Opinion of the Court. 347 U.S. judgments priority over federal tax liens, to supersede state laws making certain interests superior to mortgages and judgments, the Supreme Court of Errors concluded that by enacting § 3672 Congress "expressed the intention that federal liens should be subordinated to such mortgages and judgment liens as are described therein and, consequently, subordinated to such other incumbrances as have priority over those mortgages and judgment liens." 13 We do not agree. The United States is not interested in whether the State receives its taxes and water rents prior to mortgagees and judgment creditors. That is a matter of state law. But as to any funds in excess of the amount necessary to pay the mortgage and judgment creditors, Congress intended to assert the federal lien. There is nothing in the language of § 3672 to show that Congress intended antecedent federal tax liens to rank behind any but the specific categories of interests set out therein, and the legislative history lends support to this impression.1 Under the circumstances, we vacate the judgment of the Supreme Court of Errors of Connecticut and remand the case to that court to have determined the order of priority of the various liens asserted, in accordance with this opinion. Judgment vacated. 13 139 Conn. 363, 373, 94 A. 2d 10, 15. 14 See United States v. Gilbert Associates, 345 U. S. 361, 364; United States v. Security Trust & Savings Bank, 340 U. S. 47, 51 (concurring opinion). Syllabus. PARTMAR CORPORATION ET AL. v. PARAMOUNT PICTURES THEATRES CORP. ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT. No. 17. Argued October 13, 1953. Decided February 8, 1954. Paramount leased a theatre and granted a franchise to Partmar to exhibit first-run films of Paramount pictures, both for terms of ten years. The lease provided that it was terminable at Paramount's option if the franchise agreement "be cancelled or terminated for any reason whatsoever." In an antitrust suit by the Government against Paramount and others, a Federal District Court held that such franchise agreements were the product of an illegal conspiracy and enjoined their enforcement. Paramount then notified Partmar that it was terminating the franchise agreement because of the injunction and that it was terminating the lease because of termination of the franchise agreement. Partmar refused to vacate the theatre, and Paramount sued in a Federal District Court to obtain possession and for a declaratory judgment that the lease had been properly terminated. Partmar answered, setting up various defenses, and filed counterclaims seeking treble damages resulting from a conspiracy respecting the franchise agreement in violation of the Sherman Act. Paramount's suit and the counterclaims were separated for trial. After this Court had overruled the District Court's finding that such franchise agreements violated the Sherman Act, the eviction suit was tried and the District Court found no substantial evidence of a conspiracy respecting the franchise agreement and entered judgment for Partmar; but it also dismissed Partmar's treble-damage counterclaims, with prejudice and without trial. Partmar took no appeal from the District Court's judgment in the eviction suit; but it appealed from the judgment dismissing the treble-damage counterclaims. Held: Collateral estoppel bars further litigation by the parties of the issue of conspiracy in violation of the Sherman Act, and the judgment dismissing the counterclaims with prejudice is sustained. Pp. 90-103. (a) A prior judgment between parties operates as an estoppel in a suit on a cause of action different from that forming the basis for the original suit only as to those matters in issue or points Opinion of the Court. 347 U.S. controverted, upon the determination of which the finding or verdict was rendered. P. 91. (b) The District Court did not err in dismissing Partmar's counterclaims with prejudice and without a separate trial as to their merits, and such dismissal did not deprive Partmar of due process of law. Pp. 100-103. (c) The power remained in the trial court until entry of its final judgment to set aside, for appropriate reasons, the former order for the separate trial of the counterclaims. P. 100. (d) A separate trial on the counterclaims would have been an improper procedure, as the judgment entered in Paramount's suit was a final disposition of the determinative issue on the counterclaims-whether or not the terms of the lease were the product of an illegal conspiracy. Pp. 100–101. (e) Partmar was not prejudiced by the failure of the District Court to consider either the judgment or the decree in the Government's antitrust suit as evidence of the conspiracy alleged in the counterclaims. Pp. 102-103. 200 F. 2d 561, affirmed. In a suit by respondents to declare a lease properly terminated and to regain possession of a theatre, the District Court decided that issue in favor of petitioners but dismissed petitioners' counterclaims for treble damages under the antitrust laws. 97 F. Supp. 552. The Court of Appeals affirmed. 200 F. 2d 561. This Court granted certiorari. 345 U. S. 963. Affirmed, p. 103. Russell Hardy argued the cause for petitioners. With him on the brief were Henry Schaefer, Jr. and James Wallace Kemp. Jackson W. Chance argued the cause for respondents. With him on the brief was Rodney K. Potter. MR. JUSTICE REED delivered the opinion of the Court. This case presents a matter of federal practice involving inconsistent positions by litigants in court proceedings. We have often held that under the doctrine of res judicata a judgment entered in an action conclusively 89 Opinion of the Court. settles that action as to all matters that were or might have been litigated or adjudged therein.' But a prior judgment between the parties has been held to operate as an estoppel in a suit on a cause of action different from that forming the basis for the original suit "only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered." This latter aspect of res judicata is the doctrine of collateral estoppel by judgment, established as a procedure for carrying out the public policy of avoiding repetitious litigation. Petitioners entered counterclaims in a suit against them by respondent. These counterclaims were dismissed by the trial court upon determination of the original suit for petitioners and against respondents. The cause of action stated in petitioners' counterclaims is based upon a controverted personal right that had not been adjudged and therefore res judicata is no bar to the claimed right of recovery. Respondent, however, in its original suit had raised an issue, determinative of its cause of action, which had been therein successfully controverted by petitioners to final judgment on the merits. Collateral estoppel stands as a bar to further litigation by the parties. of this issue, and this issue was held by the trial court to be determinative of petitioners' counterclaims. Petitioners' argument that the dismissal denied a hearing of issues that might have been but were not determined by the judgment on the merits of the original action 1 Cromwell v. County of Sac, 94 U. S. 351, 352; Fayerweather v. Ritch, 195 U. S. 276, 300, 308; Gunter v. Atlantic Coast Line R. Co., 200 U. S. 273, 290; Stoll v. Gottlieb, 305 U. S. 165. 2 Cromwell v. County of Sac, supra, at 353; United States v. Moser, 266 U. S. 236, 241; Treinies v. Sunshine Mining Co., 308 U. S. 66, 74; Commissioner v. Sunnen, 333 U. S. 591, 597-601. Cf. Federal Trade Commission v. Cement Institute, 333 U. S. 683, 706, where the rule is recognized but its application denied because the issues differed. Opinion of the Court. 347 U.S. moved us to grant certiorari, limited to the issue of the counterclaims. 345 U. S. 963. Although federal jurisdiction was sought only on the ground of diversity, the complaint relied upon a breach of the Sherman Act, and the counterclaims were similarly bottomed on that federal law. Therefore our conclusion is reached on a consideration of federal law and procedure. It will depend upon whether or not any issue of fact or law remained for decision after the primary action was decided. The issue reaches us under the following circumstances. Paramount Pictures Theatres Corp., a subsidiary of Paramount Productions, Inc., and successor to Paramount Pictures, Inc., is a New York corporation engaged in the business of operating motion picture theatres throughout the United States. These three corporations will hereinafter be referred to jointly as "Paramount." On August 31, 1939, Paramount leased the Paramount Downtown Theatre in Los Angeles, California, for ten years to Partmar Corp., a California corporation, petitioner here, wholly owned by Fanchon & Marco, Inc. This lease was subsequently amended in 1942 and extended to March 18, 1952. A "film franchise agreement" was executed in conjunction with, and for the same period as, the lease. It licensed Partmar to exhibit Paramount pictures at the theatre as first "runs" of the films, required Partmar to exhibit such pictures not less than forty-six weeks each year, and set a scale of license fees. The lease expressly provided that it was terminable at the option of Paramount if the franchise agreement "be cancelled or terminated for any reason whatsoever." Other provisions of the lease and agreement are not germane to the issue before this Court. See Scott, Collateral Estoppel by Judgment, 56 Harv. L. Rev. 1; Note, Collateral Estoppel by Judgment, 52 Col. L. Rev. 647. |