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WARREN, C. J., dissenting.

times that petitioner sought to inject the conspiracy issue into the case, it was prevented from doing so. As I have already noted, petitioner's answer alleged that the eviction suit was brought in pursuance of the conspiracy; on Paramount's motion, the defense was stricken. Later when Paramount offered into evidence the decree in the Government action for the limited purpose of showing Paramount as being subject to the injunctive features of the decree, petitioner objected on the ground that the decree "should go in as a document in toto-no part of it but the whole thing." In support of the objection, petitioner argued that §5 of the Clayton Act✶ made the decree prima facie evidence of the conspiracy established in the Government action. Again petitioner was overruled..

At the conclusion of the eviction trial, the court gave judgment for petitioner because of Paramount's failure to show the illegality of the franchise by evidence of conspiracy. As to the counterclaims, the court stated: "

5

"At the time of trial it was agreed that action on the counter-claims should be postponed until after the trial of the main issue involved, and no evidence was offered by either plaintiff or defendant on the counter-claims."

Nevertheless, the court dismissed the counterclaims without trial on the ground that there was ". . . no substantial evidence of a conspiracy in this case on the part of Partmar or Paramount . . The court thus disposed of both the eviction suit and the counterclaims on the same ground-the absence of any evidence of conspiracy.

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38 Stat. 731, 15 U. S. C. § 16.

597 F. Supp. 552, 561.

6 Ibid.

WARREN, C. J., dissenting.

347 U.S.

I submit that on these facts the Court's two assumptions are unwarranted. The issue of conspiracy was not litigated; nor did petitioner have a fair opportunity to litigate the issue. Indeed, whether petitioner had an opportunity to do so is immaterial under the doctrine of collateral estoppel. If the counterclaims had been based on the same cause of action as the eviction suit, such an opportunity might have barred petitioner under the more sweeping doctrine of res judicata. But here, where the second suit is based on a different cause of action, a neglected opportunity in the first action to litigate an issue is without legal significance."

Under these circumstances, should the doctrine of collateral estoppel be invoked against petitioner to bar a trial on its counterclaims? I believe not. The doctrine presupposes, and the Constitution requires, that the party who is estopped had his day in court in a prior action and that he then had a fair hearing in which to prove his point but failed. Surely the doctrine was never intended to estop a party who in the prior action was denied such a hearing.

That, as I see it, is precisely the situation here. The eviction suit and counterclaims had been severed for trial purposes. During the trial of the eviction suit, Paramount was the only party with any reason or justification for proving that the franchise was part of a conspiracy. Because of Paramount's failure to present such proof, the court held the lease to be valid, but at the same time gave judgment against petitioner on its counterclaims because of the same shortcoming of Paramount's proof. This Court now affirms. The anomalous result is to penalize petitioner for refusing to help Paramount win the eviction suit.

See note 1, supra.

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89

WARREN, C. J., dissenting.

I believe that petitioner has been denied its day in court, and that the case should be reversed with instructions to the trial court to hear the counterclaims.R

There is yet an additional reason for not applying the doctrine of collateral estoppel here. Petitioner, as the successful party in the eviction suit, could not appeal the District Court's finding that there was no evidence of conspiracy. Lindheimer v. Illinois Bell Telephone Co., 292 U. S. 151, 176; New York Telephone Co. v. Maltbie, 291 U. S. 645. The adverse finding was not included in the Court's de· cree, as in Electrical Fittings Corp. v. Thomas & Betts Co., 307 U. S. 241. Because of this inability to appeal, the finding cannot bind petitioner in a subsequent action between the parties based upon a different cause of action. See Restatement, Judgments, § 69 (2); Scott; Collateral Estoppel by Judgment, 56 Harv. L. Rev. 1, 15-18.

The Court's opinion (footnote 6) concedes that inability to appeal precludes a subsequent application of collateral estoppel, but contends that petitioner could have appealed here because the trial court's finding in the eviction suit (as to the absence of proof of conspiracy) was material to the decree in the eviction suit. The Court's opinion cites no case, in this Court or any other, holding that a successful party can appeal findings which are not inserted as part of the decree. Indeed, the opinion overlooks the very holdings of this Court on which it relies for support. In both Lindheimer v. Illinois Bell Telephone Co., supra, and New York Telephone Co. v. Maltbie, supra, the findings which the public utility sought to appeal related to the value of its property for rate-making purposes; in each case, the trial court had held that the rates fixed by a state commission were confiscatory on the basis of those findings. Yet this Court held that the public utility, as the successful party, could not appeal those findings. Surely in this case the trial judge's finding as to conspiracy was no more "material" than the findings which this Court refused to review in Lindheimer and Maltbie.

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KERN-LIMERICK, INC. ET AL. v. SCURLOCK, COMMISSIONER OF REVENUES FOR ARKANSAS.

APPEAL FROM THE SUPREME COURT OF ARKANSAS.

No. 115. Argued January 4, 1954.-Decided February 8, 1954. The Arkansas Gross Receipts Tax Law of 1941, which levies on sellers an excise tax of 2% on the gross receipts from all sales in the State, held unconstitutional as applied to the transactions here involved, whereby private contractors procured in Arkansas two tractors for use in constructing a naval ammunition depot for the United States under a cost-plus-fixed-fee contract entered into with the Navy Department under §§ 2 (c) (10) and 4 (b) of the Armed Services Procurement Act of 1947 and providing that, in procuring articles required for accomplishment of the work, the contractor should act as purchasing agent for the Government, title to the articles purchased should pass directly from the vendor to the Government and the Government should be directly liable to the vendor for payment of the purchase price. Pp. 111-123.

(a) The Procurement Act authorized the purchase of this machinery by the Navy for the construction of an ammunition depot. P. 114.

(b) Under the Procurement Act, the Navy Department has power to negotiate contracts which provide for private purchasing agents for supplies and materials. Pp. 114-116.

(c) The restrictions in §7 (b) on delegations of authority are not applicable to actions under 82 (c) (10). Pp. 115-116.

(d) Under the contract here involved, the United States was the real purchaser; the naming of the Government as purchaser was not merely colorable and did not leave the contractor the real purchaser. Alabama v. King & Boozer, 314 U. S. 1, distinguished. Pp. 116-122.

(e) The drafting of the contract by the Navy Department to conserve Government funds, if that was the purpose, does not change the character of the transaction. Pp. 122-123. 221 Ark. 439, 254 S. W. 2d 454, reversed.

The Supreme Court of Arkansas held the Arkansas Gross Receipts Tax Law of 1941, Ark. Stat., 1947, § 84-1901 et seq., applicable to the sale of certain ma

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chinery in Arkansas for use in the construction of a naval ammunition depot for the United States. 221 Ark. 439, 254 S. W. 2d 454. On appeal to this Court, reversed, p. 123.

Assistant Attorney General Holland argued the cause for appellants. On the brief were Acting Solicitor General Stern, Mr. Holland, Ellis N. Slack and Lee A. Jackson for the United States, and A. F. House and William Nash for Kern-Limerick, Inc., appellants.

0. T. Ward argued the cause and filed a brief for appellee.

MR. JUSTICE REED delivered the opinion of the Court. This appeal brings here the legality of the application of the Arkansas Gross Receipts Tax Law of 1941, Ark. Stat., 1947, § 84-1901 et seq., to a transaction by which certain private contractors engaged in a joint venture, abbreviated WHMS, procured in Arkansas two diesel tractors costing $17,146, for use in the construction there for the United States of a naval ammunition depot estimated to cost over thirty million dollars. The tractors were procured from Kern-Limerick, Inc., a local dealer. The circumstances of the transaction would concededly make Kern-Limerick liable for the tax if the real purchaser were not the United States.

The applicable sections of the Gross Receipts Tax Law levy an "excise tax of two [2%] per centum upon the gross proceeds or gross receipts derived from all sales to any person." § 84-1903. This is a sales tax, not a use tax.' It is to be paid to the Tax Commissioner by the seller, § 84-1908. He is the taxpayer, § 84-1902 (e), and "shall collect the tax levied hereby from the purchaser."

1 Cook v. Southeast Arkansas Transportation Co., 211 Ark. 831, 202 S. W. 2d 772.

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