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but asked for a decree adjudging the title and right of the property to be in the appellant, without money and without price, unless its claim was paid. The contention was that its rights in the property were superior and paramount to those of Andrews & Whitcomb. This issue was adjudged against the appellant; this court holding that under the decisions of the state court the appellant never had any lien upon the property, and that the judgment adjudging a lien was erroneous, although it was res adjudicata as to the parties to that suit, in which the lien was adjudged. In that opinion this court, by Woods, circuit judge, say:

"The question of primary importance, it is evident, is whether the liens decreed in favor of the complainant and one of the interveners were authorized by the provisions of section 3314, Sanb. & B. Ann. St. Wis. As between two of the parties to the record, the question has been decided by this court in the affirmative. Oconto Water Co. v. National Foundry & Pipe Works, 7 C. C. A. 603, 59 Fed. 19, 18 U. S. App. 380. But in another and later case, in which the Chapman Valve Company, also a party to this appeal, was the complainant, the supreme court of Wisconsin, in a carefully considered opiilion, attirmed the contrary ruling of the circuit court for Oconto county. Chapman Valve Mfg. Co. v. Oconto Water Co., 89 Wis. 264, 274, 60 N. W. 1004, 46 Am. St. Rep. 830. The ruling of this court was based upon the opinion delivered in the circuit court by Judge Jenkins, who, it will be observed, deduced his conclusion from the analogies of previous decisions of the supreme court of Wisconsin, none of which involved the precise question. That opinion and its affirmance by this court are referred to in the later opinion of the Wisconsin court, which declared itself 'constrained to a different judgment by the force of its former decisions and by the logic of the situation, and added that the view taken was deemed to be 'in accord with the weight of authority and the better reason.' That decision, being the first direct ruling of the supreme court of the state upon the exact question under consideration, must be regarded as establishing a construction of the statute which the federal courts will follow without further inquiry. Burgess v. Seligman, 107 U. S. 20, 2 Sup. Ct. 10, 27 L. Ed. 359; Stutsman Co. v. Wallace, 142 U. S. 293, 12 Sup. Ct. 227, 35 L. Ed. 1018; Bauserman v. Blunt, 147 U, S. 647, 13 Sup. Ct. 466, 37 L. Ed. 316; Lowndes v. Town of Huntington, 153 U. S. 1, 14 Sup. Ct. 758, 38 L. Ed. 615; Roberts v. Lewis, 153 U. S. 367, 14 Sup. Ct. 945, 38 L. Ed. 747; Folsom v. Ninety-Six Tp., 159 U. S. 611, 16 Sup. Ct. 174, 40 L. Ed. 278; Balkam v. Iron Co., 154 U. S. 177, 14 Sup. Ct. 1010, 38 L. Ed. 953. In Forsyth v. City of Hammond, 18 O. C. A. 175, 71 Fed. 443, 34 U. S. App. 552, to which reference has been made, this court declined to follow the latest ruling of the supreme court of the state from which the case came, but it will be observed that it was because the decision was deemed to be distinctly inconsistent with the previous decisions of that court, and in conflict with the weight and general current of authority on the subject. In respect to the title of Andrews & Whitcomb, we are of opinion that the mortgage of the franchise carried with it the water plant. The franchise, as described in the ordinance referred to in the mortgage, included the right to 'construct, own, maintain, and operate the particular water plant which was in contemplation and already in process of construction when the mortgage was executed. In the opinion in Chapman Valve Mfg. Co. v. Oconto Water Co., 89 Wis. 264, 273, 60 N. W. 1004, 1005, 46 Am. St. Rep. 830, it is said: 'Nor does the franchise follow the plant by force of the rule that the incident follows its principal. If that maxim has any application, it should be considered that the franchise is the principal thing. All other rights spring from the franchise.'”

It seems to this court now that after that decision there was not much standing ground for the appellant, founded upon its claim to a mechanic's or material man's lien under the statute. If the appellant has no lien subsequent and subordinate to the appellees' title, it is

difficult to see on what solid ground it could base a claim to redeem. It is simply in the position of a general creditor. As such it could not have been made a party to the foreclosure of the mortgages, because it had no lien upon, nor interest in, the property covered by the mortgages. And, no doubt, that was why it was not made a party to that foreclosure. If it could not be made a party to the foreclosure and its interest barred, it is difficult to see how, after Andrews & Whitcomb had purchased the property and sold it to the water supply company, the appellant, without any lien at all, can come in and demand the right to redeem and take the plant from the purchaser.

But this is not all the litigation that has been had between the parties. After the decision of this court was rendered adjudging that the appellant had no lien, and dismissing the bill for want of equity, an action was brought by this same appellant against the Oconto City Water Supply Company, in possession, to compel that company to surrender the waterworks property to the plaintiff, upon the theory that the defendant water company, by organizing under the statute to acquire title to such property, and the right to exercise all the rights, privileges, and franchises of the old corporation, and taking such property with knowledge of the plaintiff's lien, became a mere continuation of the old organization under another name. Judgment was prayed against the defendant for the amount of the plaintiff's claim against the old Oconto Water Company, and that it be given possession of the waterworks property; that defendant be enjoined from using the property, particularly the pipes furnished by plaintiff and used in the construction of the plant,--unless within a reasonable time defendant should pay its claim. It will be observed that this suit was in equity, and went to the right and title to occupy and use the property. Defendant answered the complainant, and the issues thus formed were tried and determined by the state circuit court of Oconto county; the decision being, in effect, that in the aforesaid action in the federal court, to which the plaintiff and defendant were parties, it was decided that plaintiff was not entitled to any lien upon the terworks property as against the title under the Andrews & Whitcomb foreclosed mortgages; that the issues raised in the case were all presented in the case in the federal court, and were adjudicated adversely to the plaintiff; and that such adjudication was binding between the parties, and conclusive in that action. Judgment was rendered in favor of the defendant, dismissing the plaintiff's bill of complaint. An appeal was taken from this judgment to the supreme court of the state, and an elaborate and satisfactory opinion given by Judge Marshall, affirming the decree of the circuit court. On the question of the issues in the case at bar being res adjudicata, in view of the former decision of this court and that of the supreme court of Wisconsin, what that court said in that case seems quite as applicable to this case as to the case in the state court. The court says:

“The question of whether the trial court erred in deciding that the judgment of the federal court is res adjudicata on all points upon which appellant relies to recover is presented for consideration. It is elementary that all questions apperta ining to a cause of action, within the issues, and actually litigated, or which might have been litigated, are irrevocably an

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swered by the final decree, so far as affects the parties to such action, as regards the subject thereof. That, of course, includes not only the primary right sought to be enforced by the action, but matters germane to, and actually involved in, it. Wentworth v. Racine Co., 99 Wis. 26, 74 N. W. 551. It is conceded that under that rule it was not open for appellant in this case to litigate the question of whether its lien judgment was binding on the respondent. But it is said the right of appellant to hold the respondent liable for its claim, upon the ground that the latter took the property in controversy subject to its lien claim, was not involved in the former litigation, or presented to the court, or decided. It is with some difficulty, we confess, that we can follow the course of reasoning which leads to the statement of such premises as correct, or the conclusion based thereon. The validity of the Andrews & Whitcomb mortgages, and the title acquired through the foreclosure of them, were subjects of controversy in the creditors' suit. The pleadings show that, and the opinions filed, as well. If appellant was possessed of a claim upon the property, either by reason of the judgment against the Oconto Water Company or otherwise, paramount to the rights claimed under the Andrews & Whitcomb mortgages, they were entitled to have had such claim declared to them in the creditors' suit. The object sought by such suit was to obtain a decree to the effect that appellant was entitled to the property in controversy as it stood September 15, 1890, free from any claim of Andrews & Whitcomb, or any other party to the action. That brought before the court for adjudication the nature and validity of the title obtained through the foreclosure proceedings, not only as regards whether it was affected by the lien decree against the Oconto Water Company, because of Andrews & Whitcomb's connection with such company, but whether such title was subject to the appellant's claim under any circumstances. An examination of the pleadings in the creditors' suit leaves no doubt on that question, and, by reference to the published opinions of Judge Woods in the case, it appears that all the matters involved in the controversy above mentioned were actually decided. We might quote at length from such opinions, found in Andrews v. Pipe Works, 22 C. C. A. 110, 76 Fed. 166, 36 L. R. A. 139, and Id., 23 C. O. A. 454, 77 Fed. 774, 36 L. R. A. 153, conclusively establishing what is here said, but it is not deemed necessary. It is sufficient to say that in our judgment the decision in the creditors' suit is just as decisive that the title acquired by the foreclosure sale passed to the purchasers free and clear of any claim of the appellant, as it is that Andrews & Whitcomb were not bound by the lien judgment. Appellant's counsel concede that the effect of the decree is that their claim was not a lien upon the water company's property as against the Andrews & Whitcomb mortgages. With that concession, there was nothing left undecided, as it seems, which is involved in this case. If there was no lien as against the mortgagees, the owner under the foreclosure sale did not take any benefits which belonged legally or equitably to appellant."

It is true that the particular relief prayed for in this suit was not asked for in the former cases in the federal and state courts. But the issues involved and the prayers for relief were broad enough to cover the relief sought here if counsel had seen fit to make the claim. Under the decisions, what might fairly and properly have been litigated in these cases must be considered as having been litigated, and are answered by the final decree, as well as those things which were openly and professedly litigated. Upon the merits of the controversy in the state court, aside from the question of res adjudicata, the supreme court says:

"The mere fact that a suit is pending in the federal court on one cause of action or subject of action, affecting property not in the custody of the court, does not prevent the commencement or prosecution of any number of actions between other parties on other causes or subjects of action affecting the same property, or prevent the property from being seized in such other actions, so long as no prior possession of the res by the federal court is dis

turbed.

• Identity of subject of action or disturbance of actual possession is what limits the exclusive jurisdiction of the federal court as applied to this case. In that view, it is readily seen that the proceedings in the state court to foreclose the Andrews & Whitcomb mortgages did not conflict in the slightest degree with the jurisdiction of the federal court to enforce appellant's lien against the Oconto Water Company.

* If the Andrews & Whitcomb mortgages were valid liens upon the waterworks property, paramount to plaintiff's claim, so that by the enforcement of the mortgages the purchaser at the foreclosure sale only obtained the benefit of the mortgage security, they became possessed of no benefit that they did not fully pay for, or anything that was equitably applicable to the payment of plaintiff's claim. The essential of prior equity of plaintiff in the property, which is an absolute essential to the liability of the new owner of such property for the debts of its predecessor, does not exist, so the principle invoked does not apply.

The defendant became the bona fide owner, for full value, of the property of the Oconto Water Company, and all the franchises possessed by it for the pr ble use and enjoyment of such property. The purchasers at the foreclosure sale took title to the property with the incidental right conferred by section 1788, Rev. St. 1898, to form a new corporation to take the same by assignment, and possess the rights of the old organization. When the mortgages were given, section 1788, Rev. St. 1898, became a part of them, and a very material element in the value of the security. The right guarantied by such section was as much a part of the mortgage security as the tangible property described. The theory of the appellant is that the statute clothing a corporation circumstanced as the defendant is with the right to exercise the powers, privileges, and franchises possessed by the old corporation, which it shall have acquired bona fide, by mortgage sale, or by assignment based on a title acquired through such a sale, instead of adding to the value of a corporate mortgage covering all the property of the corporation, tangible and intangible, impairs it, and may destroy it, because a new corporation cannot be organized with the benefits of the statute without incurring the penalty of being liable for all the unsecured indebtedness of the old corporation, whether before the foreclosure sale the owner of the mortgage indebtedness had a first lien on the property or not. In other words, that the statute not only operates to prevent the general creditors from being cut off by the foreclosure proceedings, but transposes the parties so as to give the general creditors a claim on the property paramount to the mortgage. The statute will not admit of a construction leading to such an absurd result, even if the question were an open one; and it is not, as we have seen. The manifest purpose of it, as indicated, is to add to the value of a corporate mortgage of the kind under consideration. That is too plain to admit of serious controversy. Candor compels us to say that we do not think that the contrary theory merits the consideration we have given to it, since its fallacy is so glaringly apparent, and has so often been exposed in this and other courts.

To satisfy the above-indicated requirements, we are told that when Andrews & Whitcomb purchased the waterworks property at the foreclosure sale they knew that plaintiff had an adjudged lien thereon for the amount of their clain, good against the common debtor, and that the respondent was likewise circumstanced when it took the title; therefore, though it may be conceded that title passed to the respondent, it was subject to the lien judgment, and the respondent should not be allowed to use such property, except upon condition of paying the appellant's charge upon it. If that is good law, all a junior lien claimant need do to acquire precedence over the prior lien is to obtain a judgment for the enforcement of it in an action to which the prior lien claimant is not a party. We cannot agree with that proposition. The rights of Andrews & Whitcomb under their mortgages, relative to the rights of the appellant under the claim for a lien on the mortgage property, were not affected in the slightest degree by the judgment in the federal court in the lien suit. They were not parties to it or in privity with the Oconto Water Company so as to be bound as such. That seems too clear for serious controversy, and was adjudicated between the parties in the creditors' suit. So, if the appellant was not entitled to a lien on the waterworks plant as

*

against Andrews & Whitcomb, the latter derived no advantage from the foreclosure sale, except that for which they gave a full equivalent by a satisfaction of the mortgage indebtedness. They took the property without any burden resting upon it; hence incurred no duty, within the maxim which the learned counsel invoke."

There can be little question but that the decision of the state court is conclusive on the question of jurisdiction. It was fairly before that court for decision, and it decided it. But aside from the question being res adjudicata, there can be no doubt about the jurisdiction of the state court in the foreclosure proceedings. The appellant was not made a party to that suit, and so was not bound by the decree. The appellees were not parties to the suit to establish the mechanic's lien, and so were not bound by that judgment. On the question of the state court not having jurisdiction of the foreclosure proceedings because a suit for a wholly different purpose was pending in the federal court, it may be said there was no possession, actual or constructive, in either the state or federal court, during the pendency of foreclosure proceedings. The mortgagor was in actual possession during the whole time. There was no reason why the actions might not have proceeded concurrently as well as successively. The question of the better right to the property was open. Suit was brought by appellant to test that right in the federal court, and the judgment of the court went against it. Suit was then brought in the state court to test the same right, shifting the ground of the action, and the judgment of the state court was against the appellant's claim. A third suit is brought here to test the same claim, again shifting the ground of the action, but setting up and relying upon the same facts. As has already been said, if the issues involved are not fully and technically res adjudicata, they are so nearly so as to leave the appellant small standing room in court. It may properly be said that it has had its day in court. It has had its day in two courts,-in this court and in the state court. The decisions of those courts cover fully the several grounds of recovery as the appellant was then able to state them, and it cannot, by changing the grounds of its claim, continue the litigation indefinitely. One of the grounds of recovery stated in the former suit in the federal court, if it had been good for anything, was entirely adequate to furnish relief and give title and possession to the appellant. If it was entitled to a mechanic's and material man's lien on the plant, that, under the statute, would relate back to the very beginning of the improvement, and constitute a lien paramount to the lien of the mortgages; and, if the decree of the United States circuit court for the Eastern district of Wisconsin had been affirmed by this court, that would have given appellant title to the property under the sale which was made to it by the marshal under that decree. But that decree was reversed, and the bill dismissed. It had been held upon full consideration by the unanimous judgment of the highest court of the state, in the first case where the question had been squarely and fully considered, that the lien laws of Wisconsin had no application to properties of this kind. The terms of the statute were not broad enough to cover such a case, and it

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