## Facts

- Harnischfeger Sales Corporation sold a dredge to Sternberg Dredging Company and took purchase-money notes secured by a chattel mortgage on the dredge.
- The dredge was located in Louisiana; Sternberg claimed it was defective and could not operate as contemplated with a two-yard bucket and 60-foot boom, asserting breach of warranty as a defense to the notes.
- Harnischfeger sued in Louisiana seeking (1) foreclosure of the chattel mortgage and (2) a personal judgment for the balance due on the notes.
- Sternberg contested personal jurisdiction in Louisiana; after the objection was rejected, Sternberg litigated on the merits, raising the same defect/breach-of-warranty defense.
- The Louisiana trial court ordered sale of the dredge to satisfy the mortgage and entered a personal judgment on the notes.
- The Louisiana Supreme Court affirmed the foreclosure (in rem relief) but reversed the personal judgment for lack of personal jurisdiction, while issues concerning the indebtedness and Sternberg’s defect defense had been litigated in the foreclosure proceeding.
- Harnischfeger then sued in Mississippi for the remaining balance due on the same notes; Sternberg reasserted breach of warranty.
- The Mississippi trial court struck Harnischfeger’s res judicata/estoppel plea, allowed relitigation of the warranty defense, and entered judgment for Sternberg.

## Issues

1. Whether the Louisiana foreclosure judgment precluded Sternberg from relitigating, in Mississippi, issues actually litigated and determined in Louisiana concerning the amount due on the notes and the asserted breach-of-warranty/defect defense.
2. Whether reversal of the Louisiana personal judgment for lack of personal jurisdiction prevented preclusion based on determinations made in support of the in rem foreclosure decree.

## Decision

- The Mississippi Supreme Court reversed the judgment for Sternberg.
- The court held that the Louisiana judgment was conclusive as to issues actually litigated and necessarily determined in the foreclosure proceeding, including the amount of indebtedness and rejection of Sternberg’s defect defense.
- The court ruled that the Mississippi trial court erred by striking the res judicata/estoppel plea and by permitting Sternberg to relitigate the warranty defense.
- The court directed that judgment be entered consistent with the indebtedness as previously adjudicated in Louisiana.

## Legal Principles

- Issue preclusion (estoppel by judgment) bars relitigation between the same parties of issues of fact or law actually litigated and necessarily determined by a valid, final judgment.
- A court’s lack of personal jurisdiction to enter an in personam money judgment does not negate the preclusive effect of issues necessarily decided within the court’s competent in rem jurisdiction.
- Where foreclosure relief requires determining the existence and amount of the secured debt, those determinations, if actually litigated, are binding in later litigation between the same parties involving the same obligation.
- Sister-state judgments must be given full effect as to matters within the rendering court’s jurisdiction and as to issues conclusively determined in support of that relief.

## Conclusion

A Louisiana in rem foreclosure decree, though accompanied by a personal judgment later vacated for lack of personal jurisdiction, conclusively determined the indebtedness and rejected the buyer’s warranty defenses; Mississippi was required to treat those determinations as binding and to prevent relitigation of the same issues on the purchase-money notes.


Harnischfeger Sales Corp. v. Sternberg Dredging Co., 189 Miss. 73, 191 So. 94 (1939)