of the claim

and no court is empowered to inquire into collateral matters

which have no effect whatsoever upon respondent’s obliga.

tion to account with respect to petitioner’s 250 shares of

Secor Hotel stock.

The real claim in the Holden case was that the party who

tad obtained the proceeds of a condemnation award by

court order knew that he had no right to sue therefor by

reason of the fraud which he had perpetrated in obtaining

an assignment of the condemnation award: but the New

York Court of Appeals did not permit this factor to result

in the impeachment of the judgment.

Quite in accord with the principles enunciated by this

‘‘ourt, the New York authorities do not adhere to the view

that a judgment may be subjected to collateral attack on the

ground of extrinsic fraud. Such New York cases as Mayor

v. Brady, 115 N. Y. 599; Ward v. Southfield, 102 N. Y. 287:

19

Corley v. N. Y. d@ H. Rail Co., 12 N. Y. App. Div. 409; and

Matter of Holden, supra, which gave consideration to the

question as to whether extrinsic fraud would bar enforce-

ment of the judgment, involved a direct attack, by way of

motion for new trial or suit in equity, as distinguished from

a collateral attack; and it is apparent, therefore, that the

New York authorities adhere to the implied distinction set

forth in Milwaukee County v. White Co., 296 U. 8. 268, 276.

The case of Gray v. Richmond, 167 N. Y. 348, is of no signifi-

cance because the litigants therein proceeded upon the

theory that an Indiana judgment could be attacked collater-

ally and the New York Court of Appeals relied upon the

concession. In addition, Gray v. Richmond, supra, involved

fraud in securing jurisdiction.

Beference has been made to the New York authorities

under Point III herein to the effect that the courts in the

State of New York will disregard all facts with respect to

the purpose of an assignment and the disposition of pro

ceeds of suit if the assignment is fair upon its face. Refer

ence has also been made under Points V and IV herein, re

spectively, to the view adhered to by the New York court»

that zn adversary trial will bar attack on a judgment and

that technical defenses, such as lack of capacity, will be dis

regarded.

Port III

Petitioner was the Real Party in Interest in the New York

Suit.

The trial court in Ohio and the Court of Appeals, pre

requisite to their ultimate finding that the New York judg

ment was obtained by fraud, held that petitioner was not the

real party in interest in the New York suit and had no right

to bring the suit in his own name. The Court of Appeal-

did not, however, concur in the reasoning by which the tria!

court reached this result (R. 181, 184, 185).

The trial court disregarded, erroneously so, the reas-

signment of the claim to petitioner (on December 1, 19%,

and held that petitioner was bound by isolated state

ments contained in his affidavit of August 17, 1934 (R. 133

156). The Court of Appeals took the proper view, that the

affidavit referred to petitioner’s status as of November 2,

1925, when legal title to the claim was in petitioner's brother

and that whether petitioner was the real party in interest

depended upon the legal effect of the reassignment of De-

cember 1, 1925 (R. 181, 184, 185). The Court of Appeal:

then proceeded to find as a matter of law—and in doing s

it was completely in error—that the reassignment was 4

mere naked power of attorney (R. 182). It predicated its

decision upon (1) the second paragraph of the reassign-

ment which appointed the assignee (petitioner) as attorney.

in-fact for the assignor (petitioner’s brother) (R. 181, 182)

and (2) upon the fact that petitioner had only a contingent

right to share in the proceeds of suit after certain payments

(R. 183). The opinion concedes, however, that ‘‘it is true

the payments in these subheadings were to be made to liqui-

date the indebtedness’’ of petitioner (R. 183).

It is apparent, and the Court of Appeals so fownd. that

if the instrument of December 1, 1925 (R. 83), constituted

the petitioner the real party in interest in the New York suit

then the petitioner should have prevailed in the Ohio action

This fact would instantly remove any possibility of fraud

upon the New York court, as the only frand alleged ix th

concealment from the New York court at the time the «ui

Was instituted that the petitioner was not the real party i

interest. The Court of Appeals also conceded that the exe

cution and delivery of the instrument of December 1, 1925

were undisputed (R. 184).

The reassignment of December 1, 1925, sets forth an un

qualified assignment (R. 83-85, 85-88; Petitioner’s Exhibit:

D, E), appoints petitioner as attorney-in-fact for the assiz

21

nor but for petitioner’s benefit and provides for the distribu-

tion of the proceeds as follows: (1) payment of expenses ;

(2) one-half of the balance to petitioner’s wife ; (3) payment

of petitioner’s debts; and (4) payment of the balance to

petitioner.

The effect and validity of the reassignment must be de-

termined in accordance with the law of the place where the

reassignment was made, that is, in accordance with the law

of the State of New York.

Williston on Contracts, Revised Edition, page 1296;

Barbin v. Moore, 85 N. H. 362.

In Carmody’s New York Practice, the standard work on

procedure in that State, Vol. 2, pages 804 to 808, appears the

following in reference to the ‘‘real party in interest’’ stat-

ate when the question of an assignment is involved :

‘““The consideration paid, the purpose of the assign-

ment, the use to be made of any proceeds collected, is

immaterial. The plaintiff must have some title, legal

or equitable, to the thing assigned. But if the assignee

have such title, it is enough. So it is of no moment that

no consideration was paid for the demand by the as-

signee, or that others have a claim on the assignee for

a portion or for all the proceeds, or that the assignment

was made merely for the purpose of bringing an action.

The defendant has no legal interest to inquire as to

this, for a payment to or recovery by the assignee in

such case is a protection to the defendant against any

claim that can be made by the assignor. Thus where a

judgment recovered by a bank, was, for the bank’s con

venience, assigned to the cashier by an instrument abso

lute upor its face, the cashier is the proper party to

bring an action upon the judgment as the real party in

interest. All that affects the defendant in such case ix

that the legal title to the judgment is in the plaintiff, so

that a payment to, or satisfaction by him would be a full

and complete satisfaction as to all others who thereto-

fore had or might thereafter claim an interest in it.”’

(Pp. 806, 807.)

The cases supporting the same principles are:

Sheridan v. TheMayor, 68 N. Y. 30;

Schwartz v. Fletcher, 238 N. Y. App. Div. 554, 557;

Donlin v. Carlow, 120 N. Y. Misc. Rep. 698;

Horne v. McGinley, 252 N. Y. App. Div. 296;

Tioga v. Tidd, 164 N. Y. Misc. Rep. 273, 286;

Spencer v. Standard Corp., 237 N. Y. 479;

McCauley v. Georgia R. R. Bank, 239 N. Y. 514;

Meyers v. Credit Lyonnais, 259 N. Y. 399;

Hunter vy. Allen, 106 N. Y. App. Div. 557;

Allen v. Brown, 44 N. Y. 228;

Meeker v. Claghorn, 44 N. Y. 349;

Brown v. Powers, 53 N. Y. App. Div. 251;

Birdall vy. Read, 188 N. Y. App. Div. 46;

Hentschel v. Fidelity, etc., 87 F. (2d) 833, 838;

Lentz v. Oregon, 116 Oreg. 683;

Seybold v. Grand Forks, 5 N. D. 460;

Los Robles Water Co. v. Stoneman, 146 Cal. 203;

Elmquist v. Markoe, 45 Minn. 305.

This Court has indicated in Batesville y. Kauffman, 8

U.S. 151, that it is immaterial that the assignor is entitled

to part of the proceeds of suit and in doing so it cited the

case of Allen v. Brown, 44 N. Y. 228. It may be interesting

to observe that Batesville v. Kauffman, supra, was relied

upon by the United States District Court for the Western

District of New York, recently, in holding that on a power

of attorney to sue, where there was also an absolute assign:

ment and the assignor retained an interest in the proceeds,

the assignee was the real party in interest.

Miele v. City of Niagara Falls, 21 Fed. Supp. 442.

The foregoing authorities state not only the New York la¥

but the general law as to who is a ‘‘real party in interest”

23

under modern code provisions. With these authorities in

mind it is difficult to follow the reasoning of the Court of

Appeals that the reassignment of December 1, 1925, was

simply a naked power of attorney and did not constitute the

petitioner the real party in interest in the New York suit.

It may be noted, parenthetically, that Section 210 of the

Civil Practice Act (New York), pleaded by respondent in

his amended answer (R. 41, 42) provides that: ‘‘ Every ac-

tion must be prosecuted in the name of the real party in in-

terest, except that * * * a trustee of an express trust

* * * may sue without joining with him the person for

whose benefit the action is prosecuted.’’ The very least that

can be said of the reassignment is that petitioner was, by

virtue thereof, the trustee of an express trust. Hoffman v.

Foote, 172 N. Y. 348, 355, expresses the general principle

that it is unnecessary to use any particular formula of words

in order to create a trust and that principle was given full

application in Banca C. 1. Trust Co. v. Clarkson, 274 N. Y.

69,74. In the latter case the loss suffered by plaintiff was

made good by a surety company. It was agreed between

plaintiff and the surety company that plaintiff would bring

suit in its own name, but for the benefit of tle surety com-

pany, to recoup the losses, the recovery, however, to be paid

to the surety company. Based upon this simple arrange-

ment, devoid of formality, the Court of Appeals held that

plaintiff was a trustee of an express trust and that it was,

therefore, entitled to bring suit in its own name. Banca C. I.

Trust Co. v. Clarkson, supra, is, in and of itself, complete an-

swer to the contention that petitioner was not the real party

in interest.

It is well settled, moreover, that an assignor, assigning a

claim as security for a debt, still retains sufficient interest in

the claim to constitute the assignor the real party in interest.

Petitioner had, therefore, a sufficient interest, under the

a

“

March 31, 1924 assignment alone, to have brought suit in kis.

own name.

Carmody's New York Practice, Vol. 2, p. 808;

Bachman v. Hausman, 241 N. Y. App. Div. 153.

In construing the reassignment, reference may be had ts

the recitals which show the true intent to make an sssigs

ment and not, merely, to appoint an attorney.

The words ‘‘sell, assign, transfer and set over" slow

effectuate an assignment.

Kalb v. Leff, 138 N. Y. Mise. Rep. 830.

In stressing the second paragraph of the reassignmest, .

where petitioner was appointed as the assignor's attornes,

the Court of Appeals overlooked the fact that the pare

graph is nothing more than a survival of the early law apo

the subject of assignments and that it is just a precaution

adopted for use in such jurisdictions as still adhere to th

common law theory that an assignee must bring suit in ‘he

name of his assignor.

Williston on Contracts, Revised Edition, pages 116

1170, 1294; |

People v. Ladew, 237 N. Y. 413, at pages 436, 438;

Allen v. Brown, 44 NX. Y. 228;

Casady v. Scott, 40 Idaho 137.

Moreover, the appointment of the attorney provides thst

petitioner may sell or discharge the claim for his own bene

fit (BR. 84).

The reassignment provides that petitioner, if he collects

anything, shall turn the proceeds back to petitioner's

brother, but petitioner's brother must use the proceeds ®

discharging certain indebtedness of the petitioner to peti

tioner’s brother and others, paying one-half thereof to peti

tioner’s wife and the balance to petitioner. These prot’

%

sions were held wholly inconsistent with an assignment such

as would constitute petitioner the real party in interest

for the reason that bis interest, by virtue thereof, was only

contingent (R. 183) and not real, that is to say, be wax

simply an attorney in fact. This holding is clearly wrong,

because what is to be done with the proceeds is no concern

of the debtor.

Allen +. Brown, 44 N. Y. 228;

Mecker +. Claghorn, 44 N. Y. 349;

Wolcott +. Hiliman, 2 N. ¥. Mise. Rep. 459.

In reaching the conclusion that the petitioner was not the

real party in interest under the reassignment, the Court of

Appeals disregarded entirely the purpose in turning the

proceeds of the collection, if any, over to petitioner's

brother. The dominant purpose was to pay petitioner's debt»

to petitioper’s brother and others, and to pay petitioner's

wife; the balance, if any, to be paid to the petitioner. Pe-

titioner’s brother had no interest in the claim other than

as security for the payment of the petitioner's debt to him—

the balance belonged to the petitioner and his wife. A»

part of petitioner’s brother's security, he was to handle the

funds if the petitioner collected any, a provision clearly in-

ddental to the primary purpose of the instrument.

Had petitioner no interest other than payment of his obli-

gations to this brother, they were, after all, his own obliga-

tions, which fact alone would give him a real, substantial,

beneficial interest. On this point Hroww v. Ginn, 6 O. BS.

316, referred to by the Court of Appeals (R. 183), is inap-

plicable; and, moreover, that case involved a champertou»

transaction.

Stricks v. Siegel, 135 XN. Y. Mise. Rep. 8, affirmed a»

modified 124 N. Y. Mise. Rep. 266.

The Court of Appeals hopelessly confused the question

of title to the daim with the question of the disposition of

The Court of Appeals relied upon Spencer v. Standard

Chemicals Co., 237 &. Y. 479, 143 N. E. 651, as supporting

ment or the use to be made of the proceeds is immaterial

It states, simply, that an assignee is a real party in interes

if, as between assignor and assignee, the transfer ia com.

plete, so that the assignor is divested of all control and

right to the cause of action, and the assignee is entitled to

control it (the cause of action) and receive its “fruits”.

Under the New York cases, petitioner had the power to re

ceive the *‘fruits’’ of the cause of action. Walter Tite

ral party in interest by virtue of the view expressed in

Commings +. Morris, supra.

Is summary, until the respondent is discharged—and he

cannot have any concern in what occurs thereafter—peti-

tioner has legal title under paragraph 1 of the reassign-

mest. By reason of the common law he is given protective

powers under paragraph 2—powers not in derogation of the

legal title and quite consistent with the assignment itself.

And under paragraph 3 be has legal title to both the claim

and the proceeds at all relevant times (in so far as respond-

eat is concerned).

Pour IV.

The New York Judgment is Conclusive Upon Whether

Petitioner is Real Party in Interest.

Whether petitioner was the real party in interest is now

immaterial, as the judgment of the New York court is con-

desive upon that issue and the question could not be raised

in the Ohio action. Lack of capacity to sue is not an objec-

tion that goes to the jurisdiction of the court.

McCandicas +. Purland, 293 U. 8. 67, 75.

By paragraph II of his second amended complaint in the

New York action (R. 9), petitioner asserted he was the plain-

tiff in the action and *‘ now is and since in or about the month

of October, 1908, has been the owner of a one-quarter inter-

est"’ in the Secor Hotel Company, represented by 250 shares

of the common stock of that company. The ownership of

the stock and the alleged interest of petitioner in the com-

pany were the basis of petitioner's claim. The complaint

then proceeds to set forth the fraudulent conduct of re-

spondent in connection with the stock and the resultant in-

jury to petitioner. By his second amended answer (R. 40)

respondent specifically denied the allegations of Paragraph

II of said amended complaint, thus putting squarely in

sue the petitioner’s ownership of the stock and the dar

sued upon. The New York judgment is conclusive, not only

as to matters thereby actually determined, but also as

every other matter which might have been litigated and de

cided upon the issues made in the case, and upon whieh i

was tried. This doctrine is peculiarly applicable to defense:

not going to the merits of the controversy, such as ree

party in interest, capacity to sue, etc., and a judgment can

not be impeached collaterally by the assertion of such d-

fenses after judgment.

23 Cyc. 964;

3A C. J. Sec. 859;

Preeman on Judgments, Sth Ed, pages 753-756;

Roby v. Rainsberger, 27 O. 8., 674;

Smead v. Fay, 1 Disney (Ohio) 531;

Abraham French +. Marz,8 N. Y. Mise. Rep. 490:

Phillips +. Griffin, 236 N. Y. App. Div. 209:

U.S. v. California & Oregon Land Co., 192 U. 8. 355.

It matters not that the plaintiff may have falsely repre

sented or withheld from the defendant his lack of capacity

to sue or the fact that he was not the real party in mterest.

Toole +. Fite, 57 Utah 1.

Whether the respondent knew of the defenses which be

failed to assert in the original action ix immaterial.

Cauldwell +. City of New Y ork, 252%. ¥. App. Div. 5%,

362; affirmed 278 N. Y.7 (Mem.).

Still another principle prevents the respondent from set

ting up, in the Ohio suit, the defense of the real party in in-

terest, and that is the doctrine that a party cannot set up,

after judgment, facts constituting a defense of which be

Vv

29

sasiqnorant, but which, had he been diligent, he could have

Toledo Co. v. Computing Co., 261 U. 8. 399, 421;

Mayor, etc. ¥. Brady, 115 N. Y. 599;

Harrington v. Denny, 3 Fed. Supp. 584, 593; appeal dix-

missed, 68 F. (2d) 1004;

Moffett v. Robbins, 81 F. (2d) 431.

Serprising as it may seem, there ix no diseussion by the

Court of Appeals of this elementary principle of res judicata

and its application to the instant case (R. 190).

Post V.

The Absence of Extrinsic Fraud.

The Court of Appeals, having determined that the peti-

ment of December 1, 1925, then proceeded to determine

whether he suppressed and concealed that fact from the

Xew York court, and if he did, whether he committed such a

fraud on the New York court as would deny to the New York

jedgment full faith and credit in Ohio. The court found the

solution of the question ++ diffieult’’ (R. 186).

In reaching its conclusion that petitioner bas concealed

and suppressed from the New York court the fact that he

action. The circumstances surrounding the affidavit are

fully set forth in the statement of the case (ante, pp. 7-)-

Although the Court of Appeals had previously in its opin-

ion characterized parts of the affidavit ax simply conelusion=

and of no effect whatever in determining petitioner's actus!

status before the New York Court in the original action (KR.

181, 184, 185), nevertheless, it held that these *‘conelusion»”’,

¥ sp

posed information in the instrument would clearly not be

fraud connected with the merits of the controversy. In dis

‘*Bat there is an admitted exception to this general

rule in cases where, by reason of something done by the

31

successful party to a suit, there was in fact no adversary

trial or decision of the issue in the case. Where the un-

Section 499: Pearce v. Olney, 20 Conn. 544; Wierich v.

DeZoya, 7 Til. 385: Kent v. Ricards, 3 Md. Ch. 392:

Smith v. Lowry, 1 Johns. (N. Y.) Ch. 320; DeLowis et al.

v. Meek, et al., 2 lowa 55."

See also -

Wright v. Saltmarsh, 174 Oklaboma 226 ;

Jacobowitz v. Herson, 268 N. Y. 130, 133, 134. ~

The distinguishing character of “‘extrinsic’’ fraud is that

it is that kind of fraud which prevents an adversary trial

Spon the issues. If « party has lost his case by false swear-

ing, perjury, concealment, etc., all of which go to the merits

of the controversy and the issue before the court and none

of which prevents him from having an adversary trial on

the merits, then he has his remedy by way of new trial, ap-

peal, error, vacation, etc., but once the judgment has become

final, it is conclusive upon him and cannot be collaterally at-

tacked. The principle, although it may operate harshly in

some instances, ix a rule of necessity—the public necessity

that there be some time an end to litigation. As has been

32

shown, heretofore, non-disclosure of lack of capacity to sm

accompanied by concealment or false swearing or perjury,

it can rise only to the dignity of ‘‘intrinsic’’ fraud and for.

nishes no basis for a collateral attack upon the judgement.

Toole v. Fite, 57 Utah 1 ;

Borgos v. Price, 140 N. Y. Mise. Rep. 287.

Harrington vy. Denny, 3 Fed. Supp. 584, 593, 594 (appeal

dismissed 68 F. (24 ) 1004);

Matter of Holden, 271 N. Y. 212.

It should be noted, moreover, that the term ‘‘ extrinsic

fraud’’ means actual fraud. It signifies a case where one

knowingly and deliberately seeks to take undue advantage

of another for the purpose of defrauding him: and this is

true as well, in a case where the fraud consists of a con-

cealment.

Freeman on Judgments, 5th Ed. page 2569 -

Dockery ¥. Central, 45 Arizona, 434:

Ward v. Southfield, 102 N. Y. 287.

In this case there is absolutely no connection whatsoever

between petitioner's arrangement to distribute the proceeds

of suit and the respondent’s obligation to return petitioner's

250 shares of stock and his obligation to account with respect

his wife and to creditors, retaining the right to any balance

remaining thereafter? What fraud was perpetrated by

this arrangement upon respondent—one who has no interest

whatsoever in what petitioner seeks to accomplish with the

proceeds of his claim! If petitioner had assigned his claim

to petitioner’s brother and if petitioner’s brother had reas-

signed it by simple instrument prior to petitioner’s suit

against respondent, then, certainly, it could not be contended

that petitioner was.under duty to reveal what had occurred

to the New York court. This hypothetical illustration is,

in effect, the instant case. The only difference ix that the

reassignment under review provides for certain beneficial

interests—a matter that does not concern the respondent.

The hypothetical illustration and the instant case are the

same in that in both there is the complete assignment of

lega' title.

Petitioner proceeded under an instrument of reassiqn-

ment which indicated to him that he had a perfect right

to sue in his own name an@ it is inconceivable that any cour!

would contend, that petitioner, a layman, armed with that

mstrument, intended to perpetrate a fraud upon the New

York court.

Poixt VI.

The Findings, Conclusions and Judgments Rendered in the

Courts of the State of Ohio are Contrary to the Evidence

and Contrary to Law.

When the Court of Common Pleas and the Court of Ap-

peals found and concluded that petitioner was not the rae

party in interest and that he perpetrated a fraud upon the

New York court, the Ohio courts went, of necessity, behind

the New York judgment, and in doing so they made findings

completely interwoven with their denial of ful! faith and

credit to the judgment recovered by petitioner in the courts

of the State of New York. If, in a suit on a foreign judg-

ment, a court inquires into defenses such as payment after

judgment, genera! release or lack of capacity to sue by

reason of assignment of the judgment, and the trial court

3s

aan

Se

makes findings adverse to the judgment creditor, such find.

ings are not in derogation of the constitutional safeguard

But if the trial court inquires into defenses existing prior to

the rendition of the judgment, its findings, adverse to the

judgment-creditor, are, of necessity, completely interwoven

with its denial of full faith and credit. To find that peti.

tioner was not the real party in interest under the Ohio las.

the Ohio courts determined first that petitioner was not the

real party in interest in the New York suit and that n

perpetrated a fraud upon the New York courts. In making

such determination, the Ohio courts went, automatically.

behind the New York judgment conclusive, as to all matters

which were actually determined and all matters which might

have been litigated—including the defense of lack of c.

pacity to sue.

This Court may properly review the findings upon whieh

the Ohio courts determined that petitioner was not the real

party in interest and that he perpetrated a fraud upon the

New York courts because, as heretofore stated, the findings

are completely interwoven with the denial of full faith and

credit to petitioner’s judgment recovered in the State

of New York.

Fiske v. Kansas, 274 U.S. 380, 385 ;

Kansas City So. Rwy. v. Albers Comm. Co., 223 U. §.

573, 591.

The Court of Common Pleas, disregarding the binding

reassignment, predicated its findings upon statements con

tained in petitioner's affidavit of August 17, 1934, but when

those statements are properly considered and interpreted,

they do not warrant the interpretation that petitioner per-

petrated a fraud upon the Supreme Court of the State of

New York. As was found by the Court of Appeals, the afi-

davit was directed specifically to occurrences on and a status

as of November 23, 1925. London L Wallick was not seek-

ing to enjoin petitioner’s interest in the judgment obtained

against respondent. He was seeking, rather, to enjoin the

disposition of all of the proceeds of the judgment (RB. 137,

138). In opposing the motion for the completely compre-

hensive, temporary injunction, petitioner was entitled to

every possible and proper legal objection. With certainty,

London I. Wallick was not entitled to the temporary injunc-

tion because he knew of the prior assignment made by peti-

- tioner to his brother on March 31, 1924 (R. 95-101, 141).

London I. Wallick was not entitled to more than the alleged

contract itself contemplated, that is, an interest subject to

aknown prior assignment. Specifically, whatever occurred

after November 23, 1925, did not concern London I. Wal-

lick and as far as he was concerned, petitioner was entitled

to assert such facts as would reveal to the Supreme Court

of the State of New York that London I. Wallick, based upon

his alleged contract of November 23, 1925, was not entitled

to the unusual remedy of an injunction. It is also note-

worthy that when petitioner commenced his action in New

York he was the possessor of Phe reassignment of Decem-

ber 1, 1925, which had been duly executed and delivered to

bim. In addition, both the Court of Appeals and the Court

of Common Pleas disregarded the fact that respondent

possessed knowledge in March 1929 of the prior assign-

ment made by petitioner (both from Gentsch’s affidavit and

from petitioner's cross-examination at the second trial) and

that respondent made no effort to amend his pleading for

the purpose of setting forth any defense with respect

thereto. (R. 119, 120, 95-101, 190).

Proper interpretation of the affidavit of August 17, 1934,

that is to say, ax the Court of Appeals said, that it applied

to a status ax of November 23, 1925, when coupled with re-

spondent’s knowledge of fact« sufficient to enable him to

plead, in the Supreme Court of the State of New York, a

36

defense of lack of capacity to sue and when coupled

further fact that wheu petitioner commenced his New]

action he was in possession of a duly executed and deka

instrument of reassignment, destroys completely

ing or inference of fraud perpetrated upon the New§

courts. The circumstances referred to—(1) proper

pretation of the affidavit, (2) respondent’s knowledge |

assignment and (3) petitioner’s possession of a duly@

euted and delivered instrument of reassignment

linked together with the abundance of authority ow! me

point that the instrument of reassignment was quite af

cient to transfer both legal and beneficial ownership to

tioner, lead to the single inference that the Ohio 2 ;

tion—that petitioner was not the real party in interest

that he perpetrated a fraud—is contrary to the evi

and contrary to law.

Conclusion.

For the foregoing reasons it is respectfully submi

that the judgment of the Supreme Court of the State

Ohio and the judgments of the Court of Appeals of F

lin County, Ohio and of the Court of Common Pleas

Franklin County, Ohio, should be reversed.

Tuomas I. SHepipay,

Aaron Frayk,

Attorneys and Counsel for Petitioner.

Tuomas L. Suerwas,

Lewis F. Guiaser,

Asrnos Frayk,

Of Counsel.

(9183)