## Facts

- Sac County, Iowa issued negotiable courthouse bonds in 1860, payable to bearer, with attached interest coupons; the courthouse was never built.
- Cromwell sued the county in federal circuit court on four later-maturing bonds and four related coupons from the same bond issue.
- The county asserted that a prior judgment for the county in an earlier suit on other coupons from the same bond issue (brought in the name of Samuel C. Smith) precluded Cromwell’s present claims.
- In the earlier suit, evidence indicated Cromwell owned the coupons and that Smith litigated for Cromwell’s use and benefit; the court entered judgment for the county after concluding the plaintiff had not proved bona fide purchaser status (acquisition for value before maturity) as to the coupons there sued upon.
- In the present suit, the circuit court treated the prior judgment as conclusive, excluded Cromwell’s evidence that he acquired the bonds and coupons in suit for value before maturity, and entered judgment for the county.
- Cromwell sought Supreme Court review.

## Issues

1. What preclusive effect does a prior judgment have in a later suit between the same parties when the later suit involves a different claim based on different instruments from the same bond issue?
2. Did the prior judgment conclusively bar Cromwell from proving bona fide purchase for value before maturity as to the distinct bonds and coupons sued upon in this action?
3. Did the earlier finding that Smith was the “holder and owner” of the coupons bar the county from showing Smith sued as a nominal plaintiff for Cromwell’s benefit?

## Decision

- The Supreme Court reversed the circuit court’s judgment and remanded for a new trial.
- Because the second suit was on a different claim (different bonds and coupons), the earlier judgment had preclusive effect only as to issues actually litigated and necessarily decided in the earlier action.
- The circuit court erred by excluding Cromwell’s evidence that he acquired the specific bonds and coupons in this case for value before maturity.
- The “holder and owner” finding in the earlier case did not prevent the county from proving Smith litigated for Cromwell’s use and benefit; legal title in Smith was consistent with beneficial ownership in Cromwell.

## Legal Principles

- If a later action is on the same claim or demand as a prior action resolved on the merits, the prior judgment bars relitigation of the entire claim, including matters that were raised and matters that could have been raised.
- If a later action is on a different claim or demand, the prior judgment precludes only issues that were actually contested and necessarily determined in the first action.
- Failure to prove bona fide purchaser status regarding one negotiable instrument does not, by itself, conclusively determine that status as to different instruments, even if issued in the same series.
- A finding that a named plaintiff was “holder and owner” may establish sufficient legal title to sue without foreclosing proof that another person held the equitable or beneficial interest.

## Conclusion

The Court held that the prior judgment on earlier coupons did not bar Cromwell’s separate action on different bonds and coupons, except as to issues actually decided in the earlier case, and that Cromwell was entitled to present evidence of bona fide purchase for the instruments at issue.


Cromwell v. County of Sac, 94 U.S. 351 (1877)