HUTCHINSON et al. v. KENNEY, 27 F.2d 254

GRONER, District Judge (after stating the facts as above).

The assignments of error relied upon on this appeal are that the District Court erred in holding that the plaintiffs had been guilty of laches; that the court erred in holding in effect that the defendant’s judgment was a prior lien on the furniture because defendant was at the time of the making of the mortgage an officer of the corporation, and had then represented that the furniture was covered under the terms of the mortgage as security for the debt therein secured; that the court erred in holding that the matters in dispute were res adjudieata because the plaintiffs were not parties to any of the suits set up in the answer of defendant, and that the court erred in not holding that the plaintiff Mrs.

Hutchinson was entitled to an equitable lien upon the hotel furniture. We will now dispose of these assignments. Plaintiff’s mortgage was executed in 1909. In 1921 a decree of sale in a foreclosure suit was entered, and the property covered by the mortgage was purchased by her. Neither in the foreclosure suit nor in the mortgage itself does it anywhere appear that the hotel furniture was conveyed as security for the debt.

The judgment which was rendered at the February term, 1921, fixed the amount of the debt and appointed a commissioner “to sell the lands described in the complaint and in the deed of trust.” In the following September, Kenney brought his suit against the hotel company and attached the furniture, and, by consent of the parties, Mrs. Hutchinson, who, having purchased the hotel, was in possession of the furniture, was allowed to use it in connection with the hotel business, but in subordination to the rights of the sheriff under the attachment.

The situation thus continued until, at the February term, 1927, Kenney got his judgment together with the right to have the furniture sold by the sheriff to satisfy his lien. It will thus be seen that'for a period of nearly six years, plaintiff recognized that she had neither right nor title to the furniture by virtue of the bonds secured by the mortgage, and neither at the time of the foreclosure of her security, nor at the time of the institution of the suit by Kenney, did she make sueh claim.

It is true she continued to hold the furniture, and to use it, but expressly subject to the ultimate determination of Kenney’s claim of lien on it, and it was only after this claim was sustained by a decree of the state court that she asserted the claim she now makes here that the exclusion of the furniture in the granting provisions of the mortgage was an inadvertent omission.

It is true that mere delay in itself does not constitute laches, and that ordinarily delay, not amounting to a bar of the statute, will not preelude relief; and this is especially true if the delay does not work injury to the rights of the other party. In sueh circumstances, a court of equity will rarely regard it sufficient to defeat an acknowledged right.

In this case, while the lapse of six years is not in itself fatal, when considered in connection with the fact that during this entire period, plaintiff not only failed to assert the rights she now claims, but, in holding the furniture as the agent of the sheriff, and in assenting to a title wholly antagonistic to that she now sets up, she created an estoppel by laehes, which is nothing more or less than the failure to do something which should be done, or to claim or enforce a right at a proper time.

We do not, however, place our decision upon this ground, nor do we think it necessary to do more than notice the assignment that the court below erred in not holding that the defendant’s lien was subsequent to that of plaintiff because of his alleged representation. at the time of making the mortgage that it was purposed including the furniture under the security provisions thereof.

In the first place, we find nothing in the record to justify the conclusion that he made such representation, and, in the second place, it abundantly appears that that question, as well as all other justiciable matters involving his debt, and his right to a lien, were submitted to the state court, and affirmed on appeal. In the litigation in the state court between Kenney and the hotel company, the plaintiff, though not a party, was an active participant.

Her husband was then an officer in the hotel company, and all of the defenses to Kenney’s claim which she seeks now to make in her own behalf were there made for her as fully as though she had been a party to the suit. The effect of the decision there was to determine the validity of Kenney’s claim, and to constitute it a specific lien against the property described in the lien of the attachment. It should have been, and was, a final and complete determination of that question, and, in the ascertainment of facts, it was an estoppel by judgment. All of the necessary elements of the doctrine obtained.

There was identity of the thing sued for, identity of cause of action, and identity of persons or privies, and, if more be needed to make this conclusive, it is furnished in the two subsequent suits, equally abortive, instituted by the trustee in bankruptcy in both the federal and the state courts. As such trustee in bankruptcy, he was clothed with all the powers and with all the rights of the bankrupt as' the representative of the creditors.

The dismissal of his bill in both courts and the failure to appeal therefrom in either was conclusive of every point which properly 'belonged to tbe subject of litigation and which the - parties in the exercise of due diligence might have brought forward.

The skeleton record before ns does not show with the fullness we should like all of the proceedings of these several suits, but enough appears to satisfy us that all the matters now sought to be raised in this bill have had judicial determination in a court of competent jurisdiction at the suit of the parties here or of their privies, and that these matters may not now be litigated here.

But, over and beyond all of this, a careful inspection of the record in this ease convinces ns, as was decided by the Supreme Court of North Carolina, that the furniture attached by Kenney was not included in the deed of trust to Mrs. Wiggs, the mother of Mrs. Hutchinson, and, in addition to this, that the record wholly fails to show that it was ever intended so to be. In these circumstances, we feel that the decree of the lower court discharging the injunction and dismissing plaintiff’s hill was clearly right, and should be, and is, affirmed. Affirmed.