[224] Mr. Owen Calvin Neff, for appellee.

Mr. Elmer R. Vanek and Mr. Austin T. Klein, for appellant.

HERBERT, J.

The eighth error assigned by the defendant is that "the trial and appellate courts committed error in permitting plaintiff to split her cause of action and to file a separate action in the Cleveland Municipal Court for her property damage and reduce same to judgment, and, thereafter, to proceed, in the Cuyahoga County Common Pleas Court, with a separate action for personal injuries, both claims arising out of a single accident."

Other facets of this question have been before the court before.

In the case of Vasu v. Kohlers, Inc., 145 Ohio St., 321, 61 [225] N. E. (2d), 707, 166 A. L. R., 855, plaintiff operating an automobile came into collision with defendant's truck, in which collision he suffered personal injuries and also damage to his automobile. At the time of collision, plaintiff had coverage of a $50 deductible collision policy on his automobile. The insurance company paid the plaintiff a sum covering the damage to his automobile, whereupon, in accordance with a provision of the policy, the plaintiff assigned to the insurer his claim for such damage.

In February 1942, the insurance company commenced an action in the Common Pleas Court of Mahoning County against Kohlers, Inc., the defendant in the reported case, to recoup the money paid by it to cover the damage to Vasu's automobile.

In August 1942, Vasu commenced an action in the same court against Kohlers, Inc., to recover for personal injuries which he suffered in the same collision.

In March 1943, in the insurance company's action, a verdict was rendered in favor of the defendant, followed by judgment.

Two months later an amended answer was filed in the Vasu case, setting out as a bar to the action for recovery of damages for the personal injuries suffered by plaintiff the judgment rendered in favor of defendant in the insurance company case. A motion to strike that defense having been sustained, a second amended answer was filed omitting allegations as to such judgment. A trial of the action resulted in a verdict for plaintiff, upon which judgment was entered.

On appeal to the Court of Appeals the defendant claimed that the Court of Common Pleas erred in sustaining plaintiff's motion to strike from the defendant's answer the defense of res judicata claimed to have arisen by reason of the judgment in favor of the defendant in the action by the insurance company.

The Court of Appeals reversed the judgment of the Court of Common Pleas and entered final judgment in favor of defendant.

This court reversed the judgment of the Court of Appeals, holding in the syllabus, in part, as follows:

"1. If the owner of a single cause of action arising out of [226] a single tortious act brings an action against his tort-feasor, he may have but one recovery; and, in case he fails to recover, he may not maintain a subsequent action on the same cause of action, even though he has failed to include his entire cause of action or elements of damage in his original action.

"2. If an owner of a single cause of action has a recovery thereon, the cause of action is merged in the judgment; but if he fails to recover on his claimed cause of action and judgment goes against him, such judgment is res judicata and a bar to a second action on the same cause of action.

"* * *

"4. Injuries to both person and property suffered by the same person as a result of the same wrongful act are infringements of different rights and give rise to distinct causes of action, with the result that the recovery or denial of recovery of compensation for damages to the property is no bar to an action subsequently prosecuted for the personal injury, unless by an adverse judgment in the first action issues are determined against the plaintiff which operate as an estoppel against him in the second action.

"5. A right, question or fact in issue which was necessarily determined by a court of competent jurisdiction in a judgment which has become final, cannot be disputed or litigated in a subsequent suit between the same parties, although the subsequent suit is based upon a different cause of action.

"6. Where an injury to person and to property through a single wrongful act causes a prior contract of indemnity and subrogation as to the injury to property, to come into operation for the benefit of the person injured, the indemnitor may prosecute a separate action against the party causing such injury for reimbursement for indemnity moneys paid under such contract.

"7. Parties in privy, in the sense that they are bound by a judgment, are those who acquired an interest in the subject matter after the beginning of the action or the rendition of the judgment; and if their title or interest attached before that fact, they are not bound unless made parties.

"8. A grantor or assignor is not bound, as to third persons, [227] by any judgment which such third persons may obtain against his grantee or assignee adjudicating the title to or claim for the interest transferred, unless he participated in the action in such manner as to become, in effect, a party."

The foregoing syllabus is set forth at considerable length for subsequent reference herein. The first two paragraphs, although not pertinent there because of the fourth paragraph, are not only applicable but persuasive in our determination here. The sixth, seventh and eighth paragraphs deal with the factual situation which existed in the Vasu case, i. e., a prior contract of indemnity and subrogation. Although, as discussed infra, it was not actually necessary to the determination of the issue in that case, attention centers on the fourth paragraph.

The Vasu case was distinguished in the case of Markota v. East Ohio Gas Co., 154 Ohio St., 546, 97 N. E. (2d), 13, and explained in the case of Mansker v. Dealers Transport Co., 160 Ohio St., 255, 116 N. E. (2d), 3. In the Markota case, plaintiffs commenced an action for damages alleged to have been caused by the defendant in constructing and installing a pipeline over the plaintiffs' premises. Plaintiffs and defendant had entered into a right of way agreement giving the defendant the right to lay, maintain and operate the pipeline, the defendant agreeing to reimburse, indemnify and save plaintiffs harmless from and against any loss, damage or expense in connection therewith.

Plaintiffs' amended petition had seven causes of action, each for damages resulting from injuries to plaintiffs' property. Judgment was entered on the verdicts. The trial court granted a new trial on two causes of action, reducing the judgment by the amounts claimed in such causes of action. The question presented to this court was whether "the trial court erred in failing to grant a new trial in toto." This court reversed the judgment of the Court of Appeals which had affirmed the judgment of the Court of Common Pleas.

The pertinent portion of the syllabus in that case, decided by a unanimous court, is paragraph three:

"Although a right of action may arise at each time that damage covered by a single indemnity agreement occurs, a [228] plaintiff may maintain only one action to enforce any such rights existing at the time such action is commenced. (Vasu v. Kohlers, Inc., 145 Ohio St., 321, distinguished.)"

The opinion in the Markota case states (page 551):

"However, paragraphs four and six of the syllabus in Vasu v. Kohlers, Inc., 145 Ohio St., 321, 61 N. E. (2d), 707, do tend to support the defendant's contention that the separate causes of action, stated in the second amended petition in the instant case, were actually separate causes of action. It should be noted, however, that the plaintiff, in the Vasu case, had not been a party to the action brought by his indemnitor against the defendant; and, as indicated by paragraph eight of the syllabus in the Vasu case, the plaintiff was not, therefore, bound by the judgment against his indemnitor who had sought to recover from that defendant the portion of the plaintiff's claim assigned to such indemnitor."

The facts in the Mansker case are the converse of those in the instant case. In that case, Mansker commenced an action for personal injuries sustained by him in a collision of two motor vehicles and recovered a verdict and judgment, prevailing over the claim that he was estopped from prosecuting his action for the reason that the controlling issue of negligence therein had been fully litigated in a prior action between the same parties and had been determined by verdict and judgment adverse to him. Cf. paragraph five of the syllabus in the Vasu case, supra.

Two separate actions involving the same collision had previously been commenced against Mansker and his employer, Summit Fast Freight, Inc., one by Dealers Transport Company and the other by its driver, Dow, Dealers' action being for property damage and Dow's for personal injuries. In the action initiated by Dealers, in addition to a cross-petition filed by Summit for damages to its fire truck, a cross-petition was filed by Mansker to recover for damage to his tractor, due to the collision. The two previous cases were tried together by agreement and resulted in verdicts in favor of Dealers and Dow, respectively, which verdicts, after remittiturs were ordered and accepted, were reduced to judgments, and the judgments subsequently paid.

[229] In the Mansker case (160 Ohio St., 255) the issue of res judicata was raised. This court reversed the judgment of the Court of Appeals which had affirmed the judgment of the Court of Common Pleas, and entered judgment for Dealers.

As stated in the opinion, both lower courts relied on the fourth paragraph of the syllabus of the Vasu case and reached the conclusion that "such case is authority for the proposition that where the same person sustains injury to both his property and his person as a result of the same incident and due to the claimed negligence of another, an infringement of different rights occurs, so that he has two causes of action—one for damage to his property and the other for injury to his person; that, hence, where he prosecutes those causes of action separately, a verdict and judgment against him in one case do not preclude him from litigating the other, and his success in the other case is not prevented by an adverse result in the first, and that in such a situation res judicata or estoppel may not be invoked by his opponent."

The syllabus states:

"1. In a second action between the same parties on a claim, demand or cause of action different from that involved in the first action, a final judgment in the first action does not constitute a bar to the prosecution of the second, but does operate as an estoppel with regard to the relitigation of controlling points or questions actually determined in the first action. (Paragraph four of the syllabus of Vasu v. Kohlers, Inc., 145 Ohio St., 321, explained.)

"2. The final adjudication of a material issue by a court of competent jurisdiction binds the parties in any subsequent proceeding between or among them, irrespective of a difference in forms or causes of action."

Thus, the Markota and Mansker cases, distinguishing and explaining the Vasu case, have not changed the rule established in paragraph four of the syllabus of the latter case, holding that injuries to both person and property suffered by the same person as a result of the same wrongful act are infringements of different rights and give rise to distinct causes of action.

However, it is contended here that that rule is in conflict with the great weight of authority in this country and has [230] caused vexatious litigation. The following quotation from 1 American Jurisprudence, 494, Section 114, states this question well:

"It sometimes happens that a single wrongful or negligent act causes damage in respect of both the person and the property of the same individual, as, for instance, where the owner of a vehicle is injured in a collision which also damages the vehicle. In such a case, the question arises as to whether there are two causes of action or only one, and the authorities are in conflict concerning it. The majority rule is that only one cause of action arises, the reason of the rule being that as the defendant's wrongful act is single, the cause of action must be single, and that the different injuries occasioned by it are merely items of damage proceeding from the same wrong. * * *

"In other jurisdictions, the rule is that two causes of action result from a negligent act which inflicts injury on a person and his property at the same time. This conclusion has been reached in different jurisdictions by different lines of reasoning."

Upon examination of decisions of courts of last resort, we find that the majority rule is followed in the following cases in each of which the action was between the person suffering injury and the person committing the tort, and where insurers were not involved, as in the case here.

Birmingham Southern Ry. Co. v. Lintner (1904), 141 Ala., 420, 38 So., 363, 109 Am. St. Rep., 40; Jenkins v. Skelton (1920), 21 Ariz., 663, 192 P., 249; Gregory v. Schnurstein (1956), 212 Ga., 497, 93 S. E. (2d), 680; Georgia Ry. & Power Co. v. Endsley (1928), 167 Ga., 439, 145 S. E., 851, 62 A. L. R., 256; Fiscus v. Kansas City Public Service Co. (1941), 153 Kan., 493, 112 P. (2d), 83; Cassidy v. Berkovitz (1916), 169 Ky., 785, 185 S. W., 129; Pillsbury v. Kesslen Shoe Co. (1939), 136 Me., 235, 7 A. (2d), 898; Doran v. Cohen (1888), 147 Mass., 342, 17 N. E., 647; Dearden v. Hey (1939), 304 Mass., 659, 24 N. E. (2d), 644, 127 A. L. R., 1077; Tuttle v. Everhot Heater Co. (1933), 264 Mich., 60, 249 N. W., 467; King v. Chicago, Milwaukee & St. Paul Ry. Co. (1900), 80 Minn., 83, 82 N. W., 1113, 81 Am. St. Rep., 238, 50 L. R. A., 161; Kimball v. Louisville & Nashville Rd. Co. (1909), 94 Miss., 396, 48 So., 230; Chamberlain v. Mo.-Ark. Coach Lines, Inc. (1945), 354 Mo., 461, 189 S. W. (2d), 538, 161 [231] A. L. R., 204; Underwood v. Dooley (1929), 197 N. C, 100, 147 S. E., 686, 64 A. L. R., 656; Anderson v. Jacobson (1919), 42 N. D., 87, 172 N. W., 64; Fields v. Philadelphia Rapid Transit Co. (1922), 273 Pa., 282, 117 A., 59; Farmers Ins. Exchange v. Arlt (N. D., 1953), 61 N. W. (2d), 429; Holcombe v. Garland & Denwiddie, Inc. (1931), 162 S. C, 379, 160 S. E., 881; Mobile & Ohio Rd. Co. v. Matthews (1906), 115 Tenn., 172, 91 S. W., 194; Smith v. Lenzi (1929), 74 Utah, 362, 279 P., 893; Moultroup, Admx., v. Gorham (1943), 113 Vt., 317, 34 A. (2d), 96; Sprague v. Adams (1926), 139 Wash., 510, 247 P., 960, 47 A. L. R., 529; Larzo v. Swift & Co. (1946), 129 W. Va., 436, 40 S. E. (2d), 811.

The minority rule, that separate actions may be maintained to recover for personal injuries and for damages to property resulting from the same wrongful act, is set forth in the following cases:

Thelin v. Stewart (1893), 100 Cal., 372, 34 P., 861; Lamb v. Harbaugh (1895), 105 Cal., 680, 39 P., 56; Ochs v. Public Service Ry. Co. (1911), 81 N. J. L., 661, 80 A., 495, 36 L. R. A. (N. S.). 240, Ann. Cas. 1912D, 255; Reilly v. Sicilian Asphalt Paving Co. (1902), 170 N. Y., 40, 62 N. E., 772, 88 Am. St. Rep., 636, 57 L. R. A., 176; Watson v. Texas & Pacific Ry. Co. (1894), 8 Tex. Cir. App., 144, 27 S. W., 924; Carter v. Hinkle (1949), 189 Va., 1, 52 S. E. (2d), 135.

As to the rule in New York, however, it is noted in the opinion in the Vasu case (page 331) that "the court, in deciding the Reilly case, took a position contra to an earlier holding in the same state in the case of Howe v. Peckham (N. Y. Supreme Court), 6 How. Pr., 229, 10 Barb., 656, a case frequently cited (see quotation from Phillips' Pleading, infra) as supporting the single-cause-of-action rule."

The reasoning behind the majority rule seems to be well stated in the case of Mobile & Ohio Rd. Co. v. Matthews, supra, as follows:

"The negligent action of the plaintiff in error constituted but one tort. The injuries to the person and property of the defendant in error were the several results and effects of one wrongful act. A single tort can be the basis of but one action. It is not improper to declare in different counts for damages to the person and property when both result from the same tort, [232] and it is the bettor practice to do so where there is any difference in the measure of damages, and all the damages sustained must be sued for in one suit. This is necessary to prevent multiplicity of suits, burdensome expense, and delays to plaintiffs, and vexatious litigation against defendants. * * *

"Indeed, if the plaintiff fail to sue for the entire damage done him by the tort, a second action for the damages omitted will be precluded by the judgment in the first suit brought and tried."

The minority rule would seem to stem from the English case of Brunsden v. Humphrey (1884), 14 Q. B., 141. The facts in that case are set forth in the opinion in the Vasu case (page 329), concluding with the statement:

"The Master of the Rolls, in his opinion, stated that the test is `whether the same sort of evidence would prove the plaintiff's case in the two actions,' and that, in the action relating to the cab, it would be necessary to give evidence of the damage done to the plaintiff's vehicle. In the present action it would be necessary to give evidence of the bodily injury occasioned to the plaintiff, and of the sufferings which he has undergone, and for this purpose to call medical witnesses. This one test shows that the causes of action as to the damage done to the plaintiff's cab, and as to the injury occasioned to the plaintiff's person, are distinct.'"

The fallacy of the reasoning in the English court is best portrayed in the dissenting opinion of Lord Coleridge, as follows:

"It appears to me that whether the negligence of the servant, or the impact of the vehicle which the servant drove, be the technical cause of action, equally the cause is one and the same: that the injury done to the plaintiff is injury done to him at one and the same moment by one and the same act in respect of different rights, i. e. his person and his goods, 1 do not in the least deny; but it seems to me a subtlety not warranted by law to hold that a man cannot bring two actions, if he is injured in his arm and in his leg, but can bring two, if besides his arm and leg being injured, his trousers which contain his leg, and his coat-sleeve which contains his arm, have been torn."

[233] There appears to be no valid reason in these days of code pleading to adhere to the old English rule as to distinctions between injuries to the person and damages to the person's property resulting from a single tort. It would seem that the minority rule is bottomed on the proposition that the right of bodily security is fundamentally different from the right of security of property and, also, that, in actions predicated upon a negligent act, damages are a necessary element of each independent cause of action and no recovery may be had unless and until actual consequential damages are shown.

Whether or not injuries to both person and property resulting from the same wrongful act are to be treated as injuries to separate rights or as separate items of damage, paragraph three of the syllabus in the Markota case gives us the answer that a plaintiff may maintain only one action to enforce his rights existing at the time such action is commenced.

The decision of the question actually in issue in the Vasu case is found in paragraphs six, seven and eight of the syllabus, as it is quite apparent from the facts there that the first judgment, claimed to be res judicata in Vasu's action against the defendant, was rendered against Vasu's insurer in an action initiated by it after having paid Vasu for the damages to his automobile. That case is considered and discussed at length in 166 A. L. R., 870.

Upon further examination of the cases from other jurisdictions, it appears that in those instances where the courts have held to the majority rule, a separation of causes of action is almost universally recognized where an insurer has acquired by an assignment or by subrogation the right to recover for money it has advanced to pay for property damage.

In some instances those jurisdictions recognize the right of the insurer to become a party to the action and recover in the single action that part of the damages to which it has become subrogated. See Moultroup, Admx., v. Gorham, supra; Farmer v. Union Ins. Co. of Indiana (1927), 146 Miss., 600, 111 So., 584; Sprague v. Adams, supra.

In other states, and particularly in those having statutes requiring actions to be brought by the real party in interest, the courts have recognized the right of the insurer to bring [234] a separate action to recover in its own name for that part of a single cause of action to which it has become entitled by payment of damages. The following cases are illustrative:

Travelers Indemnity Co. v. Moore (1947), 304 Ky., 456, 201 S. W. (2d), 7; Underwriters at Lloyds Ins. Co. v. Vicksburg Traction Co. (1913), 106 Miss., 244, 63 So.. 455; General Exchange Ins. Corp. v. Young (1948), 357 Mo., 1099, 212 S. W. (2d), 396; Underwood v. Dooley, supra; Farmers Ins. Exchange v. Arlt, supra; Tobin, Admr., v. Glerich (1931), 162 Tenn., 96, 34 S. W. (2d), 1058.

Section 2307.05, Revised Code, requires actions to be prosecuted in the name of the real party in interest, as was done by Vasu's insurer.

The reason why the exception is recognized that, where the plaintiff has recovered from an insurance company a part of his damage, he is not estopped from prosecuting his own action, is well stated in the North Carolina case of Underwood v. Dooley, supra, as follows:

"It cannot be held as law in this state that the owner of an automobile, who, as the result of the wrong or tort of another, has sustained damages both to his automobile and to his person, and whose automobile is insured against the loss or damage which he has sustained because of injuries to his automobile, is put to an election whether or not he shall, in order to maintain an action against the wrongdoer to recover damages for injuries to his person, release the insurance company from all liability to him under its policy. He does not lose his right of action to recover for the injuries to his person, by accepting from the insurance company the amount for which it is liable to him * * *."

Coming again to the defendant's eighth assignment of error, it is noted that the rule attributed to the Ohio courts, as it is stated in 1 Ohio Jurisprudence (2d), 360, is based primarily on the Vasu case, although prior lower court decisions reaching a different conclusion are cited and recognized therein with the statement that "these cases are impliedly overruled."

Apparently, much of the vexatious litigation, with its attendant confusion, which has resulted in recent years from the filing of separate petitions by the same plaintiff, one for personal [235] injuries and one for property damage although sustained simultaneously, has grown from that one decision, this case presenting a good example.

In the light of the foregoing, it is the view of this court that the so-called majority rule conforms much more properly to modern practice, and that the rule declared in the fourth paragraph of the syllabus in the Vasu case, on a point not actually at issue therein, should not be followed.

We, therefore, conclude and hold that, where a person suffers both personal injuries and property damage as a result of the same wrongful act, only a single cause of action arises, the different injuries occasioned thereby being separate items of damage from such act. It follows that paragraph four of the syllabus in the Vasu case must be overruled.

It is not necessary in view of this conclusion to consider the other errors assigned herein.

Accordingly, the judgment of the Court of Appeals is reversed, and final judgment is entered for defendant.

Judgment reversed and final judgment for defendant.

WEYGANDT, C. J., STEWART, TAFT, MATTHIAS and BELL, JJ., concur.

ZIMMERMAN, J., dissents.

STEWART, J., concurring. In the case of Vasu v. Kohlers, Inc., 145 Ohio St., 321, 327, 61 N. E. (2d), 707, 166 A. L. R., 855, Judge Hart stated in part:

"The rule at common law and in a majority of the states of the union is that damages resulting from a single wrongful act, even though they include both property and personal injury damages, are, when suffered by the same person, the subject of only one action against the wrongdoer."

However, he referred to the fact that there were a number of state jurisdictions which followed the English rule, laid down in Brunsden v. Humphrey, 14 Q. B., 141, and known as the two-causes-of-action rule, and then proceeded to announce that rule as the Ohio rule, and it was written into the fourth paragraph of the syllabus of the Vasu case. If it had [236] been necessary to decide the question whether a single tort gives rise to two causes of action as to the one injured by such tort, I would be reluctant to disturb that holding. However, neither the discussion in the Vasu case as to whether a single or double cause of action arises from one tort nor the language of the fourth paragraph of the syllabus was necessary to decide the issue presented in the case, and obviously both such language and such paragraph are obiter dicta and, therefore, are not as persuasive an authority as if they had been appropriate to the question presented.

As to the case of Brunsden v. Humphrey, supra, which is the basis for the minority rule in this country, it seems to me that the dissenting opinion of Lord Coleridge, as quoted in the majority opinion in the present case, is not only highly persuasive but logically unanswerable, and that this court is justified in departing from the obiter dicta of the Vasu case.

ZIMMERMAN, J., dissenting.

I am not unalterably opposed to upsetting prior decisions of this court where changing conditions and the lessons of experience clearly indicate the desirability of such course, but, where those considerations do not obtain, established law should remain undisturbed in order to insure a stability on which the lower courts and the legal profession generally may rely with some degree of confidence.

Much may be said in support of the position taken in the majority opinion herein. However, there is a sharp division in the cases as to whether injuries to both person and property suffered by the same person as a result of the same wrongful act give rise to distinct causes of action or to a single cause of action. Less than 13 years ago that question was discussed at some length in the opinion in the case of Vasu v. Kohlers, Inc., 145 Ohio St., 321, 61 N. E. (2d), 707, 166 A. L. R., 855, and the rule in favor of distinct causes of action was carried into the fourth paragraph of the syllabus and approved by a unanimous court.

As is pointed out in the majority opinion, neither of the later cases of Markota v. East Ohio Gas Co., 154 Ohio St., 546. 97 N. E. (2d), 13, nor Mansker v. Dealers Transport Co., 160 [237] Ohio St., 255, 116 N. E. (2d), 3, reversed the law as set out in paragraph four of the syllabus of the Vasu case.

As to the conflict existing among the cases on the matter under discussion, attention is directed to 1 American Jurisprudence, 494, Section 114, and 1 Corpus Juris Secundum, 1334, Actions, Section 104.

In the latter volume, at pages 1334 and 1335, the following succinct and accurate statement appears:

"The question of whether a single tortious act which causes injury to the person and property of plaintiff gives rise to a single cause of action or to two separate causes is one on which there is a sharp conflict of authority * * *. In some jurisdictions an injury to person and to property, although resulting from the same tortious act, constitutes different causes of action. In other jurisdictions the fact that the injuries sustained are diversified in character does not cause two or more causes of action to accrue from a single tort, and a single tort which causes injury both to the person and property of an individual gives rise to but one cause of action * * *."

There is abundant and respectable authority for both of the above viewpoints. Ohio has deliberately adopted one of them, and I can find no impelling reason for changing the rule at the present time.

In the recent case of Reid v. Holden, 242 N. C, 408, 88 S. E. (2d), 125, the Supreme Court of North Carolina held that, although a cause of action for personal injury is separate and distinct from a cause of action for tortious damage to personal property, they may be united in the same complaint if the plaintiff so elects. Of course, that would also be true in Ohio.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.

[395] Jerome I. Chapman argued the cause for petitioners. With him on the briefs were Abe Krash, Paul Fitting, Charles G. Miller, Eugene H. Gordon, John C. Grosz, Bernard Persky, and John Curran Ladd.

Jerrold N. Offstein argued the cause and filed a brief for respondents.

JUSTICE REHNQUIST delivered the opinion of the Court.

The only question presented in this case is whether the Court of Appeals for the Ninth Circuit validly created an exception to the doctrine of res judicata. The court held that res judicata does not bar relitigation of an unappealed adverse judgment where, as here, other plaintiffs in similar actions against common defendants successfully appeal the judgments against them. We disagree with the view taken by the Court of Appeals for the Ninth Circuit and reverse.

I

In 1976 the United States brought an antitrust action against petitioners, owners of various department stores, alleging that they had violated § 1 of the Sherman Act, 15 U. S. C. § 1, by agreeing to fix the retail price of women's clothing sold in northern California. Seven parallel civil actions were subsequently field by private plaintiffs seeking treble damages on behalf of proposed classes of retail purchasers, including that of respondent Moitie in state court (Moitie I) and respondent Brown (Brown I) in the United [396] States District Court for the Northern District of California. Each of these complaints tracked almost verbatim the allegations of the Government's complaint, though the Moitie I complaint referred solely to state law. All of the actions originally filed in the District Court were assigned to a single federal judge, and the Moitie I case was removed there on the basis of diversity of citizenship and federal-question jurisdiction. The District Court dismissed all of the actions "in their entirety" on the ground that plaintiffs had not alleged an "injury" to their "business or property" within the meaning of § 4 of the Clayton Act, 15 U. S. C. § 15. Weinberg v. Federated Department Stores, 426 F. Supp. 880 (1977).

Plaintiffs in five of the suits appealed that judgment to the Court of Appeals for the Ninth Circuit. The single counsel representing Moitie and Brown, however, chose not to appeal and instead refiled the two actions in state court, Moitie II and Brown II.^[1] Although the complaints purported to raise only state-law claims, they made allegations similar to those made in the prior complaints, including that of the Government. Petitioners removed these new actions to the District Court for the Northern District of California and moved to have them dismissed on the ground of res judicata. In a decision rendered July 8, 1977, the District Court first denied respondents' motion to remand. It held that the complaints, though artfully couched in terms of state law, were "in many respects identical" with the prior complaints, and were thus properly removed to federal court because they raised "essentially federal law" claims. The court then concluded that because Moitie II and Brown II involved the "same parties, the same alleged offenses, and the same time periods" as Moitie I and Brown I, the doctrine of res judicata [397] required that they be dismissed. This time, Moitie and Brown appealed.

Pending that appeal, this Court on June 11, 1979, decided Reiter v. Sonotone Corp., 442 U. S. 330, holding that retail purchasers can suffer an "injury" to their "business or property" as those terms are used in § 4 of the Clayton Act. On June 25, 1979, the Court of Appeals for the Ninth Circuit reversed and remanded the five cases which had been decided with Moitie I and Brown I, the cases that had been appealed, for further proceedings in light of Reiter.

When Moitie II and Brown II finally came before the Court of Appeals for the Ninth Circuit, the court reversed the decision of the District Court dismissing the cases. 611 F. 2d 1267.^[2] Though the court recognized that a "strict application of the doctrine of res judicata would preclude our review of the instant decision," id., at 1269, it refused to apply the doctrine to the facts of this case. It observed that the other five litigants in the Weinberg cases had successfully [398] appealed the decision against them. It then asserted that "non-appealing parties may benefit from a reversal when their position is closely interwoven with that of appealing parties," ibid., and concluded that "[b]ecause the instant dismissal rested on a case that has been effectively overruled," the doctrine of res judicata must give way to "public policy" and "simple justice." Id., at 1269-1270. We granted certiorari, 449 U. S. 991 (1980), to consider the validity of the Court of Appeals' novel exception to the doctrine of res judicata.

II

There is little to be added to the doctrine of res judicata as developed in the case law of this Court. A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Commissioner v. Sunnen, 333 U. S. 591, 597 (1948); Cromwell v. County of Sac, 94 U. S. 351, 352-353 (1877). Nor are the res judicata consequences of a final, unappealed judgment on the merits altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case. Angel v. Bullington, 330 U. S. 183, 187 (1947); Chicot County Drainage District v. Baxter State Bank, 308 U. S. 371 (1940); Wilson's Executor v. Deen, 121 U. S. 525, 534 (1887). As this Court explained in Baltimore S.S. Co. v. Phillips, 274 U. S. 316, 325 (1927), an "erroneous conclusion" reached by the court in the first suit does not deprive the defendants in the second action "of their right to rely upon the plea of res judicata. . . . A judgment merely voidable because based upon an erroneous view of the law is not open to collateral attack, but can be corrected only by a direct review and not by bringing another action upon the same cause [of action]." We have observed that "[t]he indulgence of a contrary view would result in creating elements of uncertainty and confusion and in undermining the conclusive character of judgments, [399] consequences which it was the very purpose of the doctrine of res judicata to avert." Reed v. Allen, 286 U. S. 191, 201 (1932).

In this case, the Court of Appeals conceded that the "strict application of the doctrine of res judicata" required that Brown II be dismissed. By that, the court presumably meant that the "technical elements" of res judicata had been satisfied, namely, that the decision in Brown I was a final judgment on the merits and involved the same claims and the same parties as Brown II.^[3] The court, however, declined to dismiss Brown II because, in its view, it would be unfair to bar respondents from relitigating a claim so "closely interwoven" with that of the successfully appealing parties. We believe that such an unprecedented departure from accepted principles of res judicata is unwarranted. Indeed, the decision below is all but foreclosed by our prior case law.^[4]

In Reed v. Allen, supra, this Court addressed the issue presented here. The case involved a dispute over the rights to property left in a will. A won an interpleader action for rents derived from the property and, while an appeal was pending, brought an ejectment action against the rival claimant B. On [400] the basis of the decree in the interpleader suit A won the ejectment action. B did not appeal this judgment, but prevailed on his earlier appeal from the interpleader decree and was awarded the rents which had been collected. When B sought to bring an ejectment action against A, the latter pleaded res judicata, based on his previous successful ejectment action. This Court held that res judicata was available as a defense and that the property belonged to A:

"The judgment in the ejectment action was final and not open to assault collaterally, but subject to impeachment only through some form of direct attack. The appellate court was limited to a review of the interpleader decree; and it is hardly necessary to say that jurisdiction to review one judgment gives an appellate court no power to reverse or modify another and independent judgment. If respondent, in addition to appealing from the [interpleader] decree, had appealed from the [ejectment] judgment, the appellate court, having both cases before it, might have afforded a remedy. . . . But this course respondent neglected to follow." Id., at 198.

This Court's rigorous application of res judicata in Reed, to the point of leaving one party in possession and the other party entitled to the rents, makes clear that this Court recognizes no general equitable doctrine, such as that suggested by the Court of Appeals, which countenances an exception to the finality of a party's failure to appeal merely because his rights are "closely interwoven" with those of another party. Indeed, this case presents even more compelling reasons to apply the doctrine of res judicata than did Reed. Respondents here seek to be the windfall beneficiaries of an appellate reversal procured by other independent parties, who have no interest in respondents' case, not a reversal in interrelated cases procured, as in Reed, by the same affected party. Moreover, in contrast to Reed, where it was unclear why no appeal was taken, it is apparent that respondents here made a [401] calculated choice to forgo their appeals. See also Ackermann v. United States, 340 U. S. 193, 198 (1950) (holding that petitioners were not entitled to relief under Federal Rule of Civil Procedure 60 (b) when they made a "free, calculated, deliberate choic[e]" not to appeal).

The Court of Appeals also rested its opinion in part on what it viewed as "simple justice." But we do not see the grave injustice which would be done by the application of accepted principles of res judicata. "Simple justice" is achieved when a complex body of law developed over a period of years is evenhandedly applied. The doctrine of res judicata serves vital public interests beyond any individual judge's ad hoc determination of the equities in a particular case. There is simply "no principle of law or equity which sanctions the rejection by a federal court of the salutary principle of res judicata." Heiser v. Woodruff, 327 U. S. 726, 733 (1946). The Court of Appeals' reliance on "public policy" is similarly misplaced. This Court has long recognized that "[p]ublic policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties." Baldwin v. Traveling Men's Assn., 283 U. S. 522, 525 (1931). We have stressed that "[the] doctrine of res judicata is not a mere matter of practice or procedure inherited from a more technical time than ours. It is a rule of fundamental and substantial justice, `of public policy and of private peace,' which should be cordially regarded and enforced by the courts . . . ." Hart Steel Co. v. Railroad Supply Co., 244 U. S. 294, 299 (1917). The language used by this Court half a century ago is even more compelling in view of today's crowded dockets:

"The predicament in which respondent finds himself is of his own making . . . . [W]e cannot be expected, for his sole relief, to upset the general and well-established doctrine of res judicata, conceived in the light of the [402] maxim that the interest of the state requires that there be an end to litigation—a maxim which comports with common sense as well as public policy. And the mischief which would follow the establishment of precedent for so disregarding this salutary doctrine against prolonging strife would be greater than the benefit which would result from relieving some case of individual hardship." Reed v. Allen, 286 U. S., at 198-199.

Respondents make no serious effort to defend the decision of the Court of Appeals. They do not ask that the decision below be affirmed. Instead, they conclude that the "the writ of certiorari should be dismissed as improvidently granted." Brief for Respondents 31. In the alternative, they argue that "the district court's dismissal on grounds of res judicata should be reversed, and the district court directed to grant respondent's motion to remand to the California state court." Ibid. In their view, Brown I cannot be considered res judicata as to their state-law claims, since Brown I raised only federal-law claims and Brown II raised additional state-law claims not decided in Brown I, such as unfair competition, fraud, and restitution.

It is unnecessary for this Court to reach that issue. It is enough for our decision here that Brown I is res judicata as to respondents' federal-law claims. Accordingly, the judgment of the Court of Appeals is reversed, and the cause is remanded for proceedings consistent with this opinion.

It is so ordered.

JUSTICE BLACKMUN, with whom JUSTICE MARSHALL joins, concurring in the judgment.

While I agree with the result reached in this case, I write separately to state my views on two points.

First, I, for one, would not close the door upon the possibility that there are cases in which the doctrine of res judicata [403] must give way to what the Court of Appeals referred to as "overriding concerns of public policy and simple justice." 611 F. 2d 1267, 1269 (CA9 1980). Professor Moore has noted: "Just as res judicata is occasionally qualified by an overriding, competing principle of public policy, so occasionally it needs an equitable tempering." 1B J. Moore & T. Currier, Moore's Federal Practice ¶ 0.405 [12], p. 791 (1980) (footnote omitted). See also Reed v. Allen, 286 U. S. 191, 209 (1932) (Cardozo, J., joined by Brandeis and Stone, JJ., dissenting) ("A system of procedure is perverted from its proper function when it multiplies impediments to justice without the warrant of clear necessity"). But this case is clearly not one in which equity requires that the doctrine give way. Unlike the nonappealing party in Reed, respondents were not "caught in a mesh of procedural complexities." Ibid. Instead, they made a deliberate tactical decision not to appeal. Nor would public policy be served by making an exception to the doctrine in this case; to the contrary, there is a special need for strict application of res judicata in complex multiple party actions of this sort so as to discourage "break-away" litigation. Cf. Reiter v. Sonotone Corp., 442 U. S. 330, 345 (1979). Finally, this is not a case "where the rights of appealing and non-appealing parties are so interwoven or dependent on each other as to require a reversal of the whole judgment when a part thereof is reversed." See Ford Motor Credit Co. v. Uresti, 581 S. W. 2d 298, 300 (Tex. Civ. App. 1979).^[5]

[404] Second, and in contrast, I would flatly hold that Brown I is res judicata as to respondents' state-law claims. Like the District Court, the Court of Appeals found that those state-law claims were simply disguised federal claims; since respondents have not cross-petitioned from that judgment, their argument that this case should be remanded to state court should be itself barred by res judicata. More important, even if the state and federal claims are distinct, respondents' failure to allege the state claims in Brown I manifestly bars their allegation in Brown II. The dismissal of Brown I is res judicata not only as to all claims respondents actually raised, but also as to all claims that could have been raised. See Commissioner v. Sunnen, 333 U. S. 591, 597 (1948); Restatement (Second) of Judgments § 61.1 (Tent. Draft No. 5, Mar. 10, 1978). Since there is no reason to believe that it was clear at the outset of this litigation that the District Court would have declined to exercise pendent jurisdiction over state claims, respondents were obligated to plead those claims if they wished to preserve them. See id., § 61.1, Comment e. Because they did not do so, I would hold the claims barred.

JUSTICE BRENNAN, dissenting.

In its eagerness to correct the decision of the Court of Appeals for the Ninth Circuit, the Court today disregards statutory restrictions on federal-court jurisdiction, and, in the process, confuses rather than clarifies long-established principles of res judicata. I therefore respectfully dissent.

I

Respondent Floyd R. Brown^[6] filed this class action (Brown II) against petitioners in California state court. The complaint [405] stated four state-law causes of action: (1) fraud and deceit, (2) unfair business practices. (3) civil conspiracy, and (4) restitution. Plaintiffs' Complaint, ¶¶ 11-14, App. 99-101. It alleged "not less than $600" damages per class member, and in addition sought "appropriate multiple damages," exemplary and punitive damages, interest from date of injury, attorney's fees and costs, and other relief. Id., at 101-102. All four of the causes of action rested wholly on California statutory or common law; none rested in any fashion on federal law.

Nonetheless, petitioners removed the suit to the United States District Court for the Northern District of California, where respondent Brown filed a motion to remand on the ground that his action raised no federal question within the meaning of 28 U. S. C. § 1441 (b). Respondent's motion was denied by the District Court, which stated that "[f]rom start to finish, plaintiffs have essentially alleged violations by defendants of federal antitrust laws." App. 192. The court reasoned that "[a]rtful pleading" by plaintiffs cannot "convert their essentially federal law claims into state law claims," and held that respondent's complaint was properly removed "because [it] concerned federal questions which could have been originally brought in Federal District Court without satisfying any minimum amount in controversy." Ibid. The court then dismissed the action, holding that, under the doctrine of res judicata, Brown II was barred by the adverse decision in an earlier suit in federal court (Brown I) involving "the same parties, the same alleged offenses, and the same time periods." Ibid.

The Court of Appeals affirmed the District Court's decision not to remand, stating that "[t]he court below correctly held that the claims presented were federal in nature." 611 F. 2d 1267, 1268 (CA9 1980) (memorandum on denial of reconsideration). However, the Court of Appeals reversed the District Court's order of dismissal, and remanded for trial.

[406] II

The provision authorizing removal of actions from state to federal courts on the basis of a federal question^[7] is found in 28 U. S. C. § 1441 (b):

"Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties."

Removability depends solely upon the nature of the plaintiff's complaint: an action may be removed to federal court only if a "right or immunity created by the Constitution or laws of the United States [constitutes] an element, and an essential one, of the plaintiff's cause of action." Gully v. First National Bank in Meridian, 299 U. S. 109, 112 (1936). An action arising under state law may not be removed solely because a federal right or immunity is raised as a defense. Tennessee v. Union & Planters' Bank, 152 U. S. 454 (1894).

An important corollary is that "the party who brings a suit is master to decide what law he will rely upon and therefore does determine whether he will bring a `suit arising under' the . . . law[s] of the United States" by the allegations in his complaint. The Fair v. Kohler Die & Specialty Co., 228 U. S. 22, 25 (1913); accord, Great Northern R. Co. v. Alexander, 246 U. S. 276, 282 (1918). Where the plaintiff's claim might [407] be brought under either federal or state law, the plaintiff is normally free to ignore the federal question and rest his claim solely on the state ground. If he does so, the defendant has no general right of removal. Jones v. General Tire & Rubber Co., 541 F. 2d 660, 664-665 (CA7 1976); La Chemise Lacoste v. Alligator Co., 506 F. 2d 339, 346 (CA3 1974), cert. denied. 421 U. S. 937 (1975); Warner Bros. Records, Inc. v. R. A. Ridges Distributing Co., 475 F. 2d 262, 264 (CA10 1973); Coditron Corp. v. AFA Protective Systems, Inc., 392 F. Supp. 158, 160 (SDNY 1975).

This corollary is well grounded in principles of federalism. So long as States retain authority to legislate in subject areas in which Congress has legislated without pre-empting the field, and so long as state courts remain the preferred forum for interpretation and enforcement of state law, plaintiffs must be permitted to proceed in state court under state law. It would do violence to state autonomy were defendants able to remove state claims to federal court merely because the plaintiff could have asserted a federal claim based on the same set of facts underlying his state claim. As this Court stated in Shamrock Oil & Gas Corp. v. Sheets, 313 U. S. 100, 108-109 (1941):

"The power reserved to the states under the Constitution to provide for the determination of controversies in their courts, may be restricted only by the action of Congress in conformity to the Judiciary Articles of the Constitution. `Due regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined.'" (Quoting Healy v. Ratta, 292 U. S. 263, 270 (1934).)

The general rule that a plaintiff basing his claim solely on state law thereby avoids removal applies only where state substantive law has not been pre-empted by federal law.

"[W]here the plaintiff has a right to relief either under [408] federal law or under state law as an independent source of that right, the federal court on removal proceedings may not generally look beyond the face of the initial pleading in the state action to determine whether a federal question is presented. In certain areas, however, this either-or option is no longer available, for Congress has deemed that federal substantive law should altogether preempt and supplant state law. In such a case, where Congress has explicitly said that the exclusive source of a plaintiff's right to relief is to be federal law, it would be unacceptable to permit that very plaintiff, by the artful manipulation of the terms of a complaint, to defeat a clearly enunciated congressional objective." Hearst Corp. v. Shopping Center Network, Inc., 307 F. Supp. 551, 556 (SDNY 1969) (emphasis in original) (citation omitted).

The federal court must therefore scrutinize the complaint in the removed case to determine whether the action, though ostensibly grounded solely on state law, is actually grounded on a claim in which federal law is the exclusive authority. See Sheeran v. General Electric Co., 593 F. 2d 93, 96 (CA9), cert. denied, 444 U. S. 868 (1979); North American Phillips Corp. v. Emery Air Freight Corp., 579 F. 2d 229, 233-234 (CA2 1978); New York v. Local 144, Hotel Nursing Home and Allied Health Services Union, 410 F. Supp. 225, 226-229 (SDNY 1976).^[8]

[409] This lawsuit concerns the area of antitrust in which federal laws have not displaced state law. See generally Mosk, State Antitrust Enforcement and Coordination with Federal Enforcement, 21 A. B. A. Antitrust Section 358, 361-368 (1962). Thus, respondent Brown had the option of proceeding under state or federal law, or both. So far as is apparent from the complaint, which was carefully limited to four California state-law causes of action, this case arises wholly without reference to federal law. Under settled principles of federal jurisdiction, therefore, respondent's lawsuit should not have been removed to federal court. See Gully v. First National Bank in Meridian, 299 U. S., at 113.

The Court today nonetheless sustains removal of this action on the ground that "at least some of the claims had a sufficient federal character to support removal." Ante, at 397, n. 2. I do not understand what the Court means by this. Which of the claims are federal in character? Why are the claims federal in character? In my view, they are all predicated solely on California law.^[9] Certainly, none of them purports to state a claim under the federal antitrust laws, and the mere fact that plaintiffs might have chosen to proceed under the Clayton Act surely does not suffice to transmute their state claims into federal claims.

The Court relies on what it calls a "factual finding" by the District Court,^[10] with which the Court of Appeals agreed, that "respondents had attempted to avoid removal jurisdiction by `artful[ly]' casting their `essentially federal law claims' as state-law claims." Ibid. But this amounts to no more than [410] a pejorative characterization of respondents' decision to proceed under state rather than federal law. "Artful" or not, respondents' complaints were not based on any claim of a federal right or immunity, and were not, therefore, removable.^[11]

III

Even assuming that this Court and the lower federal courts have jurisdiction to decide this case, however, I dissent from the Court's disposition of the res judicata issue. Having reached out to assume jurisdiction, the Court inexplicably recoils from deciding the case. The Court finds it "unnecessary" to reach the question of the res judicata effect of Brown I on respondents' "state-law claims." Ante, at 402 (emphasis in original). "It is enough for our decision here," the Court says, "that Brown I is res judicata as to respondents' federal-law claims." Ibid. But respondents raised only state-law claims; respondents did not raise any federal-law claims. [411] Thus, if the Court fails to decide the disposition of respondents' state-law claims, it decides nothing. And in doing so, the Court introduces the possibility—heretofore foreclosed by our decisions^[12]—that unarticulated theories of recovery may survive an unconditional dismissal of the lawsuit.

Like JUSTICE BLACKMUN, I would hold that the dismissal of Brown I is res judicata not only as to every matter that was actually litigated, but also as to every ground or theory of recovery that might also have been presented. See ante, p. 402 (opinion concurring in judgment); 1B J. Moore & T. Currier, Moore's Federal Practice ¶ 0.410 [2], p. 1163 (1980). An unqualified dismissal on the merits of a substantial federal antitrust claim precludes relitigation of the same claim on a state-law theory. Woods Exploration & Producing Co. v. Aluminum Co. of America, 438 F. 2d 1286, 1312-1315 (CA5 1971), cert. denied, 404 U. S. 1047 (1972); Ford Motor Co. v. Superior Court, 35 Cal. App. 3d 676, 680, 110 Cal. Rptr. 59, 61-62 (1973); see Restatement (Second) of Judgments § 61.1, Reporter's Note to Illustration 10, Comment e, pp. 178-179 (Tent. Draft No. 5, Mar. 10, 1978). The Court's failure to acknowledge this basic principle can only create doubts and confusion where none were before, and may encourage litigants to split their causes of action, state from federal, in the hope that they might win a second day in court.

I therefore respectfully dissent, and would vacate the judgment of the Court of Appeals with instructions to remand to the District Court with instructions to remand to state court.

[1] Petitioners have filed a supplemental memorandum with the Court indicating that Moitie II has been voluntarily dismissed, leaving Brown II as the subject of the petition.

[2] The Court of Appeals also affirmed the District Court's conclusion that Brown II was properly removed to federal court, reasoning that the claims presented were "federal in nature." We agree that at least some of the claims had a sufficient federal character to support removal. As one treatise puts it, courts "will not permit plaintiff to use artful pleading to close off defendant's right to a federal forum . . . [and] occasionally the removal court will seek to determine whether the real nature of the claim is federal, regardless of plaintiff's characterization." 14 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3722, pp. 564-566 (1976) (citing cases) (footnote omitted). The District Court applied that settled principle to the facts of this case. After "an extensive review and analysis of the origins and substance of" the two Brown complaints, it found, and the Court of Appeals expressly agreed, that respondents had attempted to avoid removal jurisdiction by "artful[ly]" casting their "essentially federal law claims" as state-law claims. We will not question here that factual finding. See Prospect Dairy, Inc. v. Dellwood Dairy Co., 237 F. Supp. 176 (NDNY 1964); In re Wiring Device Antitrust Litigation, 498 F. Supp. 79 (EDNY 1980); Three J Farms, Inc. v. Alton Box Board Co., 1979-1 Trade Cases ¶ 62,423 (SC 1978), rev'd on other grounds, 609 F. 2d 112 (CA4 1979), cert. denied, 445 U. S. 911 (1980).

[3] The dismissal for failure to state a claim under Federal Rule of Civil Procedure 12 (b) (6) is a "judgment on the merits." See Angel v. Bullington, 330 U. S. 183, 190 (1947); Bell v. Hood, 327 U. S. 678 (1946).

[4] The decision below also conflicts with those of other Courts of Appeals holding that an adverse judgment from which no appeal has been taken is res judicata and bars any future action on the same claim, even if an authoritative contrary judicial decision on the legal issues involved is subsequently rendered in another case. E. g., National Association of Broadcasters v. FCC, 180 U. S. App. D. C. 259, 265, 554 F. 2d 1118, 1124 (1976) ("It is the generally accepted rule in civil cases that where less than all of the several co-parties appeal from an adverse judgment, a reversal as to the parties appealing does not necessitate or justify a reversal as to the parties not appealing"); Clouatre v. Houston Fire & Cas. Co., 229 F. 2d 596, 597-598 (CA5 1956); Appleton Toy & Furniture Co. v. Lehman Co., 165 F. 2d 801, 802 (CA7 1948); Ripperger v. A. C. Allyn & Co., 113 F. 2d 332, 333 (CA2), cert. denied, 311 U. S. 695 (1940).

[5] The Court of Appeals' reliance, 611 F. 2d 1267, 1269 (CA9 1980), on Uresti; Kvenild v. Taylor, 594 P. 2d 972 (Wyo. 1979); and In re Estate of McDill, 14 Cal. 3d 831, 537 P. 2d 874 (1975), appears to me to be clearly misplaced. Unlike those cases, this is not one in which the appealing and nonappealing parties made competing claims to a single piece of property, see McDill, or in which reversal only as to the appealing party would have unjustly left the nonappealing party liable, see Kvenild, or without recourse on his cross-claim, see Uresti.

[6] Since the action by respondent Moitie has been voluntarily dismissed, the only remaining issues concern the claims of respondent Brown.

[7] As the District Court acknowledged, Brown II could not be removed on the basis of diversity of citizenship, because the amount in controversy did not exceed $10,000. App. 190. The court correctly noted, however, that the action could have been removed without regard to the amount in controversy, if it could have been brought as an original action in federal court without meeting any minimum amount in controversy. Ibid. Actions under the Clayton Act, 15 U. S. C. § 15, may be brought in federal court without regard to amount in controversy. See also Pub. L. 96-486, §§ 2 (a), 4, 94 Stat. 2369-2370, 28 U. S. C. § 1331 (1976 ed., Supp. IV), and note following § 1331 (repeal of minimum amount in controversy for federal-question cases pending as of date of enactment).

[8] In this context, it is often said that a plaintiff may not "fraudulently" defeat removal by manipulation of the complaint. See, e. g., Sheeran v. General Electric Co., 593 F. 2d, at 96; Jones v. General Tire & Rubber Co., 541 F. 2d 660, 664-665 (CA7 1976); see also Great Northern R. Co. v. Alexander, 246 U. S. 276, 281, 282 (1918). Where, however, both state and federal laws would support a claim, it makes little sense to suggest that the plaintiff acts "fraudulently" if he chooses to proceed under state law in state court rather than under federal law in federal court. See Romick v. Bekins Van & Storage Co., 197 F. 2d 369, 371 (CA5 1952).

[9] Indeed, the Court admits that the additional claims in Brown II, not included in Brown I, such as unfair competition, fraud, and restitution, are "state-law claims." Ante, at 402.

[10] The District Court did not consider this conclusion a "factual finding." It was included in a section of the District Court opinion devoted to legal analysis, not in the section entitled "Facts." Compare App. 187-190 with id., at 190-192. In any event, a court's conclusion concerning the legal character of a complaint can hardly be considered a "factual finding."

[11] The decisions cited by the Court in support of its approach, all from District Courts, are inapplicable. In re Wiring Device Antitrust Litigation, 498 F. Supp. 79 (EDNY 1980), and Three J Farms, Inc. v. Alton Box Board Co., 1979-1 Trade Cases ¶ 62,423, p. 76,550 (SC 1978), rev'd on other grounds, 609 F. 2d 112 (CA4 1979), cert. denied, 445 U. S. 911 (1980), were cases in which the State itself had confined application of the state antitrust laws to purely intrastate commerce, thus leaving federal law the sole basis for suit. Similarly, Prospect Dairy, Inc. v. Dellwood Dairy Co., 237 F. Supp. 176 (NDNY 1964), concerned a claim of an unfair labor practice, which is governed exclusively by federal law. See 29 U. S. C. § 187; Teamsters v. Morton,377 U. S. 252 (1964).

Admittedly, some courts have not strictly observed the restrictions on removal jurisdiction. See, e. g., In re Carter, 618 F. 2d 1093, 1101 (CA5 1980), cert. denied sub nom. Sheet Metal Workers v. Carter, 450 U. S. 949 (1981). 14 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3722, pp. 564-566 (1976), reports that "occasionally the removal court will seek to determine whether the real nature of the claim is federal, regardless of plaintiff's characterization." (Footnote omitted.) Perusal of the cited decisions, however, reveals that most of them correctly confine this practice to areas of the law pre-empted by federal substantive law.

[12] See Brown v. Felsen, 442 U. S. 127, 131 (1979); United States v. Munsingwear, Inc., 340 U. S. 36, 38 (1950); Commissioner v. Sunnen, 333 U. S. 591, 597 (1948); Chicot County Drainage District v. Baxter State Bank, 308 U. S. 371, 378 (1940); Cromwell v. County of Sac, 94 U. S. 351, 352-353 (1877).

Mr. John N. Rogers for the plaintiff in error.

Mr. Galusha Parsons, contra.

MR. JUSTICE FIELD delivered the opinion of the court.

This was an action on four bonds of the county of Sac, in [352] the State of Iowa, each for $1,000, and four coupons for interest, attached to them, each for $100. The bonds were issued in 1860, and were made payable to bearer, in the city of New York, in the years 1868, 1869, 1870, and 1871, respectively, with annual interest at the rate of ten per cent a year.

To defeat this action, the defendant relied upon the estoppel of a judgment rendered in favor of the county in a prior action brought by one Samuel C. Smith upon certain earlier maturing coupons on the same bonds, accompanied with proof that the plaintiff Cromwell was at the time the owner of the coupons in that action, and that the action was prosecuted for his sole use and benefit.

The questions presented for our determination relate to the operation of this judgment as an estoppel against the prosecution of the present action, and the admissibility of the evidence to connect the present plaintiff with the former action as a real party in interest.

In considering the operation of this judgment, it should be borne in mind, as stated by counsel, that there is a difference between the effect of a judgment as a bar or estoppel against the prosecution of a second action upon the same claim or demand, and its effect as an estoppel in another action between the same parties upon a different claim or cause of action. In the former case, the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action. It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. Thus, for example, a judgment rendered upon a promissory note is conclusive as to the validity of the instrument and the amount due upon it, although it be subsequently alleged that perfect defences actually existed, of which no proof was offered, such as forgery, want of consideration, or payment. If such defences were not presented in the action, and established by competent evidence, the subsequent allegation of their existence is of no legal consequence. The judgment is as conclusive, so far as future proceedings at law [353] are concerned, as though the defences never existed. The language, therefore, which is so often used, that a judgment estops not only as to every ground of recovery or defence actually presented in the action, but also as to every ground which might have been presented, is strictly accurate, when applied to the demand or claim in controversy. Such demand or claim, having passed into judgment, cannot again be brought into litigation between the parties in proceedings at law upon any ground whatever.

But where the second action between the same parties is upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered. In all cases, therefore, where it is sought to apply the estoppel of a judgment rendered upon one cause of action to matters arising in a suit upon a different cause of action, the inquiry must always be as to the point or question actually litigated and determined in the original action, not what might have been thus litigated and determined. Only upon such matters is the judgment conclusive in another action.

The difference in the operation of a judgment in the two classes of cases mentioned is seen through all the leading adjudications upon the doctrine of estoppel. Thus, in the case of Outram v. Morewood, 3 East, 346, the defendants were held estopped from averring title to a mine, in an action of trespass for digging out coal from it, because, in a previous action for a similar trespass, they had set up the same title, and it had been determined against them. In commenting upon a decision cited in that case, Lord Ellenborough, in his elaborate opinion, said: "It is not the recovery, but the matter alleged by the party, and upon which the recovery proceeds, which creates the estoppel. The recovery of itself in an action of trespass is only a bar to the future recovery of damages for the same injury; but the estoppel precludes parties and privies from contending to the contrary of that point or matter of fact, which, having been once distinctly put in issue by them, or by those to whom they are privy in estate or law, has been, on such issue joined, solemnly found against them." And in the [354] case of Gardner v. Buckbee, 3 Cowen, 120, it was held by the Supreme Court of New York that a verdict and judgment in the Marine Court of the city of New York, upon one of two notes given upon a sale of a vessel, that the sale was fraudulent, the vessel being at the time unseaworthy, were conclusive upon the question of the character of the sale in an action upon the other note between the same parties in the Court of Common Pleas. The rule laid down in the celebrated opinion in the case of the Duchess of Kingston was cited, and followed: "That the judgment of a court of concurrent jurisdiction directly upon the point is as a plea a bar, or as evidence conclusive between the same parties upon the same matter directly in question in another court."

These cases, usually cited in support of the doctrine that the determination of a question directly involved in one action is conclusive as to that question in a second suit between the same parties upon a different cause of action, negative the proposition that the estoppel can extend beyond the point actually litigated and determined. The argument in these cases, that a particular point was necessarily involved in the finding in the original action, proceeded upon the theory that, if not thus involved, the judgment would be inoperative as an estoppel. In the case of Miles v. Caldwell, reported in the 2d of Wallace, a judgment in ejectment in Missouri, where actions of that kind stand, with respect to the operation of a recovery therein, as a bar or estoppel, in the same position as other actions, was held by this court conclusive, in a subsequent suit in equity between the parties respecting the title, upon the question of the satisfaction of the mortgage under which the plaintiff claimed title to the premises in the ejectment, and the question as to the fraudulent character of the mortgage under which the defendant claimed, because these questions had been submitted to the jury in that action, and had been passed upon by them. The court held, after full consideration, that in cases of tort, equally as in those arising upon contract, where the form of the issue was so vague as not to show the questions of fact submitted to the jury, it was competent to prove by parol testimony what question or questions of fact were thus submitted and necessarily passed upon by them; and [355] by inevitable implication also held that, in the absence of proof in such cases, the verdict and judgment were inconclusive, except as to the particular trespass alleged, whatever possible questions might have been raised and determined.

But it is not necessary to take this doctrine as a matter of inference from these cases. The precise point has been adjudged in numerous instances. It was so adjudged by this court in the case of The Washington, Alexandria, & Georgetown Steam Packet Co. v. Sickles, reported in the 24th of Howard. In that case, an action was brought upon a special parol contract for the use of Sickles's cut-off for saving fuel in the working of steam-engines, by which the plaintiffs, who had a patent for the cut-off, were to attach one of their machines to the engine of the defendants' boat, and were to receive for its use three-fourths of the saving of fuel thus produced, the payments to be made from time to time when demanded. To ascertain the saving of fuel an experiment was to be made in a specified manner, and the result taken as the rate of saving during the continuance of the contract. The plaintiffs in their declaration averred that the experiment had been made, at the rate of saving ascertained, and that the cut-off had been used on the boat until the commencement of the suit. In a prior action against the same defendant for an instalment due, where the declaration set forth the same contract in two counts, the first of which was similar to the counts in the second action, and also the common counts, the plaintiffs had obtained verdict and judgment; and it was insisted that the defendant was estopped by the verdict and judgment produced from proving that there was no such contract as that declared upon, or that no saving of fuel had been obtained, or that the experiment was not made pursuant to the contract, or that the verdict was rendered upon all the issues, and not upon the first count specially. The Circuit Court assented to these views, and excluded the testimony offered by the defendants to prove those facts. But this court reversed the decision, and held that the defendants were not thus estopped.

"The record produced by the plaintiffs," said the court, "showed that the first suit was brought apparently upon the same contract as the second, and that the existence and validity [356] of that contract might have been litigated. But the verdict might have been rendered upon the entire declaration, and without special reference to the first count. It was competent to the defendants to show the state of facts that existed at the trial, with a view to ascertain what was the matter decided upon by the verdict of the jury. It may have been that there was no contest in reference to the fairness of the experiment, or to its sufficiency to ascertain the premium to be paid for the use of the machine at the first trial, or it may have been that the plaintiffs abandoned their special counts and recovered their verdict upon the general counts. The judgment rendered in that suit, while it remains in force, and for the purpose of maintaining its validity, is conclusive of all the facts properly pleaded by the plaintiffs; but when it is presented as testimony in another suit, the inquiry is competent whether the same issue has been tried and settled by it."

It is not believed that there are any cases going to the extent that because in the prior action a different question from that actually determined might have arisen and been litigated, therefore such possible question is to be considered as excluded from consideration in a second action between the same parties on a different demand, although loose remarks looking in that direction may be found in some opinions. On principle, a point not in litigation in one action cannot be received as conclusively settled in any subsequent action upon a different cause, because it might have been determined in the first action.

Various considerations, other than the actual merits, may govern a party in bringing forward grounds of recovery or defence in one action, which may not exist in another action upon a different demand, such as the smallness of the amount or the value of the property in controversy, the difficulty of obtaining the necessary evidence, the expense of the litigation, and his own situation at the time. A party acting upon considerations like these ought not to be precluded from contesting in a subsequent action other demands arising out of the same transaction. A judgment by default only admits for the purpose of the action the legality of the demand or claim in suit: it does not make the allegations of the declaration or complaint evidence in an action upon a different claim. The declaration [357] may contain different statements of the cause of action in different counts. It could hardly be pretended that a judgment by default in such a case would make the several statements evidence in any other proceeding. Boyleau v. Rutlin, 2 Exch. 665, 681; Hughes v. Alexander, 5 Duer, 493.

The case of Howlett v. Tarte, 10 C.B.N.S. 813, supports this view. That was an action for rent, under a building agreement. The defendant pleaded a subsequent agreement, changing the tenancy into one from year to year, and its determination by notice to quit before the time for which the rent sued for was alleged to have accrued. The plaintiff replied that he had recovered a judgment in a former action against the defendant for rent under the same agreement, which had accrued after the alleged determination of the tenancy, in which action the defendant did not set up the defence pleaded in the second action. On demurrer, the replication, after full argument, was held bad. In deciding the case, Mr. Justice Willes said: "It is quite right that a defendant should be estopped from setting up in the same action a defence which he might have pleaded, but has chosen to let the proper time go by. But nobody ever heard of a defendant being precluded from setting up a defence in a second action because he did not avail himself of the opportunity of setting it up in the first action... . I think we should do wrong to favor the introduction of this new device into the law." Mr. Justice Byles said: "It is plain that there is no authority for saying that the defendant is precluded from setting up this defence." Mr. Justice Keating said: "This is an attempt on the part of the plaintiff to extend the doctrine of estoppel far beyond what any of the authorities warrant."

The language of the Vice-Chancellor, in the case of Henderson v. Henderson, 3 Hare, 100, 115, is sometimes cited as expressing a different opinion; but, upon examining the facts of that case, it will appear that the language used in no respect conflicts with the doctrine we have stated. In that case, a bill had been filed in the Supreme Court of Newfoundland, by the next of kin of an intestate, against A. and others, for an account of an estate and of certain partnership transactions. A decree was rendered against A., upon which the next of kin brought actions in England. A. then filed a bill there against the next [358] of kin and personal representative of the intestate, stating that the intestate's estate was indebted to him, and alleging various errors and irregularities in the proceedings in the Supreme Court of the island, and praying that the estate of the intestate might be administered, the partnership accounts taken, and the amount of the debt due to him ascertained and paid. A demurrer to the bill was allowed for want of equity, on the ground that the whole of the matters were in question between the parties, and might properly have been the subject of adjudication in the suit before that court. It was with reference to the necessity of having the subject of particular litigation, as a whole, at once before the court, and not by piecemeal, that the Vice-Chancellor said: —

"In trying this question, I believe I state the rule of court correctly, that when a given matter becomes the subject of litigation in and of adjudication by a court of competent jurisdiction, the court requires the parties to bring forward their whole case, and will not, except under special circumstances, permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in controversy, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of the case. The plea of res adjudicata applies, except in special cases, not only to the points upon which the court was required by the parties to form an opinion, and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

There is nothing in this language, applied to the facts of the case, which gives support to the doctrine that, whenever in one action a party might have brought forward a particular ground of recovery or defence, and neglected to do so, he is, in a subsequent suit between the same parties upon a different cause of action, precluded from availing himself of such ground.

If, now, we consider the main question presented for our determination by the light of the views thus expressed and the authorities cited, its solution will not be difficult. It appears from the findings in the original action of Smith, that the county of Sac, by a vote of its people, authorized the issue of [359] bonds to the amount of $10,000, for the erection of a court-house; that bonds to that amount were issued by the county judge, and delivered to one Meserey, with whom he had made a contract for the erection of the court-house; that immediately upon receipt of the bonds the contractor gave one of them as a gratuity to the county judge; and that the court-house was never constructed by the contractor, or by any other person pursuant to the contract. It also appears that the plaintiff had become, before their maturity, the holder of twenty-five coupons, which had been attached to the bonds, but there was no finding that he had ever given any value for them. The court below held, upon these findings, that the bonds were void as against the county, and gave judgment accordingly. The case coming here on writ of error, this court held that the facts disclosed by the findings were sufficient evidence of fraud and illegality in the inception of the bonds to call upon the holder to show that he had given value for the coupons; and, not having done so, the judgment was affirmed. Reading the record of the lower court by the opinion and judgment of this court, it must be considered that the matters adjudged in that case were these: that the bonds were void as against the county in the hands of parties who did not acquire them before maturity and give value for them, and that the plaintiff, not having proved that he gave such value, was not entitled to recover upon the coupons. Whatever illegality or fraud there was in the issue and delivery to the contractor of the bonds affected equally the coupons for interest attached to them. The finding and judgment upon the invalidity of the bonds, as against the county, must be held to estop the plaintiff here from averring to the contrary. But as the bonds were negotiable instruments, and their issue was authorized by a vote of the county, and they recite on their face a compliance with the law providing for their issue, they would be held as valid obligations against the county in the hands of a bona fide holder taking them for value before maturity, according to repeated decisions of this court upon the character of such obligations. If, therefore, the plaintiff received the bond and coupons in suit before maturity for value, as he offered to prove, he should have been permitted to show that fact. There was [360] nothing adjudged in the former action in the finding that the plaintiff had not made such proof in that case which can preclude the present plaintiff from making such proof here. The fact that a party may not have shown that he gave value for one bond or coupon is not even presumptive, much less conclusive, evidence that he may not have given value for another and different bond or coupon. The exclusion of the evidence offered by the plaintiff was erroneous, and for the ruling of the court in that respect the judgment must be reversed and a new trial had.

Upon the second question presented, we think the court below ruled correctly. Evidence showing that the action of Smith was brought for the sole use and benefit of the present plaintiff was, in our judgment, admissible. The finding that Smith was the holder and owner of the coupons in suit went only to this extent, that he held the legal title to them, which was sufficient for the purpose of the action, and was not inconsistent with an equitable and beneficial interest in another.

Judgment reversed, and cause remanded for a new trial.

MR. JUSTICE CLIFFORD dissenting.

Ten bonds, each for the sum of $1,000, were issued by the county for the purpose of erecting a court-house in the county seat of the county; and it appears that the bonds were made payable to bearer, one each succeeding year, till the whole were paid, with interest at the rate of ten per cent per annum. Four of the bonds are the subject of the present controversy, and the defence is the estoppel of a prior judgment in favor of the county in a suit brought to collect certain of the interest warrants annexed to the bonds.

Sufficient appears to show that the bonds were in due form, and that they contain the recital that they "were issued by the county, in accordance with the vote of the legal voters thereof, at a special election holden on the day therein mentioned, pursuant to a proclamation made by the county judge, according to the statute of the State in such case made and provided."

Annexed to the bonds were the coupons for the payment of the annual interest, and the plaintiff in the prior suit, being [361] the holder of twenty-five of the coupons, instituted the suit to recover the amount, and he alleged in his declaration that he was the holder and owner of the same; that he received the coupons in good faith before their maturity, and that he paid value for the same at the time of the transfer; that the bonds and coupons were issued by the county under and by virtue of a legal and competent authority, and that the same are valid and legal claims against the corporation.

Most of the allegations of the declaration were denied in the answer; but the defendants did not specifically deny that the plaintiff paid value for the coupons at the time he became the holder and owner.

Special findings of the facts were made by the court, from which it appears that the question whether a court-house should be built, and whether a tax sufficient to liquidate the expense should be levied, were duly submitted to the voters of the county; that the propositions were adopted at a special election held for the purpose; that the county judge made the contract for the erection of the court-house; and that he duly executed the ten bonds in question, and delivered the same to the contractor, in pursuance of the contract.

Proof of a satisfactory character was exhibited that the contract between the judge and the contractor was made in the county where the judge resided: but the court found that the bonds were signed, sealed, and delivered by the judge during his temporary absence in another county; and the findings show that the plaintiff became the owner and holder of the coupons before maturity and after the proceedings were correctly entered in the minute-book; nor is it found that the plaintiff had any notice whatever of the supposed irregularities.

Evidence of fraud in the inception of the contract is entirely wanting, except what may be inferred from the unexplained fact that the contractor gave one of the bonds, as a gratuity, to the county judge as soon as he delivered the same to the contractor. Beyond all doubt, the contractor proved to be unworthy, as he never performed his contract, or paid back the consideration.

Judgment was rendered for the defendants in the court below; and the majority of this court affirmed the judgment, [362] holding that the evidence showed that the bonds were fraudulent in their inception, and that the plaintiff could not recover, inasmuch as he did not prove affirmatively that he paid value for the bonds.

Authorities are not necessary to show that the transferee of a negotiable instrument made payable to bearer, subsequent to its date, holds it clothed with the presumption that it was negotiated to him at the time of its execution, in the usual course of business and for value, and without notice of any equities between the prior parties to the instrument. Goodman v. Harvey, 4 A. & E. 870; Goodman v. Simonds, 20 How 365; Noxon v. De Wolf, 10 Gray, 346; Ranger v. Cary, 1 Met. 373.

Coupons are written contracts for the payment of a definite sum of money on a given day, and, being drawn and executed in a given mode, for the very purpose that they may be separated from the bonds, it is held that they are negotiable, and that a suit may be maintained on them without the necessity of producing the bonds to which they were attached. Knox County v. Aspinwall, 21 How. 544; White v. Railroad, 21 id. 575; Aurora v. West, 7 Wall. 105; Murray v. Lardner, 2 id. 121.

Possession of the instrument is plenary evidence of title until other evidence is produced to control it, the holder being entitled to the same privileges and immunities as an indorsee of a bill of exchange or promissory note payable to bearer or indorsed in blank. He is not subject to any equities as between the promisor and original payee, nor to the set-off of any debt, legal or equitable, which the latter may owe to the former. Pettee v. Prout, 3 Gray, 503.

Title and possession are one and inseparable to clothe the instrument with the prima facie presumption that it was indorsed at the date of its execution, and that the holder paid value for it, and received it in good faith in the usual course of business, without notice of any prior equities. Evidence to show that he paid value for the instrument is unnecessary in the opening of his case; but the defendant may, if he can, give evidence that the consideration was illegal, that the instrument was fraudulent in its inception, or that it had been lost or stolen [363] before it was negotiated to the plaintiff; and, if the defendant proves such a defence, it will follow that it must prevail, unless the plaintiff proves that he gave value for the instrument in the usual course of business, in which event he is still entitled to recover. Fitch v. Jones, 5 El. & Bl. 238; Smith v. Braine, 16 Q.B. 243; Hall v. Featherstone, 3 Hurls. & Nor. 287.

Applying that rule to the case as it was first presented, it would seem that the plaintiff should have prevailed, as it is clear that the defendant did not give any sufficient evidence to show that the consideration of the instruments was illegal, or that they were fraudulent in their inception, or that they had been lost or stolen before the plaintiff became the holder of the same, without notice of any prior equities.

Suffice it to remark, in this connection, that these views were urged against the former judgment; but they did not prevail, and the judgment was rendered for the defendant, which is unreversed and in full force. Suit is now brought upon the bonds to which those coupons were attached, and the sole question of any importance is whether the judgment in the former case is a bar to the present suit.

Nothing can be more certain in legal decision than the proposition that the title to the bonds and coupons are the same, as the coupons were annexed to the bonds when the bonds were executed and delivered to the original holder, in pursuance of the contract for building the court-house; and it is equally certain, that if it could be proved in defence that the consideration was illegal, or that the instruments were fraudulent in their inception, or that they had been lost or stolen before they were negotiated to the holder, the defence would apply to the bonds as well as the coupons.

Before proceeding to examine the legal question, it should be remarked that the former suit was prosecuted in the name of a different plaintiff; but the theory of the present defendants is that the present plaintiff was the real owner of the coupons in that action, and that the action was prosecuted for his sole use and benefit. Testimony to prove that theory was offered in the court below, and the majority of the court now hold that evidence to prove that proposition was properly admitted. Assume that to be so, and it follows that the parties, in legal [364] contemplation, are the same; nor can it be denied that the cause of action, within the meaning of that requirement, as expounded and defined by decided cases of the highest authority, is the same as that in the former action, the rule being that the legal effect of the former judgment as a bar is not impaired, because the subject-matter of the second suit is different, provided the second suit involves the same title and depends upon the same question. Outram v. Morewood, 3 East, 346.

Holders of negotiable securities, as well as every other plaintiff litigant, are entitled to a full trial upon the merits of the cause of action; but if in such a trial judgment be rendered for the defendant, whether it be upon the verdict of a jury or upon a demurrer to a sufficient declaration, or to a material pleading involving the whole merits, the plaintiff can never after maintain against the same defendant or his privies any similar or concurrent action for the same cause, upon the same grounds as those disclosed in the first declaration, for the reason that the judgment, under such circumstances, determines the merits of the controversy, and a final judgment deciding the right must put an end to the dispute, else the litigation would be endless. Rex v. Kingston, 20 State Trials, 588; Kitchen v. Campbell, 2 W. Bl. 831; Clearwater v. Meredith, 1 Wall. 43; Ricardo v. Garcias, 12 Cl. & Fin. 400.

Allegations of an essential character may be omitted in the first declaration and be supplied in the second, in which event the judgment on demurrer in the first suit is not a bar to the second, for the reason that the merits of the cause as disclosed in the second declaration were not heard and decided in the first action. Gilman v. Rives, 10 Pet. 298; Richardson v. Barton, 24 How. 188; Aurora City v. West, 7 Wall. 90.

Where the parties and the cause of action are the same, the prima facie presumption is that the questions presented for decision were the same, unless it appears that the merits of the controversy were not involved in the issue, the rule in such a case being that where every objection urged in the second suit was open to the party within the legitimate scope of the pleadings in the first suit, and that the whole defence might have been presented in that trial, the matter must be considered as having passed in rem judicatam, and the former judgment [365] in such a case is conclusive between the parties. Outram v. Morewood, 3 East, 358; Greathead v. Broomley, 7 Term, 452.

Except in special cases, the plea of res judicata applies not only to points upon which the court was actually required to form an opinion and pronounce judgment, but to every point which properly belonged to the subject of the issue, and which the parties, exercising reasonable diligence, might have brought forward at the time. 2 Taylor, Evid. sect. 1513.

Other text-writers of high authority substantially concur in that view; as, for example, Mr. Greenleaf says that "the rule should apply only to that which was directly in issue, and not to every thing which was incidentally brought into controversy during the trial;" and the reason given for that limitation is worthy of notice, which is, that the evidence must correspond with the allegations, and be confined to the point in issue; and he remarks that it is only to the material allegations of one party that the other can be called to answer, for to such alone can testimony be regularly adduced, and upon such an issue only is judgment to be rendered. Pursuant to those suggestions, he states his conclusion as follows: "A record, therefore, is not held conclusive as to the truth of any allegations which were not material nor traversable, but as to things material and traversable it is conclusive and final."

Unless the court, in rendering the former judgment, was called upon to determine the merits, the judgment is never a complete bar; and it is safe to add, that, if the trial went off on a technical defect, or because the debt was not yet due, or because the court had not jurisdiction, or because of a temporary disability of the plaintiff or the like, the judgment will be no bar to a future action. 1 Greenl. Evid. sect. 330.

Since the resolution in Ferrer's Case, 6 Coke, 7, the general principle has always been conceded, that, when one is barred in any action, real or personal, by judgment or demurrer, confession or verdict, he is barred as to that or a similar action of the like nature for the same thing for ever. Demurrer for want of equity in such a case is allowed in chancery, because the whole matter in controversy is open in the first suit.

Contrary to that rule, a party brought a second bill of complaint, [366] and the Vice-Chancellor, in disposing of the case, expressed himself as follows: —

"Where a given matter becomes the subject of litigation in and of adjudication by a court of competent jurisdiction, the court requires the parties to bring forward their whole case, and will not, except under special circumstances, permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because the party has, from negligence, omitted part of his case."

And he added that the plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. Henderson v. Henderson, 3 Hare, Ch. 115; Bagot v. Williams, 3 B. & C. 241; Roberts v. Heine, 27 Ala. 678; Safford v. Clark, 2 Bing. 382; Miller v. Covert, 1 Wend. 487.

When a fact has been once determined in the course of a judicial proceeding, say the Supreme Court of Massachusetts, and final judgment has been rendered in accordance therewith, it cannot be again litigated between the same parties without virtually impeaching the correctness of the former decision, which, from motives of public policy, the law does not permit to be done; and they proceed to say that the estoppel is not confined to the judgment, but extends to all facts involved in it, as necessary steps, or the groundwork upon which it must have been founded. Burlen v. Shannon, 99 Mass. 203; Queen v. Hartington, 4 El. & Bl. 794; Gilbert v. Thompson, 9 Cush. 349.

Extended explanations upon the subject of estoppel by a prior judgment were made by this court nearly twenty years ago, by a judge very competent to perform that duty. Steam Packet Company v. Sickles, 24 How. 342. Such a judgment, he said, in order that it may operate as an estoppel, must have been made by a court of competent jurisdiction upon the same subject-matter between the same parties for the same purpose. He then proceeded to describe the cause of action in that case, [367] which, as he stated, was a sum of money, being a part of the consideration or price for the use of a valuable machine for which the plaintiffs had a patent; that the sum demanded was the complement of a whole, of which the sum demanded in the declaration in the former suit is the other part. Both declarations contained similar special counts; and the court remarked, that a decision in the one suit on those counts in favor of the plaintiffs necessarily included and virtually determined the sufficiency of the declaration to sustain the title of the plaintiffs, and showed that the record was admissible in evidence.

Different views were entertained by the defendants, and they submitted the proposition that a judgment was not admissible in evidence as an estoppel, unless the record showed that the very point it is sought to estop was distinctly presented by an issue, and that it was expressly found by the jury; but the court remarked, that such a rule would be impracticable, as it would restrict the operation of res judicata within too narrow bounds, and the court decided that it was not necessary as between parties and privies that the record should show that matter of the estoppel was directly in issue, "but only that the said matter in controversy might have been litigated, and that extrinsic evidence would be admitted to prove that the particular question was material and was in fact contested, and that it was referred to the decision of the jury."

Attempt was made in that case to maintain the proposition that the judgment in the first suit could not be held to be an estoppel, unless it was shown by the record that the very point in controversy was distinctly presented by an issue, and that it was explicitly found by the jury; but the court held otherwise, and expressly overruled the proposition, although the defence of estoppel failed for other reasons.

Two notes, in another case, were given by the purchaser of a vessel to the vendor of the same, and payment of the first note being refused, the payee sued the maker; and the maker, at the trial, set up as a defence that the vessel was rotten and unseaworthy at the time of sale, and that those facts were known to the plaintiff. They went to trial, and the verdict and judgment were for the defendant. Subsequently the plaintiff sued [368] the other note, and the defendant set up the judgment in the other case as a bar to the suit; and the Supreme Court of New York sustained the defence, holding that the former judgment, whether pleaded as an estoppel or given in evidence under the general issue, was conclusive that the sale was fraudulent, and that the plaintiff could not recover in the second action. Gardner v. Buckbee, 3 Cow. 127.

Certain sums of money, in a later case, were paid by a surety on two bonds given by an importer, in which the plaintiff and defendant were sureties. They were jointly liable; but the plaintiff paid the whole amount, and brought suit against the other surety for contribution. Service was made; and the defendant appeared and set up the defence that he had been released, with the consent of the plaintiff, before the payment was made; and the court sustained the defence upon demurrer, and gave judgment for the defendant.

Moneys were also paid by the same surety to discharge the liability under the second bond. Contribution being refused, the plaintiff brought a second suit, and the defendant set up the former judgment as a bar; and the court sustained the defence, it appearing that both bonds were given at the same time upon the same consideration, and as part of one and the same transaction. Bouchard v. Dias, 3 Den. 243.

Neither of the second suits in the two preceding cases were for the same cause of action as the first, but the defence was sustained as in Outram v. Morewood, 3 East, 358, because the suit was founded upon the same title.

Cases of that kind are quite numerous, and they show to a demonstration that a judgment may be a bar if the same title is involved, even though the cause of action may be founded on a different instrument, or for a different trespass upon the same premises.

Conclusive support to that proposition is found in repeated decisions, of which the following are striking examples: Burt v. Sternburgh, 4 Cow. 563; Whittaker v. Jackson, 2 Hurlst. & Colt. 931; Strutt v. Bovingdon, 5 Esp. 59.

In order to make a judgment conclusive, it is not necessary, said Mr. Justice Bigelow, that the cause of action should be the same in the first suit as that in which the judgment is pleaded [369] or given in evidence, but it is essential that the issue should be the same. The judgment is then coextensive with the issue on which it is founded, and is conclusive only so far as the same fact or title is again in dispute. Merriam v. Whittemore, 5 Gray, 317.

Decided cases in that State to the same effect are numerous, the highest court of the State holding that it is well settled that a judgment in a former suit between the same parties is a bar to a subsequent action only when the point or question in issue is the same in both; that the judgment is conclusive in relation to all matters in the suit which were put in issue, but has no effect upon questions not involved in the issue, and which were neither open to inquiry nor the subjects of litigation. Norton v. Huxley, 13 id. 290.

Damages were claimed by the plaintiff for the loss of his shop by fire communicated to it by the defendants' locomotive engine, and he recovered judgment for the injury. He subsequently brought a second suit, for the loss of his dwelling-house and shed by fire, it appearing that the house and shed took fire from the shop. Process being served, the defendants appeared and set up the former judgment as a bar. The court sustained the defence, holding that the plaintiff did not show any right to maintain another action merely by proving his omission to produce upon the trial all the evidence which was admissible in his behalf, and that having chosen to submit his case upon the evidence introduced, he was bound to abide by the verdict and judgment in the first suit. Trask v. Railroad, 2 Allen, 332.

Where a party took a bill of sale of property from the owner, and the same was subsequently attached by an officer at the suit of the creditors of the former owner, and the purchaser under the bill of sale having converted part of the property to his own use was sued by the officer, and the latter recovered judgment upon the ground that the bill of sale was fraudulent and void as to the creditors, it was held that the judgment was a bar to a subsequent suit of replevin commenced by the grantee in the bill of sale for the residue of the property in the hands of the officer. Doty v. Brown, 4 Comst. 75.

Beyond question, the bar is not defeated because the subject-matter [370] of the second suit is different from the first, if it be founded on the same title; and the Supreme Court of Pennsylvania have held, in accordance with that view, that a judgment in trespass upon a traverse of liberum tenementum estops the party against whom it has been rendered, and his privies, from afterward controverting the title to the same freehold in a subsequent action of trespass. Stevens v. Hughes, 31 Penn. St. 385; Hatch v. Garza, 22 Tex. 187; Clark v. Sammons, 12 Iowa, 370.

Tested by these several considerations, it is clear that a former judgment is a bar in all cases where the matters put in issue in the first suit were the same as the matters in issue in the second suit. Ricardo v. Garcias, 12 Cl. & Fin. 401; Beloit v. Morgan. 7 Wall. 623. "It results from these authorities that an adjudication by a competent tribunal is conclusive, not only in the proceeding in which it is pronounced, but in every other where the right or title is the same, although the cause of action may be different." 2 Smith, Lead. Cas. (7th Am. ed.) 788, 789; Bigelow on Estoppel (2d ed.), 45; Aurora City v. West, 7 Wall. 96; Outram v. Morewood, 3 East, 346; Gould v. Railroad Company, 91 U.S. 526.

Grant that, and still it is suggested that the plaintiff in the suit on the coupons did not introduce evidence to prove that he paid value for the bonds with the coupons; but the answer to that is, that he might have done so. He alleged in the declaration that he paid value, and consequently he might have given evidence to prove it, which shows that the question was directly involved in the issue between the parties.

Doubtless the plaintiff neglected to give evidence in that behalf, for the reason that he and his counsel were of the opinion that the evidence introduced by the defendants was not sufficient to repel the prima facie presumption, arising from his possession of the instruments, that he paid value for the transfer, and I am still of that opinion; but the remedy of the plaintiff, if surprised, was to except to the ruling, or to submit a motion for new trial.

Suggestions of that sort are now too late, nor are they sufficient to modify the effect of the judgment. When once finally rendered, the judgment must be considered conclusive, else litigation [371] will be endless. Litigants sometimes prefer not to bring forward their whole case or defence, in order to enjoy the opportunity to bring up a reserve in case of defeat in the first contest; but a rule which would sanction that practice would be against public policy, as it would enable a party to protract the litigation as long as he could find means or credit to compel the attendance of witnesses and to secure the services of counsel.

Joseph Brenner for Appellant.

Louis Ferrari, Edmund Nelson and G. L. Berrey for Respondent.

TRAYNOR, J.

In June, 1933, Mrs. Clara Sather, an elderly woman, made her home with Mr. and Mrs. Charles [809] O. Cook in San Dimas, California. Because of her failing health, she authorized Mr. Cook and Dr. Joseph Zeiler to make drafts jointly against her commercial account in the Security First National Bank of Los Angeles. On August 24, 1933, Mr. Cook opened a commercial account at the First National Bank of San Dimas in the name of "Clara Sather by Charles O. Cook." No authorization for this account was ever given to the bank by Mrs. Sather. Thereafter, a number of checks drawn by Cook and Zeiler on Mrs. Sather's commercial account in Los Angeles were deposited in the San Dimas account and checks were drawn upon that account signed "Clara Sather by Charles O. Cook" to meet various expenses of Mrs. Sather.

On October 26, 1933, a teller from the Los Angeles Bank called on Mrs. Sather at her request to assist in transferring her money from the Los Angeles Bank to the San Dimas Bank. In the presence of this teller, the cashier of the San Dimas Bank, Mr. Cook, and her physician, Mrs. Sather signed by mark an authorization directing the Security First National Bank of Los Angeles to transfer the balance of her savings account in the amount of $4,155.68 to the First National Bank of San Dimas. She also signed an order for this amount on the Security First National Bank of San Dimas "for credit to the account of Mrs. Clara Sather." The order was credited by the San Dimas Bank to the account of "Clara Sather by Charles O. Cook." Cook withdrew the entire balance from that account and opened a new account in the same bank in the name of himself and his wife. He subsequently withdrew the funds from this last mentioned account and deposited them in a Los Angeles Bank in the names of himself and his wife.

Mrs. Sather died in November, 1933. Cook qualified as executor of the estate and proceeded with its administration. After a lapse of several years he filed an account at the instance of the probate court accompanied by his resignation. The account made no mention of the money transferred by Mrs. Sather to the San Dimas Bank; and Helen Bernhard, Beaulah Bernhard, Hester Burton, and Iva LeDoux, beneficiaries under Mrs. Sather's will, filed objections to the account for this reason. After a hearing on the objections the court settled the account, and as part of its order declared that [810] the decedent during her lifetime had made a gift to Charles O. Cook of the amount of the deposit in question.

After Cook's discharge, Helen Bernhard was appointed administratrix with the will annexed. She instituted this action against defendant, the Bank of America, successor to the San Dimas Bank, seeking to recover the deposit on the ground that the bank was indebted to the estate for this amount because Mrs. Sather never authorized its withdrawal. In addition to a general denial, defendant pleaded two affirmative defenses: (1) that the money on deposit was paid out to Charles O. Cook with the consent of Mrs. Sather and (2) that this fact is res judicata by virtue of the finding of the probate court in the proceeding to settle Cook's account that Mrs. Sather made a gift of the money in question to Charles O. Cook and "owned no sums of money whatsoever" at the time of her death. Plaintiff demurred to both these defenses, and objected to the introduction in evidence of the record of the earlier proceeding to support the plea of res judicata. She also contended that the probate court had no jurisdiction to pass upon. Cook's ownership of the money because the executor resigned before the filing of the objections. This last contention was answered before judgment was entered, by the decision of this court in Waterland v. Superior Court, 15 Cal.2d 34 [98 PaCal.2d 211], holding that the probate court has jurisdiction in such a situation. The trial court overruled the demurrers and objection to the evidence, and gave judgment for defendant on the ground that Cook's ownership of the money was conclusively established by the finding of the probate court. Plaintiff has appealed, denying that the doctrine of res judicata is applicable to the instant case or that there was a valid gift of the money to Cook by Mrs. Sather.

Plaintiff contends that the doctrine of res judicata does not apply because the defendant who is asserting the plea was not a party to the previous action nor in privity with a party to that action and because there is no mutuality of estoppel.

The doctrine of res judicata precludes parties or their privies from relitigating a cause of action that has been finally determined by a court of competent jurisdiction. Any issue necessarily decided in such litigation is conclusively determined as to the parties or their privies if it is involved in a subsequent lawsuit on a different cause of action. (See cases cited in 2 Freeman, Judgments (5th ed.) sec. 627; 2 Black, [811] Judgments (2d ed.), sec. 504; 34 C.J. 742 et seq.; 15 Cal.Jur. 97.) The rule is based upon the sound public policy of limiting litigation by preventing a party who has had one fair trial on an issue from again drawing it into controversy. (See cases cited in 38 Yale L. J. 299; 2 Freeman, Judgments (5th ed.), sec. 626; 15 Cal.Jur. 98.) The doctrine also serves to protect persons from being twice vexed for the same cause. (Ibid) It must, however, conform to the mandate of due process of law that no person be deprived of personal or property rights by a judgment without notice and an opportunity to be heard. (Coca Cola Co. v. Pepsi Cola Co., 36 Del. 124 [172 Atl. 260]. See cases cited in 24 Am. and Eng. Encyc. (2d ed.), 731; 15 Cinn. L. Rev. 349, 351; 82 Pa. L. Rev. 871, 872.)

Many courts have stated the facile formula that the plea of res judicata is available only when there is privity and mutuality of estoppel. (See cases cited in 2 Black, Judgments (2d. ed.), secs. 534, 548, 549; 1 Freeman, Judgments (5th ed.), secs. 407, 428; 35 Yale L. J. 607, 608; 34 C.J. 973, 988.) Under the requirement of privity, only parties to the former judgment or their privies may take advantage of or be bound by it. (Ibid) A party in this connection is one who is "directly interested in the subject matter, and had a right to make defense, or to control the proceeding, and to appeal from the judgment." (1 Greenleaf, Evidence (15th ed.), sec. 523. See cases cited in 2 Black, Judgments (2d ed.), sec. 534; 15 R. C. L. 1009 ^[134]; 9 Va. L. Reg. (N.S.) 241, 242; 15 Cal.Jur. 190; 34 C.J. 992.) A privy is one who, after rendition of the judgment, has acquired an interest in the subject matter affected by the judgment through or under one of the parties, as by inheritance, succession, or purchase. (See cases cited in 2 Black, Judgments (2d ed.), sec. 549; 35 Yale L. J. 607, 608; 34 C.J. 973, 1010, 1012; 15 R. C. L. 1016. ^[135]) The estoppel is mutual if the one taking advantage of the earlier adjudication would have been bound by it, had it gone against him. (See cases cited in 2 Black, Judgments (2d ed.), sec. 534, 548; 1 Freeman, Judgments (5th ed.), sec. 428; 35 Yale L. J. 607, 608; 34 C.J. 988; 15 R. C. L. 956. ^[136])

The criteria for determining who may assert a plea of res judicata differ fundamentally from the criteria for [812] determining against whom a plea of res judicata may be asserted. The requirements of due process of law forbid the assertion of a plea of res judicata against a party unless he was bound by the earlier litigation in which the matter was decided. (Coca Cola Co. v. Pepsi Cola Co., supra. See cases cited in 24 Am. & Eng. Encyc. (2d ed) 731; 15 Cinn. L. Rev. 349, 351; 82 Pa. L. Rev. 871, 872.) He is bound by that litigation only if he has been a party thereto or in privity with a party thereto. (Ibid) There is no compelling reason, however, for requiring that the party asserting the plea of res judicata must have been a party, or in privity with a party, to the earlier litigation.

No satisfactory rationalization has been advanced for the requirement of mutuality. Just why a party who was not bound by a previous action should be precluded from asserting it as res judicata against a party who was bound by it is difficult to comprehend. (See 7 Bentham's Works (Bowring's ed.) 171.) Many courts have abandoned the requirement of mutuality and confined the requirement of privity to the party against whom the plea of res judicata is asserted. (Coca Cola Co. v. Pepsi Cola Co., supra; Liberty Mutual Insur. Co. v. George Colon & Co., 260 N.Y. 305 [183 N.E. 506]; Atkinson v. White, 60 Me. 396; Eagle etc. Insur. Co. v. Heller, 149 Va. 82 [140 S.E. 314, 57 A.L.R. 490]; Jenkins v. Atlantic Coast Line R. Co., 89 S. C. 408 [71 S.E. 1010]; United States v. Wexler, 8 Fed.2d 880. See Good Health Dairy Food Products Corp. v. Emery, 275 N.Y. 14 [9 N.E. (2d) 758, 112 A.L.R. 401].) The commentators are almost unanimously in accord. (35 Yale L. J. 607; 9 Va. L. Reg. (N. S.) 241; 29 Ill. L. Rev. 93; 18 N.Y. U. L. Q. R. 565, 570; 12 Corn. L. Q. 92.) The courts of most jurisdictions have in effect accomplished the same result by recognizing a broad exception to the requirements of mutuality and privity, namely, that they are not necessary where the liability of the defendant asserting the plea of res judicata is dependent upon or derived from the liability of one who was exonerated in an earlier suit brought by the same plaintiff upon the same facts. (See cases cited in 35 Yale L. J. 607, 610; 9 Va. L. Reg. (N. S.) 241, 245-247; 29 Ill. L. Rev. 93, 94; 18 N.Y. U. L. Q. R. 565, 566-567; 34 C.J. 988-989.) Typical examples of such derivative liability are master and servant, principal and agent, and indemnitor and indemnitee. Thus, if a plaintiff sues a servant for injuries caused by the [813] servant's alleged negligence within the scope of his employment, a judgment against the plaintiff on the grounds that the servant was not negligent can be pleaded by the master as res judicata if he is subsequently sued by the same plaintiff for the same injuries. Conversely, if the plaintiff first sues the master, a judgment against the plaintiff on the grounds that the servant was not negligent can be pleaded by the servant as res judicata if he is subsequently sued by the plaintiff. In each of these situations the party asserting the plea of res judicata was not a party to the previous action nor in privity with such a party under the accepted definition of a privy set forth above. Likewise, the estoppel is not mutual since the party asserting the plea, not having been a party or in privity with a party to the former action, would not have been bound by it had it been decided the other way. The cases justify this exception on the ground that it would be unjust to permit one who has had his day in court to reopen identical issues by merely switching adversaries.

In determining the validity of a plea of res judicata three questions are pertinent: Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication? Estate of Smead, 219 Cal. 572 [28 PaCal.2d 348]; Silva v. Hawkins, 152 Cal. 138 [92 P. 72], and People v. Rodgers, 118 Cal. 393 [46 P. 740, 50 P. 668], to the extent that they are inconsistent with this opinion, are overruled.

In the present case, therefore, the defendant is not precluded by lack of privity or of mutuality of estoppel from asserting the plea of res judicata against the plaintiff. Since the issue as to the ownership of the money is identical with the issue raised in the probate proceeding, and since the order of the probate court settling the executor's account was a final adjudication of this issue on the merits (Prob. Code, sec. 931 [formerly Code Civ. Proc., sec. 1637]; see cases cited in 12 Cal.Jur. 62, 63; 15 Cal.Jur. 117, 120), it remains only to determine whether the plaintiff in the present action was a party or in privity with a party to the earlier proceeding. The plaintiff has brought the present action in the capacity of administratrix of the estate. In this capacity she represents the very same persons and interests that were represented in the earlier hearing on the executor's account. In [814] that proceeding plaintiff and the other legatees who objected to the executor's account represented the estate of the decedent. They were seeking not a personal recovery but, like the plaintiff in the present action, as administratrix, a recovery for the benefit of the legatees and creditors of the estate, all of whom were bound by the order settling the account. (Prob. Code, sec. 931. See cases cited in 12 Cal.Jur. 62, 63.) The plea of res judicata is therefore available against plaintiff as a party to the former proceeding, despite her formal change of capacity. "Where a party though appearing in two suits in different capacities is in fact litigating the same right, the judgment in one estops him in the other." (15 Cal.Jur. 189; Williams v. Southern Pacific Co., 54 Cal.App. 571 [202 P. 356]; Stevens v. Superior Court, 155 Cal. 148 [99 P. 512]; Estate of Bell, 153 Cal. 331 [95 P. 372]. See Chicago, R. & I. R. R. Co. v. Schendel, 270 U.S. 611 [46 S. Ct. 420, 70 L.Ed. 757]; Sunshine A. Coal Co. v. Adkins, 310 U.S. 381, 401 et seq. [60 S. Ct. 907, 84 L.Ed. 1263]; Lee Co. v. Federal Trade Com., 113 Fed.2d 583; and cases cited in 16 N.Y. U. L. Q. R. 158, 159; 38 Yale L. J. 299, 310; 54 Harv. L. Rev. 890.)

The judgment is affirmed.

Gibson, C.J., Shenk, J., Curtis, J., Edmonds, J., Houser, J., and Carter, J., concurred.

[134] *. 30 Am. Jur. Judgments 219-246.

[135] *. 30 Am. Jur. Judgments 219-246.

[136] *. 30 Am. Jur. Judgments 219-246.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT.

Robert H. Rines argued the cause for petitioner. With him on the brief were Richard S. Phillips, Paul J. Foley, and Nelson H. Shapiro.

William A. Marshall argued the cause for respondent University of Illinois Foundation. With him on the brief were Charles J. Merriam and Basil P. Mann. Sidney G. Faber argued the cause for respondent JFD Electronics Corp. With him on the brief were Jerome M. Berliner, Robert C. Faber, and Myron C. Cass.

Assistant Attorney General McLaren argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Griswold, Assistant Attorney General Gray, Peter L. Strauss, Howard E. Shapiro, and Walter H. Fleischer.

[314] Briefs of amici curiae were filed by Donald R. Dunner, James B. Gambrell, and W. Brown Morton, Jr., for the American Patent Law Association; by Theodore W. Anderson for the Automatic Electric Co.; by Harold F. McNenny, John F. Pearne, and Walther E. Wyss for the Finney Co.; and by Joseph B. Brennan and Richard D. Mason for the Kawneer Co., Inc.

MR. JUSTICE WHITE delivered the opinion of the Court.

Respondent University of Illinois Foundation (hereafter Foundation) is the owner by assignment of U. S. Patent No. 3,210,767, issued to Dwight E. Isbell on October 5, 1965. The patent is for "Frequency Independent Unidirectional Antennas," and Isbell first filed his application May 3, 1960. The antennas covered are designed for transmission and reception of electromagnetic radio frequency signals used in many types of communications, including the broadcasting of radio and television signals.

The patent has been much litigated since it was granted, primarily because it claims a high quality television antenna for color reception.^[1] One of the first infringement suits brought by the Foundation was filed in the Southern District of Iowa against the Winegard Co., an antenna manufacturer.^[2] Trial was to the court, and after pursuing the inquiry mandated by Graham v. John Deere Co., 383 U. S. 1, 17-18 (1966), Chief Judge Stephenson held the patent invalid since "it would have been obvious to one ordinarily skilled in the art and wishing to design a frequency independent unidirectional [315] antenna to combine these three old elements, all suggested by the prior art references previously discussed." University of Illinois Foundation v. Winegard Co., 271 F. Supp. 412, 419 (SD Iowa 1967) (footnote omitted).^[3] Accordingly, he entered judgment for the alleged infringer and against the patentee. On appeal, the Court of Appeals for the Eighth Circuit unanimously affirmed Judge Stephenson. 402 F. 2d 125 (1968). We denied the patentee's petition for certiorari. 394 U. S. 917 (1969).

In March 1966, well before Judge Stephenson had ruled in the Winegard case, the Foundation also filed suit in the Northern District of Illinois charging a Chicago customer of petitioner, Blonder-Tongue Laboratories, Inc. (hereafter B-T), with infringing two patents it owned by assignment: the Isbell patent and U. S. Patent No. Re. 25,740, reissued March 9, 1965, to P. E. Mayes et al. The Mayes patent was entitled "Log Periodic Backward Wave Antenna Array," and was, as indicated, a reissue of No. 3,108,280, applied for on September 30, 1960. B-T chose to subject itself to the jurisdiction of the court to [316] defend its customer, and it filed an answer and counterclaim against the Foundation and its licensee, respondent JFD Electronics Corp., charging: (1) that both the Isbell and Mayes patents were invalid; (2) that if those patents were valid, the B-T antennas did not infringe either of them; (3) that the Foundation and JFD were guilty of unfair competition; (4) that the Foundation and JFD had violated the "anti-trust laws of the United States, including the Sherman and Clayton Acts, as amended"; and (5) that certain JFD antenna models infringed B-T's patent No. 3,259,904, "Antenna Having Combined Support and Lead-In," issued July 5, 1966.

Trial was again to the court, and on June 27, 1968, Judge Hoffman held that the Foundation's patents were valid and infringed, dismissed the unfair competition and antitrust charges, and found claim 5 of the B-T patent obvious and invalid. Before discussing the Isbell patent in detail, Judge Hoffman noted that it had been held invalid as obvious by Judge Stephenson in the Winegard litigation. He stated:

"This court is, of course, free to decide the case at bar on the basis of the evidence before it. Triplett v. Lowell, 297 U. S. 638, 642 (1936). Although a patent has been adjudged invalid in another patent infringement action against other defendants, patent owners cannot be deprived `of the right to show, if they can, that, as against defendants who have not previously been in court, the patent is valid and infringed.' Aghnides v. Holden, 22[6] F. 2d 949, 951 (7th Cir. 1955). On the basis of the evidence before it, this court disagrees with the conclusion reached in the Winegard case and finds both the Isbell patent and the Mayes et al. patent valid and enforceable patents." App. 73.

[317] B-T appealed, and the Court of Appeals for the Seventh Circuit affirmed: (1) the findings that the Isbell patent was both valid and infringed by B-T's products; (2) the dismissal of B-T's unfair competition and antitrust counterclaims; and (3) the finding that claim 5 of the B-T patent was obvious. However, the Court of Appeals reversed the judgment insofar as Judge Hoffman had found the Mayes patent valid and enforceable, enjoined infringement thereof, and provided damages for such infringement. 422 F. 2d 769 (1970).

B-T sought certiorari, assigning the conflict between the Courts of Appeals for the Seventh and Eighth Circuits as to the validity of the Isbell patent as a primary reason for granting the writ.^[4] We granted certiorari, 400 U. S. 864 (1970), and subsequently requested the parties to discuss the following additional issues not raised in the petition for review:

"1. Should the holding of Triplett v. Lowell, 297 U. S. 638, that a determination of patent invalidity is not res judicata as against the patentee in subsequent litigation against a different defendant, be adhered to?

"2. If not, does the determination of invalidity in the Winegard litigation bind the respondents in this case?"

I

In Triplett v. Lowell, 297 U. S. 638 (1936), this Court held:

"Neither reason nor authority supports the contention that an adjudication adverse to any or all the claims of a patent precludes another suit upon the same claims against a different defendant. While [318] the earlier decision may by comity be given great weight in a later litigation and thus persuade the court to render a like decree, it is not res adjudicata and may not be pleaded as a defense." 297 U. S., at 642.

The holding in Triplett has been at least gently criticized by some judges. In its opinion in the instant case, the Court of Appeals for the Seventh Circuit recognized the Triplett rule but nevertheless remarked that it "would seem sound judicial policy that the adjudication of [the question of the Isbell patent's validity] against the Foundation in one action where it was a party would provide a defense in any other action by the Foundation for infringement of the same patent." 422 F. 2d, at 772.^[5]

[319] In its brief here, the Foundation urges that the rule of Triplett be maintained. Petitioner B-T's brief took the same position, stating that "[t]hough petitioners stand to gain by any such result, we cannot urge the destruction of a long-accepted safeguard for patentees merely for the expediency of victory." Brief for Petitioner 12. The Government, however, appearing as amicus curiae, urges that Triplett was based on uncritical acceptance of the doctrine of mutuality of estoppel, since limited significantly, and that the time has come to modify Triplett so that "claims of estoppel in patent cases [are] considered on a case by case basis, giving due weight to any factors which would point to an unfair or anomalous result from their allowance." Brief for the United States 7. The Government's position was spelled out in a brief filed more than a month after petitioner B-T filed its brief.

At oral argument the following colloquy occurred between the Court and counsel for B-T:

"Q. You're not asking for Triplett to be overruled?

"A. No, I'm not. I maintain that my brother here did have a right if there was a genuine new issue or some other interpretation of the [patent] claim or some interpretation of law in another circuit that's different than this Circuit, he had a right to try, under Triplett below, in another circuit.

"In this particular case, where we're stuck with substantially the same documentary evidence, where we were not able to produce [in the Seventh Circuit] even that modicum of expert testimony that existed in the Eighth Circuit, we think there may be as suggested by the Solicitor General, some reason for modification of that document [sic] in a case such as this." Tr. of Oral Arg. 7-8.

[320] In light of this change of attitude from the time petitioner's brief was filed, we consider that the question of modifying Triplett is properly before us.^[6]

II

Triplett v. Lowell exemplified the judge-made doctrine of mutuality of estoppel, ordaining that unless both parties (or their privies) in a second action are bound by a judgment in a previous case, neither party (nor his privy) in the second action may use the prior judgment as determinative [321] of an issue in the second action. Triplett was decided in 1936. The opinion stated that "the rules of the common law applicable to successive litigations concerning the same subject matter" did not preclude "relitigation of the validity of a patent claim previously held invalid in a suit against a different defendant." 297 U. S., at 644. In Bigelow v. Old Dominion Copper Co., 225 U. S. 111, 127 (1912), the Court had stated that it was "a principle of general elementary law that the estoppel of a judgment must be mutual."^[7] The same [322] rule was reflected in the Restatement of Judgments. Restatement of Judgments § 93 (1942).^[8]

But even at the time Triplett was decided, and certainly by the time the Restatement was published, the mutuality rule had been under fire. Courts had discarded the requirement of mutuality and held that only the party against whom the plea of estoppel was asserted had to have been in privity with a party in the prior action.^[9] As Judge Friendly has noted, Bentham had attacked [323] the doctrine "as destitute of any semblance of reason, and as `a maxim which one would suppose to have found its way from the gaming-table to the bench' . . . ." Zdanok v. Glidden Co., 327 F. 2d 944, 954 (CA2 1964), cert. denied, 377 U. S. 934 (1964) (quoting 3 J. Bentham, Rationale of Judicial Evidence 579 (1827), reprinted in 7 Works of Jeremy Bentham 171 (J. Bowring ed. 1843)). There was also ferment in scholarly quarters.^[10]

Building upon the authority cited above, the California Supreme Court, in Bernhard v. Bank of America Nat. Trust & Savings Assn., 19 Cal. 2d 807, 122 P. 2d 892 (1942), unanimously rejected the doctrine of mutuality, stating that there was "no compelling reason . . . for requiring that the party asserting the plea of res judicata must have been a party, or in privity with a party, to the earlier litigation." Id., at 812, 122 P. 2d, at 894. Justice Traynor's opinion, handed down the same year the Restatement was published, listed criteria since employed by many courts in many contexts:

"In determining the validity of a plea of res judicata three questions are pertinent: Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the plea is asserted a party or in [324] privity with a party to the prior adjudication?" 19 Cal. 2d, at 813, 122 P. 2d, at 895.

Although the force of the mutuality rule had been diminished by exceptions and Bernhard itself might easily have been brought within one of the established exceptions, "Justice Traynor chose instead to extirpate the mutuality requirement and put it to the torch." Currie, Civil Procedure: The Tempest Brews, 53 Calif. L. Rev. 25, 26 (1965).

Bernhard had significant impact. Many state and federal courts rejected the mutuality requirement, especially where the prior judgment was invoked defensively in a second action against a plaintiff bringing suit on an issue he litigated and lost as plaintiff in a prior action.^[11] The trend has been apparent in federal-question cases.^[12] The federal courts found Bernhard persuasive. As Judge Hastie stated more than 20 years ago:

"This second effort to prove negligence is comprehended by the generally accepted precept that a party who has had one fair and full opportunity to prove a claim and has failed in that effort, should not be permitted to go to trial on the merits of that claim a second time. Both orderliness and reasonable time saving in judicial administration require that [325] this be so unless some overriding consideration of fairness to a litigant dictates a different result in the circumstances of a particular case.

"The countervailing consideration urged here is lack of mutuality of estoppel. In the present suit [the plaintiff] would not have been permitted to take advantage of an earlier affirmative finding of negligence, had such finding been made in [his first suit against a different defendant]. For that reason he argues that he should not be bound by a contrary finding in that case. But a finding of negligence in the [plaintiff's first suit] would not have been binding against the [defendant in a second suit] because [that defendant] had no opportunity to contest the issue there. The finding of no negligence on the other hand was made after full opportunity to [plaintiff] on his own election to prove the very matter which he now urges a second time. Thus, no unfairness results here from estoppel which is not mutual. In reality the argument of [plaintiff] is merely that the application of res judicata in this case makes the law asymmetrical. But the achievement of substantial justice rather than symmetry is the measure of the fairness of the rules of res judicata." Bruszewski v. United States, 181 F. 2d 419, 421 (CA3 1950), cert. denied, 340 U. S. 865 (1950).

Many federal courts, exercising both federal question and diversity jurisdiction, are in accord unless in a diversity case bound to apply a conflicting state rule requiring mutuality.^[13]

[326] Of course, transformation of estoppel law was neither instantaneous nor universal. As late as 1961, eminent authority stated that "[m]ost state courts recognize and apply the doctrine of mutuality, subject to certain exceptions. . . . And the same is true of federal courts, when free to apply their own doctrine." Moore & Currier, Mutuality and Conclusiveness of Judgments, 35 Tul. L. Rev. 301, 304 (1961) (footnotes omitted); see also, 1B J. Moore, Federal Practice ¶ 0.412 [1], pp. 1803-1804 (1965). However, in 1970 Professor Moore noted that "the trend in the federal courts is away from the rigid requirements of mutuality advocated herein." Id., Supp. 1970, at 53. The same trend is evident in the state courts.^[14]

[327] Undeniably, the court-produced doctrine of mutuality of estoppel is undergoing fundamental change in the common-law tradition. In its pristine formulation, an increasing number of courts have rejected the principle as unsound. Nor is it irrelevant that the abrogation of mutuality has been accompanied by other developments —such as expansion of the definition of "claim" in bar and merger contexts^[15] and expansion of the preclusive effects afforded criminal judgments in civil litigation^[16]— which enhance the capabilities of the courts to deal with some issues swiftly but fairly.

Obviously, these mutations in estoppel doctrine are not before us for wholesale approval or rejection. But at the very least they counsel us to re-examine whether mutuality of estoppel is a viable rule where a patentee seeks to relitigate the validity of a patent once a federal court has declared it to be invalid.^[17]

[328] III

The cases and authorities discussed above connect erosion of the mutuality requirement to the goal of limiting relitigation of issues where that can be achieved without compromising fairness in particular cases. The courts have often discarded the rule while commenting on crowded dockets and long delays preceding trial. Authorities differ on whether the public interest in efficient judicial administration is a sufficient ground in and of itself for abandoning mutuality,^[18] but it is clear that more than crowded dockets is involved. The broader question is whether it is any longer tenable to afford a litigant more than one full and fair opportunity for judicial resolution of the same issue. The question in these terms includes as part of the calculus the effect on judicial administration, but it also encompasses the concern exemplified by Bentham's reference to the gaming table in his attack on the principle of mutuality of estoppel. [329] In any lawsuit where a defendant, because of the mutuality principle, is forced to present a complete defense on the merits to a claim which the plaintiff has fully litigated and lost in a prior action, there is an arguable misallocation of resources. To the extent the defendant in the second suit may not win by asserting, without contradiction, that the plaintiff had fully and fairly, but unsuccessfully, litigated the same claim in the prior suit, the defendant's time and money are diverted from alternative uses—productive or otherwise—to relitigation of a decided issue. And, still assuming that the issue was resolved correctly in the first suit, there is reason to be concerned about the plaintiff's allocation of resources. Permitting repeated litigation of the same issue as long as the supply of unrelated defendants holds out reflects either the aura of the gaming table or "a lack of discipline and of disinterestedness on the part of the lower courts, hardly a worthy or wise basis for fashioning rules of procedure." Kerotest Mfg. Co. v. C-O-Two Co., 342 U. S. 180, 185 (1952). Although neither judges, the parties, nor the adversary system performs perfectly in all cases, the requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most significant safeguard.

Some litigants—those who never appeared in a prior action—may not be collaterally estopped without litigating the issue. They have never had a chance to present their evidence and arguments on the claim. Due process prohibits estopping them despite one or more existing adjudications of the identical issue which stand squarely against their position. See Hansberry v. Lee, 311 U. S. 32, 40 (1940); Bernhard, 19 Cal. 2d, at 811, 122 P. 2d, at 894. Also, the authorities have been more willing to permit a defendant in a second suit to invoke an estoppel against a plaintiff who lost on the same claim in an earlier suit than they have been to allow a plaintiff [330] in the second suit to use offensively a judgment obtained by a different plaintiff in a prior suit against the same defendant.^[19] But the case before us involves neither due process nor "offensive use" questions. Rather, it depends on the considerations weighing for and against permitting a patent holder to sue on his patent after it has once been held invalid following opportunity for full and fair trial.

There are several components of the problem. First, we analyze the proposed abrogation or modification of the Triplett rule in terms of those considerations relevant to the patent system. Second, we deal broadly with the economic costs of continued adherence to Triplett. Finally, we explore the nature of the burden, if any, that permitting patentees to relitigate patents once held invalid imposes on the federal courts.

A

Starting with the premise that the statutes creating the patent system, expressly sanctioned by the Constitution,^[20] represent an affirmative policy choice by Congress to reward inventors, respondents extrapolate a special public interest in sustaining "good" patents and characterize patent litigation as so technical and difficult as to present unusual potential for unsound adjudications. Although Triplett made no such argument in support of its holding, that rule, offering the unrestricted right to [331] relitigate patent validity, is thus deemed an essential safeguard against improvident judgments of invalidity.^[21]

We fully accept congressional judgment to reward inventors through the patent system. We are also aware that some courts have frankly stated that patent litigation can present issues so complex that legal minds, without appropriate grounding in science and technology, may have difficulty in reaching decision.^[22] On the other hand, this Court has observed that issues of nonobviousness under 35 U. S. C. § 103 present difficulties "comparable to those encountered daily by the courts in such frames of reference as negligence and scienter, and should be amenable to a case-by-case development." Graham v. John Deere Co., 383 U. S., at 18. But assuming a patent case so difficult as to provoke a frank admission of judicial uncertainty, one might ask what reason there is to expect that a second district judge or court of [332] appeals would be able to decide the issue more accurately. Moreover, as Graham also indicates, Congress has from the outset chosen to impose broad criteria of patentability while lodging in the federal courts final authority to decide that question. 383 U. S., at 10. In any event it cannot be sensibly contended that all issues concerning patent validity are so complex and unyielding. Nonobviousness itself is not always difficult to perceive and decide and other questions on which patentability depends are more often than not no more difficult than those encountered in the usual nonpatent case.^[23]

Even conceding the extreme intricacy of some patent cases, we should keep firmly in mind that we are considering the situation where the patentee was plaintiff in the prior suit and chose to litigate at that time and place. Presumably he was prepared to litigate and to litigate to the finish against the defendant there involved. Patent litigation characteristically proceeds with some deliberation and, with the avenues for discovery available under the present rules of procedure, there is no reason to suppose that plaintiff patentees would face either surprise or unusual difficulties in getting all relevant and probative evidence before the court in the first litigation.

Moreover, we do not suggest, without legislative guidance, that a plea of estoppel by an infringement or [333] royalty suit defendant must automatically be accepted once the defendant in support of his plea identifies the issue in suit as the identical question finally decided against the patentee or one of his privies in previous litigation.^[24] Rather, the patentee-plaintiff must be permitted to demonstrate, if he can, that he did not have "a fair opportunity procedurally, substantively and evidentially to pursue his claim the first time." Eisel v. Columbia Packing Co., 181 F. Supp. 298, 301 (Mass. 1960). This element in the estoppel decision will comprehend, we believe, the important concerns about the complexity of patent litigation and the posited hazard that the prior proceedings were seriously defective.

Determining whether a patentee has had a full and fair chance to litigate the validity of his patent in an earlier case is of necessity not a simple matter. In addition to the considerations of choice of forum and incentive to litigate mentioned above,^[25] certain other factors immediately emerge. For example, if the issue is nonobviousness, appropriate inquiries would be whether the first validity determination purported to employ the standards announced in Graham v. John Deere Co., supra; whether the opinions filed by the District Court and the reviewing court, if any, indicate that the prior case was one of those relatively rare instances where the courts wholly failed to grasp the technical subject matter and issues in suit; and whether without fault of his own the patentee was deprived of crucial evidence or witness in the first litigation.^[26] But as so often is the case, no one [334] set of facts, no one collection of words or phrases, will provide an automatic formula for proper rulings on estoppel pleas. In the end, decision will necessarily rest on the trial courts' sense of justice and equity.

We are not persuaded, therefore, that the Triplett rule, as it was formulated, is essential to effectuate the purposes of the patent system or is an indispensable or even an effective safeguard against faulty trials and judgments. Whatever legitimate concern there may be about the intricacies of some patent suits, it is insufficient in and of itself to justify patentees relitigating validity issues as long as new defendants are available. This is especially true if the court in the second litigation must decide in a principled way whether or not it is just and equitable to allow the plea of estoppel in the case before it.

B

An examination of the economic consequences of continued adherence to Triplett has two branches. Both, however, begin with the acknowledged fact that patent litigation is a very costly process. Judge Frank observed in 1942 that "the expense of defending a patent suit is often staggering to the small businessman." Picard v. United Aircraft Corp., 128 F. 2d 632, 641 (CA2 1942) (concurring opinion). In Lear, Inc. v. Adkins, 395 U. S. 653, 669 (1969), we noted that one of the benefits accruing to a businessman accepting a license from a patentee who was threatening him with a suit was avoiding "the necessity of defending an expensive infringement action during the period when he may be least able to afford one." Similarly, in replying to claims by alleged [335] infringers that they have been guilty of laches in suing on their patents, patentees have claimed that the expense of litigating forced them to postpone bringing legal action. See, e. g., Baker Mfg. Co. v. Whitewater Mfg. Co., 430 F. 2d 1008, 1014-1015 (CA7 1970). In recent congressional hearings on revision of the patent laws, a lawyer-businessman discussing a proposal of the American Society of Inventors for government-sponsored insurance to provide funds for litigation to individual inventors holding nonassigned patents stated: "We are advised that the average cost for litigating a patent is about $50,000."^[27]

This statement, and arguments such as the one made in Baker Mfg., supra, must be assessed in light of the fact that they are advanced by patentees contemplating action as plaintiffs, and patentees are heavily favored as a class of litigants by the patent statute. Section 282 of the Patent Code provides, in pertinent part:

"A patent shall be presumed valid. The burden of establishing invalidity of a patent shall rest on a party asserting it."

If a patentee's expense is high though he enjoys the benefits of the presumption of validity, the defendant in an infringement suit will have even higher costs as he both introduces proof to overcome the presumption and attempts to rebut whatever proof the patentee offers to bolster the claims. In testimony before the Senate subcommittee considering patent law revision in 1967, a member of the President's Commission on the Patent [336] System discussed the financial burden looming before one charged as a defendant in a complex infringement action in terms of amounts that sometimes run to "hundreds of thousands of dollars."^[28]

Statistics tend to bear this out. Patent suits constitute between 1% and 2% of the total number of civil cases filed each year in the District Courts.^[29] Despite this relatively small figure, and notwithstanding the overwhelming tendency to try these suits without juries,^[30] [337] patent cases that go to trial seem to take an inordinate amount of trial time.^[31] While in 1961 a Senate staff report stated that the "typical patent trial, without a jury, was completed in 3 days or less,"^[32] recent figures indicate that this description of the time required is today [338] inaccurate.^[33] And time—particularly trial time—is unquestionably expensive.

As stated at the outset of this section, the expense of patent litigation has two principal consequences if the Triplett rule is maintained. First, assuming that a perfectly sound judgment of invalidity has been rendered in an earlier suit involving the patentee, a second infringement action raising the same issue and involving much of the same proof has a high cost to the individual parties. The patentee is expending funds on litigation to protect a patent which is by hypothesis invalid. These moneys could be put to better use, such as further research and development. The alleged infringer—operating as he must against the presumption of validity—is forced to divert substantial funds to litigation that is wasteful.

The second major economic consideration is far more significant. Under Triplett, only the comity restraints flowing from an adverse prior judgment operate to limit the patentee's right to sue different defendants on the same patent. In each successive suit the patentee enjoys the statutory presumption of validity, and so may easily put the alleged infringer to his expensive proof. As a consequence, prospective defendants will often decide that paying royalties under a license or other settlement is preferable to the costly burden of challenging the patent.

[339] The problem has surfaced and drawn comment before. See, e. g., Nickerson v. Kutschera, 419 F. 2d 983, 988 n. 4 (CA3 1969) (dissenting opinion); Picard v. United Aircraft Corp., 128 F. 2d, at 641-642 (concurring opinion). In 1961, the Senate Judiciary Subcommittee on Patents, Trademarks, and Copyrights published a staff study of infringement and declaratory judgment actions terminated in the district courts and courts of appeals during 1949-1958; the report showed 62 actions commenced after an earlier determination that the patent in suit was not valid. It also noted that the "vast majority" of such suits were terminated without a second adjudication of validity. 1961 Staff Report 19. It is apparent that termination without a second adjudication of validity was the result of a licensing agreement or some other settlement between the parties to the second suit. It is also important to recognize that this study covered only cases filed and terminated; there were undoubtedly more suits that were threatened but not filed, because the threat alone was sufficient to forestall a challenge to the patent.

This is borne out by the observations of the President's Commission on the Patent System and recent testimony on proposals for changes in the patent laws. Motivated by the economic consequences of repetitious patent litigation, the Commission proposed:

"A final federal judicial determination declaring a patent claim invalid shall be in rem, and the cancellation of such claim shall be indicated on all patent copies subsequently distributed by the Patent Office." Recommendation XXIII, Commission Report 38.

The Commission stressed the competitive disadvantage imposed on an alleged infringer who is unable or unwilling to defend a suit on the patent, stating also that a "patentee, having been afforded the opportunity to [340] exhaust his remedy of appeal from a holding of invalidity, has had his `day in court' and should not be allowed to harass others on the basis of an invalid claim. There are few, if any, logical grounds for permitting him to clutter crowded court dockets and to subject others to costly litigation." Id., at 39. The report provoked the introduction of several bills to effect broad changes in the patent system. Some bills contained provisions imposing an inflexible rule of in rem invalidity operating against a patentee regardless of the character of the litigation in which his patent was first declared invalid. See S. 1042, 90th Cong., 1st Sess., § 294 (1967), and H. R. 5924, 90th Cong., 1st Sess., § 294 (1967);^[34] cf. [341] S. 3892, 90th Cong., 2d Sess., § 294 (1968).^[35] Hearings were held in both Houses on these and other patent revision bills.^[36]

[342] In the Senate hearings, a member of the President's Commission remarked:

"The businessman can be subjected to considerable harassment as an alleged infringer. Even in cases where he feels strongly that the patent would ultimately be held invalid, when he considers the hundreds of thousands of dollars in complex cases that could be involved in defending a suit, he may conclude that the best course of action is to settle for less to get rid of the problem. These nuisance settlements, although distasteful, are often, under the present system, justified on pure economics.

.....

"In many instances the very survival of the small businessman may be at stake. His cost of fully litigating a claim against him can seriously impair his ability to stay in business." 1967 Senate Hearings 103.^[37]

The tendency of Triplett to multiply the opportunities for holders of invalid patents to exact licensing agreements or other settlements from alleged infringers must [343] be considered in the context of other decisions of this Court. Although recognizing the patent system's desirable stimulus to invention, we have also viewed the patent as a monopoly which, although sanctioned by law, has the economic consequences attending other monopolies.^[38] A patent yielding returns for a device that fails to meet the congressionally imposed criteria of patentability is anomalous.^[39] This Court has observed:

"A patent by its very nature is affected with a public interest. . . . [It] is an exception to the general rule against monopolies and to the right to access to a free and open market. The far-reaching social and economic consequences of a patent, therefore, give the public a paramount interest in seeing that patent monopolies spring from backgrounds free from fraud or other inequitable conduct and that such monopolies are kept within their legitimate scope." Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806, 816 (1945).

One obvious manifestation of this principle has been the series of decisions in which the Court has condemned attempts to broaden the physical or temporal scope of the patent monopoly. As stated in Mercoid v. MidContinent Investment Co., 320 U. S. 661, 666 (1944):

"The necessities or convenience of the patentee do not justify any use of the monopoly of the patent [344] to create another monopoly. The fact that the patentee has the power to refuse a license does not enable him to enlarge the monopoly of the patent by the expedient of attaching conditions to its use. United States v. Masonite Corp., [316 U. S. 265,] 277 [(1942)]. The method by which the monopoly is sought to be extended is immaterial. United States v. Univis Lens Co., [316 U. S. 241,] 251-252 [(1942)]. The patent is a privilege. But it is a privilege which is conditioned by a public purpose. It results from invention and is limited to the invention which it defines."^[40]

A second group of authorities encourage authoritative testing of patent validity. In 1952, the Court indicated that a manufacturer of a device need not await the filing of an infringement action in order to test the validity of a competitor's patent, but may institute his own suit under the Declaratory Judgment Act. Kerotest Mfg. Co. v. C-O-Two Co., 342 U. S., at 185-186.^[41] Other [345] decisions of this type involved removal of restrictions on those who would challenge the validity of patents.^[42]

Two Terms ago in Lear, Inc. v. Adkins, 395 U. S. 653 (1969), we relied on both lines of authority to abrogate the doctrine that in a contract action for unpaid patent royalties the licensee of a patent is estopped from proving "that his licensor was demanding royalties for the use of an idea which was in reality a part of the public domain." 395 U. S., at 656. The principle that "federal law requires that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent," 395 U. S., at 668, found support in Sears and Compco and the first line of cases discussed above.^[43] The holding that licensee estoppel was no longer tenable was rooted in the second line of cases eliminating obstacles to suit by those disposed to challenge the validity of a patent. 395 U. S., at 663-668. Moreover, as indicated earlier, we relied on practical considerations that patent licensees "may often be the only individuals with enough economic incentive to challenge the patentability of an inventor's discovery." 395 U. S., at 670.

To be sure, Lear obviates to some extent the concern that Triplett prompts alleged infringers to pay royalties on patents previously declared invalid rather than to engage in costly litigation when infringement suits are [346] threatened. Lear permits an accused infringer to accept a license, pay royalties for a time, and cease paying when financially able to litigate validity, secure in the knowledge that invalidity may be urged when the patentee-licensor sues for unpaid royalties. Nevertheless, if the claims are in fact invalid and are identical to those invalidated in a previous suit against another party, any royalties actually paid are an unjust increment to the alleged infringer's costs. Those payments put him at a competitive disadvantage vis-à-vis other alleged infringers who can afford to litigate or have successfully litigated the patent's validity.

This has several economic consequences. First, the alleged infringer who cannot afford to defend may absorb the royalty costs in order to compete with other manufacturers who have secured holdings that the patent is invalid, cutting the profitability of his business and perhaps assuring that he will never be in a financial position to challenge the patent in court. On the other hand, the manufacturer who has secured a judicial holding that the patent is invalid may be able to increase his market share substantially, and he may do so without coming close to the price levels that would prevail in a competitive market. Because he is free of royalty payments, the manufacturer with a judgment against the patent may price his products higher than competitive levels absent the invalid patent, yet just below the levels set by those manufacturers who must pay royalties. Third, consumers will pay higher prices for goods covered by the invalid patent than would be true had the initial ruling of invalidity had at least the potential for broader effect. And even if the alleged infringer can escape royalty obligations under Lear when he is able to bear the cost of litigation, any royalty payments passed on to consumers are as a practical matter unrecoverable by those who in fact paid them. Beyond all of this, the [347] rule of Triplett may permit invalid patents to serve almost as effectively as would valid patents as barriers to the entry of new firms—particularly small firms.

Economic consequences like these, to the extent that they can be avoided, weigh in favor of modification of the Triplett mutuality principle. Arguably, however, the availability of estoppel to one charged with infringement of a patent previously held invalid will merely shift the focus of litigation from the merits of the dispute to the question whether the party to be estopped had a full and fair opportunity to litigate his claim in the first action. Moore & Currier, supra, n. 7, at 309-310. It would seem sufficient answer to note that once it is determined that the issue in both actions was identical, it will be easier to decide whether there was a full opportunity to determine that issue in the first action than it would be to relitigate completely the question of validity. And, this does not in fact seem to have been a problem in other contexts, where strict mutuality of estoppel has been abandoned.

It has also been suggested that 35 U. S. C. § 285, which allows a court to award reasonable attorney's fees to a prevailing party "in exceptional cases,"^[44] and 35 U. S. C. § 288, under which a patentee forfeits his right to recover costs even as to the valid claims of his patent if he does not disclaim invalid claims before bringing suit, work to inhibit repetitious suits on invalid patents. But neither of these provisions can operate until after litigation has occurred, and the outlay required to try a lawsuit presenting validity issues is the factor which undoubtedly forces many alleged infringers into accepting [348] licenses rather than litigating. If concern about such license agreements is proper, as our cases indicate that it is, the accused infringer should have available an estoppel defense that can be pleaded affirmatively and determined on a pretrial motion for judgment on the pleadings or summary judgment. Fed. Rules Civ. Proc. 8 (c), 12 (c), and 56.

C

As the preceding discussion indicates, although patent trials are only a small portion of the total amount of litigation in the federal courts, they tend to be of disproportionate length.^[45] Despite this, respondents urge that the burden on the federal courts from relitigation of patents once held invalid is de minimis. They rely on the figures presented in the 1961 Staff Report: during the period 1948-1959, 62 federal suits were terminated which involved relitigation of a patent previously held invalid, a figure constituting about 1% of the patent suits commenced during the same period. The same figures show that these 62 suits involved 27 patents, indicating that some patentees sue more than once after their patent has been invalidated. Respondents also urge that most of these 62 suits were settled without litigation. 1961 Staff Report 19. But, as we have suggested, this fact cuts both ways.

Even accepting respondents' characterization of these figures as de minimis, it is clear that abrogation of Triplett will save some judicial time if even a few relatively lengthy patent suits may be fairly disposed of on pleas of estoppel. More fundamentally, while the cases do discuss reduction in dockets as an effect of elimination of the mutuality requirement, they do not purport to hold that predictions about the actual amount of judicial time that will be saved under such a holding control decision [349] of that question. Of course, we have no comparable figures for the past decade concerning suits begun after one declaration of invalidity, although a number of recent, significant examples of repeated litigation of the same patent have come to our attention.^[46] Regardless of the magnitude of the figures, the economic consequences of continued adherence to Triplett are serious and any reduction of litigation in this context is by comparison an incidental matter in considering whether to abrogate the mutuality requirement.

D

It is clear that judicial decisions have tended to depart from the rigid requirements of mutuality. In accordance with this trend, there has been a corresponding development of the lower courts' ability and facility in dealing with questions of when it is appropriate and fair to impose an estoppel against a party who has already litigated an issue once and lost. As one commentator has stated:

"Under the tests of time and subsequent developments, the Bernhard decision has proved its merit and the mettle of its author. The abrasive action of new factual configurations and of actual human controversies, disposed of in the common-law tradition by competent courts, far more than the commentaries of academicians, leaves the decision revealed for what it is, as it was written: a shining landmark of progress in justice and law administration." Currie, 53 Calif. L. Rev., at 37.

When these judicial developments are considered in the light of our consistent view—last presented in Lear, Inc. v. Adkins—that the holder of a patent should not be insulated from the assertion of defenses and thus allowed [350] to exact royalties for the use of an idea that is not in fact patentable or that is beyond the scope of the patent monopoly granted, it is apparent that the uncritical acceptance of the principle of mutuality of estoppel expressed in Triplett v. Lowell is today out of place. Thus, we conclude that Triplett should be overruled to the extent it forecloses a plea of estoppel by one facing a charge of infringement of a patent that has once been declared invalid.

IV

Res judicata and collateral estoppel are affirmative defenses that must be pleaded. Fed. Rule Civ. Proc. 8 (c). The purpose of such pleading is to give the opposing party notice of the plea of estoppel and a chance to argue, if he can, why the imposition of an estoppel would be inappropriate. Because of Triplett v. Lowell, petitioner did not plead estoppel and respondents never had an opportunity to challenge the appropriateness of such a plea on the grounds set forth in Part III-A of this opinion. Therefore, given the partial overruling of Triplett, we remand the case. Petitioner should be allowed to amend its pleadings in the District Court to assert a plea of estoppel. Respondents must then be permitted to amend their pleadings, and to supplement the record with any evidence showing why an estoppel should not be imposed in this case. If necessary, petitioner may also supplement the record. In taking this action, we intimate no views on the other issues presented in this case. The judgment of the Court of Appeals is vacated and the cause is remanded to the District Court for further proceedings consistent with this opinion.

[1] The Foundation has filed six infringement actions based on the Isbell patent. Foundation's Brief 22.

[2] The Foundation claimed that all of the Isbell patent's 15 claims except numbers 6, 7, and 8 were infringed by one or more of Winegard's 22 antenna models designed for receiving television signals.

[3]The District Judge held:

"Those skilled in the art [of antenna design] at the time of the Isbell application knew (1) the log periodic method of designing frequency independent antennas, (2) that antenna arrays consisting of straight dipoles with progressively varied lengths and spacings exhibit greater broad band characteristics than those consisting of dipoles of equal length and spacing and, (3) that a dipole array type antenna having elements spaced less than 1/2 wavelength apart could be made unidirectional in radiation pattern by transposing the feeder line between elements and feeding the array at the end of the smallest element.

"It is the opinion of the Court that it would have been obvious to one ordinarily skilled in the art and wishing to design a frequency independent unidirectional antenna to combine these three old elements, all suggested by the prior art references previously discussed." 271 F. Supp., at 418-419.

[4] See Petition for Certiorari 13. The grant of certiorari was not limited to the validity vel non of the Isbell patent.

[5] See also Nickerson v. Kutschera, 419 F. 2d 983, 984 (CA3 1969); id., at 984-988 (Hastie, C. J., dissenting); Nickerson v. Kutschera, 390 F. 2d 812 (CA3 1968); Tidewater Patent Development Co. v. Kitchen, 371 F. 2d 1004, 1006 (CA4 1966); Aghnides v. Holden, 226 F. 2d 949, 951 (CA7 1955) (Schnackenberg, J., concurring); Technograph Printed Circuits, Ltd. v. Packard Bell Electronics Corp., 290 F. Supp. 308, 317-319 (CD Cal. 1968) (holding that Triplett did not bar an infringement suit defendant's motion for summary judgment on res judicata grounds because (1) the statements as to mutuality of estoppel were dicta, and (2) the Triplett rule conflicted not only with more recent precedent in the estoppel area but also with the spirit of certain provisions of the Federal Rules of Civil Procedure, adopted six years after Triplett was decided); Nickerson v. Pep Boys—Manny, Moe & Jack, 247 F. Supp. 221 (Del. 1965). In the latter case, Judge Steel imposed an estoppel on facts somewhat similar to those before us. He analyzed the cases relied on in Triplett, id., at 221-222, and concluded: "[f]rom the standpoint of the precedents [it cities], . . . Triplett v. Lowell does not rest upon too solid a foundation." Id., at 222. Cf. Technograph Printed Circuits, Ltd. v. United States, 178 Ct. Cl. 543, 372 F. 2d 969 (1967); Agrashell, Inc. v. Bernard Sirotta Co., 281 F. Supp. 704, 707-708 (EDNY 1968).

[6] In rebuttal, counsel for petitioner made it clear that he was urging a "modification" of Triplett.

"Q. Well, has Petitioner finally decided to forego any request for reconsidering Triplett, entirely, or in any part? I understood you previously to say you would welcome a modification of it to some extent.

"A. Well, Your Honor, I think that is correct. The question . . . that was asked of us in our brief by this Court was should Triplett be overruled. That we answered no.

"Now the question is should there be modification. I think in all of law, when somebody is abusing it, . . . there are exceptions, and I think the Solicitor [General] is very close to [using] the idea that if in fact this were the same trial and they had the opportunity to present their witnesses before, and they didn't do it, that it seriously ought to be considered whether there ought to be an estoppel in a situation such as this." Tr. of Oral Arg. 64-65.

Rule 23 (1) (c) of the Rules of this Court states that "[o]nly the questions set forth in the petition or fairly comprised therein will be considered by the court." While this rule reflects many decisions stating that the Court is not required to decide questions not raised in a petition for certiorari, it does not limit our power to decide important questions not raised by the parties. The rule has certain well-recognized exceptions, particularly in cases arising in the federal courts. See R. Robertson & F. Kirkham, Jurisdiction of the Supreme Court of the United States § 418 (R. Wolfson & P. Kurland ed. 1951); R. Stern & E. Gressman, Supreme Court Practice § 6.37 (4th ed. 1969).

The instant case is not one where the parties have not briefed or argued a question that the Court nevertheless finds controlling under its authority to notice plain error. See Rule 40 (1) (d) (2), Rules of the Supreme Court of the United States; Silber v. United States, 370 U. S. 717 (1962). Rather, given what transpired at oral argument, the case is like Moragne v. States Marine Lines, Inc., 398 U. S. 375 (1970). There, after granting certiorari, we asked the parties to brief and argue the continued validity of The Harrisburg, 119 U. S. 199 (1886). The petitioner, who would have stood to gain if The Harrisburg perished, argued that that decision should be overruled, but strongly maintained that it was unnecessary to do so in order to afford her relief. Respondent, of course, argued that The Harrisburg should be left intact. The United States, appearing as amicus curiae, urged the Court to overrule The Harrisburg, and that was the result.

Moreover, in a landmark decision involving an important question of judicial administration in the federal courts, this Court overruled a prior decision of many years' standing although the parties did not urge such a holding in their briefs. Erie R. Co. v. Tompkins, 304 U. S. 64, 66, 68-69 (1938). See also R. Jackson, The Struggle for Judicial Supremacy 281-282 (1949). While the question here is hardly of comparable importance, it is a significant one, in the same general field, and it has been fully briefed and argued by the parties and amici. See Moragne, 398 U. S., at 378-380, n. 1; cf. NLRB v. Pittsburgh S. S. Co., 337 U. S. 656, 661-662 (1949).

[7] See also 225 U. S., at 130-131; Stone v. Farmers' Bank, 174 U. S. 409 (1899); Keokuk & W. R. Co. v. Missouri, 152 U. S. 301, 317 (1894); Litchfield v. Goodnow, 123 U. S. 549, 552 (1887). Bigelow also spent some time discussing one of the many exceptions to the mutuality requirement, 225 U. S., at 127-128. These "exceptions" are described in Moore & Currier, Mutuality and Conclusiveness of Judgments, 35 Tul. L. Rev. 301, 311-329 (1961), and Note, 35 Geo. Wash. L. Rev. 1010, 1015-1017 (1967).

[8]Under the topic head "persons not Parties or Privies," § 93 provides:

"General Rule. Except as stated in §§ 94-111, a person who is not a party or privy to a party to an action in which a valid judgment other than a judgment in rem is rendered (a) cannot directly or collaterally attack the judgment, and (b) is not bound by or entitled to claim the benefits of an adjudication upon any matter decided in the action."

Illustration 10 of the Restatement stated the essentials of the Triplett rule:

"A brings an action against B for infringement of a patent. B defends on the ground that the alleged patent was void and obtains judgment. A brings an action for infringement of the same patent against C who seeks to interpose the judgment in favor of B as res judicata, but setting up no relation with B. On demurrer, judgment should be for A."

[9] Atkinson v. White, 60 Me. 396, 398 (1872); Jenkins v. Atlantic Coast Line R. Co., 89 S. C. 408, 71 S. E. 1010 (1911); United States v. Wexler, 8 F. 2d 880 (EDNY 1925); Brobston v. Darby Borough, 290 Pa. 331, 138 A. 849 (1927); Eagle, Star & British Dominions Ins. Co. v. Heller, 149 Va. 82, 140 S. E. 314 (1927); Liberty Mutual Ins. Co. v. George Colon & Co., 260 N. Y. 305, 183 N. E. 506 (1932); Coca Cola Co. v. Pepsi-Cola Co., 36 Del. 124, 172 A. 260 (Super. Ct. 1934); see also Good Health Dairy Products Corp. v. Emery,275 N. Y. 14, 19, 9 N. E. 2d 758, 760 (1937). In the latter case, the New York Court of Appeals stated:

"It is true that [the owner of the automobile], not being a party to the earlier actions, and not having had a chance to litigate her rights and liabilities, is not bound by the judgments entered therein, but, on the other hand, that is not a valid ground for allowing the plaintiffs to litigate anew the precise questions which were decided against them in a case in which they were parties."

[10] The principle was attacked in Cox, Res Adjudicata: Who Entitled to Plead, 9 Va. L. Rev. (n. s.) 241, 245-247 (1923); Comment, 35 Yale L. J. 607, 610 (1926); Comment, 29 Ill. L. Rev. 93, 94 (1934); Note, 18 N. Y. U. L. Q. Rev. 565, 570-573 (1941); Recent Decisions, 27 Va. L. Rev. 955 (1941); Recent Cases, 15 U. Cin. L. Rev. 349 (1941). Cf. Von Moschzisker, Res Judicata, 38 Yale L. J. 299, 303 (1929); Comment, 23 Ore. L. Rev. 273 (1944); Recent Cases, 54 Harv. L. Rev. 889 (1941).

[11] For discussion of the "offensive-defensive" distinction, see generally Vestal, Preclusion/Res Judicata Variables: Parties, 50 Iowa L. Rev. 27, 43-76 (1964); Note, 35 Geo. Wash. L. Rev. 1010 (1967). See also Currie, Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine, 9 Stan. L. Rev. 281 (1957); Note, 68 Col. L. Rev. 1590 (1968); Note, 52 Cornell L. Q. 724 (1967).

[12] In federal-question cases, the law applied is federal law. This Court has noted, "It has been held in non-diversity cases, since Erie R. Co. v. Tompkins, that the federal courts will apply their own rule of res judicata." Heiser v. Woodruff, 327 U. S. 726, 733 (1946). See also Vestal, Res Judicata/Preclusion by Judgment: The Law Applied in Federal Courts, 66 Mich. L. Rev. 1723, 1739, 1745 (1968); id., cases cited at 1739-1740, nn. 62-64.

[13] See, e. g., Lober v. Moore, 135 U. S. App. D. C. 146, 417 F. 2d 714 (1969); Provident Tradesmens Bank & Trust Co. v. Lumbermens Mutual Cas. Co., 411 F. 2d 88, 92-95 (CA3 1969); Seguros Tepeyac, S. A., Compania Mexicana v. Jernigan, 410 F. 2d 718, 726-728 (CA5 1969), cert. denied, 396 U. S. 905 (1969); Cauefield v. Fidelity & Cas. Co. of New York, 378 F. 2d 876, 878-879 (CA5), cert. denied, 389 U. S. 1009 (1967); Graves v. Associated Transport, Inc., 344 F. 2d 894 (CA4 1965); Kurlan v. Commissioner, 343 F. 2d 625, 628-629 (CA2 1965); United States v. United Air Lines, 216 F. Supp. 709, 725-730 (ED Wash., Nev. 1962), aff'd as to res judicata, sub nom. United Air Lines v. Wiener, 335 F. 2d 379, 404-405 (CA9 1964); Zdanok v. Glidden Co., supra, at 954-956; Davis v. McKinnon & Mooney, 266 F. 2d 870, 872-873 (CA6 1959); People v. Ohio Cas. Ins. Co., 232 F. 2d 474, 477 (CA10 1956); Adriaanse v. United States, 184 F. 2d 968 (CA2 1950), cert. denied, 340 U. S. 932 (1951); Maryland v. Capital Airlines, Inc., 267 F. Supp. 298, 302-305 (Md. 1967); Mathews v. New York Racing Assn., Inc., 193 F. Supp. 293 (SDNY 1961); Eisel v. Columbia Packing Co., 181 F. Supp. 298 (Mass. 1960).

[14] See cases cited n. 9, supra.A most recent canvass of cases is presented in Note, 35 Geo. Wash. L. Rev. 1010 (1967).

The Supreme Court of Oregon was the most recent state court to adopt Bernhard. Bahler v. Fletcher, 257 Ore. 1, 474 P. 2d 329 (1970); see also Pennington v. Snow, 471 P. 2d 370, 376-377 (Alaska 1970); Ellis v. Crockett, 51 Haw. 45, 56, 451 P. 2d 814, 822 (1969); Pat Perusse Realty Co. v. Lingo, 249 Md. 33, 238 A. 2d 100 (1968); Sanderson v. Balfour, 109 N. H. 213, 247 A. 2d 185 (1968); Home Owners Fed. Savings & Loan Assn. v. Northwestern Fire & Marine Ins. Co., 354 Mass. 448, 451-455, 238 N. E. 2d 55, 57-59 (1968) (approving use of Bernhard by a defendant against a previously losing plaintiff); DeWitt, Inc. v. Hall, 19 N. Y. 2d 141, 225 N. E. 2d 195 (1967); Lustik v. Rankila, 269 Minn. 515, 131 N. W. 2d 741 (1964); Lucas v. Velikanje, 2 Wash. App. 888, 471 P. 2d 103 (1970) (lower state appellate court held that State Supreme Court would follow Bernhard in an appropriate case); Howell v. Vito's Trucking & Excavating Co., 20 Mich. App. 140, 173 N. W. 2d 777 (1969); Desmond v. Kramer, 96 N. J. Super, 96, 232 A. 2d 470 (1967); Lynch v. Chicago Transit Authority, 62 Ill. App. 2d 220, 210 N. E. 2d 792 (1965).

[15] See F. James, Civil Procedure 552-573 (1965); Vestal, Res Judicata/Preclusion by Judgment: The Law Applied in Federal Courts, 66 Mich. L. Rev. 1723, 1724 (1968).

[16] See Moore v. United States, 360 F. 2d 353 (CA4 1965); Teitelbaum Furs, Inc. v. Dominion Ins. Co., Ltd., 58 Cal. 2d 601, 375 P. 2d 439 (1962); Eagle, Star & British Dominions Ins. Co. v. Heller, 149 Va. 82, 140 S. E. 314 (1927); Vestal, supra, n. 15, at 1724; Vestal & Coughenour, Preclusion/Res Judicata Variables: Criminal Prosecutions, 19 Vand. L. Rev. 683 (1966).

[17] We agree with the Government that Congress has not approved the Triplett rule, either by its failure to modify that rule over the years, see Boys Markets, Inc. v. Retail Clerks Union, 398 U. S. 235, 241-242 (1970); Girouard v. United States, 328 U. S. 61, 69-70 (1946); Helvering v. Hallock, 309 U. S. 106, 119-120 (1940); by anything that transpired during the preparation for and accomplishment of the 1952 revision of the Patent Code; or because in rem invalidity provisions, see n. 34, infra, have disappeared from recent proposals for reform of the patent statute.

[18] Professors Moore and Currier point out that one of the underpinnings of the general concept of res judicata is the prevention of harassment of some litigants by the repeated assertion of the same or different claims against them by others, and that this problem is simply not present where the person asserting an estoppel was not a party (or privy to a party) in the earlier suit. They then argue that "the doctrine of judicial finality is not a catchpenny contrivance to dispose of cases merely for the sake of disposition and clear up dockets in that manner." Moore & Currier, supra, n. 7, at 308. On the other hand, Professor Vestal argues that "[j]udges, overwhelmed by docket loads, are looking for devices to expedite their work. Preclusion offers an opportunity to eliminate litigation which is not necessary or desirable." Vestal, supra, n. 15, at 1724.

[19] But see United States v. United Air Lines, supra; Zdanok v. Glidden Co., supra; Currie, Civil Procedure: The Tempest Brews, 53 Calif. L. Rev. 25, 28-37 (1965); Vestal, 50 Iowa L. Rev., at 55-59; cf. Semmel, Collateral Estoppel, Mutuality and Joinder of Parties, 68 Col. L. Rev. 1457 (1968); Weinstein, Revision of Procedure: Some Problems in Class Actions, 9 Buffalo L. Rev. 433, 448-454 (1960); Note, 35 Geo. Wash. L. Rev. 1010 (1967).

[20] U. S. Const., Art. I, § 8, cl. 8.

[21]The Court of Claims has stated:

"For patent litigation there is a special reason why relitigation is not automatically banned as needless or redundant, and why error should not be perpetuated without inquiry. Patent validity raises issues significant to the public as well as to the named parties. Sinclair & Carroll Co. v. Interchemical Corp., 325 U. S. 327, 330 (1945). It is just as important that a good patent be ultimately upheld as that a bad one be definitively stricken. At the same time it must be remembered that the issue of patent validity is often `as fugitive, impalpable, wayward, and vague a phantom as exists in the whole paraphernalia of legal concepts. . . . If there be an issue more troublesome, or more apt for litigation than this, we are not aware of it.' Harries v. Air King Products Co., supra, 183 F. 2d at 162 (per L. Hand, C. J.). Because of the intrinsic nature of the subject, the first decision can be quite wrong, or derived from an insufficient record or presentation." Technograph Printed Circuits, 178 Ct. Cl., at 556, 372 F. 2d, at 977-978.

[22] See Nyyssonen v. Bendix Corp., 342 F. 2d 531, 532 (CA1 1965); Harries v. Air King Products Co., 183 F. 2d 158, 164 (CA2 1950); Parke-Davis & Co. v. H. K. Mulford Co., 189 F. 95, 115 (SDNY 1911).

[23] The Triplett rule apparently operates to defeat a plea of estoppel where a patent has been declared invalid under provisions other than 35 U. S. C. § 103, the section defining nonobviousness of the subject matter as a prerequisite to patentability and giving rise to many technical issues which it is claimed courts are poorly equipped to judge. Under §§ 101 and 102 of the 1952 Act, patentability is also conditioned on novelty and utility. Some subsections of § 102—each of which can result in the loss of a patent—involve completely nontechnical issues. Yet the breadth of Triplett would force defendants in repetitious suits on a patent invalidated on one of these grounds to repeat proof that may be simple of understanding yet expensive to produce.

[24] See nn. 34-35, infra.

[25] See Zdanok v. Glidden Co., 327 F. 2d, at 956; Teitelbaum Furs, Inc., 58 Cal. 2d, at 606-607, 375 P. 2d, at 441; cf. Berner v. British Commonwealth Pacific Airlines, Ltd., 346 F. 2d 532, 540-541 (CA2 1965).

[26] It has been argued that one factor to be considered in deciding whether to allow a plea of estoppel in a second action is the possibility that the judgment in the first action was a compromise verdict by a jury. This problem has not, however, been deemed sufficient to preclude abrogation of the mutuality principle in other contexts. Nor would it appear to be a significant consideration in deciding when to sustain a plea of estoppel in patent litigation, since most patent cases are tried to the court. See n. 30, infra.

[27] Hearings on Patent Law Revision before the Subcommittee on Patents, Trademarks, and Copyrights of the Senate Committee on the Judiciary, 90th Cong., 2d Sess., 616 (1968) (statement of Henry J. Cappello, President, Space Recovery Research Center, Inc., and consultant on patent policy for the National Small Business Association) (hereafter 1968 Senate Hearings).

[28]Hearings on Patent Law Revision before the Subcommittee on Patents, Trademarks, and Copyrights of the Senate Committee on the Judiciary, 90th Cong., 1st Sess., 103 (1967) (statement of James W. Birkenstock, Vice President, I. B. M. Corp.) (hereafter 1967 Senate Hearings).

It is significant that the President's Commission identified as one of its primary objectives "reduc[ing] the expense of obtaining and litigating a patent." "To Promote the Progress of . . . Useful Arts" In an Age of Exploding Technology, Report of the President's Commission on the Patent System 4 (1966) (hereafter Commission Report). Judge Rich of the Court of Customs and Patent Appeals, whose public reaction to the Commission Report was mixed, did agree that "[l]itigation being as expensive as it is, no one embarks upon it lightly." Rich, The Proposed Patent Legislation: Some Comments, 35 Geo. Wash. L. Rev. 641, 644 (1967).

[29] In fiscal 1968, 71,449 civil actions were filed in the federal district courts, 857 of which were patent suits. In fiscal 1969, 77,193 civil suits were filed; 889 involved patents. In fiscal 1970, 87,321 civil suits were initiated, 1,023 of which involved patents. Annual Report of the Director of the Administrative Office of the United States Courts for the Fiscal Year Ended June 30, 1968, Table C-2 (1969); Annual Report of the Director of the Administrative Office of the United States Courts for the Fiscal Year Ended June 30, 1969, Table C-2 (1970); Annual Report of the Director of the Administrative Office of the United States Courts for the Fiscal Year Ended June 30, 1970, Table C-2 (temp. ed. 1971) (hereafter Annual Report 1968, etc.).

[30] Most patent cases are tried to the court. In fiscal 1968, 1969, and 1970, the total number of patent cases going to trial and the number of patent cases going to juries were, respectively: 1968— 131, 2; 1969—132, 8; and 1970—119, 3. Annual Reports 1968-1970, Table C-8.

[31]The table below compares patent cases tried to the court during fiscal 1968, 1969, and 1970 with all nonjury civil cases tried during the same years. It reveals several facts: (1) something over 90% of all civil litigation is concluded within three full trial days, but less than half the patent cases are concluded in such a period of time; (2) whereas between 1.2% and 1.7% of civil nonjury trials in general require 10 or more trial days, between 14.7% and 19% of the patent cases tried to the court require 10 or more days to conclude; and (3), while the three-year trend in the district courts appears to be toward more expeditious handling of civil cases tried without a jury in terms of an annual increase in the percentage of cases concluded in three trial days or less and an overall decrease in the percentage of cases requiring 10 or more days, the trends in patent litigation are exactly contrary.

                              Fiscal 1968 Fiscal 1969 Fiscal 1970Total civil non-jury trials. . . .   5,478              5,619                6,078Total patent non-jury trials. .        129                124                116Approx. % of non-jury civil  cases concluded in 3 trial  days or less. . . . . . . . . . .   92.2               92.8                93.1Approx. % of non-jury patent  cases concluded in 3 trial  day or less. . . . . . . . . . . .  49.6               46.8                44.0Approx. % of non-jury civil  trials taking 10 or more trial  days to conclude. . . . . . . . .   1.7          1.2         1.3Approx. % of non-jury patent  trials taking 10 or more  trial days to conclude. . . . . . 14.7          15.3         19Source: Annual Reports 1968-1970, Table C-8.

[32] An Analysis of Patent Litigation Statistics, Staff Report of the Subcommittee on Patents, Trademarks, and Copyrights of the Senate Committee on the Judiciary, 86th Cong., 2d Sess., 2 (1961) (Committee Print) (hereafter 1961 Staff Report).

[33] See n. 31, supra. The 1961 Staff Report also noted that during the "fiscal years 1954-58 . . . nine [patent] trials consumed 20 or more days." Id., at 2. Further examination of recent figures from the Administrative Office of the United States Courts indicates that this statement would also be of questionable validity today. In fiscal 1968, 38 civil trials that took 20 days or more to try were terminated. Of these, five, or about 13%, were patent cases. The comparable figures for fiscal 1969 are 28 civil trials requiring 20 or more days concluded, seven (25%) of which were patent cases. In fiscal 1970, 32 such civil cases were terminated; seven, or about 22%, of these suits were patent cases. Annual Reports, 1968-1970, Table C-9.

[34]"Estoppel and cancellation

"(a) In any action in a Federal court in which the issue of the validity or scope of a claim of a patent is properly before the court, and the owner of the patent as shown by the records of the Patent Office is a party or has been given notice as provided in subsection (c) of this section, a final adjudication, from which no appeal has been or can be taken, limiting the scope of the claim or holding it to be invalid, shall constitute an estoppel against the patentee, and those in privity with him, in any subsequent Federal action, and may constitute an estoppel in such other Federal actions as the latter court may determine, involving such patent. Within thirty days of such adjudication the clerk of the court shall transmit notice thereof to the Commissioner, who shall place the same in the public records of the Patent Office pertaining to such patent, and endorse notice on all copies of the patent thereafter distributed by the Patent Office that the patent is subject to such adjudication.

"(b) In any action as set forth in subsection (a) of this section, upon a final adjudication from which no appeal has been or can be taken that a claim of the patent is invalid, the court may order cancellation of such claim from the patent. Such order shall be included in the notice to the Commissioner specified in subsection (a) of this section, and the notice of cancellation of a claim shall be published by the Commissioner and endorsed on all copies of the patent thereafter distributed by the Patent Office.

"(c) In any action in a Federal court in which the validity or scope of a claim of a patent is drawn into question, the owner of the patent, as shown by the records of the Patent Office, shall have the unconditional right to intervene to defend the validity or scope of such claim. The party challenging the validity or scope of the claim shall serve upon the patent owner a copy of the earliest pleadings asserting such invalidity. If such owner cannot be served with such pleadings, after reasonable diligence is exercised, service may be made as provided for in the Federal Rules of Civil Procedure and, in addition, notice shall be transmitted to the Patent Office and shall be published in the Official Gazette."

[35]"Cancellation by court

"(a) In any action in a Federal court in which the issue of the validity of a claim of a patent is drawn into question, and the owner of the patent is shown by the records of the Patent Office is a party or has been given notice as provided in subsection (b) of this section, the court may, upon final adjudication, from which no appeal has been or can be taken, holding the claim to be invalid after such claim has previously been held invalid on the same ground by a court of competent jurisdiction from which no appeal has been or can be taken, order cancellation of such claim from the patent. Within thirty days of such order the clerk of the court shall transmit notice thereof to the Commissioner, who shall place the same in the public records of the Patent Office pertaining to such patent, and notice of cancellation of the claim shall be published by the Commissioner and endorsed on all copies of the patent thereafter distributed by the Patent Office.

"(b) In any action in a Federal court in which the validity of a claim of a patent is drawn into question, the owner of the patent, as shown by the records of the Patent Office, shall have the unconditional right to intervene to defend the validity of such claim. The party challenging the validity of the claim shall serve upon the patent owner a copy of the earliest pleadings asserting such invalidity. If such owner cannot be served with such pleadings, after reasonable diligence is exercised, service may be made as provided for in the Federal Rules of Civil Procedure and, in addition, notice shall be transmitted to the Patent Office and shall be published in the Official Gazette."

[36] See, e. g., Hearings on General Revision of the Patent Laws before Subcommittee No. 3 of the House Committee on the Judiciary, 90th Cong., 1st and 2d Sess. (1967-1968); 1967 Senate Hearings, supra, n. 28. In House Hearings, testimony on in rem invalidity provisions covered the full spectrum of opinion. The Patent Section of the American Bar Association was opposed. House Hearings 464-465. The Department of Justice favored it. Id., at 622. The Judicial Conference of the United States approved the provision in principle. Report of the Proceedings of the Judicial Conference of the United States, Feb. and Sept. 1968, p. 81. Testimony in the Senate Hearings was also varied.

[37] Although these bills died in committee, it is noteworthy that by ascribing binding effect to the first federal declaration of invalidity, some of the proposed provisions went beyond mere abrogation of Triplett's mutuality principle. Had the statutes been enacted as proposed, see nn. 34-35, supra, the question of whether the patentee had a full and fair opportunity to litigate the validity of his patent in the first suit would apparently have been irrelevant once it was shown that the patentee had received notice that the validity of his patent was in issue.

[38] See generally Sears, Roebuck & Co. v. Stiffel Co., 376 U. S. 225, 229-230 (1964); Compco Corp. v. Day-Brite Lighting, 376 U. S. 234 (1964); Kennedy, Patent and Antitrust Policy: The Search for a Unitary Theory, 35 Geo. Wash. L. Rev. 512 (1967).

[39] United States v. Bell Telephone Co., 128 U. S. 315, 357, 370 (1888); see also Katzinger Co. v. Chicago Mfg. Co., 329 U. S. 394, 400-401 (1947); Cuno Corp. v. Automatic Devices Corp., 314 U. S. 84, 92 (1941); A. & P. Tea Co. v. Supermarket Corp., 340 U. S. 147, 154-155 (1950) (concurring opinion).

[40] See also Brulotte v. Thys Co., 379 U. S. 29 (1964); International Salt Co. v. United States, 332 U. S. 392 (1947); United States v. Gypsum Co., 333 U. S. 364, 389 (1948); Scott Paper Co. v. Marcalus Co., 326 U. S. 249 (1945); Morton Salt Co. v. Suppiger Co., 314 U. S. 488, 491-492 (1942); Ethyl Gasoline Corp. v. United States, 309 U. S. 436, 455-459 (1940); International Business Machines Corp. v. United States, 298 U. S. 131 (1936); Carbice Corp. v. American Patents Corp., 283 U. S. 27 (1931); Motion Picture Patents Co. v. Universal Film Co., 243 U. S. 502 (1917).

[41] In Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U. S. 172 (1965), the defendant in an infringement action was permitted to counterclaim for treble damages under § 4 of the Clayton Act by asserting that the patent was invalid because procured or enforced with knowledge of fraud practiced on the Patent Office, "provided the other elements necessary to a [monopolization case under § 2 of the Sherman Act] are present." Id., at 174.

[42] See MacGregor v. Westinghouse Electric & Mfg. Co., 329 U. S. 402, 407 (1947); Katzinger Co. v. Chicago Mfg. Co., 329 U. S., at 398-401; Scott Paper Co. v. Marcalus Co., supra; Sola Electric Co. v. Jefferson Electric Co., 317 U. S. 173 (1942); Westinghouse Electric & Mfg. Co. v. Formica Insulation Co., 266 U. S. 342 (1924); Pope Mfg. Co. v. Gormully, 144 U. S. 224, 234 (1892).

[43] See Sears, 376 U. S., at 229-231; see also Beckman Instruments, Inc. v. Technical Development Corp., 433 F. 2d 55, 58-59 (CA7 1970); Kraly v. National Distillers & Chemical Corp., 319 F. Supp. 1349 (ND Ill. 1970).

[44] Including, apparently, a suit on a patent previously held invalid and as to which the second court can find no reasonable argument for validity. See Tidewater Patent Development Co. v. Kitchen, 371 F. 2d 1004, 1013 (CA4 1966); Dole Valve Co. v. Perfection Bar Equipment, Inc., 318 F. Supp. 122 (ND Ill. 1970).

[45] See nn. 31-33, supra, and accompanying text.

[46] See, e. g., cases cited n. 5, supra; Brief for Petitioner B-T 13-14; Brief for the United States as amicus curiae 28 and 32 n. 12.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.

[323] Jack B. Levitt argued the cause for petitioners. With him on the briefs were Irving Parker, Joseph N. Salomon, and Robert N. Cooperman.

Samuel K. Rosen argued the cause and filed a brief for respondent.^[1]

Joel D. Joseph filed a brief for the Washington Legal Foundation as amicus curiae.

[324] MR. JUSTICE STEWART delivered the opinion of the Court.

This case presents the question whether a party who has had issues of fact adjudicated adversely to it in an equitable action may be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a new party.

The respondent brought this stockholder's class action against the petitioners in a Federal District Court. The complaint alleged that the petitioners, Parklane Hosiery Co., Inc. (Parklane), and 13 of its officers, directors, and stockholders, had issued a materially false and misleading proxy statement in connection with a merger.^[2] The proxy statement, according to the complaint, had violated §§ 14 (a), 10 (b), and 20 (a) of the Securities Exchange Act of 1934, 48 Stat. 895, 891, 899, as amended, 15 U. S. C. §§ 78n (a), 78j (b), and 78t (a), as well as various rules and regulations promulgated by the Securities and Exchange Commission (SEC). The complaint sought damages, rescission of the merger, and recovery of costs.

Before this action came to trial, the SEC filed suit against the same defendants in the Federal District Court, alleging that the proxy statement that had been issued by Parklane was materially false and misleading in essentially the same respects as those that had ben alleged in the respondent's complaint. Injunctive relief was requested. After a 4-day [325] trial, the District Court found that the proxy statement was materially false and misleading in the respects alleged, and entered a declaratory judgment to that effect. SEC v. Parklane Hosiery Co., 422 F. Supp. 477. The Court of Appeals for the Second Circuit affirmed this judgment. 558 F. 2d 1083.

The respondent in the present case then moved for partial summary judgment against the petitioners, asserting that the petitioners were collaterally estopped from relitigating the issues that had been resolved against them in the action brought by the SEC.^[3] The District Court denied the motion on the ground that such an application of collateral estoppel would deny the petitioners their Seventh Amendment right to a jury trial. The Court of Appeals for the Second Circuit reversed, holding that a party who has had issues of fact determined against him after a full and fair opportunity to litigate in a nonjury trial is collaterally estopped from obtaining a subsequent jury trial of these same issues of fact. 565 F. 2d 815. The appellate court concluded that "the Seventh Amendment preserves the right to jury trial only with respect to issues of fact, [and] once those issues have been fully and fairly adjudicated in a prior proceeding, nothing remains for trial, either with or without a jury." Id., at 819. Because of an intercircuit conflict,^[4] we granted certiorari. 435 U. S. 1006.

[326] I

The threshold question to be considered is whether, quite apart from the right to a jury trial under the Seventh Amendment, the petitioners can be precluded from relitigating facts resolved adversely to them in a prior equitable proceeding with another party under the general law of collateral estoppel. Specifically, we must determine whether a litigant who was not a party to a prior judgment may nevertheless use that judgment "offensively" to prevent a defendant from relitigating issues resolved in the earlier proceeding.^[5]

A

Collateral estoppel, like the related doctrine of res judicata,^[6] has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation. Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U. S. 313, 328-329. Until relatively recently, however, the scope of collateral estoppel was limited by the doctrine of mutuality of parties. Under this mutuality doctrine, neither party could use a prior judgment [327] as an estoppel against the other unless both parties were bound by the judgment.^[7] Based on the premise that it is somehow unfair to allow a party to use a prior judgment when he himself would not be so bound,^[8] the mutuality requirement provided a party who had litigated and lost in a previous action an opportunity to relitigate identical issues with new parties.

By failing to recognize the obvious difference in position between a party who has never litigated an issue and one who has fully litigated and lost, the mutuality requirement was criticized almost from its inception.^[9] Recognizing the validity of this criticism, the Court in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, supra, abandoned the mutuality requirement, at least in cases where a patentee seeks to relitigate the validity of a patent after a federal court in a previous lawsuit has already declared it invalid.^[10] The [328] "broader question" before the Court, however, was "whether it is any longer tenable to afford a litigant more than one full and fair opportunity for judicial resolution of the same issue." 402 U. S., at 328. The Court strongly suggested a negative answer to that question:

"In any lawsuit where a defendant, because of the mutuality principle, is forced to present a complete defense on the merits to a claim which the plaintiff has fully litigated and lost in a prior action, there is an arguable misallocation of resources. To the extent the defendant in the second suit may not win by asserting, without contradiction, that the plaintiff had fully and fairly, but unsuccessfully, litigated the same claim in the prior suit, the defendant's time and money are diverted from alternative uses—productive or otherwise—to relitigation of a decided issue. And, still assuming that the issue was resolved correctly in the first suit, there is reason to be concerned about the plaintiff's allocation of resources. Permitting repeated litigation of the same issue as long as the supply of unrelated defendants holds out reflects either the aura of the gaming table or `a lack of discipline and of disinterestedness on the part of the lower courts, hardly a worthy or wise basis for fashioning rules of procedure.' Kerotest Mfg. Co. v. C-O-Two Co., 342 U. S. 180, 185 (1952). Although neither judges, the parties, nor the adversary system performs perfectly in all cases, the requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most significant safeguard." Id., at 329.^[11]

[329] B

The Blonder-Tongue case involved defensive use of collateral estoppel—a plaintiff was estopped from asserting a claim that the plaintiff had previously litigated and lost against another defendant. The present case, by contrast, involves offensive use of collateral estoppel—a plaintiff is seeking to estop a defendant from relitigating the issues which the defendant previously litigated and lost against another plaintiff. In both the offensive and defensive use situations, the party against whom estoppel is asserted has litigated and lost in an earlier action. Nevertheless, several reasons have been advanced why the two situations should be treated differently.^[12]

First, offensive use of collateral estoppel does not promote judicial economy in the same manner as defensive use does. Defensive use of collateral estoppel precludes a plaintiff from relitigating identical issues by merely "switching adversaries." Bernhard v. Bank of America Nat. Trust & Savings Assn., 19 Cal. 2d, at 813, 122 P. 2d, at 895.^[13] Thus defensive collateral estoppel gives a plaintiff a strong incentive to join [330] all potential defendants in the first action if possible. Offensive use of collateral estoppel, on the other hand, creates precisely the opposite incentive. Since a plaintiff will be able to rely on a previous judgment against a defendant but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to adopt a "wait and see" attitude, in the hope that the first action by another plaintiff will result in a favorable judgment. E. g., Nevarov v. Caldwell, 161 Cal. App. 2d 762, 767-768, 327 P. 2d 111, 115; Reardon v. Allen, 88 N. J. Super. 560, 571-572, 213 A. 2d 26, 32. Thus offensive use of collateral estoppel will likely increase rather than decrease the total amount of litigation, since potential plaintiffs will have everything to gain and nothing to lose by not intervening in the first action.^[14]

A second argument against offensive use of collateral estoppel is that it may be unfair to a defendant. If a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously, particularly if future suits are not foreseeable. The Evergreens v. Nunan, 141 F. 2d 927, 929 (CA2); cf. Berner v. British Commonwealth Pac. Airlines, 346 F. 2d 532 (CA2) (application of offensive collateral estoppel denied where defendant did not appeal an adverse judgment awarding damages of $35,000 and defendant was later sued for over $7 million). Allowing offensive collateral estoppel may also be unfair to a defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant.^[15] Still another situation where it might be [331] unfair to apply offensive estoppel is where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result.^[16]

C

We have concluded that the preferable approach for dealing with these problems in the federal courts is not to preclude the use of offensive collateral estoppel, but to grant trial courts broad discretion to determine when it should be applied.^[17] The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.

In the present case, however, none of the circumstances that might justify reluctance to allow the offensive use of collateral estoppel is present. The application of offensive collateral [332] estoppel will not here reward a private plaintiff who could have joined in the previous action, since the respondent probably could not have joined in the injunctive action brought by the SEC even had he so desired.^[18] Similarly, there is no unfairness to the petitioners in applying offensive collateral estoppel in this case. First, in light of the serious allegations made in the SEC's complaint against the petitioners, as well as the foreseeability of subsequent private suits that typically follow a successful Government judgment, the petitioners had every incentive to litigate the SEC lawsuit fully and vigorously.^[19] Second, the judgment in the SEC action was not inconsistent with any previous decision. Finally, there will in the respondent's action be no procedural opportunities available to the petitioners that were unavailable in the first action of a kind that might be likely to cause a different result.^[20]

We conclude, therefore, that none of the considerations that would justify a refusal to allow the use of offensive collateral estoppel is present in this case. Since the petitioners received a "full and fair" opportunity to litigate their claims in the [333] SEC action, the contemporary law of collateral estoppel leads inescapably to the conclusion that the petitioners are collaterally estopped from relitigating the question of whether the proxy statement was materially false and misleading.

II

The question that remains is whether, notwithstanding the law of collateral estoppel, the use of offensive collateral estoppel in this case would violate the petitioners' Seventh Amendment right to a jury trial.^[21]

A

"[T]he thrust of the [Seventh] Amendment was to preserve the right to jury trial as it existed in 1791." Curtis v. Loether, 415 U. S. 189, 193. At common law, a litigant was not entitled to have a jury determine issues that had been previously adjudicated by a chancellor in equity. Hopkins v. Lee, 6 Wheat. 109; Smith v. Kernochen, 7 How. 198, 217-218; Brady v. Daly, 175 U. S. 148, 158-159; Shapiro & Coquillette, The Fetish of Jury Trial in Civil Cases: A Comment on Rachal v. Hill, 85 Harv. L. Rev. 442, 448-458 (1971).^[22]

Recognition that an equitable determination could have collateral-estoppel effect in a subsequent legal action was the major premise of this Court's decision in Beacon Theatres, Inc. v. Westover, 359 U. S. 500. In that case the plaintiff sought a declaratory judgment that certain arrangements between it [334] and the defendant were not in violation of the antitrust laws, and asked for an injunction to prevent the defendant from instituting an antitrust action to challenge the arrangements. The defendant denied the allegations and counter-claimed for treble damages under the antitrust laws, requesting a trial by jury of the issues common to both the legal and equitable claims. The Court of Appeals upheld denial of the request, but this Court reversed, stating:

"[T]he effect of the action of the District Court could be, as the Court of Appeals believed, `to limit the petitioner's opportunity fully to try to a jury every issue which has a bearing upon its treble damage suit,' for determination of the issue of clearances by the judge might `operate either by way of res judicata or collateral estoppel so as to conclude both parties with respect thereto at the subsequent trial of the treble damage claim.' " Id., at 504.

It is thus clear that the Court in the Beacon Theatres case thought that if an issue common to both legal and equitable claims was first determined by a judge, relitigation of the issue before a jury might be foreclosed by res judicata or collateral estoppel. To avoid this result, the Court held that when legal and equitable claims are joined in the same action, the trial judge has only limited discretion in determining the sequence of trial and "that discretion . . . must, wherever possible, be exercised to preserve jury trial." Id., at 510.^[23]

Both the premise of Beacon Theatres, and the fact that it enunciated no more than a general prudential rule were confirmed by this Court's decision in Katchen v. Landy, 382 U. S. 323. In that case the Court held that a bankruptcy court, sitting as a statutory court of equity, is empowered to adjudicate [335] equitable claims prior to legal claims, even though the factual issues decided in the equity action would have been triable by a jury under the Seventh Amendment if the legal claims had been adjudicated first. The Court stated:

"Both Beacon Theatres and Dairy Queen recognize that there might be situations in which the Court could proceed to resolve the equitable claim first even though the results might be dispositive of the issues involved in the legal claim." Id., at 339.

Thus the Court in Katchen v. Landy recognized that an equitable determination can have collateral-estoppel effect in a subsequent legal action and that this estoppel does not violate the Seventh Amendment.

B

Despite the strong support to be found both in history and in the recent decisional law of this Court for the proposition that an equitable determination can have collateral-estoppel effect in a subsequent legal action, the petitioners argue that application of collateral estoppel in this case would nevertheless violate their Seventh Amendment right to a jury trial. The petitioners contend that since the scope of the Amendment must be determined by reference to the common law as it existed in 1791, and since the common law permitted collateral estoppel only where there was mutuality of parties, collateral estoppel cannot constitutionally be applied when such mutuality is absent.

The petitioners have advanced no persuasive reason, however, why the meaning of the Seventh Amendment should depend on whether or not mutuality of parties is present. A litigant who has lost because of adverse factual findings in an equity action is equally deprived of a jury trial whether he is estopped from relitigating the factual issues against the same party or a new party. In either case, the party against whom estoppel is asserted has litigated questions of fact, and has had the facts determined against him in an earlier proceeding. [336] In either case there is no further factfinding function for the jury to perform, since the common factual issues have been resolved in the previous action. Cf. Ex parte Peterson, 253 U. S. 300, 310 ("No one is entitled in a civil case to trial by jury unless and except so far as there are issues of fact to be determined").

The Seventh Amendment has never been interpreted in the rigid manner advocated by the petitioners. On the contrary, many procedural devices developed since 1791 that have diminished the civil jury's historic domain have been found not to be inconsistent with the Seventh Amendment. See Galloway v. United States, 319 U. S. 372, 388-393 (directed verdict does not violate the Seventh Amendment); Gasoline Products Co. v. Champlin Refining Co., 283 U. S. 494, 497-498 (retrial limited to question of damages does not violate the Seventh Amendment even though there was no practice at common law for setting aside a verdict in part); Fidelity & Deposit Co. v. United States, 187 U. S. 315, 319-321 (summary judgment does not violate the Seventh Amendment).^[24]

The Galloway case is particularly instructive. There the party against whom a directed verdict had been entered argued that the procedure was unconstitutional under the Seventh Amendment. In rejecting this claim, the Court said:

"The Amendment did not bind the federal courts to the exact procedural incidents or details of jury trial according [337] to the common law in 1791, any more than it tied them to the common-law system of pleading or the specific rules of evidence then prevailing. Nor were `the rules of the common law' then prevalent, including those relating to the procedure by which the judge regulated the jury's role on questions of fact, crystallized in a fixed and immutable system. . . .

"The more logical conclusion, we think, and the one which both history and the previous decisions here support, is that the Amendment was designed to preserve the basic institution of jury trial in only its most fundamental elements, not the great mass of procedural forms and details, varying even then so widely among common-law jurisdictions." 319 U. S., at 390, 392 (footnote omitted).

The law of collateral estoppel, like the law in other procedural areas defining the scope of the jury's function, has evolved since 1791. Under the rationale of the Galloway case, these developments are not repugnant to the Seventh Amendment simply for the reason that they did not exist in 1791. Thus if, as we have held, the law of collateral estoppel forecloses the petitioners from relitigating the factual issues determined against them in the SEC action, nothing in the Seventh Amendment dictates a different result, even though because of lack of mutuality there would have been no collateral estoppel in 1791.^[25]

The judgment of the Court of Appeals is

Affirmed.

MR. JUSTICE REHNQUIST, dissenting.

It is admittedly difficult to be outraged about the treatment accorded by the federal judiciary to petitioners' demand for a jury trial in this lawsuit. Outrage is an emotion all but [338] impossible to generate with respect to a corporate defendant in a securities fraud action, and this case is no exception. But the nagging sense of unfairness as to the way petitioners have been treated, engendered by the imprimatur placed by the Court of Appeals on respondent's "heads I win, tails you lose" theory of this litigation, is not dispelled by this Court's antiseptic analysis of the issues in the case. It may be that if this Nation were to adopt a new Constitution today, the Seventh Amendment guaranteeing the right of jury trial in civil cases in federal courts would not be included among its provisions. But any present sentiment to that effect cannot obscure or dilute our obligation to enforce the Seventh Amendment, which was included in the Bill of Rights in 1791 and which has not since been repealed in the only manner provided by the Constitution for repeal of its provisions.

The right of trial by jury in civil cases at common law is fundamental to our history and jurisprudence. Today, however, the Court reduces this valued right, which Blackstone praised as "the glory of the English law," to a mere "neutral" [339] factor and in the name of procedural reform denies the right of jury trial to defendants in a vast number of cases in which defendants, heretofore, have enjoyed jury trials. Over 35 years ago, Mr. Justice Black lamented the "gradual process of judicial erosion which in one-hundred-fifty years has slowly worn away a major portion of the essential guarantee of the Seventh Amendment." Galloway v. United States, 319 U. S. 372, 397 (1943) (dissenting opinion). Regrettably, the erosive process continues apace with today's decision.^[26]

I

The Seventh Amendment provides:

"In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law."

The history of the Seventh Amendment has been amply documented by this Court and by legal scholars,^[27] and it would serve no useful purpose to attempt here to repeat all that has been written on the subject. Nonetheless, the decision of this case turns on the scope and effect of the Seventh Amendment, which, perhaps more than with any other provision of the Constitution, are determined by reference to the historical [340] setting in which the Amendment was adopted. See Colgrove v. Battin, 413 U. S. 149, 152 (1973). It therefore is appropriate to pause to review, albeit briefly, the circumstances preceding and attending the adoption of the Seventh Amendment as a guide in ascertaining its application to the case at hand.

A

It is perhaps easy to forget, now more than 200 years removed from the events, that the right of trial by jury was held in such esteem by the colonists that its deprivation at the hands of the English was one of the important grievances leading to the break with England. See Sources and Documents Illustrating the American Revolution 1764-1788 and the Formation of the Federal Constitution 94 (S. Morison 2d ed. 1929); R. Pound, The Development of Constitutional Guarantees of Liberty 69-72 (1957); C. Ubbelohde, The Vice-Admiralty Courts and the American Revolution 208-211 (1960). The extensive use of vice-admiralty courts by colonial administrators to eliminate the colonists' right of jury trial was listed among the specific offensive English acts denounced in the Declaration of Independence.^[28] And after [341] war had broken out, all of the 13 newly formed States restored the institution of civil jury trial to its prior prominence; 10 expressly guaranteed the right in their state constitutions and the 3 others recognized it by statute or by common practice.^[29] Indeed, "[t]he right to trial by jury was probably the only one universally secured by the first American state constitutions . . . ." L. Levy, Legacy of Suppression: Freedom of Speech and Press in Early American History 281 (1960).^[30]

One might justly wonder then why no mention of the right of jury trial in civil cases should have found its way into the Constitution that emerged from the Philadelphia Convention in 1787. Article III, § 2, cl. 3, merely provides that "The Trial of all Crimes, except in Cases of Impeachment, shall be by Jury." The omission of a clause protective of the civil jury right was not for lack of trying, however. Messrs. Pinckney and Gerry proposed to provide a clause securing the right of jury trial in civil cases, but their efforts failed.^[31] Several reasons [342] have been advanced for this failure. The Federalists argued that the practice of civil juries among the several States varied so much that it was too difficult to draft constitutional language to accommodate the different state practices. See Colgrove v. Battin, supra, at 153.^[32] Whatever the reason for the omission, however, it is clear that even before the delegates had left Philadelphia, plans were under way to attack the proposed Constitution on the ground that it failed to contain a guarantee of civil jury trial in the new federal courts. See R. Rutland, George Mason 91 (1961); Wolfram 662.

The virtually complete absence of a bill of rights in the proposed Constitution was the principal focus of the Anti-Federalists' attack on the Constitution, and the lack of a provision for civil juries featured prominently in their arguments. See Parsons v. Bedford, 3 Pet. 433, 445 (1830). Their pleas struck a responsive chord in the populace, and the price exacted in many States for approval of the Constitution was the appending of a list of recommended amendments, chief among them a clause securing the right of jury trial in civil cases.^[33] Responding to the pressures for a civil jury [343] guarantee generated during the ratification debates, the first Congress under the new Constitution at its first session in 1789 proposed to amend the Constitution by adding the following language: "In suits at common law, between man and man, the trial by jury, as one of the best securities to the rights of the people, ought to remain inviolate." 1 Annals of Cong. 435 (1789). That provision, altered in language to what became the Seventh Amendment, was proposed by the Congress in 1789 to the legislatures of the several States and became effective with its ratification by Virginia on December 15, 1791.^[34]

The foregoing sketch is meant to suggest what many of those who oppose the use of juries in civil trials seem to ignore. The founders of our Nation considered the right of trial by jury in civil cases an important bulwark against tyranny and corruption, a safeguard too precious to be left to the whim of the sovereign, or, it might be added, to that of the judiciary.^[35] Those who passionately advocated the right to a civil jury trial did not do so because they considered the jury a familiar procedural device that should be continued; the concerns for the institution of jury trial that led to the passages of the Declaration of Independence and to the Seventh Amendment were not animated by a belief that use of juries would lead to more efficient judicial administration. Trial by a jury of laymen rather than by the sovereign's judges [344] was important to the founders because juries represent the layman's common sense, the "passional elements in our nature," and thus keep the administration of law in accord with the wishes and feelings of the community. O. Holmes, Collected Legal Papers 237 (1920). Those who favored juries believed that a jury would reach a result that a judge either could not or would not reach.^[36] It is with these values that underlie the Seventh Amendment in mind that the Court should, but obviously does not, approach the decision of this case.

B

The Seventh Amendment requires that the right of trial by jury be "preserved." Because the Seventh Amendment demands preservation of the jury trial right, our cases have uniformly held that the content of the right must be judged by historical standards. E. g., Curtis v. Loether, 415 U. S. 189, 193 (1974); Colgrove v. Battin, 413 U. S., at 155-156; Ross v. Bernhard, 396 U. S. 531, 533 (1970); Capital Traction Co. v. Hof, 174 U. S. 1,8-9 (1899); Parsons v. Bedford, supra, at 446. Thus, in Baltimore & Carolina Line v. Redman, 295 U. S. 654, 657 (1935), the Court stated that "[t]he right of trial by jury thus preserved is the right which existed under the English common law when the Amendment was adopted." [345] And in Dimick v. Schiedt, 293 U. S. 474, 476 (1935), the Court held: "In order to ascertain the scope and meaning of the Seventh Amendment, resort must be had to the appropriate rules of the common law established at the time of the adoption of that constitutional provision in 1791."^[37] If a jury would have been impaneled in a particular kind of case in 1791, then the Seventh Amendment requires a jury trial today, if either party so desires.

To be sure, it is the substance of the right of jury trial that is preserved, not the incidental or collateral effects of common-law practice in 1791. Walker v. New Mexico & S. P. R. Co., 165 U. S. 593, 596 (1897). "The aim of the Amendment, as this Court has held, is to preserve the substance of the common-law right of trial by jury, as distinguished from mere matters of form or procedure, and particularly to retain the common-law distinction between the province of the court and that of the jury. . . ." Baltimore & Carolina Line v. Redman, supra, at 657. Accord, Colgrove v. Battin, supra, at 156-157; Gasoline Products Co. v. Champlin Refining Co., 283 U. S. 494, 498 (1931); Ex parte Peterson, 253 U. S. 300, 309 (1920). "The Amendment did not bind the federal courts to the exact procedural incidents or details of jury trial according to the common law of 1791, any more than it tied them to the common-law system of pleading or the specific rules of evidence then prevailing." Galloway v. United States, 319 U. S., at 390.

To say that the Seventh Amendment does not tie federal courts to the exact procedure of the common law in 1791 does [346] not imply, however, that any nominally "procedural" change can be implemented, regardless of its impact on the functions of the jury. For to sanction creation of procedural devices which limit the province of the jury to a greater degree than permitted at common law in 1791 is in direct contravention of the Seventh Amendment. See Neely v. Martin K. Eby Constr. Co., 386 U. S. 317, 322 (1967); Galloway v. United States, supra, at 395; Dimick v. Schiedt, supra, at 487; Ex parte Peterson, supra, at 309-310. And since we deal here not with the common law qua common law but with the Constitution, no amount of argument that the device provides for more efficiency or more accuracy or is fairer will save it if the degree of invasion of the jury's province is greater than allowed in 1791. To rule otherwise would effectively permit judicial repeal of the Seventh Amendment because nearly any change in the province of the jury, no matter how drastic the diminution of its functions, can always be denominated "procedural reform."

The guarantees of the Seventh Amendment will prove burdensome in some instances; the civil jury surely was a burden to the English governors who, in its stead, substituted the vice-admiralty court. But, as with other provisions of the Bill of Rights, the onerous nature of the protection is no license for contracting the rights secured by the Amendment. Because " `[m]aintenance of the jury as a fact-finding body is of such importance and occupies so firm a place in our history and jurisprudence . . . any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care.' " Dimick v. Schiedt, supra, at 486, quoted in Beacon Theatres, Inc. v. Westover, 359 U. S. 500, 501 (1959).

C

Judged by the foregoing principles, I think it is clear that petitioners were denied their Seventh Amendment right to a [347] jury trial in this case. Neither respondent nor the Court doubts that at common law as it existed in 1791, petitioners would have been entitled in the private action to have a jury determine whether the proxy statement was false and misleading in the respects alleged. The reason is that at common law in 1791, collateral estoppel was permitted only where the parties in the first action were identical to, or in privity with, the parties to the subsequent action.^[38] It was not until 1971 that the doctrine of mutuality was abrogated by this Court in certain limited circumstances. Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U. S. 313.^[39] But developments in the judge-made doctrine of collateral estoppel, however salutary, cannot, consistent with the Seventh Amendment, contract in any material fashion the right to a jury trial that a defendant would have enjoyed in 1791. In the instant case, resort to the doctrine of collateral estoppel does more than merely contract the right to a jury trial: It eliminates the right entirely and therefore contravenes the Seventh Amendment.

The Court responds, however, that at common law "a litigant was not entitled to have a jury [in a subsequent action at law between the same parties] determine issues that had been previously adjudicated by a chancellor in equity," and that "petitioners have advanced no persuasive reason . . . why the meaning of the Seventh Amendment should depend on [348] whether or not mutuality of parties is present." Ante, at 333, 335. But that is tantamount to saying that since a party would not be entitled to a jury trial if he brought an equitable action, there is no persuasive reason why he should receive a jury trial on virtually the same issues if instead he chooses to bring his lawsuit in the nature of a legal action. The persuasive reason is that the Seventh Amendment requires that a party's right to jury trial which existed at common law be "preserved" from incursions by the government or the judiciary. Whether this Court believes that use of a jury trial in a particular instance is necessary, or fair or repetitive is simply irrelevant. If that view is "rigid," it is the Constitution which commands that rigidity. To hold otherwise is to rewrite the Seventh Amendment so that a party is guaranteed a jury trial in civil cases unless this Court thinks that a jury trial would be inappropriate.

No doubt parallel "procedural reforms" could be instituted in the area of criminal jurisprudence, which would accomplish much the same sort of expedition of court calendars and conservation of judicial resources as would the extension of collateral estoppel in civil litigation. Government motions for summary judgment, or for a directed verdict in favor of the prosecution at the close of the evidence, would presumably save countless hours of judges' and jurors' time. It can scarcely be doubted, though, that such "procedural reforms" would not survive constitutional scrutiny under the jury trial guarantee of the Sixth Amendment. Just as the principle of separation of powers was not incorporated by the Framers into the Constitution in order to promote efficiency or dispatch in the business of government, the right to a jury trial was not guaranteed in order to facilitate prompt and accurate decision of lawsuits. The essence of that right lies in its insistence that a body of laymen not permanently attached to the sovereign participate along with the judge in the factfinding [349] necessitated by a lawsuit. And that essence is as much a part of the Seventh Amendment's guarantee in civil cases as it is of the Sixth Amendment's guarantee in criminal prosecutions. Cf. Thiel v. Southern Pacific Co., 328 U. S. 217, 220 (1946).

Relying on Galloway v. United States, Gasoline Products Co. v. Champlin Refining Co., and Fidelity & Deposit Co. v. United States, 187 U. S. 315 (1902), the Court seems to suggest that the offensive use of collateral estoppel in this case is permissible under the limited principle set forth above that a mere procedural change that does not invade the province of the jury and a defendant's right thereto to a greater extent than authorized by the common law is permissible. But the Court's actions today constitute a far greater infringement of the defendant's rights than it ever before has sanctioned. In Galloway, the Court upheld the modern form of directed verdict against a Seventh Amendment challenge, but it is clear that a similar form of directed verdict existed at common law in 1791. E. g., Beauchamp v. Borret, Peake 148, 170 Eng. Rep. 110 (N. P. 1792); Coupey v. Henley, 2 Esp. 540, 542, 170 Eng. Rep. 448, 449 (C. P. 1797).^[40] The modern form did not materially alter the function of the jury. Similarly, the modern device of summary judgment was found not to violate the Seventh Amendment because in 1791 a demurrer to the evidence, a procedural device substantially similar to summary judgment, was a common practice. E. g., Pawling v. United States, 4 Cranch 219, 221-222 (1808).^[41] [350] The procedural devices of summary judgment and directed verdict are direct descendants of their common-law antecedents. They accomplish nothing more than could have been done at common law, albeit by a more cumbersome procedure. See also Montgomery Ward & Co. v. Duncan, 311 U. S. 243, 250 (1940). And while at common law there apparently was no practice of setting aside a verdict in part,^[42] the Court in Gasoline Products permitted a partial retrial of "distinct and separable" issues because the change in procedure would not impair the substance of the right to jury trial. 283 U. S., at 498. The parties in Gasoline Products still enjoyed the right to have a jury determine all issues of fact.

By contrast, the development of nonmutual estoppel is a substantial departure from the common law and its use in this case completely deprives petitioners of their right to have a jury determine contested issues of fact. I am simply unwilling to accept the Court's presumption that the complete extinguishment of petitioners' right to trial by jury can be justified as a mere change in "procedural incident or detail." Over 40 years ago, Mr. Justice Sutherland observed in a not dissimilar case: "[T]his court in a very special sense is charged with the duty of construing and upholding the Constitution; and in the discharge of that important duty, it ever must be alert to see that a doubtful precedent be not extended by mere analogy to a different case if the result will be to weaken or subvert what it conceives to be a principle of the fundamental law of the land." Dimick v. Schiedt, 293 U. S., at 485.

[351] II

Even accepting, arguendo, the majority's position that there is no violation of the Seventh Amendment here, I nonetheless would not sanction the use of collateral estoppel in this case. The Court today holds:

"The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel." Ante, at 331.

In my view, it is "unfair" to apply offensive collateral estoppel where the party who is sought to be estopped has not had an opportunity to have the facts of his case determined by a jury. Since in this case petitioners were not entitled to a jury trial in the Securities and Exchange Commission (SEC) lawsuit,^[43] I would not estop them from relitigating the issues determined in the SEC suit before a jury in the private action. I believe that several factors militate in favor of this result.

First, the use of offensive collateral estoppel in this case runs counter to the strong federal policy favoring jury trials, even if it does not, as the majority holds, violate the Seventh Amendment. The Court's decision in Beacon Theatres, Inc. v. Westover, 359 U. S. 500 (1959), exemplifies that policy. In Beacon Theatres the Court held that where both equitable and legal claims or defenses are presented in a single case, "only under the most imperative circumstances, circumstances which in view of the flexible procedures of the Federal Rules we cannot now anticipate, can the right to a jury trial of legal issues be lost through prior determination of equitable claims." [352] Id., at 510-511.^[44] And in Jacob v. New York, 315 U. S. 752, 752-753 (1942), the Court stated: "The right of jury trial in civil cases at common law is a basic and fundamental feature of our system of federal jurisprudence which is protected by the Seventh Amendment. A right so fundamental and sacred to the citizen, whether guaranteed by the Constitution or provided by statute, should be jealously guarded by the courts." Accord, Simler v. Conner, 372 U. S. 221, 222 (1963); Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U. S. 525, 537-539 (1958) (strong federal policy in favor of juries requires jury trials in diversity cases, regardless of state practice). Today's decision will mean that in a large number of private cases defendants will no longer enjoy the right to jury trial.^[45] Neither the Court nor respondent has adverted or cited to any unmanageable problems that have resulted [353] from according defendants jury trials in such cases. I simply see no "imperative circumstances" requiring this wholesale abrogation of jury trials.^[46]

Second, I believe that the opportunity for a jury trial in the second action could easily lead to a different result from that obtained in the first action before the court and therefore that it is unfair to estop petitioners from relitigating the issues before a jury. This is the position adopted in the Restatement (Second) of Judgments, which disapproves of the application of offensive collateral estoppel where the defendant has an opportunity for a jury trial in the second lawsuit that was not available in the first action.^[47] The Court accepts the proposition that it is unfair to apply offensive collateral estoppel "where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result." Ante, at 331. Differences in discovery opportunities between the two actions are cited as examples of situations where it would be unfair to permit offensive collateral estoppel. Ante, at 331 n. 15. But in the Court's view, the fact that petitioners would have been entitled to a jury trial in the present action is not such a "procedural opportunit[y]" because "the presence or absence of a jury as factfinder is basically neutral, quite unlike, for example, the [354] necessity of defending the first lawsuit in an inconvenient forum." Ante, at 332 n. 19 (emphasis added).

As is evident from the prior brief discussion of the development of the civil jury trial guarantee in this country, those who drafted the Declaration of Independence and debated so passionately the proposed Constitution during the ratification period, would indeed be astounded to learn that the presence or absence of a jury is merely "neutral," whereas the availability of discovery, a device unmentioned in the Constitution, may be controlling. It is precisely because the Framers believed that they might receive a different result at the hands of a jury of their peers than at the mercy of the sovereign's judges, that the Seventh Amendment was adopted. And I suspect that anyone who litigates cases before juries in the 1970's would be equally amazed to hear of the supposed lack of distinction between trial by court and trial by jury. The Court can cite no authority in support of this curious proposition. The merits of civil juries have been long debated, but I suspect that juries have never been accused of being merely "neutral" factors.^[48]

Contrary to the majority's supposition, juries can make a difference, and our cases have, before today at least, recognized this obvious fact. Thus, in Colgrove v. Battin, 413 U. S., at 157, we stated that "the purpose of the jury trial in . . . civil cases [is] to assure a fair and equitable resolution of factual issues, Gasoline Products Co. v. Champlin Co., 283 U. S. 494, 498 (1931) . . . ." And in Byrd v. Blue Ridge [355] Rural Electrical Cooperative, supra, at 537, the Court conceded that "the nature of the tribunal which tries issues may be important in the enforcement of the parcel of rights making up a cause of action or defense . . . . It may well be that in the instant personal-injury case the outcome would be substantially affected by whether the issue of immunity is decided by a judge or a jury." See Curtis v. Loether, 415 U. S., at 198; cf. Duncan v. Louisiana, 391 U. S. 145, 156 (1968). Jurors bring to a case their common sense and community values; their "very inexperience is an asset because it secures a fresh perception of each trial, avoiding the stereotypes said to infect the judicial eye." H. Kalven & H. Zeisel, The American Jury 8 (1966).

The ultimate irony of today's decision is that its potential for significantly conserving the resources of either the litigants or the judiciary is doubtful at best. That being the case, I see absolutely no reason to frustrate so cavalierly the important federal policy favoring jury decisions of disputed fact questions. The instant case is an apt example of the minimal savings that will be accomplished by the Court's decision. As the Court admits, even if petitioners are collaterally estopped from relitigating whether the proxy was materially false and misleading, they are still entitled to have a jury determine whether respondent was injured by the alleged misstatements and the amount of damages, if any, sustained by respondent. Ante, at 325 n. 2. Thus, a jury must be impaneled in this case in any event. The time saved by not trying the issue of whether the proxy was materially false and misleading before the jury is likely to be insubstantial.^[49] It is just as probable that today's decision will have the result of coercing defendants to agree to consent orders or settlements [356] in agency enforcement actions in order to preserve their right to jury trial in the private actions. In that event, the Court, for no compelling reason, will have simply added a powerful club to the administrative agencies' arsenals that even Congress was unwilling to provide them.

[1] Solicitor General McCree, Deputy Solicitor General Easterbrook, Stephen M. Shapiro, Harvey L. Pitt, Paul Gonson, and Michael K. Wolensky filed a brief for the United States et al. as amici curiae urging affirmance.

[2] The amended complaint alleged that the proxy statement that had been issued to the stockholders was false and misleading because it failed to disclose: (1) that the president of Parklane would financially benefit as a result of the company's going private; (2) certain ongoing negotiations that could have resulted in financial benefit to Parklane; and (3) that the appraisal of the fair value of Parklane stock was based on insufficient information to be accurate.

[3] A private plaintiff in an action under the proxy rules is not entitled to relief simply by demonstrating that the proxy solicitation was materially false and misleading. The plaintiff must also show that he was injured and prove damages. Mills v. Electric Auto-Lite Co., 396 U. S. 375, 386-390. Since the SEC action was limited to a determination of whether the proxy statement contained materially false and misleading information, the respondent conceded that he would still have to prove these other elements of his prima facie case in the private action. The petitioners' right to a jury trial on those remaining issues is not contested.

[4] The position of the Court of Appeals for the Second Circuit is in conflict with that taken by the Court of Appeals for the Fifth Circuit in Rachal v. Hill, 435 F. 2d 59.

[5] In this context, offensive use of collateral estoppel occurs when the plaintiff seeks to foreclose the defendant from litigating an issue the defendant has previously litigated unsuccessfully in an action with another party. Defensive use occurs when a defendant seeks to prevent a plaintiff from asserting a claim the plaintiff has previously litigated and lost against another defendant.

[6] Under the doctrine of res judicata, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, the second action is upon a different cause of action and the judgment in the prior suit precludes relitigation of issues actually litigated and necessary to the outcome of the first action. 1B J. Moore, Federal Practice ¶ 0.405 [1], pp. 622-624 (2d ed. 1974); e. g., Lawlor v. National Screen Serv. Corp., 349 U. S. 322, 326; Commissioner v. Sunnen, 333 U. S. 591, 597; Cromwell v. County of Sac, 94 U. S. 351, 352-353.

[7] E.g., Bigelow v. Old Dominion Copper Co., 225 U. S. 111, 127 ("It is a principle of general elementary law that estoppel of a judgment must be mutual"); Buckeye Powder Co. v. E. I. DuPont de Nemours Powder Co., 248 U. S. 55, 63; Restatement of Judgments § 93 (1942).

[8] It is a violation of due process for a judgment to be binding on a litigant who was not a party or a privy and therefore has never has an opportunity to be heard. Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U. S. 313, 329; Hansberry v. Lee, 311 U. S. 32, 40.

[9] This criticism was summarized in the Court's opinion in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, supra, at 332-327. The opinion of Justice Traynor for a unanimous California Supreme Court in Bernhard v. Bank of America Nat. Trust & Savings Assn.,19 Cal. 2d 807, 812, 122 P. 2d 892, 895, made the point succinctly:

"No satisfactory rationalization has been advanced for the requirement of mutuality. Just why a party who was not bound by a previous action should be precluded from asserting it as res judicata against a party who was bound by it is difficult to comprehend."

[10] In Triplett v. Lowell, 297 U. S. 638, the Court had held that a determination of patent invalidity in a prior action did not bar a plaintiff from relitigating the validity of a patent in a subsequent action against a different defendant. This holding of the Triplett case was explicitly over-ruled in the Blonder-Tongue case.

[11] The Court also emphasized that relitigation of issues previously adjudicated is particularly wasteful in patent cases because of their staggering expense and typical length. 402 U. S., at 334, 348. Under the doctrine of mutuality of parties an alleged infringer might find it cheaper to pay royalties than to challenge a patent that had been declared invalid in a prior suit, since the holder of the patent is entitled to a statutory presumption of validity. Id., at 338.

[12] Various commentators have expressed reservations regarding the application of offensive collateral estoppel. Currie, Mutuality of Estoppel: Limits of the Bernhard Doctrine, 9 Stan. L. Rev. 281 (1957); Semmel, Collateral Estoppel, Mutuality and Joinder of Parties, 68 Colum. L. Rev. 1457 (1968); Note, The Impacts of Defensive and Offensive Assertion of Collateral Estoppel by a Nonparty, 35 Geo. Wash. L. Rev. 1010 (1967). Professor Currie later tempered his reservations. Civil Procedure: The Tempest Brews, 53 Calif. L. Rev. 25 (1965).

[13] Under the mutuality requirement, a plaintiff could accomplish this result since he would not have been bound by the judgment had the original defendant won.

[14] The Restatement (Second) of Judgments § 88 (3) (Tent. Draft No. 2, Apr. 15, 1975) provides that application of collateral estoppel may be denied if the party asserting it "could have effected joinder in the first action between himself and his present adversary."

[15] In Professor Currie's familiar example, a railroad collision injures 50 passengers all of whom bring separate actions against the railroad. After the railroad wins the first 25 suits, a plaintiff wins in suit 26. Professor Currie argues that offensive use of collateral estoppel should not be applied so as to allow plaintiffs 27 through 50 automatically to recover. Currie, supra, 9 Stan. L. Rev., at 304. See Restatement (Second) of Judgments § 88 (4), supra.

[16] If, for example, the defendant in the first action was forced to defend in an inconvenient forum and therefore was unable to engage in full scale discovery or call witnesses, application of offensive collateral estoppel may be unwarranted. Indeed, differences in available procedures may sometimes justify not allowing a prior judgment to have estoppel effect in a subsequent action even between the same parties, or where defensive estoppel is asserted against a plaintiff who has litigated and lost. The problem of unfairness is particularly acute in cases of offensive estoppel, however, because the defendant against whom estoppel is asserted typically will not have chosen the forum in the first action. See, id., § 88 (2) and Comment d.

[17] This is essentially the approach of id., § 88, which recognizes that "the distinct trend if not the clear weight of recent authority is to the effect that there is no intrinsic difference between `offensive' as distinct from `defensive' issue preclusion, although a stronger showing that the prior opportunity to litigate was adequate may be required in the former situation than the latter." Id., Reporter's Note, at 99.

[18] SEC v. Everest Management Corp., 475 F. 2d 1236, 1240 (CA2) ("[T]he complicating effect of the additional issues and the additional parties outweighs any advantage of a single disposition of the common issues"). Moreover, consolidation of a private action with one brought by the SEC without its consent is prohibited by statute. 15 U. S. C. § 78u (g).

[19] After a 4-day trial in which the petitioners had every opportunity to present evidence and call witnesses, the District Court held for the SEC. The petitioners then appealed to the Court of Appeals for the Second Circuit, which affirmed the judgment against them. Moreover, the petitioners were already aware of the action brought by the respondent, since it had commenced before the filing of the SEC action.

[20] It is true, of course, that the petitioners in the present action would be entitled to a jury trial of the issues bearing on whether the proxy statement was materially false and misleading had the SEC action never been brought—a matter to be discussed in Part II of this opinion. But the presence or absence of a jury as factfinder is basically neutral, quite unlike, for example, the necessity of defending the first lawsuit in an inconvenient forum.

[21] The Seventh Amendment provides: "In Suits at common law, where the value in controversy shall exceed twenty dollars, the right to jury trial shall be preserved. . . ."

[22] The authors of this article conclude that the historical sources "indicates that in the late eighteenth and early nineteenth centuries, determinations in equity were thought to have as much force as determinations at law, and that the possible impact on jury trial rights was not viewed with concern. . . . If collateral estoppel is otherwise warranted, the jury trial question should not stand in the way." 85 Harv. L. Rev., at 455-456. This common-law rule is adopted in the Restatement of Judgments § 68, Comment j (1942).

[23] Similarly, in both Dairy Queen, Inc. v. Wood, 369 U. S. 469, and Meeker v. Ambassador Oil Corp., 375 U. S. 160, the court held that legal claims should ordinarily be tried before equitable claims to preserve the right to a jury trial.

[24] The petitioners' reliance on Dimick v. Schiedt, 293 U. S. 474, is misplaced. In the Dimick case the Court held that an increase by the trial judge of the amount of money damages awarded by the jury violated the second clause of the Seventh Amendment, which provides that "no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law." Collateral estoppel does not involve the "re-examination" of any fact decided by a jury. On the contrary, the whole premise of collateral estoppel is that once an issue has been resolved in a prior proceeding, there is no further factfinding function to be performed.

[25] In reaching this conclusion, the Court of Appeals went on to state:

"Were there any doubt about the [question whether the petitioners were entitled to a jury redetermination of the issues otherwise subject to collateral estoppel] it should in any event be resolved against the defendants in this case for the reason that, although they were fully aware of the pendency of the present suit throughout the non-jury trial of the SEC case, they made no effort to protect their right to a jury trial of the damage claims asserted by plaintiffs, either by seeking to expedite trial of the present action or by requesting Judge Duffy, in the exercise of his discretion pursuant to Rule 39 (b), (c), F.R.Civ.P., to order that the issues in the SEC case be tried by a jury or before an advisory jury." 565 F. 2d, at 821-822. (Footnote omitted.)

The Court of Appeals was mistaken in these suggestions. The petitioners did not have a right to a jury trial in the equitable injunctive action brought by the SEC. Moreover, an advisory jury, which might have only delayed and complicated that proceeding, would not in any event have been a Seventh Amendment jury. And the petitioners were not in a position to expedite the private action and stay the SEC action. The Securities Exchange Act of 1934 provides for prompt enforcement actions by the SEC unhindered by parallel private actions. 15 U. S. C. § 78u (g).

[26] Because I believe that the use of offensive collateral estoppel in this particular case was improper, it is not necessary for me to decide whether I would approve its use in circumstances where the defendant's right to a jury trial was not impaired.

[27] See, e.g., Colgrove v. Battin, 413 U. S. 149 (1973); Capital Traction Co. v. Hof, 174 U. S. 1 (1899); Parsons v. Bedford, 3 Pet. 433 (1830); Henderson, The Background of the Seventh Amendment, 80 Harv. L. Rev. 289 (1966) (hereinafter Henderson); Wolfram, The Constitutional History of the Seventh Amendment, 57 Minn. L. Rev. 639 (1973) (hereinafter Wolfram). See also United States v. Wonson, 28 F. Cas. 745 (No. 16,750) (CC Mass. 1812) (Story, C. J.).

[28] The Declaration of Independence states: "For depriving us in many cases, of the benefits of Trial by Jury." Just two years earlier, in the Declaration of Rights adopted October 14, 1774, the first Continental Congress had unanimously resolved that "the respective colonies are entitled to the common law of England, and more especially to the great and inestimable privilege of being tried by their peers of the vicinage, according to the course of that law." 1 Journals of the Continental Congress 69 (1904).

Holdsworth has written that of all the new methods adopted to strengthen the administration of the British laws, "the most effective, and therefore the most disliked, was the extension given to the jurisdiction of the reorganized courts of admiralty and vice-admiralty. It was the most effective, because it deprived the defendant of the right to be tried by a jury which was almost certain to acquit him." 11 W. Holdsworth, A History of English Law 110 (1966). While the vice-admiralty courts dealt chiefly with criminal offenses, their jurisdiction also was extended to many areas of the civil law. Wolfram 654 n. 47.

[29] Ga. Const., Art. LXI (1777), in 2 The Federal and State Constitutions Colonial Charters, and Other Organic Laws 785 (F. Thorpe ed. 1909) (hereinafter Thorpe); Md. Const., Art. III (1776), in 3 Thorpe 1686-1687; Mass. Const., Art. XV (1780), in 3 Thorpe 1891-1892; N. H. Const., Art. XX (1784), in 4 Thorpe 2456; N. J. Const., Art. XXII (1776), in 5 Thorpe 2598; N. Y. Const., Art. XLI (1777), in 5 Thorpe 2637; N. C. Const., Declaration of Rights, Art. XIV (1776), in 5 Thorpe 2788; Pa. Const., Declaration of Rights, Art. XI (1776), in 5 Thorpe 3083; S. C. Const., Art. XLI (1778), in 6 Thorpe 3257; Va. Const., Bill of Rights, § 11 (1776), in 7 Thorpe 3814. See Wolfram 655.

[30] When Congress in 1787 adopted the Northwest Ordinance for governance of the territories west of the Appalachians, it included a guarantee of trial by jury in civil cases. 2 Thorpe 960-961.

[31] The proposal was to add the following language to Art. III: "And a trial by jury shall be preserved as usual in civil cases." 2 M. Farrand, The Records of the Federal Convention of 1787, p. 628 (1911). The debate regarding this proposal is quoted in Colgrove v. Battin, supra, at 153-155, n. 8.

[32] The objection of Mr. Gorham of Massachusetts was that "[t]he constitution of Juries is different in different States and the trial itself is usual in different cases in different States." 2 M. Farrand, supra, at 628. Commentators have suggested several additional reasons for the failure of the convention to include a civil jury guarantee. See Henderson 294-295; ("[T]he true reason for omitting a similar provision for civil juries was at least in part that the convention members simply wanted to go home"); Wolfram 660-666.

[33] See Henderson 298; Wolfram 667-703. Virginia's recommended jury trial amendment is typical: "That, in controversies respecting property, and in suits between man and man, the ancient trial by jury is one of the greatest securities to the rights of the people, and [ought] to remain sacred and inviolable." 3 J. Elliot, Debates on the Federal Constitution 658 (2d ed. 1836).

[34] The Judiciary Act of September 24, 1789, which was passed within six months of the organization of the new government and on the day before the first 10 Amendments were proposed to the legislatures of the States by the First Congress, provided for a civil jury trial right. 1 Stat. 77.

[35] Thomas Jefferson stated: "I consider [trial by jury] as the only anchor yet imagined by man, by which a government can be held to the principles of its constitution." 3 The Writings of Thomas Jefferson 71 (Washington ed. 1861).

[36] Wolfram 671. Professor Wolfram has written:

"[T]he antifederalists were not arguing for the institution of civil jury trial in the belief that jury trials were short, inexpensive, decorous and productive of the same decisions that judges sitting without juries would produce. The inconveniences of jury trial were accepted precisely because in important instances, through its ability to disregard substantive rules of law, the jury would reach a result that the judge either could not or would not reach. Those who favored the civil jury were not misguided tinkerers with procedural devices; they were, for the day, libertarians who avowed that important areas of protection for litigants in general, and for debtors in particular, would be placed in grave danger unless it were required that juries sit in civil cases." Id., at 671-672.

[37] The majority suggests that Dimick v. Schiedt is not relevant to the decision in this case because it dealt with the second clause of the Seventh Amendment. Ante, at 336 n. 23. I disagree. There is no intimation in that opinion that the first clause should be treated any differently from the second. The Dimick Court's respect for the guarantees of the Seventh Amendment applies as much to the first clause as to the second.

[38] See Smith v. Kernochen, 7 How. 198, 218 (1849); Hopkins v. Lee, 6 Wheat. 109, 113-114 (1821); F. Buller, An Introduction to the Law Relative to Trials at Nisi Prius *232 (7th ed. 1817); T. Peake, A Compendium of the Law of Evidence 38 (2d ed. 1806).

[39] The Court's decision in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation is, on its facts, limited to the defensive use of collateral estoppel in patent cases. Abandonment of mutuality is a recent development. The case of Bernhard v. Bank of America Nat. Trust & Sav. Assn., 19 Cal. 2d 807, 122 P. 2d 892, generally considered the seminal case adopting the new approach, was not decided until 1942.

[40] See Henderson 302-303 ("In the England of 1790 the phrase `to direct a verdict' was common. Further, it was commonplace to instruct the jury `that the plaintiff was entitled to recover,' or `the plaintiff must have a verdict' "); Scott, Trial by Jury and the Reform of Civil Procedure, 31 Harv. L. Rev. 669, 686 (1918) (cases cited therein).

[41] To demur, a party would admit the truth of all the facts adduced against him and every adverse inference that could be drawn therefrom, and the court would determine which party should receive judgment on the basis of these admitted facts and inferences. See Slocum v. New York Life Ins. Co., 228 U. S. 364, 388 (1913); Gibson v. Hunter, 2 H. Bl. 187, 126 Eng. Rep. 499 (N. P. 1793); Henderson 304-305; Scott, supra n. 15, at 683-684.

[42] The Court in Gasoline Products quoted Lord Mansfield, who stated that when a verdict is correct as to one issue but erroneous as to another " `for form's sake, we must set aside the whole verdict . . . .' " Edie v. East India Co., 1 W. Bl. 295, 298 (K. B. 1761), quoted 283 U. S., at 498.

[43] I agree with the Court that "petitioners did not have a right to a jury trial in the equitable injunctive action brought by the SEC." Ante, at 338 n. 24.

[44] Meeker v. Ambassador Oil Corp., 375 U. S. 160 (1963) (per curiam), is a case where the doctrine of collateral estoppel yielded to the right to a jury trial. In Meeker, plaintiffs asserted both equitable and legal claims, which presented common issues, and demanded a jury trial. The trial court tried the equitable claim first, and decided that claim, and the common issues, adversely to plaintiffs. As a result, it held that plaintiffs were precluded from relitigating those same issues before a jury on their legal claim. 308 F. 2d 875, 884 (CA10 1962). Plaintiffs appealed, alleging a denial of their right to a jury trial, but the Tenth Circuit affirmed the trial court. This Court reversed the Court of Appeals on the basis of Beacon Theatres, Inc. v. Westover, 359 U. S. 500 (1959), and Dairy Queen, Inc. v. Wood, 369 U. S. 469 (1962), even though, unlike those cases, the equitable action in Meeker already had been tried and the common issues determined by the court. Thus, even though the plaintiffs in Meeker had received a "full and fair" opportunity to try the common issues in the prior equitable action, they nonetheless were given the opportunity to retry those issues before a jury. Today's decision is totally inconsistent with Meeker and the Court fails to explain this inconsistency.

[45] The Court's decision today may well extend to other areas, such as antitrust, labor, employment discrimination, consumer protection, and the like, where a private plaintiff may sue for damages based on the same or similar violations that are the subject of government actions.

[46] This is not to say that Congress cannot commit enforcement of statutorily created rights to an "administrative process or specialized court of equity." Curtis v. Loether, 415 U. S. 189, 195 (1974); see Atlas Roofing Co., Inc. v. Occupational Safety & Health Review Comm'n, 430 U. S. 442 (1977); Katchen v. Landy, 382 U. S. 323 (1966); NLRB v. Jones & Laughlin Steel Corp., 301 U. S. 1 (1937).

[47] Restatement (Second) of Judgments § 88 (2), Comment d (Tent. Draft No. 2, Apr. 15, 1975). Citing Rachal v. Hill, 435 F. 2d 59 (CA5 1970), cert. denied, 403 U. S. 904 (1971), the Reporter's Note states: "The differences between the procedures available in the first and second actions, while not sufficient to deny issue preclusion between the same parties, may warrant a refusal to carry over preclusion to an action involving another party." Restatement, supra, at 100.

[48] See, e. g., Hearings on Recording of Jury Deliberations before the Subcommittee to Investigate the Administration of the Internal Security Act and Other Internal Security Laws of the Senate Committee on the Judiciary, 84th Cong., 1st Sess., 63-81 (1955) (thorough summary of arguments pro and con on jury trials and an extensive bibliography); H. Kalven & H. Zeisel, The American Jury 4 n. 2 (1966) (bibliography); Redish, Seventh Amendment Right to Jury Trial: A Study in the Irrationality of Rational Decision Making, 70 Nw. U. L. Rev. 486, 502-508 (1975) (discussion of arguments for and against juries).

[49] Much of the delay in jury trials is attributed to the jury selection, voir dire, and the charge. See H. Zeisel, H. Kalven, & B. Buchholz, Delay in the Court 79 (1959). None of these delaying factors will be avoided by today's decision.