Cole v. Gales

Couch, J., delivered the opinion of the Court. William T. Gales, the appellee, sued the appellant, Colonel C. Cole, in the Circuit Court for Baltimore County for his share of monies received and disbursed by appellant personally, which monies actually belonged to a corporation of which both parties were stockholders. In this suit the ⁵⁰⁷ appellant pleaded res judicata and the general issue. Following a non-jury trial the court held that res judicata did not bar the suit and found in favor of appellee.

On appeal, appellant urges us to find the trial court in error as to the res judicata issue and that the evidence was insufficient to support the judgment. We shall agree with the appellant as to the first issue and thus need not address the latter issue. This controversy stems from a business relationship between appellant and appellee whereby they formed a corporation to own and operate the "Owl Club” in the Belvedere Hotel, Baltimore City. The parties here each owned 49% of the club.

The club was forced out of business when the hotel closed and through the efforts of the appellant recovered a judgment for approximately $110,000.00 against a third party claimed to be responsible for the club’s shut-down. This judgment was satisfied for some $83,000.00, the monies being received by appellant and disbursed without any payment made to appellee, who did not even know of the judgment or its satisfaction. When knowledge thereof was gained by the appellee, he sued appellant in the Superior Court of Baltimore City. During the course of a non-jury trial in that court, there was evidence of the receipt of an additional $23,516.00 by appellant on behalf of the corporation, which money again had been disbursed without including appellee as a recipient.

Although appellee requested the Baltimore City court to include this additional amount in its award, which the court refused to do, no motion was made to amend his declaration. A judgment was thereafter entered in favor of appellee for his distributive share of the $83,000.00. This judgment was not appealed, and was subsequently satisfied. Thereafter, the instant case was brought in Baltimore County.

Both parties agree that the doctrine of res judicata is: "... a judgment between the same parties and their privies is a final bar to any other suit upon the same cause of action, and is conclusive, not only as to all matters that have been decided in the original suit, but as to all matters which with propriety could ⁵⁰⁸ have been litigated in the first suit, where the court had jurisdiction, proceedings were regular, and his omission was due to his own negligence.” See Alvey v. Alvey, 225 Md. 386, 390 , 171 A.2d 92 (1961); Tucker v. Tucker, 35 Md. App. 710 , 373 A.2d 16 (1977). The parties’ respective positions are: Appellant contends the appellee had knowledge of the additional $23,516.00 prior to the