Harnischfeger Sales Corp. v. Sternberg Dredging Co.

Harnischfeger Sales Corp. (seller) (plaintiff) sold Sternberg Dredging Co. (purchaser) (defendant) a dredge with notes secured by a chattel mortgage for a part of the purchase price. Thereafter, the seller initiated a suit against the purchaser in Louisiana—where the dredge was located—to enforce the chattel mortgage and for a personal judgment on the note. The purchaser appeared and contested personal jurisdiction, lost, and then argued that the dredge was defective. After a full trial on the merits, the trial court entered a decree that the dredge be sold and rendered a personal judgment against the purchaser for the amount due on the note. The Louisiana Supreme Court affirmed the judgment enforcing the lien of the chattel mortgage but reversed the judgment on the note, holding that the trial court lacked jurisdiction to enter a personal judgment. The seller then filed suit against the purchaser in Mississippi, where the court had personal jurisdiction over the purchaser. The seller sought to recover the balance due on the note. The purchaser alleged breach of warranty and made the same arguments it did in the Louisiana proceeding regarding its defense there that the dredge was defective. The gist of the defense in both actions was that the dredge would not and could not carry a two-yard bucket. The seller objected to the defense and argued that the Louisiana judgment was res judicata to that defense and estopped the purchaser from relitigating that defense in the Mississippi action. The trial court struck the seller’s res judicata claim and held for the purchaser on the merits. The seller appealed.