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Ferris v. Udell et al.

controversy, setting up their judgment execution, sheriff's sale and certificate, and that they had assigned onehalf of the certificate to Ferris, but this assignment had not been recorded when English began his foreclosure suit. English's right to foreclose against Browning and Sloan depended entirely on the validity of the sale of the lots by the assignee in bankruptcy as against the sheriff's sale to Browning and Sloan.

If the assignee's sale was not binding on Browning and Sloan, then the court could not legally adjudge a foreclosure of English's mortgage against Browning and Sloan, because English's mortgage was made by one whose title was derived wholly through the sale of the assignee in bankruptcy. Therefore, two things must necessarily have been adjudicated and adjudged in English's foreclosure suit before the decree of foreclosure could be, as it was, entered against Browning and Sloan, viz:

1. That the sale of the lots in question by the assignee in bankruptcy as against Browning and Sloan was valid and binding.

2. That the sheriff's sale to Browning and Sloan on the execution on their judgment was invalid against Hitchcock, the purchaser at the bankrupt sale.


"Every point which must necessarily have been decided in order to support the judgment or decree is concluded. If a judgment necessarily determines. a particular fact, that determination is conclusive, and requires the same fact to be determined in the same way in all subsequent actions between the same parties." 1 Freeman Judgments (4th ed.), section 257.

Generally, a judgment is conclusive only between adversary parties. 12 Am. and Eng. Encyc. of Law, 83 and 84, and authorities there cited.

Hitchcock, under whom appellees claim, was not an

Ferris v. Udell et al.


adversary party to Browning and Sloan on the record in the English foreclosure suit, but he was a codefendant with them. Yet English was an adverse party to them and he necessarily had to assert and maintain the validity of the Hitchcock title derived from the bankrupt sale and the invalidity of Browning and Sloan's title, and he was in privity with Hitchcock in that contest. Hitchcock title and the Browning and Sloan title were adverse and conflicting claims, and in that contest Hitchcock's interest was adverse to that of Browning and Sloan, though he was a codefendant with them. Besides, it is settled law in this State and in other States that a decree in a suit to foreclose a mortgage adjudicating the titles involved is conclusive upon the parties. Bundy v. Cunningham, 107 Ind. 360; Masters v. Templeton, 92 Ind. 447; 1 Freeman Judg. (4th ed.), section 303, O'Brien v. Moffitt, 133 Ind. 660 (667).

It is true the appellant Ferris was not a party to the English foreclosure suit, but he purchased one-half of the interest in the lots of Browning and Sloan since that litigation. As to that interest he is a privy with them and is equally bound with them by that decree as to that interest. When English began the suit, Ferris held an assignment of one-half of the Browning and Sloan certificate of sheriff's sale, but such assignment had not been recorded as the statute provides. R. S. 1894, section 778; R. S. 1881, section 766.

English had no notice of such assignment when he brought his foreclosure suit, though he received such notice pending that litigation.

Under such circumstances Ferris is regarded by the law as a purchaser pendente lite and equally bound by the decree with the parties. Boice v. Michigan, etc., Life Ins. Co., 114 Ind. 480; Adair v. Mergentheim, 114 Ind. 303;

Ferris v. Udell et al.

Wilters Mortgage Foreclosures, section 42, page 97; Bennett Lis Pendens, section 333, p. 380.

It makes no difference whether the court erred in the foreclosure decree or not. If it did so err, the sole remedy was by appeal. Though the decree is full of errors it is nevertheless binding and conclusive when brought collaterally in question, as it is here, so long as the court had jurisdiction of the subject and the parties and the adjudication was within the issues, all of which was the case here. The appellant was, therefore, estopped and concluded by the decree from setting up the title he as


It is contended by the appellant that the redemption from English's foreclosure sale extinguished the decree, and therefore its conclusive character was destroyed. The only effect of a sale on the judgment is to satisfy or pay the same, and the only effect of a redemption is to extinguish the sale by making the payment in money instead of the sale.

The judgment is not extinguished by a sale or satisfaction. Its conclusiveness remains unaffected thereby; otherwise a second recovery might be had for the same cause. The judgment, though paid, is a complete bar and conclusive of everything therein adjudicated. There was no error in the conclusion of law that appellant had no title.

The judgment is affirmed.

HACKNEY, J., took no part in this decision.

Filed Sept. 27, 1894; petition for a rehearing overruled Dec. 19, 1894.

139 600 149 61 $150 188 150 191

Bruner, Receiver of the Crawfordsville Waterworks Co., v. Brown.

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No. 17,120.


CORPORATION.-Promoter's Contract.-Ratification of.—A contract made
by the promoters of a corporation previous to its organization, and
ratified and confirmed by it afterwards, is binding upon the corpo-


SAME.-Contracts with Promoters.-Payment of Promoter's Services.— Purchase of Property from.-A corporation has the right to make contracts with its promoters to pay them for their services and to purchase property from them.

SAME.-Contract.—Construction of Waterworks in Consideration of Stock and Bonds.-Value of Stock.-Action by Receiver.-Fraud.-Where a contract is entered into between a waterworks company, which at the time has no indebtedness, and another, whereby the latter, in consideration of the construction of the waterworks plant, receives a certain amount in bonds and a certain amount in paid up stock, and a statement is filed in the county clerk's office showing that the stock is paid up by the execution of the contract for the construction of the works, in pursuance of section 3861, R. S. 1881, thereby giving notice to all concerned, a receiver of the corporation, suing for the benefit of creditors, can not recover from a holder the value of the stock unless the fact of fraud in the transaction is proved and found.

From the Montgomery Circuit Court.

S. C. Kennedy, H. J. Milligan and P. S. Kennedy, for appellant.

C. Martindale, B. Crane and A. B. Anderson, for appellee.

DAILEY, J.-This is an action in which the appellant seeks to recover, for the benefit of the creditors of the Crawfordsville Waterworks Company, a judgment against the appellee on a claim alleged to be due from appellee as a holder of alleged unpaid stock in that corporation. The complaint is in two paragraphs, the first of which is for the collection of the par value of $20,000 of stock of

Bruner, Receiver of the Crawfordsville Waterworks Co., v. Brown.

said company, which it is claimed the defendant owns, and for which it is alleged nothing has ever been paid to the company.

The second paragraph is to collect upon a subscription of $1,000 of the stock of the Crawfordsville Waterworks Company made by the appellee.

The defendant answered that the $20,000 of stock had been paid for, setting forth the manner in which the same was paid; and also answered that the one thousand dollar subscription to the stock of the company had been paid, setting forth the manner in which the same was paid.

Issues having been made up, the case was submitted to the court for trial, and the court, at the request of the appellant, made a special finding of facts and stated its conclusion thereon, that the plaintiff should recover nothing on either paragraph of his complaint.

As the record is presented to this court, there is but one question that can be properly considered by us, which is: "Did the trial court err in its conclusion of law upon the facts found?" The special finding of facts. is quite voluminous, and it is not essential to this opinion that we should embody herein a synopsis of its contents. From the facts found by the court, it appears that the appellee, at the time of the formation of the Crawfordsville Waterworks Company, subscribed for $1,000 of the stock therein, and afterwards became the owner by transfer from Comegys & Lewis, who under contract had constructed the entire waterworks plant of said company, of $20,000 additional stock, making $21,000 of stock held by the appellee in the corporation. In regard to the $1,000 subscription to the stock of the company made by the appellee, it is the contention of the appellant that the appellee will not be permitted to avoid the responsibility which he publicly assumed by the act,

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