9 Opinion of the Court Company brought against Samuel A. and Harry Myers for damages for deceit on the ground that defendants had obtained credit from the Trust Company by a false statement of their financial condition. The defendants pleaded res adjudicata, because of a decree of the United States District Court for Massachusetts in bankruptcy, where the fact of falsity as to the statement had previously been determined in the defendants' favor. The Massachusetts court held that the bankrupt proceedings were not res adjudicata, since the cause of action asserted in the Massachusetts court was not the same as that asserted in the bankruptcy court. On review, the Supreme Court quoted at some length from Cromwell v. Sac County, 94 U. S. 351, as follows: "In considering the operation of this judgment, it should be borne in mind, as stated by counsel, that there is a difference between the effect of a judgment as a bar or estoppel against the prosecution of a second action upon the same claim or demand, and its effect as an estoppel in another action between the same parties upon a different claim or cause of action. In the former case, the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action. It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose "But where the second action between the same parties is upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered. In all cases, therefore, where it is sought to apply the estoppel of a judgment rendered upon one cause of action to matters arising in a suit upon a different cause of action, the inquiry must always be as to the point or question actually litigated and determined in the original action, not what might have been thus litigated and determined. Only upon such matters is the judgment conclusive in another action." See also Southern Pacific R. R. Co. v. United States, 168 U. S. 1, 50; Troxell v. Delaware, Lackawanna & Western R. R. Co., 227 U. S. 434, 440. 145 C. Cls. Opinion of the Court After quoting this, it said: Coming now to apply these principles to the case before us, it is very clear that the opposition to the composition in the bankruptcy court was not the same cause of action as the suit for deceit here. *** The defense of res judicata as to the cause was therefore not established by the judgment confirming the composition. However, the Court further said: *** This suit between respondent and petitioners was decided by the Referee and the two courts against the respondent and the composition was confirmed because it was found that the statement of January 1, 1916, was true and not false. This is exactly the same issue which arose in the suit for deceit which is before us. Recovery of the judgment under consideration can not be sustained except upon the finding that the statement was false. The respondent, the Trust Company, can not litigate again that issue in this case, because it is bound by the finding against it in its opposition to the confirmation of the composition. This follows necessarily from the rule in the second class of cases laid down by Mr. Justice Field in the language already quoted. It should be noted that in the Myers case the bankruptcy court had no jurisdiction to entertain an action in tort for deceit. However, it did have the authority to determine whether a petition for composition should be confirmed, and to do so the court had the authority to first determine whether the bankrupt's statements were false. It follows, therefore, that although the court is one of limited jurisdiction, if it has authority to determine the issue within the scope of its jurisdiction, all other courts are estopped from subsequently relitigating the same issue. The nature of the relief sought in the first action never controls the application of the rule of estoppel by judgment. See United States v. Silliman, 167 F. 2d 607. Because of this reasoning, we are of opinion that we were in error in the Levy and O'Brien cases, cited supra, and they must be overruled. Plaintiff's motion for summary judgment is denied; defendant's motion for summary judgment is granted, and plaintiff's petition must be dismissed. It is so ordered. 9 Syllabus BASTIAN, Circuit Judge, sitting by designation; LARAMORE, Judge; MADDEN, Judge, and JONES, Chief Judge, concur. ROBERT B. MCGUIRE v. THE UNITED STATES [No. 383-54. Decided February 11, 1959. Defendant's motion for rehearing overruled July 13, 1959] ON DEFENDANT'S AND PLAINTIFF'S MOTIONS FOR SUMMARY JUDGMENT Civilian pay; dismissal; regulation of executive department; recovery-measure of.-In an action for back pay for the period of plaintiff's removal from his position as a Deputy Collector of Internal Revenue, it is held that where the removal action was taken under an Internal Revenue Service rule of conduct for its employees, providing for disciplinary action for persistent refusal or habitual neglect to pay personal and family debts and where the charging letter, the decision to remove, and the decision on appeal referred only to a single instance of failure or refusal to pay a debt, the discharge was illegal and invalid, because the charging letter failed to state an offense within the meaning of that rule of conduct and plaintiff was not apprised of the conduct upon which his removal was, in fact, based. Plaintiff is entitled to recover all back pay lost, including any statutory or in-grade increase, and compensation for annual leave he would have earned, the limitations contained in the 1948 amendment to the Lloyd-La Follette Act not being applicable. Internal Revenue 1228 Civilian pay; dismissal; regulation of executive department; administrative interpretation of. Where a Treasury Department regulation providing for disclipinary action against employees who "without just cause persistently refuse or habitually neglect to pay personal and family debts" has been interpreted by the Department as applying only to situations where there have been frequent complaints against an employee by his creditors, a departmental letter of charges and a dismissal decision referring to a single unpaid debt of the employee is insufficient to support the dismissal under the regulation of the Treasury Department. United States 36 Civilian pay; dismissal; regulation of executive department-tardy compliance with.-Where a statement of charges and a dismissal decision of an employing agency is insufficient under the 574580-61 -3 Opinion of the Court 145 C. Cls. regulations of the agency or department because both referred to only one instance of failure to pay personal debts, whereas the regulation referred to frequent or persistent failure to pay debts as a cause for removal, the dismissal is illegal and a later attempt by the employing agency to cure these defects by notifying the employee that his discharge had actually been based upon other instances of his failure to pay personal debts will not serve to cure the illegality of the dismissal. United States 36 Civilian pay; dismissal; regulations of executive department; recovery-measure of.-Where plaintiff is dismissed from his civilian Government position in violation of a valid Treasury Department regulation issued pursuant to section 161 of the Revised Statutes, and he is not thereafter reinstated, the limitations on the recovery of back pay imposed by section 6(b)(1) of the 1948 amendment to the Lloyd-La Follette Act (62 Stat. 354, 355) are not applicable and the plaintiff is entitled to recover any in-grade and statutory increases which he would have earned during the period of removal, plus payment for any annual leave he would have earned during that period, less his outside earnings. Crocker v. United States, 130 C. Cls. 567; Hynning v. United States, 141 C. Cls. 486. United States 39 (8) Mr. Carl L. Shipley for the plaintiff. Miss Frances L. Nunn, with whom was Mr. Assistant Attorney General George Cochran Doub, for the defendant. MADDEN, Judge, delivered the opinion of the court: The plaintiff, asserting that his purported discharge on January 8, 1954, from his position as a Deputy Collector of Internal Revenue was illegal and invalid, sues for the salary he would have received if he had not been discharged. The Government has moved to dismiss the plaintiff's petition on the ground that it appears from the available documents that there was no procedural defect in relation to the discharge, and that the merits of the grounds for the discharge should not be reviewed by the court. The plaintiff began his work as a Deputy Collector on November 1, 1942, in New York. In 1947 he was transferred to a collection district which had its offices in Newark, New Jersey. In March of 1953 the Bureau of Internal Revenue received a complaint from one William Verderosa that the plaintiff had induced him to be a co-signer with the plaintiff 17 Opinion of the Court on a note for $792 payable to the Chemical Bank and Trust Company of New York City. The note had been given in January 1952 to obtain money for the plaintiff to pay another note on which he had defaulted, for which default his automobile had been seized. When the note to Chemical Bank came due in June 1952, the plaintiff did not pay it. The bank obtained a judgment against the plaintiff and Verderosa, and Verderosa was obliged to pledge his life insurance policies to secure payment of the judgment and to pay off the judgment in instalments. Verderosa of course called upon the plaintiff to pay the note and the judgment, but the plaintiff did not pay or make any arrangement to pay Verderosa. The Internal Revenue Inspection Service conducted an investigation of the Verderosa complaint and on August 19, 1953, it issued a letter preferring a charge against the plaintiff as follows: Charge 1-Violation of Section 30 of the pamphlet entitled "Rules of Conduct and Other Instructions for Employees of the Internal Revenue Service" March 1952 edition (Section 34, July 1944 edition), which states in part, "Employees who, without just cause persistently refuse or habitually neglect to pay personal and family debts will be disciplined." The letter said that the basis of the charge was that the plaintiff had defaulted on the $792 note and had not repaid nor evidenced any intention to repay Mr. Verderosa. It said that the intention of the Revenue Service was to discharge the plaintiff or otherwise discipline him. It advised the plaintiff of his right to reply to the charge personally and in writing. On August 25 the plaintiff replied in writing, describing his financial difficulties and the reasons for them. He said that he had made several promises to Mr. Verderosa but had been unable to keep them. He asked for indulgence. On December 29 he was notified in writing that he would be discharged on January 8, 1954, and that, under the Treasury's grievance procedure, he might appeal in writing to the Director of Personnel, Treasury Department, in Washington. The plaintiff employed counsel and an appeal was taken. The appeal pointed to the plaintiff's long and un |