Messrs. P. A. Willcox, Frederic d. McKenney, F. L. Willcox, and Henry E. Davis for plaintiff in error.
[215 U.S. 252, 254] Charles A. Douglas, W. F. Stevenson, and E. O. Woods for defendant in error.
Mr. Justice McKenna delivered the opinion of the court:
This case involves the question as to whether the state courts gave due force and effect to a judgment of the circuit court of the United States for the district of South Carolina in an action brought by plaintiff in error against the defendant in error.
The action in the case at bar was brought by defendant in error, whom we shall call Kirven, against plaintiff in error, whom we shall call the Chemical Company, for damages resulting from the defective manufacture of certain fertilizers bought by Kirven of the Chemical Company, through one McCall, to whom he gave his note for $2,228. The allegation of complainant is:
The Chemical Company, in its answer, set, up, among other defenses, the judgment of the circuit court of the United States. The plea was not sustained, and judgment was entered for Kirven for the amount sued for, which was affirmed by the supreme court of the state. 77 S. C. 493, 58 S. E. 424.
The facts, so far as necessary to be stated, are as follows: The Chemical Company, being a New Jersey corporation, brought action against Kirven in the circuit court of the United States for the district of South Carolina on the note before mentioned. Kirven, among other defenses, set up [215 U.S. 252, 256] that the note was given for fertilizers, 'for which he agreed to pay a sound price, which is set forth in the note sued upon, and were purchased for the use of the defendant himself and his tenants and customers in making a crop for the year in which the said note was given, but the said fertilizers were so unskilfully manipulated and manufactured and prepared, and were of such inferior quality, that instead of being a benefit to the crops of defendant and his tenants and customers, to whom he furnished the same, they were deleterious and destructive to the crops, and destroyed the same in large part, and there was an entire failure of consideration to the defendant for said note.'
Kirven subsequently filed a supplementary answer, in which he omittted, the Chemical Company not objecting, the defense above set out, but pleaded as a counterclaim certain proceedings instituted by the Chemical Company in North Carolina, in which it attached certain cotton belonging to Kirven, sold the same, and 'applied and appropriated the proceeds to its own use and benefit.' The value of the cotton and the amount 'so seized and appropriated' were alleged to be twenty-four hundred and fifty dollars ($2,450).
Kirven, when testifying as to the purchase of the fertilizers, said: 'I did not know anything until later on, there was a complete destruction of my crop.' Counsel for the company objected 'to the latter clause, on the ground that that whole question is taken out of the complaint.' The objection was sustained and the answer stricken out. The Chemical Company recovered judgment for nine hundred eleven dollars and seven cents ($911. 07).
A motion is made to dismiss the writ of error, on the grounds (1) that the assignment of errors in the supreme court of the state lacked certainty of specification, as it only stated that the refusal by the trial court to give proper and full credit to the judgment of the circuit court 'thereby denied to the defendant [the Chemical Company] a right arising under the authority of the United States.' This, it [215 U.S. 252, 257] is contended, is not sufficient to raise a Federal right, and the following cases are cited: Chicago & N. W. R. Co. v. Chicago, 164 U.S. 454 , 41 L. ed. 511, 17 Sup. Ct. Rep. 129; Clarke v. McDade, 165 U.S. 168 , 41 L. ed. 673, 17 Sup. Ct. Rep. 284; Miller v. Cornwall R. Co. 168 U.S. 131 , 42 L. ed. 409, 18 Sup. Ct. Rep. 34; Harding v. Illinois, 196 U.S. 78 , 49 L. ed. 394, 25 Sup. Ct. Rep. 176; Thomas v. Iowa, 209 U.S. 258 , 52 L. ed. 782, 28 Sup. Ct. Rep. 487.
The cases are not applicable. In neither of them was the contention under the Constitution of the United States identified or passed upon. In the case at bar there is a definite right arising under the authority of the United States, and the decision of the court was in effect against it. The case falls within Crescent City L. S. L. & S. H. Co. v. Butchers' Union S. H. & L. S. L. Co. 120 U.S. 141 , 30 L. ed. 614, 7 Sup. Ct. Rep. 472; Pittsburgh, C. C. & St. L. R. Co. v. Long Island Loan & T. Co. 172 U.S. 494 , 43 L. ed. 528, 19 Sup. Ct. Rep. 238; Deposit Bank v. Frankfort, 191 U.S. 499 , 48 L. ed. 276, 24 Sup. Ct. Rep. 154.
The question on the merits is a narrow one. Its solution depends upon the application of well-known principles,-too well known to need much more than statement. It is established that the bar of a judgment in another action for the same claim or demand between the same parties extends to not only what was pleaded or litigated in the first action, but what might have been pleaded or litigated. If the second action is upon a different claim or demand, the bar of the judgment is limited to that which was actually litigated and determined. Cromwell v. Sac County, 94 U.S. 351 , 24 L. ed. 195; Northern P. R. Co. v. Slagth, 205 U.S. 122 , 51 L. ed. 738, 27 Sup. Ct. Rep. 442. Of course, as contended by the Chemical Company, there are some defenses which are necessarily negatived by the judgment,- are presumed never to have existed. These are such as go to the validity of the plaintiff's demand in its inception or show its performance, such as is said in Cromwell v. Sac County, supra, as forgery, want of consideration, or payment. But this court has pointed out a distinction between such defenses and those which, though arising out of the transaction constituting plaintiff's claim, may cut it down or give rise to an antagonistic demand. Of such defenses we said, speaking through Mr. Justice Holmes in Merchants' Heat & Light Co. v. J. B. Clow & Sons, 204 U.S. 286 , 51 L. ed. 488, 27 Sup. Ct. Rep. 285, that the right to [215 U.S. 252, 258] plead them as a defense 'is of modern growth and is merely a convenience that saves bringing another suit, not a necessity of the defense.' And showing how essentially they were independent of the plaintiff's demand, although they might be of a defense to it, it was said that when the defendant set them up he became a plaintiff in his turn, and subject to a jurisdiction that he otherwise might have denied and resisted. The principle was applied to recoupment as well as to set-off proper. Even at common law, it was said, 'since the doctrine has been developed, a demand in recoupment is recognized as a cross demand, as distinguished from a defense. Therefore, although there has been a difference of opinion as to whether a defendant by pleading it is concluded by the judgment from bringing a subsequent suit for the residue of his claim, a judgment in his favor being impossible at common law, the authorities agree that he is not concluded by the judgment if he does not plead his cross demand, and that whether he shall do so or not is left wholly to his choice.' This doctrine is attempted to be avoided by insisting that Kirven's plea in the circuit court and his cause of action in the case at bar is an assertion of a want of consideration for the note, and, it is urged, brings the case under one of the defenses mentioned in Cromwell v. Sac County, supra, which would have defeated recovery on the note, and that the judgment obtained necessarily negatives the facts upon which Kirven now bases his cause of action. 'Call it what he may please,' the Chemical Company says, 'the basis of Kirven's claim in this suit is an alleged failure of consideration of such great degree that it amounted to positive viciousness, which would have been a perfect defense to the suit in the United States court.' It may be, indeed, that such 'viciousness' could have been set up in the action in the circuit court, but it would be to confound distinctions that have always been recognized, and the effect of which are pointed out in Merchants' Heat & Light Co. v. J. B. Clow & Sons, supra, to conclude that the judgment recovered [215 U.S. 252, 259] negatives the existence of that 'viciousness,' or the damages which were consequent to it. This was the view taken by the supreme court of the state, that court deciding that the cause of action in the circuit court and that in the case at bar were upon different claims or demands,-'one being upon a promissory note, and the other for unliquidated damages' arising from the destruction of Kirven's crops. And the supreme court also decided that Kirven withdrew the defense based on the damages to him. It was omitted, as we have seen, from the supplementary answer. Testimony in regard to it was excluded upon the objection of the Chemical Company, and there is support for the contention that the company is estopped to urge that a defense which was excluded upon its objection was involved in the action and concluded by the judgment.
It is, however, contended by the Chemical Company that whether new matter constitutes a defense or counterclaim under 170 and 171 of the Code of Procedure of South Carolina (inserted in the margin1), it must be set up by a defendant in his answer, and cannot be, if not set up, used as an independent cause of action. It is also contended that this being the practice in the state courts, by virtue of the
1 Sec. 170. The answer of the defendant must contain:
Sec. 171. The counterclaim mentioned in the last section must be one existing in favor of a defendant and against a plaintiff, between whom a several judgment might be had in the action, and arising out of one of the following causes of action:
Finally, it is urged that, in the case of Greenwood Drug Co. v. Bromonia Co. 81 S. C. 516, 62 S. E. 840, decided since the case at bar, the supreme court of the state of South Carolina is in accord with the contention of the Chemical Company as to the effect of judgments as res judicata, and has modified the views expressed by that court in the case at bar. It may well be contended that we are not concerned to consider to what extent that learned court has modified its views, as we have taken jurisdiction of this case because of our right to decide the weight and effect to be given to the judgment of the circuit court. It is enough, however, to say that the supreme court of South Carolina did not question the correctness of its decision in the case at bar.