Court Opinion

ID: 6468918
Source: CourtListenerOpinion
Date Created: 2022-06-26 14:09:01.352475+00
Date Added: 2024-06-11T09:11:13.581070
License: Public Domain

On Motion for Rehearing. BOTTS, J. Appellants, by their motion for rehearing and the brief in support thereof, ask us to give further consideration to the proposition of their right to trial by jury. They say that our decision is, to use their own language: "That the nature of the action, whether legal or ^equitable, is determined from the complaint alone — that is to say, if plaintiff files a complaint which states a cause of 'action triable in equity, nothing that may thereafter appear in the pleadings can possibly give rise to t'he trial of any controverted fact according to the course of law. It is this proposition that we respectfully request the court to further consider. Does the nature of the complaint absolutely determine the course of'the procedure as to trial?” We have examined our previous opinion in vain for any indication that we bave either directly or by implication reached such a decision as that stated by appellants. We did not so decide, nor was it necessary or proper for us to give consideration to the general question of whether or not a plaintiff might, by the form and verbiage of his complaint, absolutely control the final selection of the tribunal by which his cause of action should be adjudicated. The relief to which the plaintiff was entitled in this case was the foreclosure of his mortgage, and that relief could only be administered by a court of equity. When a plaintiff undertakes to so frame his complaint as to make it appear on the face thereof that he is seeking equitable relief, when, as a matter of law and fact the law courts could afford him a plain, adequate, and complete remedy, it will be time enough for us to consider the question now suggested by appellants, and, when that time arrives, without undertaking to bind the court in any way, it is not improbable that the real inquiry will be largely whether or not the facts in the case disclose that a court of law can furnish a remedy that is plain, adequate, and complete. Pankey v. Ortiz, 26 N. M. 575, 195 Pac. 906. These facts might appear from the complaint, or from uncontroverted allegations of the answer, or from the evidence, or from all combined, since the Code permits a litigant to secure a hearing upon a simple and concise statement of the facts to be relied upon without regard to form. If we were to apply that test to the present case, it is readily apparent that a court of law cannot supply the remedy to which the plaintiff is entitled, to wit, the foreclosure of his mortgage. Nor would such a test in any wise conflict with the case of the Southern Railway v. Howell, 89 S. C. 391, 71 S. E. 972, Ann. Cas. 1913A, 1070, now strongly relied upon by appellants. The facts in that ease are that the defendant had fenced a portion of the plaintiff’s right of way and claimed title to the portion inclosed, and the plaintiff, instead of filing an action at law to recover possession of its right of way, filed a complaint in the nature of a bill in equity to restrain the maintenance of the fence as a continuing trespass. The right of way was an easement across land of which the defendant was the owner of the fee. The defenses were estoppel and abandonment, which the court held to be legal defenses. The language of the opinion relied upon by appellants is as follows: “It will not be necessary to notice the complaint in detail to determine whether, in form, it is an action for the recovery of the possession of real estate, as contended by appellant, or whether it is only an action in equity for injunction, as contended by respondent, and, therefore, one of equitable cognizance. It has been decided by this court too often to require citation of the cases that a plaintiff cannot, by framing his complaint so that his action would, under the old procedure, be one cognizable only by a court of equity, select the forum in which the issue shall be tried and thereby defeat a defendant’s constitutional right of trial by jury- The complaint alone does not necessarily determine the character of the issues — whether they are legal or equitable — or the mode of trial to which the parties are entitled. Those are questions which must be determined from an examination of all the pleadings in the case. Now, in this case, the defendant claims title to ¡the land in dispute, based upon the defenses mentioned. If they present issues which, before the adoption of the reformed procedure, were legal in their nature — that is, issues which were cognizable by a court of law, then the defendant was entitled to have them decided by a jury.” When it was understood that the relief, if any, to which the plaintiff in that case was entitled under the facts, was possession of the land inclosed by the defendant, which relief could have been readily administered by a court of law, there is nothing in the opinion which runs counter to what we have said, either here or in our former opinion. A little later we shall have occasion to notice what the South Carolina courts have to say with reference to the right to jury trial in cases such as the one now before us. Neither is the Indiana case of Reichert v. Krass, 13 Ind. App. 348, 40 N. E. 706, 41 N. E. 835, also relied upon by appellants, in any wise contrary to our holding. We shall also have occasion to notice that case later. While the point which is made by appellants is not well taken, it has occurred to ns that probably in our original opinion we did not give sufficient consideration to appellants’ claim of right to a jury trial on the cross-complaint, considered solely and strictly as a defense to plaintiff’s cause of action. Our consideration was largely based upon the theory that the allegations of the cross-complaint could have formed the basis of an independent action at law which the appellants voluntarily brought into the equity suit. A more careful examination of the cross-complaint discloses that the allegations thereof are sought to be made available against the plaintiff on two theories. The first is that the plaintiff was in reality the original payee and mortgagee, and mortgagee corporation being a mere dummy; the second is that the contract out of which the note and mortgage grew had been breached by the mortgagee prior to the assignment to the plaintiff, and that plaintiff had full notice of the breach, and therefore took the note and mortgage subject to the same “equities” which existed in favor of the defendants and against the mortgagee. The first theory is the one to which we gave consideration in arriving at our conclusion that defendants were not entitled to a jury trial of the issues on the cross-complaint. In that conclusion we think we were correct. On that theory defendants were not compelled to plead the breach of the contract in this suit, and would not have been in any wise prejudiced by their failure so to do in a subsequent action at law for damages. See extensive note, 8 A. L. R. 694. But, under the second theory of the cross-complaint, considered solely and strictly as a defense against recovery by the plaintiff who held the note and mortgage subject to defendants’ equities, it is probably true, at least we shall here assume it to be true, that defendants were compelled to plead the subject-matter of their cross-complaint or forever lose the benefit of such defense. What was the nature of the defense® Defendants claim that the mortgagee had not done all that it had. agreed to do by the contract, in consideration of which the note and mortgage had been given — in other words, that there had been a failure of consideration. It is elementary that consideration is an essential element in every contract, and this is no less true in equity than it is at law (3 Pom. Eq. Jur. [4th Ed.] 3114, §1293) and therefore a contract, without consideration, is no more enforceable in equity than it is at law. In fact, failure of consideration can often be shown at law, as for instance, where the contract is under seal. 3 Pom. Eq. Jur. (4th Ed.) 3114, §1293; Corbett v. Cronkhite, 239 Ill. 9, 87 N. E. 874; Steinmeyer et al. v. Steinmeyer et al., 55 S. C. 9, 33 S. E. 15; Couch v. McCoy (C. C.) 138. Fed. 696; Vasser v. Vasser, 23 Miss. 378; Burling v. King, 66 Barb. (N. Y.) 633; Minturn v. Seymour, 4 Johns. Ch. (N. Y.) 498; In the Matter of the Estate of Webb, deceased, 49 Cal. 541; Meek v. Kettlewell, 1 Hare, 464, 66 Eng. Reprint, 1114; Jefferys v. Jefferys Cr. & Ph. 139, 41 Eng. Reprint, 443; Cochrane v. Willis, 34 Beav., 359, 55 Eng. Reprint, 673. In this case, however, it is not contended that the failure of consideration has been total, but only partial, and our own court in territorial days held that partial failure of consideration is a defense pro tanto. Staab v. Garcia y Ortiz, 3 N. M. 33, 1 Pac. 857. The defense of partial failure of consideration, of course, rests on a somewhat different ground from that of total want of consideration, in that the latter goes to the validity of the contract, whereas the former goes merely to the reduction or extinguishment of plaintiff’s claim, and is in reality but an application of the doctrines of recoupment, set-off, or compensation. But these doctrines were all known and applied by courts of equity long before they were recognized in courts of law (3 Story’s Eq. Jur. [14th Ed.] § 1866 et seq.; 1 Pom. Eq. Jur. [4th Ed.] 222, § 175; 2 Pom. Eq. Jur. § 704), and were proper defenses to suits in equity. Equity was the originator of the right and practice of balancing debits against credits growing out of the transaction involved in a suit, and always weighed the “equities” of the parties to the end that a just and equitable decree might ultimately be rendered. A quotation from Pomeroy, by which he compares the practice of courts of law with that of courts of equity in this respect, may not be out of place here. 1 Pom. Eq. Jur. (14th Ed.) 222. “Another important element of the concurrent equitable jurisdiction exists in the marked difference between the modes of .proceedur’e at law and in equity with, reference to the actual rendition of final judgment and the form of such judgment. The judgment in an action at law, unaltered by modern statutes, is most truly a yea, yea, or a nay, nay; that is, it is a single, undivided award, or denial of some one of the three kinds of relief above described as alone possible; no adjustment of opposing rights, no partial relief to each of the opposing litigants, is permitted. The judgment is either for the defendant wholly, that the plaintiff take nothing by his action, or for the plaintiff wholly, that he recover possession of a specified tract of land, or of a specified chattel, or that he recover a single sum of money from the defendant, or from all the defendants if there are more than one. The doctrine of set-off, by which a defendant may recover judgment for a debt against the plaintiff, is wholly of a statutory origin; and the doctrine of recoupment, by which the plaintiff's pecuniary recovery! may be lessened by means of a claim for damages in favor of the defendant, is a very recent innovation upon the common-law methods of procedure. The modes of procedure in a court of equity ‘have never been thus restricted. Its decree is not confined to a single adjudication for or against the defendant; but as a preliminary, and leading up to the final award in favor of either party, or even in the very final award itself being- thus partially in favor of both litigants, it may make any adjustments, admit any limitations, and determine upon any cross-demands and subordinate claims which complete justice done to the parties shall require. The decree in eauity can thus easily shape itself to the circumstances of each case, even when the final relief is only an award of money, or of possession of land or of chattels.” So, assuming tbe rule to be that a defendant must plead all available defenses if he would have the benefit thereof, the rule is applicable'to suits in equity no less than to actions at law, and, had this suit been brought under the old equity practice and before the adoption of the Code, the defendants would have been compelled to plead their defenses and would not have been entitled to a jury trial of tbe issues raised thereby. The Code has not given litigants a new substantive right to a jury trial where none existed before and, since the right did not previously exist in this kind of case, it has no existence now. The case of Daniels v. Mutual Ben. Ins. Co., 73 Neb. 257, 102 N. W. 458, was a suit to foreclose a mortgage in which the defendant interposed a legal defense. The court held that the interposition by a defendant of a legal defense to an action originally instituted to obtain equitable relief alone does not secure for the defendant a right to a trial by jury of the legal defenses. Crissman v. McDuff, 114 Iowa, 83, 86 N. W. 50, was a suit in equity to foreclose an attorney’s lien. Under the provisions of an Iowa statute, the defendant gave a bond which had the effect of releasing the lien, and then demanded that the cause be transferred to the law docket and tried by a jury, on the theory that the filing of the bond reduced the attorney’s claim to a mere money demand. The court held that the refusal to transfer the cause to the law docket was not an infringement of defendant’s right to a jury trial, since a defendant has no right to a jury trial, of an issue of law presented by an answer in a suit properly brought in equity. The case of Angus v. Craven, 132 Cal. 691, 64 Pac. 1091, was a suit in equity to quiet title to certain land and to cancel certain deeds under which defendant claimed. The defendant filed a cross-bill in the nature of a legal action in ejectment, and demanded a'jury trial of the issues raised thereby. It was alleged by plaintiff that defendant’s claim was false and fraudulent and based in part upon certain false and forged deeds. The court held that it was not error to deny defendant a jury trial. See, also, Catch v. Garretson, 100 Iowa, 252, 69 N. W. 550, and Ryman v. Lynch, 76 Iowa, 587, 41 N. W. 320. The case of Reichert v. Krass, 13 Ind. App. 348, 41 N. E. 835, is the one hereinbefore referred to as being relied upon by appellants. The opinion, appearing at that citation, is the one on rehearing, and a com-píete understanding thereof can be obtained only by a consideration of the original opinion reported in 40 N. E. 706. The plaintiff filed a suit in equity to foreclose a mechanic’s lien, and the defendant set up, by a cross-complaint, a breach of the contract under which the lien was claimed. The court said: “The cause being at issue on the complaint and the cross-complaint, and being called tor trial, Charles A. Reichert moved the court for and demanded a jury to try the issue joined on his cross-complaint. This motion was denied, to which the said defendant excepted. The ruling on this motion was made a cause for a new trial', and presents the only question for our consideration on this appeal. The appellee’s position is that the action to foreclose the mechanic’s lien is strictly an equity proceeding, and triable by the court, without the aid of a jury; that the matters set out in the cross-complaint are properly matter in defense, and are necessarily drawn into equity by the complaint. The grievances complained of in the counterclaim grew out of the same contract and transactions which are the basis of the complaint. The defendant may, under such circumstances, elect whether he will use the injuries he has sustained as a defense by way of recoupment, or he may use it as a counterclaim or as an independent cause of action. Brower v. Nellis, 6 Ind. App. 325, 33 N. E. 672; Aultman v. Richardson (Ind. App.) 38 N. E. 532; Aultman v. Forgy (Ind. App.) 36 N. E. 939. If he use the matter in defense by way of recoupment, 'he can have no judgment over for any excess of damages. If he use it as a counterclaim, he may have judgment over for the excess found due him. But in either event the plaintiff’s right to a recovery will be defeated. As the plaintiff’s right to a recovery in his equitable action is liable to be defeated by the counterclaim, the whole controversy is drawn into equity, and is triable by the court without the aid of a jury. Towns v. Smith, 115 Ind. 480, 16 N. E. 811; Martin v. Martin, 118 Ind. 227, 20 N. E. 763. It is true that the appellant might have elected to use the breach of the contract set out in his counterclaim as an independent cause of action, and have had the issues thereon tried by a jury; but, as he voluntarily brought it into an equitable proceeding, he will be bound to submit to the rules that govern in such proceedings. The court did not err in overruling the motion.” It will be seen that the ease was decided on much the same theory as that upon which our original opinion with reference to the right to jury trial on a cross-complaint is based and, by his motion for rehearing, the defendant contended that; “The matters set up by the defendant in his cross-complaint were pleaded because he was compelled to make answer to the plaintiff’s action, or lose his day in court. If he had not defended, and a judgment had been rendered against 'him upon the complaint, he could not thereafter maintain an independent action upon the matters set out in his cross-complaint. He was compelled to make his defense, or lose' his remedy. If he had not done so, a plea of former adjudication would have barred any action which he might have attempted to maintain thereafter upon such facts.” Thus it is seen that the appellant in tbat case raised the very question wbicb we are now considering, contending, in effect tbat be was deprived of bis right to jury trial on the cross-complaint because be was compelled to litigate the subject-matter thereof in tbat suit. In the opinion on rehearing, the court held tbat be was compelled to present tbat defense or lose bis remedy on the facts but, notwithstanding such conclusion, adhered to the former opinion tbat be bad not been deprived of the right to jury trial. the court said: “This action is not a suit on a common count, to recover money due under a special contract, but it is a suit on the contract itself, alleging- full performance on the plaintiff’s part. The breach, set up in the counterclaim was necessarily involved in the complaint. But it does not necessarily follow from this that the appellant was not entitled to a jury trial. This depends upon the nature of the issues joined on the complaint. If those issues were strictly legal, and not of an equitable character, then the appellant was entitled to a jury. If, however, the issues were of an equitable character, the issues joined on the counterclaim were, of necessity, drawn into equity. The foreclosure of a mechanic’s lien is an equitable proceeding, and the matters contained on the counterclaim were necessarily drawn into equity. If appellant’s contention should prevail, we might have this anomalous condition: The court, in trying the issues joined on the complaint, might find that the plaintiff had fully complied with the contract on his part, and the jury, in trying the issues joined on the counterclaim, might find that the plaintiff did not comply with all the conditions of the contract, and assess damages for the breach. We would then have two separate, distinct, and contradictory findings and adjudications of the same matter in the same action. Such a condition was never contemplated by our Code. Petition overruled.” Resuming our consideration of tbe South Carolina authorities, we find tbe Supreme Court of that state to have held consistently that in a suit for mortgage foreclosure a defense, based on facts which, considered independently and alone, would form the basis of an independent action at law, upon being interposed in the equity suit is drawn into equity and triable to the court without a jury. McLaurin v. Hodges, 43 S. C. 187, 20 S. E. 991; Hunt v. Nolen, 46 S. C. 551, 24 S. E. 543; Sullivan Hardware Co. v. Washington et al., 47 S. C. 187, 25 S. E. 45; Pratt v. Timmerman, 69 S. C. 186, 48 S. E. 255; Gibbes v. Hamilton, 89 S. C. 438, 71 S. E. 1029; Welborn v. Cobb, 92 S. C. 384, 75 S. E. 691; Mobley Co. v. McLucas et al., 99 S. C. 99, 82 S. E. 986. In Welborn v. Cobb, supra, the plaintiff Welborn was the assignee of the mortgagee, Dickson. He brought suit to foreclose, making Dickson and the mortgagor, Cobb, parties defendant. In his complaint he alleged that he was informed and believed that Cobb claimed the right to set-off against the mortgage debt the sum of $845, with interest, because of a deficiency in the acreage of the tract conveyed to him by Dickson on the ground that Dickson had falsely represented to him that it contained 138 acres when it contained only 113, and to- the extent of the shortage the consideration of the notes and mortgage had failed. Dickson demurred on the ground that two causes of action, one of which was in favor of the defendant Cobb, had been improperly united, and that, by compelling him to then litigate with Cobb the question of damages claimed by reason of the alleged misrepresentation and shortage, he was deprived of his constitutional right to jury trial. The language of the opinion is particularly applicable here because it deals with the facts favorable to Cobb, both in their character as an independent cause, of action and in that of a defense strictly. The court, after remarking that the case of Latimer v. Wharton, 41 S. C. 508, 19 S. E. 855, 44 Am. St. Rep. 739, seemed to have been misunderstood to some extent by the lower court, said: “That case does not hold that, in so far as the equity ■of a purchaser of land to be relieved from payment of the purchase money, or any part thereof, depends upon a mere failure of consideration, such equity can be set up only as a defense to an action can be set up only as a defense to an action for the purchase money. But that case noes not hold, and we think no case can be found in our reports which does hold, that a failure of consideration which results from a breach of warranty, express or implied, or from fraud, accident, mistake, or misrepresentation, intentional or unintentional, cannot be asserted actively as a cause of action and afford ground for relief. Therefore, in so far as Cobb’s equity depended upon a mere failure of consideration, he could be relieved in this action, or not at all; but in so far as it depended upon Dickson’s misrepresentation, it was available to him, either as a separate cause of action against Dickson, or as a defense in this action. But appellant seems to overlook the fact that the same facts which constitute a cause of action may also constitute a de-defense. The facts here referred to are as a defense. Therefore there was no improper joinder of causes of action in the complaint. “As to the right of a trial by jury: Where a defendant sets up, as a defense to an equitable cause of action, facts which grow out of that cause of action, or the transaction which gave rise to it, and are so interwoven with it as to be inseparable from it, the defense partakes of the nature of the cause of action and is equitable, and not triable by jury, as of right. In McLaurin v. Hodges, 43 S. C. 187, 20 S. E. 991, the action was to foreclose a mortgage. The defense was usury, and a counterclaim to recover double the usurious interest which had been paid was set up. Now, unquestionably, if the facts constituting that counterclaim had been set up in a separate action by the defendant against the plaintiff, the action would have been legal, and triable by jury. But, when set up as a defense the plaintiff’s equitable cause of action for foreclasure, this court held that as it grew out of that cause of action, or the transaction which gave rise to it, and was inseparable from it, and as its determination would directly affect the amount recoverable on the equitable cause of action, it was an equitable defense and triable by the court. In Hunt v. Nolen, 46 S. C. 553, 24 S. E. 544, the court said: ‘This action for foreclosuse is on the equity side of the court, and the defense is that there was a partial failure of consideration, arising out of the transaction in which the mortgage was given. The issues are therefore all equitable in their nature.’ To the same effect is Pratt v. Timmerman, 69 S. C. 187, 48 S. E. 255, and numerous other cases might be cited. Besides, there are numerous instances in which equity administers legal rights which arise incidentally or collaterally in causes of which it has taken jurisdiction. Hughes v. Kirkpatrick, 37 S. C. 161, 15 S. E. 912; Jenkins v. Jenkins, 83 S. C. 544, 65 S. E. 736; Ex parte Wilson, 84 S. C. 447, 66 S. E. 675.” So, in this case, when we consider the subject-matter of appellants’ cross-complaint strictly as a defense to the equitable relief sought by plaintiff, its determination would necessarily affect the amount and extent of plaintiff’s relief in' his equity suit, and would thereby ’ be drawn into equity for consideration and adjudication by the chancellor without the aid of a jury. It follows that appellants’ motion for rehearing should be denied, and it is s<3 ordered. PARKER, C. J., and BRATTON, J., concur.