and the bonds held by them are null and void, except to the extent that the Chemical Bank has an interest therein as pledgee. In the event and to the extent that the Chemical Bank exercises its rights in the bonds as pledgee so that either principal or interest are paid thereon by the bridge commission, the bridge commission shall be subrogated to all the rights of the Chemical Bank against Ketcham and Nongard arising out of the note of the bond syndicate which the bonds were pledged to secure.
'To the extent that the members of the selling syndicate or their nominees have an interest therein, the entire transaction in all its ramifications is rescinded and they shall repay to the bridge commission the sum of $ 3,050,347 which represents the gross profit which they received from the sale of their stock in the Burlington-Bristol Bridge Company. The obligation to repay this sum shall be both joint and several as to Bell, Hanff, Ketcham, Nongard and Powell, but shall be several only as against the remaining sellers in the amounts they each received, specifically: Rowland H. Murray -- $ 76,258.68; Thomas J. Christensen -- $ 305,034.70; Irene E. Powell -- $ 122,013.88; Paul A. Powell -- $ 122,013.88; Mildred P. Meader, $ 122,013.88; Rickard W. Parks and Gladys A. Parks -- $ 129,939.75. Judgment in the sums indicated, together with interest thereon from October 22, 1948, will accordingly be entered against these defendants and in favor of the bridge commission.' 8 N.J. at page 501, 86 A.2d at page 234.
The arguments of the plaintiffs that they are in a position as if the Supreme Court had departed from the issues raised in the case and had imprisoned them or fined them is without merit. They were not, as in many of the cases cited by them, in the position of having their rights cut off under no issue raised before the court; as in Munday v. Vail, supra, analyzed and approved in Reynolds v. Stockton, supra. Neither were they unserved defendants against whom void judgments had been taken in state courts who sought relief against said judgments in federal courts, as in their cited cases of Marshall v. Holmes, supra, and Atchison, T. & S.F.R.Co. v. Wells, 1924, 265 U.S. 101, 44 S. Ct. 469, 68 L. Ed. 928. Nor were they, as in the cited case of Windsor v. McVeigh, supra, in the situation of the respondent to a forfeiture action commenced in the Federal Court of Virginia under a statute of 1862 who was commanded by process of monition to appear and answer, and when he did so at the designated time, on motion of the district attorney, his appearance and answer was stricken because he was 'a resident within the City of Richmond, within the Confederate lines, and a rebel.'
Other cases referred to by the plaintiffs are found equally inapposite. Every substantial issue mentioned by them in this suit was either raised by them before the trial court or could have been raised. The fact that the New Jersey Supreme Court resolved those issues by measures of relief which differed from those adopted by the Superior Court did not deprive the plaintiffs of their due process. Surely that they regard the relief granted by the New Jersey Supreme Court in its determination of equities before it as bearing upon them with too harsh impact cannot be a ground for an inferior federal court to measure the judgment of the highest tribunal of a state.
There can be no disagreement with plaintiffs' submission that the refusal of the United States Supreme Court to review the decision of a state's highest court does not constitute a decision upon the merits so as to bar a United States District Court from entertaining a suit before it. But the circumstances that permit such recourse must be extraordinary. In Williams v. Tooke, 5 Cir., 1940, 108 F.2d 758, 759, the complaint alleged numerous errors committed by the Texas courts dealing with the case and that they deliberately, intentionally, arbitrarily and capriciously discriminated against the plaintiffs and refused to award them relief, and that the State of Texas acting by its judicial departments, in effect, took plaintiffs' property and gave it to the defendants without consideration and without due process of law in violation of the 14th Amendment of the Constitution of the United States. In affirming a decision adverse to the plaintiffs by the United States District Court for the Eastern District of Texas, the Court of Appeals of the Fifth Circuit said:
'If all the judgments complained of were merely erroneous that would not amount to a denial of due process of law. (Cases cited). However, if a case between private parties is arbitrarily and capriciously decided, in violation of settled principles of law and contrary to undisputed facts, though the court so deciding had jurisdiction over the suit, the judgment may be in violation of the 14th Amendment. (Cases cited). But that does not help appellant in this case. We are dealing solely with the jurisdiction of the District Court. The purpose of the suit is clearly to seek a review of the decisions of the Texas courts and the reversal of those decisions for error. The jurisdiction of the District Court is strictly original. It has no jurisdiction to reverse or modify the judgment of a state court. The errors complained of could be reviewed only by the Supreme Court. (Cases cited). It was the duty of the District Court to dismiss the suit. 28 U.S.C.A. 80.
'The judgment is affirmed.' At page 759.
And in Moffett v. Robbins, 10 Cir., 1936, 81 F.2d 431, 435, the Court said:
'It is well settled that a final judgment rendered by a court having jurisdiction of the subject-matter and parties is conclusive upon the parties and those in privity with them in a subsequent action upon the same cause of action as to all matters in fact actually litigated or which might have been litigated therein; and such a judgment operates as an estoppel between the same parties in a subsequent proceeding upon a different cause of action only with respect to the matters actually litigated and adjudicated. That ancient rule applies even though the judgment may have been erroneous in fact or law, or both. (Cases cited). It is equally well settled by the decisions of this court and others that a United States Court cannot vacate a judgment or decree of a state court, nor mandate that court to do so. Folk v. Monsell, 10 Cir., 71 F.2d 816. It may, however, restrain a successful litigant from enjoying the fruits of a judgment fraudulently obtained in a state court if the requisite elements of federal and equity jurisdiction exist. In doing so the court does not act in review of the judgment, nor is it concerned with irregularities occurring in the proceedings in the state court. It considers the conduct of the successful party there and if it is found that he committed fraud in securing the judgment, he is prevented from enjoying its benefits. The restraint acts upon the party and does not affect the judgment. (Cases cited). But such relief will be granted only upon fraud extrinsic to the matters tried and determined by the other court and which caused the court to render a wrong judgment, such as the successful party through fraud or deception preventing the unsuccessful from presenting his case, or from attending the trial, or where his attorney was induced to betray his client's interest, or other chicanery of that kind. The submission of perjured testimony or a fraudulent instrument on which the judgment rests is not enough, because a matter of that kind is necessarily intrinsic the proceedings. (Cases cited). In order to come within the rule, it must appear by clear allegations of fact that the party asserting it had a valid defense to the cause of action on which the judgment was rendered; that he was prevented by extrinsic fraud, accident, mistake, concealment, or other chicanery from presenting such defense, and that he had not been negligent in availing himself of it. (Cases cited.) At page 435.
Manifestly the complaint in the state court raised issues inviting the application of broad equitable relief. The relief contrived by the New Jersey Supreme Court was well within the complaint and the proofs considering all of the circumstances they encompassed, as is exhaustively demonstrated in the opinion of the New Jersey Supreme Court. The charge of the plaintiffs here that the New Jersey Supreme Court acted as a court of original jurisdiction and rendered a judgment against them not responsive to the pleadings, thus preventing them from defending themselves and unconstitutionally depriving them of their day in court, is without foundation because the issues as to the propriety of their profits and the validity of their bonds were before the court and were thoroughly litigated and finally adjudicated. Their charges furnish no basis for review here.
The plaintiffs urge that in the event that the judgment of the New Jersey Supreme Court is not determined to be a nullity then judgment should be granted in their favor in the sum of $ 1,240,000 against the Bridge Commission under the second and third counts of their complaint, for money had and received by it for which no valid bonds have been delivered, or for money loaned by the plaintiffs. They seek to support this view with the argument, among others, that nowhere in its opinion did the New Jersey Supreme Court state that the plaintiffs were not entitled to the money; and that the effect of denying them such a judgment renders them liable to an additional judgment of $ 1,240,000 'for the money they had loaned to the Bridge Commission.'
On the other hand we have seen that these contentions of the plaintiffs, as in the case of the others, were considered by the New Jersey Supreme Court. It has specifically protected the equity of every innocent holder by providing that the Bridge Commission shall, from the tolls it collects, liquidate such bonds. It has as specifically declared that the plaintiffs are not to be regarded as innocent holders and that their bonds being null and void the Bridge Commission may not honor them, except to the extent that the Chemical Bank has an interest in them as pledgee, and in the event and to the extent that the Chemical Bank exercises its rights as pledgee so that either principal or interest is paid thereon by the Bridge Commission, it shall be subrogated to all the rights of the Chemical Bank against the plaintiffs arising out of the transaction which the bonds were given to secure. It is clear that the judgment of the New Jersey Supreme Court rendered these bonds valueless to the plaintiffs and, contrary to their arguments, the judgment they crave here which would require the Bridge Commission to collect tolls to pay them $ 1,240,000, would thwart the very judgment imposed upon them by the New Jersey Supreme Court. There can be no ground for such action.
There being no genuine issue as to any material fact the defendants are entitled to have their motion granted that the first count of the complaint shall be dismissed and summary judgment entered in their favor, and the defendant Burlington County Bridge Company is entitled to have its motion granted that the second and third counts of the complaint be dismissed and for summary judgment thereon in its favor.
An order should be settled in conformity with the foregoing conclusions.