## Facts

- Mitchell (plaintiff), a Beaufort County farmer, obtained financing connected to his potato crop and executed two notes totaling $9,000 (one for $6,000 and one for $3,000) along with crop mortgages.
- The loan arrangement was made through the South Carolina Agricultural Credit Company (credit company); the Federal Intermediate Credit Bank of Columbia (Bank) (defendant) later claimed it merely purchased Mitchell’s notes and mortgages from the credit company before maturity.
- Mitchell alleged that, as part of the overall arrangement, his produce would be sold through the Beaufort Truck Growers Co‑operative Association and that the proceeds would be assigned as security for the Bank.
- Mitchell grew and shipped potatoes/produce under that arrangement, and the crop sales allegedly netted at least $18,000.
- Mitchell claimed one or more defendants received the crop proceeds but refused to account to him for the funds or pay him any balance after satisfaction of the $9,000 debt.
- In October 1926, Mitchell filed a South Carolina state-court action seeking an accounting and recovery of any balance due from the crop-sale proceeds after payment of the notes.
- Separately, on August 1, 1926, the Bank sued Mitchell in federal court on the two notes to recover $9,000 (the notes having been transferred to the Bank by the credit company).
- In the federal case, Mitchell raised (among other things) the same potato-proceeds allegations as a complete defense to the Bank’s claim on the notes, but he did not assert any counterclaim for affirmative recovery of surplus proceeds.
- The federal court entered judgment for Mitchell, denying the Bank recovery on the notes.
- After the federal judgment, the Bank filed a plea in bar in the state action, arguing Mitchell’s state claim was merged in or barred by the prior federal action because it arose from the same facts Mitchell had already litigated defensively.
- The state trial court sustained the plea in bar and dismissed/blocked Mitchell’s state action; Mitchell appealed to the Supreme Court of South Carolina.

## Issues

1. Whether Mitchell’s state-court action for an accounting and recovery of alleged surplus crop-sale proceeds was barred by merger/res judicata because he had already used the same facts as a complete defense in the Bank’s prior federal action on the notes, without asserting a counterclaim.

## Decision

- The Supreme Court of South Carolina affirmed.
- The court held Mitchell could not maintain the later state action because the claim for crop-sale proceeds arose from the same transaction and factual basis he had already presented as a complete defense in the federal note action.
- Having had the opportunity in the federal case to seek affirmative relief by counterclaim on those same facts, Mitchell could not pursue a second lawsuit for additional relief based on the same cause of action.

## Legal Principles

- A final judgment between the same parties can bar later litigation not only of matters actually decided, but also of claims arising from the same cause of action that were available in the earlier action.
- A party may not split a single cause of action by using the same set of facts first as a defense to defeat liability and later as the basis for an affirmative claim for recovery.
- When a defendant’s demand for affirmative relief arises out of the same transaction that forms the basis of the plaintiff’s claim, and the defendant could obtain full relief in the first action through a counterclaim, a later separate action on that demand is barred.
- The merger/bar aspect of claim preclusion applies even when the earlier case ended with judgment for the party now suing, if the later suit seeks additional relief grounded on the same facts already litigated.

## Conclusion

Mitchell’s later state action for an accounting and payment of alleged surplus potato-crop proceeds was barred because the same transaction and facts had already been litigated in the Bank’s prior federal suit on the notes, where Mitchell used those facts as a complete defense but did not seek affirmative recovery by counterclaim; he could not pursue a second suit to obtain further relief from that same controversy.


Mitchell v. Federal Intermediate Credit Bank, 164 S.E. 136 (1932)