Cromwell v. County of Sac
94 U.S. 351, 24 L. Ed. 195 (1877)

  • Cromwell was holding four bonds issued by Sac County, Iowa. He sued Sac for the value of the bonds when they refused to pay him.
    • The bonds had been issued by Sac to a contractor to build a courthouse. But no courthouse had ever been built, and the value of the bonds was questionable.
      • There was evidence that the bonds were issued fraudulently.
    • The bonds were worth $1k each and there were four $100 interest coupons attached to each bond that were payable upon maturity.
      • The coupons, like a check, are negotiable and could be signed over to another person.
  • Sac argued that several years before, they had already been sued by Cromwell (through and intermediary named Smith) for not paying on the $100 interest coupons from the bonds that Cromwell owned, therefore he shouldn’t be allowed to come back now and sue again for not paying on the $1k bonds.
    • Sac argued that Cromwell was estopped from suing them on the same issue due to issue preclusion (aka estoppel by judgment).
    • In the initial case, Cromwell had tried to cash in 25 coupons. The Trial Court found for Sac, since Cromwell could not explain how he had obtained the coupons, implying that they had been obtained through fraud.
      • The initial case was appealed all the way up to the US Supreme Court, who eventually found for Sac.
  • The US Supreme Court reversed and remanded for trial.
    • The US Supreme Court found that whatever illegality or fraud there was in the issue of the bonds equally affected the bonds and the coupons. Therefore, in general, the finding and judgment that the bonds were invalid estops Cromwell from claiming the bonds are valid.
    • However, in the initial trial, Cromwell was only asked to show that he legally obtained the 25 coupons. He was not attempting to cash in the 4 bonds, and therefore nothing in the trial record speaks to whether he obtained the bonds legally. Therefore, Cromwell wasn’t suing about exactly the same thing, and so he was not estopped by issue preclusion.
      • The US Supreme Court noted that just because Cromwell may have illegally obtained some of the coupons he was trying to cash in, that doesn’t mean he illegally obtained all of the coupons and bonds he was trying to cash in.