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Surely not. If a trustee sues on behalf of a cestui que trust to enforce a certain right, and the judgment is that the cestui que trust has no right; can the cestui que trust afterwards sue, say when the trusteeship has come to an end? The person who contracts for a benefit to be conferred on a third person does not, it is true, stand in the same position as a trustee; but the question can only be answered by seeing what would be the position of affairs in various circumstances. Supposing the action by the contracting party to have terminated in a judgment in their favour: what would the judgment be? Judgment for the plaintiff, that he is entitled to a declaration that the beneficiary under the contract is entitled to the benefit contracted for. Supposing the right were to the possession of a jewel, would not the beneficiary be entitled to the jewel in virtue of the judgment for the person who actually made the contract?
The position seems to me to be rather aptly described by saying that he takes in successive relation to the plaintiff. For strictly speaking, the right to the jewel would pass through the plaintiff, in virtue of his judgment, to the rightful owner in virtue of the declaration of the judgment.
Applying that reasoning to this action, and assume the first action to have been brought by the Government, the gist of it is to enforce the agreement by which it was agreed that Chi Chuen should transfer to Yiu Chow the rights which Yiu Chow had under the Ordinance.
Now assume judgment to be given for the Government, that is, a declaration made that Yiu Chow had a right under the Ordinance, the right the Government would have obtained would be to have the right of Chi Chuen to the land recognised. This seems to me a very clear case of successive relationship to the same right: for Yiu Chow's right is in direct succession to the right of the Government under the judgment. And what is true if judgment is given for the plaintiff must also be true if it is given for the defendant.
Although an American decision is not a binding authority, it seems to me to lay down an intelligent principle which is of material assistance in deciding this case, which I think is of first impression, and I adopt it. I am therefore of opinion that the claim in this action is concluded by the decision of the Privy Council in the former action.
The same result is arrived at by considering the question from another and simpler point of view.
The distinction between judgments in rem and judgments in personam is better known than appreciated. A judgment in rem creates a right in rem and is said to bind all the world, whereas a judgment in personam binds only the parties to it. But whether any given judgment has this wider operation or not depends on whether the law which governs the judgment declares the resultant right to be in rem. The law governs the nature of rights acquired under it. Thus a judgment for the defendant who has bought a chattel in market overt in England is in rem, because the English law declares him to have a right to his purchase, even against the true owner. And so a sale by a sheriff may or may not confer a right in rem according as the law of the country where the seizure takes place decides. But the true distinction between the two classes of judgments lies simply in the different area of their operation, and this, as I have just said, depends on the law under which any specific judgment is given.
Now a judgment in personam is said to decide only the rights of the parties to the suit. But the rule is couched in this form, because in an action between A and B, the rights in issue are usually only the rights of A and B, and those parties are concluded by the judgment from contesting the question again. To revert once again to the simple case where C sues A on a contract made between A and B conferring rights on C; if judgment is given for A because C was not a party to the contract, then clearly that is merely a judgment in personam determining the rights of C as against A, and B would not be affected by it, and B might sue A to enforce the rights he has contracted to give C, not merely because he was not a party to the original action, but also, and it is important to bear this in mind, because C would get his rights in virtue of a different equity. But supposing the question decided in the action between A and B is that C had no rights at all, then in order to see whether C can sue afterwards, another question arises; which is precisely the same as the question which arises in an action by B against A after a decision in an action by C against A, that C has no rights at all. It is therefore of great importance first to ascertain what the former judgment has decided.
If in the former action it has been decided that C had by law no rights, that is a judgment in personam it is true, but its scope, the area of its operation, included the rights of C: and I am very strongly of opinion that C is bound by it if the former action was by B against A, or that B is bound by it if the former action was by C against A. For the following reason.
Reverting to what I said just now, the scope of a judgment depends on the law which governs it. The difference between judgments in rem and judgments in personam is simply one of degree: and just as the law may decree that a certain judgment is in rem, that it binds others than those who are parties to it; so the act of parties which often replaces the law, may determine the scope of the judgment, and then if all three parties A, that becomes its true legal area of operation.
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