Brief for the Respondents in Opposition — Johnson v. Kersh Lake Drainage District

INDEX OF SUBJECT MATTER

Page

Statement of the Case. . a Soe

Argument cuoinicciatiansaniscamiale ae

I Amendment of Pleadings After Remand i 10

Il. Is the Judgment of This tg in Kersh Lake Drainage Dis-

trict v. Johnson, 309 U. S. 485, Res Adjudicata of all the

Issues Involved? 14

III. Did the Supreme Court of Arkansas Deny Full ‘Faith: ‘and

Credit to the Judgment of this Court in the Johnson Case? 21

IV. Section 8246 of Pope’s Digest of the Statutes of Arkansas... 22

TABLE OF CASES

: Baltimore Steamship Company v. Phillips, 274 U. S. 316 aR

: Chicot County D. D. v. Baxter State Bank, 308 U. S. 371_— Reale 16

5 Cornish v. Keese, 21 Ark. 528 a

4 Cromwell v. County of Sac, 94 U. S. 351 iddcadindasdies <a

j Diaz v. Patterson, 263 U. S. 399 ; Pa cet 20

: Erie Railroad Co. v. Tompkins, 304 U. S. 64 scinacicacte aa

Great Western Telegraph Co. v. Burnham, 162 U. S. 339.......--_-__...._ 20

: Grubb v. Public Utilities Commission, 281 U. S. 470 po ea 18

é Johnson v. Kersh Lake Drainage Dist., 198 Ark. 743, 131 S. W. (24) 620 3

5 Kersh Lake Drainage Dist. v. State Bank & Trust Co., 85 F. (2d) 643 11

* Kersh Lake Drainage Dist. v. State Bank & Trust Co., 92 F. (2d) 783. 1

a Kersh Lake Drainage Dist. v. Johnson, et al., 309 U. S. 485 3

4 King v. West Virginia, 216 U. S. 92 RR See ANS OE RR A

f Long v. Long, 104 Ark. 562, 149 S. W. 662 EE Sat PERT |

% Messenger v. Anderson, 225 U. S. - ts POTTS OS

3 Mutual Life Ins. Co. v. Hill, 193 U. S. 551 febieet a ae

fe McIntosh v. Wiggins, 123 F. (2d) be SS ea ae

Potts, In Re:, 166 U. S. 263 ape sa

Quanah, Acme & Pacific Ry. Co. v. W ichita State Bank & Trust Co.,

127 Tex. 407, 938 S. W. (2d) 701 RE 20

Remington v. Central Pacific R. Co., 198 U. S. 95 . cae

Seagraves v. Wallace, 69 F. (2d) 163 Bi ee ae

Southern Railway Co. v. Kentucky, 284 U. S. 338 mia

RS Steinfeld v. Zeckendorf, 239 U. S. 26 PRE.

* White v. Holman, 32 Ark. 753 Sa tlie cake Co

4 Wichita County v. City Bank, 306 U. S. 103 nay 18

4 Wolff Packing Co. v. Industrial Court, 267 U. S. 552 sancti, ae

Ms Wood v. Wood, 59 Ark. 441 | wont, Fae

q TABLE OF STATUTES CITED

> Pope’s Digest of the Statutes of Arkansas, Sec. 8246 cadey: 23

“a Pope’s Digest of the Statutes of Arkansas, Sec. 8248 pines 4

2 Pope's Digest of the Statutes of Arkansas, Sec. 8249 Fae oe a 5

REARS TAREE

ne EP

IN THE CV RASS SONS eo RE

Supreme Court of the United States

OCTOBER TERM, 1941

Te ee eae - | e

Vv. No.

Kersu Lake Drainace Disrrict, er a... Respondents.

RESPONDENTS’ BRIEF IN OPPOSITION TO

GRANTING OF WRIT OF CERTIORARI

STATEMENT OF THE CASE

In 1935 creditors of Kersh Lake Drainage District, here-

inafter referred to as District, obtained judgment in the

amount of $54,655. The judgment was rendered in the United

States District Court, hereinafter referred to as District

Court. The District appealed. Affirmance followed. See

Kersh Lake Drainage District vy. State Bank & Trust Com-

pany, 85 F. (2d) 643. The creditors then filed a supplemental

suit asking that the commissioners of the Distriet be required

to colleet taxes and to apply the proceeds on the judgment.

In that suit the District contended that the lands which had

paid the original assessments in full were exempted of further

tax liability. The creditors contended that under applicable

statutes of Arkansas, the lands were liable for interest on the

original assessments. The creditors prevailed. The Dis-

trict appealed. The judgment of the District Court was af-

firmed. See Nersh Lake Drainage District v. State Bank &

Trust Company, 92 F. (2d) 783.

Pursuant to directions of the District Court, the commis-

sioners then instituted a suit in the Lincoln Chancery Court,

hereinafter referred to as Chancery Court, against delinquent

lands. ‘The commissioners themselves owned a substantial

portion of the lands involved in the suit. One A. J. Johnson,

an attorney, also owned one tract of land involved in the suit.

He filed an answer in behalf of himself, the commissioners,

and a large number of other landowners. For himself he

pleaded a decree of the Chancery Court rendered in October,

1931, in a suit which he had filed against the District. This

decree exempted his tract of 160 acres from further tax

liability on the theory that interest was not collectible on the

assessment. In behalf of the commissioners as individual

landowners and a large number of other landowners, he

pleaded a decree of the Chancery Court rendered in June,

1932, in a suit filed by W. A. Fish, ef al., against the District.

This suit involved hundreds of tracts of land containing more

than two-thirds of the acreage of the entire District. The

decree, like that in the prior Johnson suit, enjoined the Dis-

trict from collecting interest on the original assessments.

Both decrees were pleaded in bar of the District’s asserted

right to collect interest on assessments. In response the Dis-

trict pleaded the decree of the District Court as affirmed by

the Cireuit Court of Appeals, Eighth Cireuit, which held that

interest was collectible. The Chancery Court sustained the

plea of the District holding that the decree of the District

Court, being the last in point of time, was res adjudicata ot

the issue as to the collectibility of interest. Johnson and the

other landowners, including the three commissioners of the

District, appealed to the Supreme Court of Arkansas, herein-

after referred to as Supreme Court. There it was held that

the Johnson and the Fish decrees were special defenses for

special groups of landowners, and that such defenses had not

nee:

peas ke Ss

Pagans

2 SAGAS INDE RIS LTRS EE —— 7

3 sal acid Fitts nr GE SMa Ce 7 Es cnr hy Ak

been invalidated by the deeree which had been rendered in

favor of the creditors in the District Court. See Johnson v.

Kersh Lake Drainage District, 198 Ark, 743, 181 5. W. 2d 620.

The creditors then applied to the District Court asking

that the Commissioners be required, in the name of the Dis-

trict, to petition this Court for a writ of certiorari on the

ground that certain constitutional rights had been infringed.

The commissioners as individual landowners who had profited

by the decision of the Supreme Court resisted the efforts to

obtain a review. The District Court, however, ordered the

District to apply for the writ. Such a writ was issued, but

after a hearing on the merits the judgment of the Supreme

Court was affirmed. See Kersh Lake Drainage District v.

Johnson, et al., 309 U. S. 485. In essence the holding of this

Court was that the proceedings in the Supreme Court meas-

ured up to the requirements of the Constitution of the United

States. In the light of that holding, the litigation was re-

turned to the State court in order that it might there shape

itself and take such course as might be appropriate under

State law.

In the record on the first appeal to the Supreme Court

there were no allegations or proof of fraud. Counsel for the

creditors who briefed the case for the District merely argued

that because the Fish decree on its face showed that the com-

missioners as individuals were beneficiaries, the decree was

void. The Supreme Court held that this was not sufficient

to invalidate the decree. With respect to that conclusion of

the Supreme Court, this Court said:

“It is sufficient to state as to this contention that the

‘esues of fraud and collusion raise no question which

the Supreme Court of Arkansas was not competent finally

to decide.”’

4 | Bi:

Kersh Lake Drainage District v. Johnson, supra,

p. 492.

The Supreme Court also stated in its opinion that fraud,

even if it existed, could be utilized only ina direct attack on

the decree. This Court said:

“* * * And the Supreme Court of Arkansas points

out that under controlling Arkansas law the Chancery

decrees ‘could only have been set aside on appeal or by

direct action to annul them on the ground of fraud, and

as we have said no appeals were taken, and no fraud on

the court in which the decrees were rendered, is reflected

by this record’ ’’ (p. 492).

The direct attack to which the Supreme Court referred

‘as one specifically provided by statute. Excepting the

remedy by appeal which must be perfected in six months, this

statute provides the only means by which a decree may he

nullified after the lapse of the term during which it was

rendered. The relevant provisions appear in Sections 8246,

8248 and 8249 of Pope’s Digest of the Statutes of Arkansas

and read as follows:

‘Seetion 8246. Grounds for vacating or modifying.

The court in which a judgment or final order has been

entered or made shall have power, after the expiration

of the term, to vaeate or modify such judgment or order:

** *

“Pourth: For fraud practiced by the suecessful

party in obtaining the judgment or order.

“Seventh: For unavoidable casualty or misfortune

preventing the party from appearing or defending.

‘Section 8248. Procedure to vacate or modify. The

proceedings to va ‘ate or modify the judgment or order

on the grounds mentioned in the fourth, fifth, sixth,

seventh and eighth subdivisions of Section 8246 shall be

by complaint, verified by affidavit, setting forth the

sae Bese pak nd A NER NO IEEE AN TES OS

98 5

x judgment or order, the grounds to vacate or modify it,

and the defense to the action if the party applying was

defendant. On the complaint a summons shall issue and

] be served, and other proceedings had as in an action by

: proceedings at law.

n

“Section 8249. A judgment shall not be vacated on

motion or complaint until it is adjudged that there is

Ss a valid defense to the action in which the judgment is

v rendered, or, if the plaintiff seeks its vacation, that there

Ny is a valid cause of action; and where a judgment is modi-

d fied, all liens and securities obtained under it shall be

* preserved to the modified judgment.”’

ri

The mandate of this Court duly reached the Supreme

Court. The mandate of the Supreme Court in turn reached

ed the Chancery Court. It directs the Chancery Court to enter

he a decree ‘‘not inconsistent with the opinion herein delivered”’

Lis :

(R. 6).

be

as It is an elementary rule that one who pleads res adjudt-

$65, cata has the burden of establishing such a defense. In the

cas first trial, Johnson, the commissioners, and the other land-

owners never reached the point where they were required to

prove their case on res adjudicata. Before they were ready

Ans to assume that burden the Chancery Court held that regard-

ion less of any decrees which they might offer, the decree pleaded

er: by the District, the one which had been lately rendered in the

District Court, was conclusive. On appeal the Supreme Court

‘ful said that the District Court decree was no barrier, and the

cause was remanded in order that the landowners might offer

une the decrees of 1931 and 1932 in support of their plea of res

adjudicata. There was no question concerning the efficacy

The of the Johnson decree of October, 1931, to sustain his plea

ws of res adjudicata. It was then coneeded, and at all times

| he since has been conceded, that he was entitled to a final decree

the exempting his tract of 160 acres from further taxation. He

6

has been accorded all relief which he obtained in the first

appeal to the Supreme Court and the subsequent review by

this Court. All of those who relied upon the Fish decree of

1932, however, had no such clear-cut right to relief. Upon

examining the so-called copy of the Fish decree which Attor-

ney Johnson had attached to the answer as an exhibit, it was

discovered that it was not a true copy. It omitted material

parts. These omissions made it unintelligible. By its express

terms, certain tracts of land were excluded from its protective

provisions, In the so-called copy of the decree which was at-

tached as an exhibit to the answer, the excluded lands could

not be definitely ascertained. In both the original and the

so-called copy, which was used as an exhibit, it was noticeable

that some of the descriptions used the word ‘‘part,’’ and

under Arkansas law this rendered them void for uncertainty.

Under such conditions, the creditors thought it advisable

to file an amendment which would (a) point out the void

descriptions; (b) point out the lands expressly excluded

from the protective terms of the decree; and (c) attack the

decree on the ground of fraud. In fact it was not necessary

to file any amendment with respect to (a) and (b) for the

landowners, upon presenting the Fish decree as proof would

necessarily have to reveal the express exceptions and the

void descriptions, provided they offered a true copy of the

decree. The creditors then applied to the District Court ask-

ing that the commissioners be directed to file an amendment

embracing (a), (b) and (ce). The commissioners, as individ-

ual landowners, stoutly resisted the application. They con-

tended that the District Court should not force them to

‘‘stultify’’ themselves by alleging their own fraud. They

contended that the trial court should enter a decree relieving

all lands of tax liability; notwithstanding the express excep-

- Bn ae Onn , x mothe w ES FF OEE ENTREE NEO SO ee RE Se ANE

Nee ee A RRB IAS ©

See a

ra Te ae 7

tions in the Fish decree, and notwithstanding the obviously

void descriptions. The District Court sustained the creditors

as to (a) and (b), but sustained the commissioners as to (c).

The order contains this recital:

‘Nothing herein shall be construed as preventing the

creditors of the District from intervening in the pending

suit or filing any other suit which to them may seem

advisable’? (R. 9).

In the foreclosure suit, the District, under compulsion,

filed an amendment setting up the specified defects in the

Fish deeree (R. 6-8). The commissioners and the other land-

owners filed a combination motion to strike and answer (R.

14). It is significant that they did not object then, as they

do now, on the specific ground that leave to amend would

first have to be obtained from this court. It is significant

that petitioners asked leave to amend so as to include lands

in Section 10 which were inadvertently omitted from the copy

of the Fish decree which they attached as an exhibit to their

answer (R.16). At that time they evidently thought the right

to amend was to be tested under Arkansas law. The fore-

closure suit came on for hearing on July 11, 1940. The Chan-

cery Court disregarded the matters set up in the amendment

and rendered a decree releasing all lands in the Fish decree

from further taxes, regardless of void deseriptions or express

exceptions (R. 17). The District, under compulsion, then

appealed to the Supreme Court. The appeal was lodged on

January 9, 1941 (R. 47). It will be observed that the trial

in the Chancery Court and the second appeal to the Supreme

Court were but subsequent steps in the same case which had

previously been before the Supreme Court and this Court.

We turn now to the other suit. The commissioners hav-

ing refused to allow the District to file suit alleging their

8

fraud in the procurement of the Fish decree, the creditors,

acting pursuant to the reservation contained in the order of

the District Court hereinabove quoted, on September 24,

1940, filed an independent proceeding under the statute to

vacate the Fish decree. The complaint, in substance, alleges

that instead of appealing from the decree which had been

obtained by Johnson in October, 1931, the commissioners of

the District agreed with him that they would not appeal if

he would file a similar suit and obtain the same relief for

their lands as he had obtained for his land; that they agreed to

use funds of the District in order to provide an audit which

would facilitate the entry of such a decree; and that they

had allowed it to be entered clandestinely and with a view

of cheating the creditors of the District (R. 24). The com-

missioners and the other landowners answered. They pleaded

the prior proceeding in the foreclosure suit, both in the

Supreme Court and in this Court, as res adjudicata (R. 36).

They did not suggest then as they do now that a suit of this

nature could not be filed without first having obtained leave

from this Court. Proof was taken. The rapacity of the

commissioners and their betrayal of the creditors were clearly

established. The suit came on for trial on March 21, 1941.

The Chancery Court decided in favor of the defendants. The

creditors appealed. The appeal was lodged in the Supreme

Court on May 26, 1941 (R. 47).

At this stage both suits were before the Supreme Court.

It was then evident that if the decree of the Chancery Court

in the creditors’ suit should be reversed, then the Fish decree

would stand vacated, and it would no longer have vitality

as the basis for a plea of res adjudicata in the foreclosure

suit. Consequently the two suits were consolidated. Upon

the undisputed evidence in the record in the creditors’ suit,

SPEAR EEE

ee pie. . ¥ SETI Ve ee Pee canes ae Re ANG:

9

the Supreme Court found that the commissioners had acted

dishonestly in permitting the Fish decree to be entered, in

declining to perfect an appeal, and in concentrating the tax

burden of the District on the remaining lands which were

not involved in the Fish suit (R. 48-59). As the Fish decree

had been vitiated, there was no occasion for the court to

pass upon the amendment which had been filed in the fore-

closure suit. The court still having control of the foreclosure

suit, it had the right to make such orders therein as seemed

to be appropriate. In view of the holding in the creditors’

suit, there could be no termination of the foreclosure suit

other than by reversal with directions to ignore the Fish

decree and tax all lands equally.

So petitioners stand defeated in the very court which had

previously sustained them, but they are reluctant to surrender

the fruits of their proven raseality.

roe

Seer en

ee eee

10

ARGUMENT

i

AMENDMENT OF PLEADINGS AFTER REMAND

It is said that the Chancery Court could not permit an

amendment of the pleadings without leave of this Court. If

that were so, then in every instance of a review of a State

court decision on certiorari, this Court would be called upon

to supervise all subsequent procedural steps. The incongruity

of such a practice repels acceptance of the idea. Petitioners,

at page 19 of their brief, have cited various decisions of this

Court which hold that inferior courts must comply with the

express directions contained in the mandate. Such a rule

must necessarily exist in all systems of law having a court

of last resort. If any of the subsequent proceedings in the

State court were violative of the terms or the spirit of the

mandate, then they cannot stand. When the record was here

before, there were neither allegations nor proof of fraud, and

the creditors’ suit which resulted in the vacation of the Fish

decree was not in contemplation. Under such conditions the

language of the mandate should be read in the light of the

issues which were here for decision. The particular points

pressed here by the creditors, respondents now, were that the

proceedings up to that point infringed certain constitutional

rights. The directory provisions of the mandate naturally

would be confined to the precise points decided in this Court.

Petitioners cite cases which hold that after remand a

bill of review on the ground of newly discovered evidence may

be filed only after leave has been obtained from the appellate

court. Undoubtedly, that is the rule in the Federal Courts;

but that is not the rule which is applied in Arkansas. There

permission to file a bill of review need not be obtained from

1l

the appellate court. If the ground is newly discovered evi-

dence, leave is obtained from the trial court. If the ground

is error apparent, the bill may be filed as a matter of right.

The following excerpt is taken from the case of Long v.

Long, 104 Ark. 562, 149 S. W. 662:

‘‘As a bill of review, it was sought to annul the

former decree for errors apparent on the record, and also

for newly discovered evidence. In order to file a bill of

review based on newly discovered evidence, it is neces-

sary to first obtain leave of the court in which the decree

was rendered. But it is not necessary to obtain such leave

of the court where the bill of review is founded on errors

of law apparent on the face of the record. Cornish v.

Keese, 21 Ark, 528; White v. Holman, 32 Ark. 753; Wood

v. Wood, 59 Ark, 441” (p. 567).

Review was allowed here to make certain that constitu-

tional guaranties had not been ignored. That secured, it

would seem that the case, with its status unaltered in other

respects, should go back to the jurisdiction and the body of

law from whence it came. It is inconceivable that because

this Court should review a State court decision by certiorari,

the case on remand would be marked for a procedural course

different from that laid out for all other cases in the same

court. It is significant that petitioners in the State court

never once suggested by pleadings or argument that leave

of this Court was a prerequisite for amendment of the plead-

ings or for the institution of a plenary suit attacking the Fish

decree. They felt no hesitaney in amending their answer

without first asking permission (R. 16).

In Steinfeld v. Zeckendorf, 239 U. 8. 26, the appeal came

to this Court while Arizona was a territory, but before the

decision it had become a state. The case was ‘*remanded

for such further proceedings as may not be inconsistent with

ae eee

wn ae

en

wwe ea an aN

12

the opinion.’”’? That language, Judge Holmes said, was ‘‘the

formula usual in cases coming from a State.”’ Then he

added :

o*** But apart from technical objections that have

been urged the only question that would be open is

whether the judgment below was inconsistent with the

opinion of this court, and as it very plainly is not, there

ix no reason for disturbing it. Our mandate was not

concerned with the allowance of attorneys’ fees and some

other matters that were argued, and therefore they pre-

sent no Federal question and need not be considered”

(p. 31). (Italics supplied.)

In this instance the mandate was not concerned with the

sufficieney of the exhibit attached to the answer filed by the

landowners to support their plea of res adjudicata; and it

was not concerned with the results which might follow if the

Supreme Court should later find that the Fish decree was

fraudulent and hold that it should be uprooted. The happen-

ings in the State court subsequent to the review by this Court

present no Federal questions. This Court, in the first appeal,

stated that there was no violation of the due process clause:

that the ereditors were bound by the decrees ‘tunless there

was fraud or collusion,’ and that the judgment of the Dis-

triet Court had not been denied full faith and credit. The

Johnson decree has been given effect. The Fish decree has

subsequently been invalidated for fraud. It is evident that

the mandate of this Court has not been disobeyed, and that

the only questions now raised are of a non-Federal nature,

Southern Railway Company v. Kentucky, 284 U.S. 888,

involved franchise taxes imposed by the State of Kentucky.

The State court fixed certain valuations for assessing the

taxes. On appeal this Court reversed on the ground that the

additional values attributed to a certain 127.03 miles of rail-

roac

proj

viol;

Upo

in a

spec

Paci

pan}

ame

the «

first

ceed

the d

full

ment

an in

Was |

this (

13

road were so excessive and arbitrary as in reality to include

property outside of Kentucky, and that enforcement would

violate the due process clause of the Fourteenth Amendment.

Upon remand, Kentucky amended its petition so as to claim,

in addition to its earlier demands, franchise taxes with re-

spect to Kentucky mileage of Cincinnati, New Orleans & Texas

Pacific Railway. Unlike petitioners here, the railway com-

pany objected in the trial court on the ground that the

amendment was in conflict with the mandate. We quote from

the opinion:

‘* * * Appellants maintained below that the pro-

ceedings were in conflict with our mandate and that to

enforce the taxes claimed would be to tax property out-

side the Commonwealth’? (p, 340),

As to the propriety of the amendment, this Court said:

“Our former decision merely held that the particular

application of the state statute then under consideration

Was repugnant to the due process clause. The judgment

now before us is based on a different claim. The remand-

ing of the case by the court of appeals and the filing of an

amended petition in the circuit court by the Common-

wealth and the trial thereon were not inconsistent with

the mandate of this court. Mutual Life Ins. Co. v. Hill,

193 U.S. 551, 553. Wolff Packing C'o. v. Industrial Court,

267 U.S. 552, 562"’ (p. 341).

That language is well fitted to this situation. On the

first appeal this Court merely held that the particular pro-

ceedings in the State court did not, as to creditors, violate

the due process clause of the Fourteenth Amendment or the

full faith and credit clause of the Constitution. The judg-

ment now under review is based on a different claim. By

an independent suit it has been shown that the Fish decree

Was a product of fraud, and such suit was filed long after

this Court’s mandate was filed in the Supreme Court.

14

If this Court should be of the opinion that the amend-

ments which were made in the State court could only be made

with its permission or that respondents should have sought

leave here before attacking the Fish decree for fraud, then

they ask that they now be allowed to file the appropriate

applications. Such procedure seems to us to have been

sanctioned by this Court in the case of Jn Re: Potts, 166 U.S,

263, one of the authorities cited by petitioners.

IS THE JUDGMENT OF THIS COURT IN KERSH LAKE

DRAINAGE DISTRICT v. JOHNSON, 309 U.S. 485,

RES ADJUDICATA OF ALL THE ISSUES IN-

VOLVED?

If that question is answered in the affirmative, then the

judgment of this Court froze the litigation at that stage and

deprived Arkansas litigants of a well-defined statutory rem-

edy which is not affected by any statute of limitations. The

rule of res adjudicata was developed for the salutary purpose

of giving finality to judgments after an opportunity had been

given the litigants to settle all controvertible issues. It was

not designed as a shield for the protection of fraud. The

only way in which the Fish decree could be scrutinized for

fraud was by the special statutory proceeding. Such a pro-

ceeding ordinarily could be invoked only by the party to the

suit who had suffered from the fraud of an adversary. In

the Fish suit the commissioners of the District and other

landowners were plaintiffs. As commissioners they defended

the suit in the name of the District. To obtain relief under

the statute, the District would have to sue the landowners,

including the commissioners, alleging fraud and a meritorious

defense, Naturally, the commissioners who participated in

the fraud and who profited by the terms of the Fish decree

= syoxtr ENT SP TRATES

15

would not, in the name of the District, compel themselves to

disgorge. That is why no suit under the statute had been

commenced prior to the first appeal.

At page 21 of their brief, petitioners say:

“If the Fish decree was obtained by fraud, the re-

spondents had an opporiunity to allege and prove the

fraud when the decree was pleaded as res adjudicata.”’

The respondents were not parties to the suit wherein

the Fish decree was pleaded as res adjudicata. That was an

ordinary foreclosure suit. It was filed by the District as

plaintiff. The District was dominated by the commissioners.

The District pleaded the decree of the District Court, for

under the circumstances that could not be avoided. The com-

missioners and other landowners, in defense to the suit,

pleaded the Fish decree. It was not possible at that point to

plead any decree setting aside the Fish decree for fraud, for

no such suit had even been filed. In the Supreme Court it

was argued by the attorneys who represented the ereditors

and who were permitted to brief the ease that the Fish decree,

on its face, showed fraud because the commissioners were its

principal beneficiaries. The Supreme Court pointed out that

the deeree could be vitiated only by a direct attack. After

the remand, the creditors asked the commissioners, in the

name of the District, to file such a suit. They declined. The

creditors then filed the suit in their names alleging that

although it was the duty of the commissioners to take the

initiative and file the suit, they had declined to do so (R.

“6). Before losing control of the foreclosure suit, the Su-

preme Court decided the suit attacking the Fish deeree. For

the first time there was a decree in existence which could be

pleaded in opposition to the Fish decree. Surely there can

16

be no rule of res adjudicata which will force the Supreme

Court into the awkward position of saying the Fish decree is

fraudulent, but we must allow it to protect those who maneu-

vered its entry because those same persons had not, prior to

the institution of the foreclosure suit, voluntarily pursued the

statutory remedy which alone could bring about its in-

validation.

The cases cited by petitioners do not sustain their argu-

ments. In all of those cases the judgments which supported

the pleas of res adjudicata had been rendered in separate and

distinet proceedings and had become final. Here the appellate

court still had control of the foreclosure suit. No final decree

had ever been entered.

In Chicot County Drainage District vy. Baxter State Bank,

et al., 308 U.S. 371, the judgment which supported the plea

of res adjudicata was entered in 1956 in a proceedings under

the Act of May 24, 1984, providing for Municipal Debt Re-

adjustment. Long after that decree had become final, a bond-

owner sued the district. In the first action the hbondowner

was a party and could have pleaded the invalidity of the Act

of May 24, 1934, but failed to do so. In the second suit the

bondholder sought to plead the unconstitutionality of the Act.

It was held that the judgment in the readjustment proceeding

which had long since become final was res adjudicata,

Cromwell v. County of Sac, 94 U.S. 301, also dealt with a

judgment which had become final, but the opinion discusses a

phase of the rule of res adjudicata which is applicable here.

From the opinion:

“In considering the operation of this judgment, it

should be borne in mind, as stated by counsel, that there

is a difference between the effect of a judgment as a bar

17

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 * * * (p. 302).

‘But where the second action between the same

parties is upon a different claim or demand, the judg-

ment in the prior action operates as an estoppel only as

to those matters in issue or points controverted, upon

the determination of which the finding or verdict was

rendered’? (p. 858),

This distinction was argued in the brief submitted to the

Supreme Court. Even had the rule of res adjudicata been

applicable on the second appeal in the same case, this dis-

tinction would have been fatal to the petitioners, for it is evi-

dent that the deeree which resulted from the direct attack

on the Fish deeree was a ‘different elaim or demand’’ from

any defense which was pleaded in the foreclosure suit. Neces-

sarily, it was a different claim because the decree which ad-

judged the Fish decree to be invalid was not in existence at

the time the foreclosure suit was instituted.

In Baltimore Ste amship Company v. Phillips, 274 U.S.

316, another of the authorities cited by petitioners, the court

said:

‘co

A judgment merely. voidable because based

upon an erroneous view of the law is not open to col-

lateral attack, but ean be corrected only by a direct review

and not by bringing another action upon the same cause”’

(p. 325).

The judgement of the Supreme Court on the first appeal

Was voidable. It was not open to collateral attack, but it

. . . Sd

could be corrected by direet review, and it was corrected by

direct review. No final Judgment had ever been entered at

GLEE LS ELE

EOP Asie PNR

18

the time the Fish decree was invalidated. Law of the case

and stare decisis could raise nothing more than non-Federal

questions.

In Grubb v. Public Utilities Commission, 281 U. S. 470,

this comment is found:

«“* * * the appellant must abide by the rule that a

judgment upon the merits in one suit is res adjudicata

in another where the parties and the subject are the

same,”’ ete. (p. 479).

This is not an instance of a judgment rendered in one

suit being offered in another suit. Here there is only one suit.

Here petitioners are in the attitude of offering a judgment

entered at one stage of the proceeding as being conclusive of a

different judgment on an additional showing of facts at a

subsequent stage of the same proceeding. The difference is

fundamental.

In McIntosh v. Wiggins, (C.C.A. 8) 123 F. (2d) 316, a

headnote reads as follows:

“A judgment which is wrong but unreversed and

unmodified is just as effective as a judgment which is

right.’’

Here the first judgment of the Supreme Court was

wrong, but it cannot be classified as ‘‘unreversed and un-

modified.”’

Other decisions of this Court quite plainly show that a

judgment entered at one stage of a proceeding cannot be

urged as res adjudicata to the entry of another judgment al

a subsequent stage of the same proceeding.

Wichita County v. City Bank, 306 U.S. 103, is in point.

19

Suit was filed by a Texas bank in the State court. J udg-

ment was entered in favor of the defendant on its cross-

action. The Supreme Court of Texas reversed and remanded

for a new trial, expounding the applicable law. In the mean-

time, the bank became insolvent, a liquidator was appointed,

and its assets were turned over to another bank. The pro-

ceeding was then removed to the United States District Court.

Un trial there recovery on the notes was denied the insolvent

bank, but jurisdiction was retained for winding up its affairs.

The Cireuit Court of Appeals set aside the decree because

the District Court failed to make specific findings of fact and

conclusions of law. In remanding, the Circuit Court of Ap-

peals, for the guidance of the trial court, stated principles

of law which it thought to be applicable. These were at vari-

ance with the State law. The Cireuit Court of Appeals had

assumed that as the litigation involved a commercial trans-

action, the Federal law would apply. Erie Railroad Company

v. Tompkins, 304 U.S. 64, was then decided, and on a second

petition for rehearing the Cireuit Court of Appeals disclaimed

any purpose of declining to follow the Texas law, but said its

opinion was in harmony with the rule announced by the Texas

court in a later case. Review was sought in this Court on the

ground that it was the duty of the Cireuit Court of Appeals

to apply the Texas law as it stood at the time of the rendition

of the first judgment of reversal by the Texas appellate court.

From the opinion:

‘‘In departing from the ‘law of the case,’ as an-

nounced by the state court, and applying a different rule,

the court below correctly stated that by reason of the

removal it had been substituted for the Texas Supreme

Court as the appropriate court of appeal and that it was

its duty to apply the Texas law as the Texas court would

have declared and applied it on a second appeal if the

cause had not been removed. It was the duty of the

federal court to apply the law of Texas as declared by its

20

highest court. Erie Railroad Co. v. Tompkins, supra.

But the case on the first appeal had not become res ad-

judicata. Remington vy. Central Pacific R. Co., 198 U.S.

95, 99, 100; Messenger v. Anderson, 220 U.S. 486, 444;

Diaz v. Patterson, 263 U. 8. 399, 402; Seagraves v. Wal-

lace, 69 F. 2d 163, 164, 165. And since the Supreme Court

of Texas holds itself free upon reconsideration to modify

or recede from its own opinions, see Quanah, Acme &

Pacific Ry. Co. v. Wichita State Bank & Trust Co., supra,

superseding 89 S. W. 2d 385, the court below, in applying

the local law, was likewise free to depart from the earlier

rulings to the extent that examination of the later opin-

ions of the Texas Supreme Court showed that it had

modified its opinion on the first appeal. Hence the only

question for our decision is whether the Court of Appeals

rightly concluded that the state court had thus altered

its opinion’’ (p. 107). (Emphasis supplied. )

In Messenger v. Anderson, 225 U.S. 436, the question was

the proper construction of a will. The contest had gone to the

Cireuit Court of Appeals, Sixth Cireuit, on three occasions.

In the meantime, the Ohio court had construed the will. On

the last appeal the Circuit Court of Appeals declined to change

its construction. Mr. Justice Holmes, in delivering the opinion

of this Court, said:

«“* * * Tn the absence of statute the phrase, law of

the case, as applied to the effect of previous orders on the

later action of the court rendering them in the same case,

merely expresses the practice of courts generally to re-

fuse to reopen what has been decided, not a limit to their

power. King v. West Virginia, 216 U.S. 92, 100. Reming-

ton v. Central Pacific R. R. Co., 198 U. S. 95. 99, 100,

Great Western Telegraph Co. v. Burnham, 162 U. S. 339,

343’? (p. 444). (Emphasis supplied.)

The ease of Seagrares v. Wallace, (C.C.A. 5) 69 F. (2d)

163, cited by this Court in the ease of Wichita County v. City

Bank, supra, is convincing authority for the following propo-

sitions:

c

21

1. When a judgment is affirmed on appeal there is res

adjudicata, and no power exists after the lapse of the term

to alter the judgment. (In the first appeal to the Supreme

Court there was no affirmance. There was a reversal of a

judgment rendered by the lower court in favor of the credi-

tors.)

2. A judgment of the appellate court binds the lower

court as law of the ease.

3. Questions within the rule of law of the case, though

ordinarily not re-examinable, are not beyond the power of

review. Good practice only, and not jurisdiction, is involved.

4. Justice is better than consistency, and an appellate

court, so long as it has jurisdiction over the controversy, ought

to have power to do justice according to law, and should be

eager to correct its own errors.

IIL.

DID THE SUPREME COURT OF ARKANSAS DENY

FULL FAITH AND CREDIT TO THE JUDGMENT

OF THIS COURT IN THE JOHNSON CASE?

At page 23 of their brief, petitioners contrast the holdings

of this court when the case was here for review with the

holdings of the Supreme Court when the case was before it

on the second appeal. They ignore all that happened during

the intervening period, and by doing so they miss the pivotal

question which is now before this Court. That question is

whether this Court’s opinion and its mandate ean be con-

strued as forbidding a consideration by the Supreme Court

of a special statutory proceeding which was subsequently

commenced and which terminated with the finding that the

commissioners, in allowing the Fish decree to be entered, had

1 Mn PENT PAT TES PTT RRL

22

violated the rudiments of fair play. The circumstances, the

language of this Court’s opinion, and the language of its

mandate do not justify an affirmative answer.

IV.

SECTION 8246 OF POPE’S DIGEST OF THE

STATUTES OF ARKANSAS

The arguments under this subdivision of petitioners’

brief are repetitious. They speak of this Court’s mandate

as if it insured them against the consequences of fraud which

might later come to light. They say that the ‘‘court by its

mandate ordered a decree to be entered in accordance with

its judgment.’’ With that we agree. We differ only as to the

scope of the judgment. We submit that the only judgment

rendered here was that the proceedings then reviewed had

conformed to constitutional requirements. We submit that

there was nothing in this Court’s mandate or judgment evi-

dencing an intention to deprive the Supreme Court of the right

to modify a former opinion in the same case, a right which

this Court has at all times preserved for itself and other appel-

late federal courts.

Only non-federal questions arise by reason of the last

judgment of the Supreme Court which deprived the petitioners

of the temporary success which they gained with a fraudulent

decree. We submit that review should be denied.

Respectfully,

A. H. Rowett,

A. H. Rowe t, Jr.,

J. W. Dickey,

A. F. Hovss,

Counsel for Respondents.