dismissal of Broder'a counterclaim in Civil Action No. 2244-50, as well as its denial of his motion to add the surety as a third-party defendant in that action and the parties' dismissal 'with prejudice' of that action, constitutes a bar to the claim here asserted.
Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., provides, in part:
'Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for improper venue, operates as an adjudication upon the merits.'
See Slack v. Rich, 87 U.S.APP.D.C. 123, 182 F.2d 706. Rule 41(c) provides that, 'The provisions of this rule apply to the dismissal of any counterclaim, cross-claim, or third-party claim.'
The order of October 6, 1950, dismissing Broder's counterclaim, therefore operated as an adjudication on the merits that Broder did not have a cause of action as there alleged for the defaults of the builder under the construction contract. This order is res judicata not only as to Mirkes, the plaintiff in that suit, but also as to his surety, Hartford, the defendant herein.
Under the bond on which this suit is based, the surety bound itself to indemnify and save harmless Broder from all cost and damages which he might suffer by reason of Mirkes' failure to faithfully perform his construction contract in the sum of $ 17,600, and to reimburse Broder for all outlay and expense which he might incur in making good any such default. The plaintiff's claim against the surety can be no greater than his claim against the principal; and if the principal is not liable, neither is the surety.
It is elementary that 'a question of fact or of law distinctly put in issue and directly determined by a court of competent jurisdiction as a ground of recovery or defense in a suit or action between parties sui juris is conclusively settled by the final judgment or decree therein so that it cannot be further litigated in a subsequent suit between the same parties or their privies, whether the second suit be for the same or a different cause of action.' Oklahoma v. Texas, 256 U.S. 70, 85, 41 S. Ct. 420, 422, 65 L. Ed. 831; Southern Pacific R. Co. v. United States, 168 U.S. 1, 48-49, 18 S. Ct. 18, 42 L. Ed. 355.
An issue decided in an action by the obligee against the principal, a judgment in which would be binding on the surety, cannot thereafter be relitigated in an action against the surety. Aetna Casualty & Surety Co. v. Abbott, 4 Cir., 130 F.2d 40, 42.
The plaintiff Broder makes a point of the fact that he sought to bring in Hartford as a third-party defendant in the prior suit, but that Hartford resisted his motion; and the plaintiff therefore contends that Hartford was a stranger to the prior action and that any judgment therein cannot be binding on Hartford. A judgment against the principal in a suit of which the surety has full knowledge is not only evidence, but conclusive evidence as to the surety's liability and binds the surety, against every defense except fraud and collusion in obtaining it, or the defense that the judgment against the principal was not within the scope of operation of the contract of suretyship. Whelan v. McCullough, 4 App.D.C. 58, 64-65; Lake County, for Use and Benefit of Baxley v. Massachusetts Bonding & Insurance Co., 5 Cir., 75 F.2d 6, 8. Hartford would therefore have been bound by any judgment against Mirkes on the counterclaim in the counterclaim in the prior action, and may plead dismissal of the counterclaim as res judicata in the present action.
Aside from dismissal of the counterclaim, this court, when it denied the motion to bring in Hartford as a third-party defendant in the prior action on a third-party complaint alleging the same cause of action stated in the present complaint, held that Broder has no cause of action against Hartford on such facts. Further, Broder consented to dismissal of the whole prior action with prejudice in the praecipe of July 16, 1951, and his right to have the praecipe set aside and the proceeding reopened has already been denied, on March 28, 1952.
The present action is an attempt to relitigate issues raised and disposed of in Civil Action No.2244-50, and for that reason the motion to dismiss must be granted.
The court finds no merit in the other ground of the defendant's motion to dismiss, that the plaintiff, by suing in the Municipal Court for breach of the accord and satisfaction, has elected to limit his claim to $ 3,000. While, for the purposes of the Municipal Court action, the plaintiff has limited his claim to the amount of that court's jurisdiction, such limitation will not bind this court unless and until the plaintiff obtains a judgment in the Municipal Court which operates as res judicata in any litigation pending in this court. Where the judgment sought is strictly in personam, both a state court and a federal court, having concurrent jurisdiction, may proceed with the litigation until a judgment is obtained in one of them which may be set up as res judicata in the other. Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 59 S. Ct. 275, 83 L. Ed. 285; Kline v. Burke Const. Co., 260 U.S. 226, 43 S. Ct. 79, 67 L. Ed. 226.
Counsel will prepare and present promptly an appropriate order.
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