White and Tinsley (Borrowers) filed suit against World Finance of Meridian, Inc. (Lender) in District Court in Mississippi alleging various truth-in-lending violations under 15 U.S.C.A. § 16391 and implementing Regulation Z. Each claimant sought statutory damages in the amount of twice the finance charge up to $1,000 plus reasonable attorney fees. The alleged violations arose out of the execution of a note by White and Tinsley jointly in the amount of $629.28 to World Finance.2 When Borrowers defaulted on the note, Lender filed suit for collection in a Mississippi County Court under the Small Loan Regulatory Act, Miss.Code Ann. § 75-67-117 (Supp.1980). Borrowers counterclaimed alleging various loan violations under Mississippi law.3 That Court dismissed the case with prejudice finding that Lender had violated several Mississippi statutes. See note 3, supra. In the present action, Lender denied Borrowers' allegations and moved for summary judgment by interposing a plea of res judicata based on this Mississippi County Court judgment for collection on the note.4 On September 25, 1980, the Court overruled Lender's motion for summary judgment and awarded Borrowers a total of $377.90 in damages plus $250.90 in attorney fees. Both parties were dissatisfied with the judgment and filed notices of appeal. Now before this Court, Lender seeks a resolution of the res judicata issue while Borrowers seek an additional recovery of $377.90 which would represent what was originally prayed for twice the finance charge for each plaintiff. See note 2, supra.

For the following reasons, we affirm the Court's ruling precluding the application of res judicata, but reverse as to the recovery award, granting instead, the statutory recovery allowed to each Borrower.

"Under federal law, a prior suit which concluded with a final judgment on the merits rendered by a Court of competent jurisdiction acts as an absolute bar (res judicata) to a subsequent action between the same parties on the same action." Commercial Box and Lumber v. Uniroyal Inc., 623 F.2d 371, 373 (5th Cir. 1980).

Res judicata actually comprises two doctrines concerning the preclusive effect of a prior adjudication.5 The first is "claim preclusion", or "true res judicata", the effect of which extends to the litigation of all issues relevant to the same claim or cause of action between the same parties whether or not raised at trial. Garner v. Giarrusso, 571 F.2d 1330 (5th Cir. 1978); International Assoc. of Machinists & Aerospace Workers v. Nix, 512 F.2d 125, 131 (5th Cir. 1975). Clearly, the purpose of claim preclusion is to avoid multiple suits on identical entitlements or obligations between the same parties. Kasper Wire Works, Inc. v. Leco Engineering & Mach., 575 F.2d 530 (5th Cir. 1978). Accordingly, the principal test recognized by this Court for comparing causes of action is whether the primary right and duty or wrong are the same in each action. Kemp v. Birmingham News, Co., 608 F.2d 1049, 1052 (5th Cir. 1979), citing Stevenson v. International Paper Co., 516 F.2d 103, 109 (5th Cir. 1975). It has also been said that it is the substance of the actions that must be compared and not their form. Astron Industrial Associations, Inc. v. Chrystal Motors Corp., 405 F.2d 958, 961 (5th Cir. 1968).

In the present case there is no question that the same parties were involved in the suit in county court which is a court of competent jurisdiction and which suit resulted in a final judgment. The question then becomes whether the cause of action in the county court raised in Borrowers' counterclaim was in essence the same cause of action that now appears in this Court.

Lender relies heavily on the argument that the "substance" of 15 U.S.C.A. § 1639 and Miss.Code Ann. § 75-67-127 (see notes 1 and 4, supra ) is the same to regulate disclosures. If so, it necessarily would follow that an action brought under the state statute is the same cause of action as one brought under the federal statute. We disagree with Lender's conclusion.

In discussing this identity of state and federal causes of action, the Fourth Circuit observed:

The identity of two actions ... will not be destroyed in the res judicata context simply because the two suits are based on different statutes.... Nor will the rule be any different because a state statute is the authority for one action and a federal statute for the other when the two statutes afford the same right or interdict the same wrong. Nash County Board of Education v. The Biltmore Co., et al., 1980-81 Trade Reg.Rep. (CCH) P 63,715 (Jan. 12, 1981).

Although the primary right and duty in both statutes in the case at hand is identical in that they require disclosures, the nature and extent of those disclosures and the remedies afforded for nondisclosure are distinct and different. For example, the action which was brought in county court in the present case was for a collection on a note. Seeking protection from a collection law suit, Borrowers counterclaimed with a defense that blanks were left on the loan statement in violation of Miss.Code Ann. § 75-67-127(2)(b). The Court found that Lender had violated that section as well as others. See note 3, supra. By comparison, the present action under review seeks relief pursuant to 15 U.S.C.A. § 1640 (Truth-In-Lending Act TILA), which establishes damages as a matter of law for violations, particularly that portion of the security interest dealing with after acquired property. See note 4, supra. Although this is a specific violation of the TILA, Pollock v. General Finance Corp., 535 F.2d 295 (5th Cir. 1970), it is not an express violation of Miss.Code Ann. § 75-67-127. Therefore, the violations or wrongs sued for under TILA are different than those addressed in the county court under the Small Loan Regulatory Act, and thus constitute two separate causes of action.

Lender argues in the alternative that if these actions are two separate causes of action, Borrowers should have raised the federal TILA claim in the County Court. This Court has addressed the opposite procedural posture in Plant v. Blazer Financial Services, Inc. of Ga., 598 F.2d 1357 (5th Cir. 1979). There, we held in a federal TILA suit that default on the underlying debt was a compulsory counterclaim. Although the Court did not expressly find the converse to be true, it did refer to a Florida District Court opinion, Drew v. Flagship First Nat. Bank of Titusville, 448 F. Supp. 434 (M.D.Fla.1977), which does present the identical procedural situation as in our case. That Court rejected the defendant/creditor's assertion that the debtor should have brought its truth-in-lending claim as a compulsory counterclaim in an earlier state debt action, stating:

(A)n analysis of the state debt and truth-in-lending actions reveals that despite surface similarities these two claims are quite distinct. Hence there is no basis for holding that under Florida law a right of action under the Act must be asserted as a compulsory counterclaim if an action on the underlying indebtedness is brought.

The only significant link between the two claims which could lead to the conclusion that they concern a common "transaction or occurrence" is the credit extension; each sues as a consequence of the other's obligation on the note (cites omitted). The lender's claim is for the balance of the note. The debtor's claim is to remedy alleged violations of the Act as a consequence of the lender's failure to make the appropriate credit disclosures (emphasis added).

We follow the reasoning and results in Drew in disposing of Lender's counterclaim argument Mississippi has no statutory compulsory counterclaim. Thus, we affirm the District Court's action in not applying the doctrine of true res judicata since we have already concluded that there are substantial differences in the two statutes at issues.

However, our affirmance of the preclusion of "true res judicata" does not end our inquiry. We must now determine whether the present action is barred by the related doctrine of collateral estoppel or "issue preclusion." This Court has stated that the three traditional requirements for the application of the doctrine of collateral estoppel are: (i) the issue to be precluded must be identical to that involved in the prior action, (ii) in the prior action the issue must have been actually litigated, and (iii) the determination made of the issue in the prior action must have been necessary to the resulting judgment. James Talcott, Inc. v. Allahabad Bank, Ltd., 444 F.2d 451, 458-59 (5th Cir.), cert. denied, 404 U.S. 940, 92 S. Ct. 280, 30 L. Ed. 2d 253 (1971). Harris v. Washington, 404 U.S. 55, 92 S. Ct. 183, 30 L. Ed. 2d 212 (1971). See generally 18 C. Wright, A. Miller, Federal Practice and Procedure § 4432 (1981).

Simply stated, collateral estoppel means that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue or point in controversy cannot be relitigated between the same parties in any future lawsuit.

By comparing the issues adjudicated at the county level (see note 3, supra ) with those alleged in Borrowers' federal complaint (see note 2, supra ), it is readily apparent that the violations or issues in question are distinct and different. Accordingly, we find that the present suit is not barred by the doctrine of collateral estoppel.

We cannot affirm, however, the District Court's damage award. The TILA allows recovery "with respect to any person" where liability is found for "twice the amount of the finance charge in connection with the transaction up to $1,000." 15 U.S.C.A. § 1640(a)(1)7 (emphasis added). This Court has allowed a husband and wife who signed a promissory note and who were jointly and severally liable under state law to be entitled to two statutory penalties. See Cody v. Community Loan Corp. of Richmond County, 606 F.2d 499, 508 (5th Cir. 1979), cert. denied, 446 U.S. 988, 100 S. Ct. 2973, 64 L. Ed. 2d 846 (1980), citing Davis v. United Companies Mortgage and Investment of Grentna, Inc., 551 F.2d 971, 972 (5th Cir. 1977) (two statutory penalties allowed when there are two borrowers who are jointly and severally liable for the note).

The record reveals that both White and Tinsley, Borrowers, signed all the documents together and were jointly and severally liable for the note. Thus, the District Court should have awarded each of the Borrowers the statutory penalty which in our case would entitle Borrowers to an additional $377.90.

Accordingly, we modify the judgment appealed from so as to award the additional sum of $377.90 to the plaintiffs upon their cross-appeal, and, as modified, the judgment is affirmed.

AFFIRMED AS MODIFIED.