JOCIE MOTOR LINES, Inc.
v.
JOHNSON et al.
No. 530.
Supreme Court of North Carolina.
February 3, 1950.*390 Smathers, Smathers & Carpenter, Charlotte, and Smathers & Meekins, Asheville, for plaintiff.
Helms & Mulliss, Charlotte, for defendant.
DENNY, Justice.
We think the questions sought to be litigated in this action were or might have been adjudicated in the case of Hodges et al. v. Johnson et al., D.C., 52 F.Supp. 488. The plaintiff herein was made a third party defendant in that action, under the Federal Rules of Civil Procedure, Rule 14, 28 U.S.C.A., governing third party practice. The rule permits a defendant "to bring in a third party, provided the third party is liable to the defendant by way of contribution, indemnity, or otherwise, for the claim made against him." 35 C.J.S., Federal Courts, § 123 e, page 993, where the reason for this rule is also stated, as follows: "Rule 14 was formulated and adopted, in keeping with the purpose of all the Federal Rules of Civil Procedure, to simplify and expedite procedure, the purpose of such rule being to accomplish in one proceeding the adjudication of the rights of all persons concerned in the controversy, to prevent the necessity of trying several related claims in different lawsuits and to enable all of them to be disposed of in one action, or, as otherwise expressed, the purpose or object of such rule is to avoid circuity of action and multiplicity of suits and to adjust in a single suit the several phases of the same controversy as it affects the parties. The remedy provided by this rule must be exercised promptly. The rule should be liberally construed to effectuate its intended purposes, to the end that circuity of action may be avoided and that disputed jural relationships growing out of the same matter be resolved in one action, and should be supplied whenever the application of such rule will simplify procedure, secure a speedy trial, terminate the litigation, and reduce costs."
*391 It was further provided in Rule 13(a), 28 U.S.C.A., which Rule was in effect in 1943, that: "A pleading shall state as a counterclaim any claim, not the subject of a pending action, which at the time of filing the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction." And in 13(g) of the same Rule, that: "A pleading may state as a cross-claim any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein * * *. Such cross-claim may include a claim that the party against whom it is asserted is or may be liable to the crossclaimant for all or part of a claim asserted in the action against the cross-claimant."
It seems to us that the Federal Rules of Civil Procedure, as set forth above, were devised to cover just such a factual situation as that presented on this appeal. Under the express provisions of these Rules, it was contemplated that all questions which might arise between the defendant and a third party defendant, by way of contribution, indemnity or otherwise, growing out of a pending action, should be adjudicated in one action.
In the case of Hancock Oil Co. v. Universal Oil Products Co., 9 Cir., 115 F.2d 45, 47, it was held that where a counterclaim arises out of the "transaction or occurrence that is the subject matter of the opposing party's claim," the counterclaim is compulsory and unless stated in the answer the right to recover thereon is lost.
Furthermore, prior to the amendment of Rule 14, which became effective March 19, 1948, the rule provided: "The thirdparty defendant is bound by the adjudication of the third-party plaintiff's liability to the plaintiff, as well as of his own to the plaintiff or to the third-party plaintiff."
The question of primary and secondary liability could have been raised in the former litigation, just as it was in the case of War Emergency Co-Op. Ass'n v. Widenhouse, 4 Cir., 169 F.2d 403, where the facts were essentially on all-fours with those before the Court in Hodges et al. v. Johnson et al., supra.
In the last cited case, Judge Barksdale held, as a conclusion of law, that [52 F. Supp. 490] "Johnson was an independent contractor, and upon the familiar general rule of respondeat superior, there would be no liability upon Jocie for the negligence of Gilmore. * * *" He then said: "However, inasmuch as it appears to me that the situation here presents an exception to the general rule that an employer of an independent contractor is not liable for bodily harm caused by such independent contractor or his servants, I conclude that Jocie is jointly and severally liable with Johnson for the negligence of Johnson's servant, Gilmore. The exception to which I refer is stated in the `Restatement of the Law of Torts', p. 1149, Section 428, as follows: * * * `An individual or a corporation carrying on an activity which can be lawfully carried on only under a franchise granted by public authority and which involves an unreasonable risk of harm to others, is subject to liability for bodily harm caused to such others by the negligence of a contractor employed to do work in carrying on the activity.'"
Therefore, it is quite clear that the parties hereto are not only bound by the judgment entered in Hodges et al. v. Johnson et al., supra, as to the questions raised and determined therein, but the judgment is res judicata on the issues that could have been raised and adjudicated therein. Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832; Southern Distributing Co. v. Carraway, 196 N.C. 58, 144 S.E. 535; Moore v. Harkins, 179 N.C. 167, 101 S.E. 564; Griffin v. Griffin, 183 Va. 443, 32 S.E.2d 700; Brunner v. Cook, 134 Va. 266, 114 S.E. 650.
Moreover, in the case of Brown v. L. H. Bottoms Truck Lines, 227 N.C. 297, 42 S.E.2d 71, 76, where Brown, the owner of a truck, leased it to a franchise carrier, we held that the relationship of employer and employee existed between Brown, the lessor, who was also the driver of the truck, and *392 the lessee, the owner of the franchise. The defendant, lessee, contended Brown was an independent contractor and besides he had agreed to indemnify and save harmless the lessee against any claim arising from the operation of the leased vehicle. The agreement to indemnify was in the identical language as that contained in the lease now under consideration. Devin, J., in speaking for the Court, said: "The provision in the contract in the case at bar whereby the lessor Brown agreed to indemnify and save harmless the lessee from any claim arising from the operation of the vehicle may not be held to relieve the defendant, if as a matter of law under the facts found liability under the Workmen's Compensation Act accrued, as provided by the statute. G.S. § 97-6. The act of the defendant in accord with the provisions of the lease in placing its own license plates on Brown's truck under the circumstances disclosed, thus giving it the status and holding it out as its own vehicle for the purpose of this trip, a procedure which alone authorized its operation, must be regarded as an assumption of such control as would defeat the plea of nonliability for injury to the driver on the ground of independent contractor."
The holder of a franchise from the Interstate Commerce Commission, for the transportation of goods in interstate commerce, cannot escape liability to the public for the negligent operation of trucks leased from one not authorized to transport goods in interstate commerce, and operated under its own franchise and license plates for the transportation of goods in interstate commerce. Brown v. L. H. Bottoms Truck Co., supra; Wood v. Miller, 226 N.C. 567, 39 S.E.2d 608; Hodges et al. v. Johnson et al., supra; Steffens v. Continental Freight Forwarders Co., 66 Ohio App. 534, 35 N.E.2d 734; Kimble v. Wilson, 352 Pa. 275, 42 A.2d 526; Restatement of the Law of Torts, Section 428.
The plaintiff and the defendant herein were parties to the action in Hodges et al. v. Johnson et al., supra, and the judgment therein holding them to be jointly and severally liable to the plaintiffs in that action, was tantamount to holding them to be joint tort-feasors as a matter of law, and no appeal having been taken therefrom, Angel v. Bullington, supra, the plaintiff is not entitled to re-litigate matters which were or might have been adjudicated in that action.
The decisions of our Federal Courts must be accorded the same faith and credit by us that we are required to give to the judicial proceedings of another State. Supreme Lodge, Knights of Pythias v. Meyer, 265 U.S. 30, 44 S.Ct. 432, 68 L.Ed. 885; Hancock Nat. Bank v. Farnum, 176 U.S. 640, 20 S.Ct. 506, 44 L.Ed. 619; Lewis v. Furr, 228 N.C. 89, 44 S.E.2d 604; Suskin v. Hodges, 216 N.C. 333, 4 S.E.2d 891; G.S. § 8-4.
The demurrer interposed below should have been sustained, accordingly the judgment overruling the demurrer is
Reversed.