William Clyde, III v. Emma Clyde Hodge, Margaret Hodge Dauler, Frances Hodge Gordon, Emma Hodge Sarosdy, Edwin Hodge, JR., and Does I Through X, Inclusive, 413 F.2d 48, 3rd Cir. (1969)

413 F.
2d 48
William CLYDE, III, Appellant,

v.
Emma Clyde HODGE, Margaret Hodge Dauler, Frances
Hodge
Gordon, Emma Hodge Sarosdy, Edwin Hodge, Jr., and
Does I Through X, inclusive.
No. 17507.
United States Court of Appeals Third Circuit.

Argued March 28, 1969.
Decided July 11, 1969, Rehearing Denied Aug. 13, 1969.
Maynard Garrison, Jr., San Francisco, Cal., Wallace Garrison, Pascoe &
Ray, San Francisco, Cal., Robert W. Smiley, Brandt, Riester, Brandt &
Malone, Pittsburgh, Pa., on the brief, for appellant.
John C. Bane, Jr., Reed, Smith, Shaw & McClay, Pittsburgh, Pa. John H.
Scott, Jr., James H. McConomy, Pittsburgh, Pa., on the brief, for
appellees.
Before SEITZ, ALDISERT and STAHL, Circuit Judges.
OPINION OF THE COURT
SEITZ, Circuit Judge.
Appellant, William Clyde, III, brought a diversity action in the district court
charging that by mistake, undue influence, or fraud Emma Clyde Hodge and
Edwin Hodge, Jr. (the Hodges) and other unnamed individuals caused
Margaret Burns Clyde (settlor), appellant's grandmother, to exclude him from
participation in an inter vivos trust which was dated January 31, 1933. The
Hodges, who were not beneficiaries under the trust, and their children, who
were beneficiaries, were named as defendants, and all are appellees here. The
trustee is not a party to the action. The relief sought was damages from the
Hodges, a constructive trust placed on the trust proceeds received by the
children of the Hodges under the trust, and an order determining the rights of
the parties under the trust.

2
Before any decision was rendered by the district court in the present case, an
action was brought in an Ohio state court by the Toledo Trust Company as
trustee of the inter vivos trust for the purpose of 'securing advice and
instructions' concerning the administration of the trust. In particular the trustee
sought a determination of whether appellant had any interest in the trust assets.
As the trustee's petition shows, this problem arose because the trust instrument
contained a recital that William Johnson Clyde, appellant's father, had no
children, whereas appellant's father did then have a child, namely appellant.1
The children of the Hodges, but not the Hodges themselves, as well as the
present appellant, together with 'all other persons known to have interests or
claims of interest' in the income or corpus of the trust were named there as
defendants.
The children of the Hodges answered the petition and claimed that the
distributions were properly made to them pursuant to the provisions of the trust
instrument and in accordance with the express intention of the settlor. Appellant
also filed an answer to the trustee's petition as well as a cross-petition
challenging the trustee's activities in connection with the preparation of the
trust instrument and including a charge that the trustee engaged in a fraudulent
scheme and conspiracy with the Hodges to deprive appellant of an interest in
the trust. By the cross-petition, appellant sought a reformation of the trust
instrument to provide him with the interest in the trust he would have received
had the settlor been properly informed, instructed, and advised by the trustee.
After final hearing, in an unreported opinion, the Ohio court determined, inter
alia, that the agreement accurately reflected the settlor's intent and that the trust
was 'valid and subsisting.' It gave instructions that payments should be made in
accordance with its terms. Appellant's cross-petition was dismissed with
prejudice, and no appeal was taken.
Thereafter the district court granted a motion for summary judgment by

appellees in our case. It ruled, inter alia, that the judgment in the Ohio action, to
which the appellant had been a party, barred the instant suit 'under the
principles of res judicata.'
Unquestionably, the courts of the United States must give full faith and credit to
the final judgments of state courts. Constitution of the United States, Article IV,
Section 1; 28 U.S.C.A. 1738; Huron Holding Corporation v. Lincoln Mine
Operating Company, 312 U.S. 183, 61 S.Ct. 513, 85 L.Ed. 725 (1941). The
district court was therefore compelled to give the Ohio judgment the same
force and effect in this action as it would have been accorded by the Ohio
courts.2 We are thus faced with the question of what force and effect the Ohio
court would have given its earlier judgment if this action had been brought in
Ohio.
7
We think that as to the apellees who were parties to the Ohio litigation (the
children of the Hodges) the Ohio judgment would be a complete defense to this
action under the res judicata principle if it were brought in Ohio. The doctrine
of res judicata, as distinguished from the more limited doctrine of collateral
estoppel, requires identity both of parties (or their privies) and causes of action.
The children of the Hodges and the appellant were of course parties to the Ohio
litigation and, as the Ohio judgment indicated, their pleadings asserted
conflicting claims to the trust proceeds in issue which were resolved on the
merits. Here, as to the children of the Hodges, appellant in our view reasserts
the same claim to the proceeds in issue, albeit cloaked in different legal garb.
Therefore as to those appellees we agree with the district court's conclusion that
appellant's claim against them is barred under the principle of res judicata. Nor
is the result altered by the fact that appellant here attempts to support his action
on theories not advanced in the Ohio litigation.
As to the Hodges, who were not parties to the Ohio litigation, the principal of
res judicata as we employ it is inapplicable and the issue is solely whether the
more limited doctrine of collateral estoppel is a defense here to appellant's
claim. We think it is not. In order for the doctrine to be applicable, Ohio law
requires identity both of parties and issues. Schimke, Admx. v. Earley, 173
Ohio St. 521, 184 N.E.2d 209 (1962); Oney v. Needham, 10 Ohio App.2d 15,
225 N.E.2d 280 (1966). While many jurisdictions have abandoned the
requirement of identity of parties (commonly known as the requirement of
mutuality), Ohio has not done so as yet. See First National Bank of Cincinnati
v. Berkshire Life Ins. Co., 176 Ohio St. 395, 199 N.E.2d 863, 866 (1964). The
Hodges' reliance on Pennsylvania law in connection with the need for mutuality
is misplaced, because Ohio law is controlling. Thus, Ohio would not apply its
earlier judgment as a bar to the action as against the Hodges, and the district
court should not have given estoppel effect to the Ohio judgment insofar as the
Hodges were concerned.
The district court, however, made an alternative ruling on the merits in favor of
all appellees. We must consider it as to the Hodges because of our
determination that the Hodges cannot assert the Ohio judgment as a defense to
this action. The ruling on the merits was made pursuant to a motion for
summary judgment and was based on an evaluation of conflicting affidavits and
depositions. Because of the conflicting state of the evidence as to material facts

the district court was not justified in making such a ruling at the summary
judgment stage. Fed.R.Civ.P., Rule 56(c). The Hodges therefore cannot rely on
the alternative ruling.
10
In support of the district court judgment, the Hodges raise numerous other
defenses. Some of them constitute restatements or variations of the defenses of
res judicata and collateral estoppel and are to that extent controlled by our
determination of these issues. The remainder were not passed upon by the
district court, but raise issues of such a nature that the district court should
decide them in the first instance.
11
We conclude that as to all appellees other than the Hodges, the judgment of the
district court will be affirmed. As to the Hodges, the judgment will be reversed
and the matter remanded to the district court for proceedings consistent with
this opinion.
No children were born to appellant's father after the execution of the trust
instrument
Ohio law controls the effect to be given the Ohio judgment notwithstanding the
fact that the district court was sitting in diversity in Pennsylvania. Holm v.
Shilensky, 388 F.2d 54, 56, footnote 2 (2nd Cir., 1968)

William Clyde, III v. Emma Clyde Hodge, Margaret Hodge Dauler, Frances Hodge Gordon, Emma Hodge Sarosdy, Edwin Hodge, JR., and Does I Through X, Inclusive, 413 F.2d 48, 3rd Cir. (1969)

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413 F.

William CLYDE, III, Appellant,

United States Court of Appeals Third Circuit.

the parties under the trust.

Thereafter the district court granted a motion for summary judgment by

depositions. Because of the conflicting state of the evidence as to material facts

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