#### The Guaranty Trust Co. of New York, Plaintiff, v. David C. Robinson, Emma A. Robinson and Roswell R. Moss, Impleaded, etc., Defendants.

(Supreme Court, Chemung Special Term,

April, 1900.)

X. Equitable action — Jury trial of issues refused where answers set up legal and equitable defenses and intricate issues.

Where a trustee of a bonded indebtedness forecloses a mortgage given *to*secure it and the defendants interpose answers, raising a multiplicity of intricate questions and asserting both legal and equi*278table defenses to overthrow the complaint, a motion by them to settle issues for trial by a jury should be denied as matter of discretion, the defendants having no absolute right to a jury trial.

¡2. Same — Reference ordered for plaintiff on affirmative defenses requiring examination of a long account.

Where the defenses set up are affirmative and sufficiently indicate that an accounting must be had which will require the examination of a long account, the action will be referred, at the instance of the plaintiff, although there be nothing in the complaint to indicate the necessity of a reference.

Aotiow to foreclose a mortgage.

Davies, Stone & Auerbach (Reynolds, Stanchfield & Collin, of counsel), for plaintiff.

A. C. & J. P. Eustace, for defendants Robinson.

Roswell R. Moss, in person.

Eobbes, J.

This is an action to foreclose a mortgage, given as collateral security to six bonds, amounting in all to the sum of $750,000, with interest. The action is, therefore, clearly an action in equity.

There are several defenses interposed by the answers; some of these defenses are clearly equitable in their character, and others are legal defenses. Making another test, some of the defenses interposed are pleaded for the purpose of defeating a recovery on the bonds and to cancel the mortgage, as having had no valid inception — having been obtained by fraud.

The plea of usury is also interposed, and a claim for damages for the nonperformance of the contract alleged in the defendants’— the Robinsons’— answers. In these several answers something like ninety-seven issues are proposed.

Motions were made, on the part of the last-named defendants, to settle issues for trial by a jury.

Careful examination of all the facts averred in the complaint, and the facts set forth in the answers, convinces me that the court ought not to settle issues or send them to trial before a jury. The *279averments in the answers must he taken in their entirety, for the purpose of determining what is to he litigated. Johnson v. Golder, 132 N. Y. 116.

The plaintiff stands in the relation of a trustee for the bonded indebtedness, and for that reason the defendants are not entitled to trial by a jury. Zimmerman v. Hinkle, 108 N. Y. 282.

These defendants have interposed answers to a complaint which is clearly equitable in form, and have alleged in said answers and joined together, though in separate counts, different causes of action arising out of the same transaction and relating thereto:

*First.*A defense to the enforcement of the mortgage security.

*Second.*A set-off and counterclaim arising from the proceeds alleged to have been collected by the mortgagee, for the benefit of the mortgagors, and which, it is alleged, should be applied on said indebtedness. These are clearly equitable defenses.

*Third.*Growing out of the transactions and the agreements in relation thereto, it is alleged that the plaintiff has wrongfully and unlawfully taken usury.

*Fourth.*Setting out a cause of action for damages for false and fraudulent representations; with proper averments; these being actions at law and enforceable in that form; and joined together with equitable defenses, in the same answers; the defendants are not entitled to a trial by a jury, as matter of right; but having thus joined legal and equitable defenses in the same answers to overthrow an equitable complaint, is, in law, a waiver of their right to a trial by a jury. Loomis v. Decker, 4 App. Div. 409; distinguished and approved in 26 id. 313; Davison v. Associates of the Jersey Co., 71 N. Y. 333; Cogswell v. N. Y., N. H. *&*H. R. R. Co., 105 id. 319; Bell v. Merrifield, 109 id. 202; Dudley v. Congregation, etc., of St. Francis, 138 id. 460.

This action having been brought to enforce the payment of said bonds and to foreclose the security held thereon, it is difficult to see how a motion to frame issues for a trial by jury can properly be granted, where the answers seek to set aside the mortgage and also ask for the enforcement of a counterclaim. Hayes v. Bainbridge, 61 N. Y. St. Repr. 853; Cook v. Jenkins, 79 N. Y. 575.

In the election of their remedy, the defendants having united legal with equitable defenses and thereby having waived their right to a trial by a jury, it is difficult for the court to see its way clear to grant the framing of issues as a matter of discretion. 71 N. Y. 333, *supra,*and authorities cited.

*280Where the leading and important defense is a defense in equity, as distinguished from law, issues' will not he settled to be tried by a jury.

By an examination of all the issues in this action, with a multiplicity of questions raised by the answers and sought to be tried, the court is impressed with the belief that it would be difficult for jurors to comprehend and carry in their minds, clearly, these issues, enabling them to intelligently and properly pass on the questions of fact involved.

It is quite reasonable to suppose that injustice might be done to all parties by the submission to a jury of the various and perplexing questions which would necessarily be raised on the trial of this action. With these views held by the court, it would neither be just nor proper to frame such issues.

The next question to be examined is the motion, made on the part of the plaintiff, for a reference of the issues raised by the pleadings.

If the defenses interposed are established, the answers show that there must be an accounting between the parties. For instance, the defendants claim that the mortgagee is in possession .of the property, covered by the mortgage, and that a large portion of the claims-for which the mortgage is being foreclosed has been paid and liquidated by the proceeds received from the úse of said property, and that, as to them, the plaintiff is a trustee or mortgagee in possession; and equity requires that the proceeds which have come into» the hands of the plaintiff, above the running expenses, at least, should be applied in liquidation of the claim.

It is also alleged that certain losses have been sustained in consequence of the nonperformance of the contract under which the bonds and the mortgage were executed and. are now held. Defendants also claim that large sums of money have been received, usuriously and corruptly, as a bonus, which, they insist, for that reason, must, at least, be applied towards the liquidation of the indebtedness covered by said security.

■ On the trial, all of these questions must be examined carefully and patiently for the purpose of seeing what are the rights of the parties, whether any of the indebtedness has been paid, to what extent, and what application of the proceeds, if any, should be made towards the mortgage security.

In other words, the proceeding must take the form of an accounting between the plaintiff and the defendants.

*281This is a very strong reason why the action should be sent to a referee, since the court would not, even on a trial at Special Term, sit and hear an accounting between the parties and in that manner adjust their affairs. This method of trial the court always has the right to control and may, of its own motion, send such issues to a referee for the purpose of ascertaining what kind of a judgment should be entered. In other words, the issues, as they are spread upon the record, clearly involve the examination of a long account. Code Civ. Pro., § 1013; Spence v. Simis, 137 N. Y. 616.

Looking at the claims made by the pleadings, and the suggestions contained in the moving and answering affidavits, there is no question left for discussion that the trial will involve the examination of a long account. Cassidy v. McFarland, 139 N. Y. 201; Rowland v. Rowland, 141 id. 485.

The answers in this action must be treated as affirmative defenses, and, therefore, must take the place of a complaint, in an examination to see whether the action is referable.

There is nothing in the plaintiff’s complaint which, of itself, suggests that the action is referable, and, therefore, the defendants would have no absolute right to move for a reference against the consent of the plaintiff, since, in that case, the question as to whether an action is referable, without consent of both parties, is-to be determined by the complaint alone. Steck v. Colorado F. & I. Co., 142 N. Y. 236.

But in the case at bar, treating the answers as the complaint; — since they set forth affirmative defenses, which might have been used as causes of action against this plaintiff, we must look at those-pleadings to see whether the matters therein contained involve the examination of a long account; therefore, the case of Steck v. Colorado F. & I. Co., *supra,*is in point against the defendants, as will be seen by an examination of this and the subsequent authorities. The Steck case went to the limit of the doctrine therein held, and was affirmed by a bare majority of the court. Spence v. Simis, 137 N. Y. 616; Cassidy v. McFarland, 139 id. 201; Rowland v. Rowland, 141 id. 485; Nat. Shoe & Leather Bank v. Baker, 148 id. 581.

This rule applies to equitable as well as legal actions. If this action is made referable, it is made so alone by the defenses interposed and the nature, variety and complication of those defenses.

The motions to frame issues for a trial by a jury are denied, and *282the motion for a reference of the issues, under the pleadings, is granted.

The attorneys for the respective parties may agree on a referee, within ten days after the service of the orders; otherwise, a referee will be appointed by the court. Orders may be drawn accordingly.

Ordered accordingly.