Brief Fact Summary.
Plaintiffs sued Defendants for breaching a restrictive covenant prohibiting the sale or use of the homes in the area to black people.
Synopsis of Rule of Law.
The outcome of a lawsuit is rendered res judicata for all who are a designated party of the lawsuit and for non-formal parties in a class action whose common interests are fairly represented by the formal parties.
It is quite another to hold that all those who are free alternatively either to assert rights or to challenge them are of a single class, so that any group, merely because it is of the class so constituted, may be deemed adequately to represent any others of the class in litigating their interests in either alternative.View Full Point of Law
A group of landowners created a restrictive covenant hat prohibited their land from being sold or used by a black person, enforceable only if ninety-five percent of owners in the area signed the agreement. Only fifty-four percent of landowners signed it, but an earlier lawsuit between the landowners, Burke v. Kleiman, found the agreement legally binding under the false belief that ninety-five percent of the owners signed it. Following this decision, the Hansberrys (Defendants), a black family, bought a home in the area and were sued by Lee (Plaintiff) for breach of the restrictive covenant. Defendants’ argued that the agreement was not binding because not enough landowners had signed, Plaintiffs argued that this issue was barred by res judicata under Burke.
Can a party be bound by an earlier judgment to which they were not a party and not members of a class?
No, the Defendants were not bound by the judgment in Burke. The decisions of the lower courts are reversed.
The Court determined that res judicata did not apply to the present case because the Defendants were not parties to the Burke case. The parties in the Burke case were not designated as a class action acting on behalf of others and the parties could not be said to represent the same interests as the Defendants because all parties in Burke were current landowners, not individuals trying to buy a home.