Hamilton v. Carpenter

SHENK, J.

The defendants appeal from a decree foreclosing a trust deed executed by them to secure their promissory note in the amount of $7,500, payable to plaintiff and representing the unpaid balance of the purchase price of certain improved real property.

There is ample evidence in the record to establish the default of the defendants in the performance of their obligations under the instruments, and the trial court accordingly so found and entered the decree of foreclosure from which this appeal is prosecuted. The defendants’ principal contention has to do with the asserted error of the trial court in rejecting certain proffered evidence addressed to their third and fourth affirmative defenses. In their third defense it was alleged, in detail, that plaintiff, without the knowledge of the defendants, had falsely represented the condition of the premises and that the defendants relying thereon to their detriment had entered into the transaction. It was further alleged that the reasonable value of repairs necessary to put the premises in the condition represented by plaintiff was $5,045.88, for which the defendants prayed an offset and credit as against the balance due on the purchase price. In the fourth affirmative defense the allegations of fraud were incorporated by reference and it was prayed that an offset and credit be allowed in the above amount against the unpaid balance because of alleged failure of consideration.

The trial court refused to permit the defendants to introduce any evidence addressed to these allegations of fraud upon the theory that there had been a final adjudication of the fraud issue against the defendants in a prior action between the parties. The prior action which the trial court herein held to be

res judicata

of the fraud issue was commenced by the defendants herein more than two years before the filing of the present action. Much of the record in the earlier action was placed in evidence here. It appears therefrom that the defendants here, plaintiffs there, sought to

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recover damages from plaintiff here, defendant there, for alleged fraud in his representations as to the condition of the property. Examination of the allegations in the complaint for damages for fraud in the earlier action, and of those relied on by the defendants here in their third and fourth affirmative defenses, discloses that they are substantially identical, and we have no hesitancy in declaring that if a final adjudication thereof was had in the earlier action it is