72 Wn.2d 109, J. A. HENDERSON, Appellant, v. BARDAHL INTERNATIONAL CORPORATION, Respondent and Cross-appellant
[No. 38795. En Banc. Supreme Court September 21, 1967.]
J. A. HENDERSON, Appellant, v. BARDAHL INTERNATIONAL CORPORATION, Respondent and Cross-appellant.«*»

Henderson places great reliance on the landmark case of Bernhard v. Bank of America Nat'l Trust & Sav. Ass'n, 19 Cal. 2d 807, 122 P.2d 892 (1942), in which Chief Justice Traynor in dealing with the requirement of mutuality as applied to res judicata "laid it to rest," as one commentator said, "by a triumph of judicial statesmanship."«10»

«10» Brainerd Currie in 9 Stan. L. Rev. 281, 282 (1957), "Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine," and in 53 Cal. L. Rev. 25 (1965) "Civil Procedure: The Tempest Brews."

116 HENDERSON v. BARDAHL INT'L CORP. [72 Wn.2d 109

Henderson urged in the trial court and urges here that under the Bernhard case and the many which have followed it, that privity and mutuality are no longer required in the modern concept of estoppel by judgment, and that even the frequently asserted rule that estoppel by judgment is to be used as a shield by a defendant, and not as a sword by a plaintiff, is, with some distinctions, no longer regarded as valid.«11»

Our own cases show prior determinations of the Department of Labor and Industries being used as res judicata both offensively and defensively in actions by employees against employers.«12»

We recognize that there are many cases where the issues of mutuality, privity, and the offensive-defensive distinction should not be permitted to obstruct the application of collateral estoppel by judgment. However, it is unnecessary to consider those issues in the present case, intriguing as they may be, because we are convinced that the trial court properly found collateral estoppel by judgment inapplicable. We would agree with the trial court for three basic reasons.

First: Certain findings and the judgment in the Geddes case are ambiguous and confusing, and not decisive of the issue as to the date of the termination of the Geddes distributorship.

Our interpretation of the findings and judgment in the Geddes case is that the trial court specifically recognized that, in the areas other than Brazil, Bardahl had terminated the Geddes distributorship on July 28, 1959. That was the reason it awarded him judgment in the sum of $19,849.97

«11» It is to be noted that Henderson was not a party in the Geddes case; that, as plaintiff, the only weapon in his legal arsenal on this appeal is his claim that Bardahl is estopped by the judgment and findings in the Geddes case to again litigate the issue of when the Geddes distributorship terminated.

«12» Offensively: Miller v. St. Regis Paper Co., 60 Wn.2d 484, 374 P.2d 675 (1962); Prince v. Saginaw Logging Co., 197 Wash. 4, 84 P.2d 397 (1932).

Defensively: Shoopman v. Calvo, 63 Wn.2d 627, 388 P.2d 559 (1964).

Sept. 1967] HENDERSON v. BARDAHL INT'L CORP. 117

for profits on sales made direct to his subdistributors prior to the termination of the contract; and awarded him $12,821 as additional profits which he would have earned had he received a 90-day notice of termination instead of a 60-day notice.

In short, the trial court in the Geddes case regarded July 28, 1959, as the date of the termination in the Geddes distributorship, but because it found Geddes had not received adequate notice of the intent to terminate his distributorship he was permitted to recover the profits he would have made if he had received reasonable notice (90 days) of intent to terminate.

The only language used by the trial court in the Geddes findings which gives any support to Henderson's contention is finding No. 11, with reference to the Brazilian sales, which we have quoted in footnote 6. Recovery was permitted to Geddes of $1 per gallon on the 13,851 gallons of concentrate manufactured and sold in Brazil "during the period covered by plaintiff's [Geddes] contract." While Geddes' contract with Bardahl relative to Brazil limited him to only $1 a gallon on the Brazilian sales, no difference is pointed out with reference to Bardahl's right to terminate that distributorship when and as it did.

[2] As indicated, the trial court in one part of the findings and judgment in the Geddes case clearly recognized July 28, 1959, as the termination of the distributorship. Any doubt cast upon that holding by the holding in another part of the findings and judgment, as to the profits lost in Brazil, could no more than make the judgment ambiguous and inconsistent - with July 28, 1959, being the termination date for all areas except Brazil for which no termination date was indicated. (The latest date for the termination of the distributorship, even under Henderson's contention, was August 24, 1959.) There is nothing to indicate any reason for such a variation. An ambiguous and inconsistent judgment should not be the basis for an estoppel by judgment. In 2 Orland, Wash. Prac., § 387 (2d ed.), p. 417, it is stated:

118 HENDERSON v. BARDAHL INT'L CORP. [72 Wn.2d 109

And, where, because of the ambiguity or indefiniteness of the verdict or judgment, the appellate court cannot say that the issue was determined in the prior action, collateral estoppel will not be applied as to that issue. This is supported by Hamm v. Camerota, 48 Wn.2d 34, 290 P.2d 713 (1955); Rufener v. Scott, 46 Wn.2d 240, 280 P.2d 253 (1955); Braley Motor Co. v. Northwest Cas. Co., 184 Wash. 47, 49 P.2d 911 (1935).

Second: The same issue was not necessarily decided in the Geddes and Henderson actions.

[3] It is axiomatic that for collateral estoppel by judgment to be applicable, that the facts or issues claimed to be conclusive on the parties in the second action were actually and necessarily litigated and determined in the prior action. Ira v. Columbia Food Co., 226 Ore. 566, 360 P.2d 622, 86 A.L.R.2d 1378 (1961); The Evergreens v. Nunan 141 F.2d 927 (2d Cir. 1944), 152 A.L.R. 1187.

The trial court in the instant case had to decide when the Geddes distributorship terminated, and the parties to the Henderson-Bardahl contract had a right to be heard on that issue. For the purposes of that contract, Henderson's right to a commission on the Geddes sales of concentrate was to end when the latter's distributorship terminated.

For the purposes of the Geddes-Bardahl-distributorship contract, Geddes' right to recover for lost profits continued, so the trial court found in the Geddes case even after the actual termination and for a period sufficient to total 90 days from the notice of intent to terminate, given on May 26, 1959. The trial court in that case was concerned with the question of what was a reasonable notice of intent to terminate prior to the actual termination.

Third: The claimed collateral estoppel by judgment would work an injustice on Bardahl. As to the commission claimed by Henderson on 10,063 gallons of Bardahl concentrate manufactured and sold in Brazil subsequent to August 24, 1959 (the date on which Henderson says that the Geddes distributorship was terminated), we have a situation where the finding in the Geddes case - that during the

Sept. 1967] HENDERSON v. BARDAHL INT'L CORP. 119

period covered by the Geddes-Bardahl contract 13,851 gallons were manufactured and sold in Brazil - is manifestly an error. As we have indicated, the unchallenged testimony is that after the 3,788 gallons were manufactured and sold in March or April, 1959, no other Bardahl concentrate was manufactured and sold in Brazil until at least September (probably November), 1959. The appellant Henderson does not dispute this testimony, but says that it should not have been admitted because the trial court in the Geddes case had found that 13,851 gallons had been manufactured and sold while the Geddes contract was in effect.

[4] This would be an $11,069.30 windfall for Henderson by estoppel, and a corresponding loss to Bardahl.

The Florida Supreme Court has said:

[T]his Court, among others, has gone so far as to hold that it will not invoke the doctrine of res adjudicata if to do so would work injustice. The propriety of such ruling can not be questioned when one reflects upon the fact that the primary purpose for which our courts were created is to administer justice. (Beverly Beach Properties, Inc. v. Nelson, 68 So.2d 604, 607, 41 A.L.R.2d 1071 (1953)).

Professor Currie says in an article in the California Law Review, heretofore cited in footnote 10, No legal principle, perhaps least of all the principle of collateral estoppel, should ever be applied to work injustice. (p.37)

It is generally recognized that the doctrine of res judicata (and this applies to that branch known as collateral estoppel by judgment) is not to be applied so rigidly as to defeat the ends of justice, or to work an injustice. DiCarlo v. Angeloni, 3 Cal. 2d 225, 44 P.2d 562, 99 A.L.R. 990 (1935). See 30A Am. Jur. Judgments, § 325.

Our conclusion is that the trial court in the present case properly held that the Geddes-Bardahl distributorship was terminated on July 28, 1959, and awarded to the plaintiff Henderson all the relief to which he was entitled.

On the cross-appeal, Bardahl makes four contentions:

1. Claim for refund against Henderson: Bardahl contends that it was entitled to a refund from Henderson of

120 HENDERSON v. BARDAHL INT'L CORP. [72 Wn.2d 109

$3,267 for commissions paid to him on 84 drums of concentrate, which Bardahl had sold to Geddes but which Bardahl subsequently had to buy back from him.

There seems to be merit to Henderson's contention that the defendant Bardahl International Corporation did not have such an assignment of this claim from Bardahl Manufacturing Corporation as would entitle it to maintain an action for the refund, or to use it as an offset. However, we prefer to dispose of the matter on the merits.

The trial court found, on the basis of the testimony of Bardahl's witness W. G. Simpson, that the repurchase of the 84 drums of concentrate from Geddes was for the manufacturing corporation's own purpose and that such a repurchase could not be made the basis of a claim for refund for the commissions paid Henderson by Bardahl. In discussing this issue, the trial court said:

Mr. Simpson testified very forthrightly what happened.

Now, we find this situation: These products were sold to Mr. Geddes and they were paid for and they belonged to Mr. Geddes. This is not a case where products were turned back for credit and products taken in place or anything of that sort. Mr. Simpson had to buy this fellow out, good or bad, to get rid of him. This was not a case of either obligation on the part of Mr. Bardahl to take them back nor a right of Mr. Geddes for any credits or anything of that sort. This was a straight buy out, as I see it, of products that Geddes may have allowed to become contaminated and things of that sort.

There seems to be no reason to disagree with the analysis of the trial court.

2. Claim that no interest should be allowed on the items making up the judgment awarded Henderson: Henderson's judgment for $8,583.30 was made up of items due him; and the dates on which Bardahl had received payment on each item was established.

[5] The trial court correctly applied the law relative to interest, as laid down in Mall Tool Co. v. Far West Equip. Co., 45 Wn.2d 158, 273 P.2d 652 (1954). On the items on which Henderson was allowed recovery, the evidence

Sept. 1967] HENDERSON v. BARDAHL INT'L CORP. 121

established the number of gallons purchased; the dates on which payments were made by "Geddes or by some person acting by, through or under Geddes or a subdistributor of Geddes." All that was needed was simple arithmetic - a multiplication of the number of gallons sold by $1.10, and the computation of interest from the date Bardahl received the payment. Bardahl's further complex relationship with Geddes had no bearing on these specific items due Henderson.

3. Parol testimony of Henderson's agreement to waive his commission on sales made in Brazil should have been admitted:

We agree with Bardahl that a written agreement may be modified by a subsequent oral agreement between the parties.

[6] The oral agreement, which Bardahl offered to prove, was prior to the execution of the written commission agreement of January 22, 1959, on which this action is based. The agreement is complete in itself and not ambiguous; there is no claim of accident, mistake or fraud. The trial court properly refused to admit parol testimony to vary the written agreement. Thomesen v. Hales, 52 Wn.2d 741, 328 P.2d 697 (1958).

4. Judgment for $8,583.30 should be reduced by $4,166.88, the amount of the commissions on the Brazilian sales:

This is closely related to the attempt to introduce evidence of an agreement by Henderson to waive his commissions on concentrate sold in Brazil. This is the commission on the 3,788 gallons of concentrate manufactured and sold in Brazil before the termination of the Geddes distributorship July 28, 1959. There is no evidence to sustain an agreement by Henderson to waive this commission.

On both the appeal and the cross-appeal the judgment appealed from is affirmed.

ALL CONCUR.

72 Wn.2d 109, J. A. HENDERSON, Appellant, v. BARDAHL INTERNATIONAL CORPORATION, Respondent and Cross-appellant[No. 38795. En Banc. Supreme Court September 21, 1967.]J. A. HENDERSON, Appellant, v. BARDAHL INTERNATIONAL CORPORATION, Respondent and Cross-appellant.«*»

72 Wn.2d 109, J. A. HENDERSON, Appellant, v. BARDAHL INTERNATIONAL CORPORATION, Respondent and Cross-appellant
[No. 38795. En Banc. Supreme Court September 21, 1967.]
J. A. HENDERSON, Appellant, v. BARDAHL INTERNATIONAL CORPORATION, Respondent and Cross-appellant.«*»