David Steed & Associates, Inc. v. Young

HUNTLEY, Justice.

David Steed, et al., petition this Court by mandamus to require the district judge, to vacate his order denying Steed a jury trial on the legal causes of action asserted in their compulsory counterclaim. We grant the writ.

Idaho First National Bank instituted a mortgage foreclosure action against Steed to recover amounts due on his allegedly defaulted loans. Steed filed a separate action against the Bank alleging various causes of action grounded both in law and equity, including causes of action for breach of contract, fraud, constructive fraud and conspiracy, negligence, intentional infliction of emotional distress, constructive trust and a claim for injunctive relief against unfair competition. Steed made a proper and timely request for a jury trial on the legal causes apart from the equitable causes to be tried by the court. The court ordered that the two cases be consolidated, and Steed’s complaint was properly denominated a compulsory counterclaim pursuant to I.R.C.P. 13(a) because it arose from the same transaction as the Bank’s complaint.

The Bank filed a motion to strike Steed’s demand for a jury trial on the ground that this is primarily a foreclosure action in equity, the counterclaim was based upon issues necessarily determined in the foreclosure action, and Steed’s counterclaim also asked for equitable relief. The district court granted the motion and struck the demand for jury trial.

I.

The determination of the issue presented on appeal should be made in the context of the history and purposes of the right to trial by jury. Our forefathers wisely provided in Article 1, Section 7 of the Idaho Constitution: “The right to trial by jury shall remain inviolate ...” They so provided because they recognized that the jury system is the single most important guardian of the people’s right to be protected from oppressive and overreaching government.

Few Americans realize that the right to jury trial in civil cases has almost been lost in England. English judges, with the acquiescence of a compliant bar, have totally eliminated the right to trial by jury in civil cases except in cases of libel or slander. The English themselves seem to have forgotten the words of their eminent jurist, Blackstone, who wrote that trial by jury is:

... the glory of the English law ... [i]t is the most transcendent privilege which any subject can enjoy, or wish for, that he cannot be affected in his property, his liberty, or his person but by the unanimous consent of twelve of his neighbors and equals.

Blackstone Commentaries 79.

Some American judges and legislators have similarly lost touch with the following language in our Declaration of Independence:

[George III] has combined with others to subject us to a jurisdiction foreign to our Constitution, and unacknowledged by our laws; giving his assent to their acts of pretended legislation: ... For depriving us, in many cases, of the benefits of trial by jury ...

The French philosopher and essayist, De Toqueville, who understood and appreciated democracy in America with keener insight than any other observer of the Nineteenth Century, stated that the jury system in America:

... places the real direction of society in the hands of the governed ... and not in ... the government ... He who punishes the criminal ... is the real master of society. All the sovereigns who have chosen to govern by their own authority, and to direct society, instead of obeying its direction, have destroyed or enfeebled the institution of the jury.

Those who believe in strict construction of our Constitution recognize that the judiciary’s oath to “support and defend the Constitution” requires that we resist the temptation to enhance judicial power through encroachment into the provinces constitutionally delegated to the jury.

II.

Our forefathers’ wise constitutional mandate is reflected today in I.R.G.P. 38(a):

Jury trial of right — Right preserved.— The right of trial by jury as declared by the Constitution or as given by a statute of the state of Idaho shall be preserved to the parties inviolate except in the small claims department. (Emphasis added).

Constitutional provisions should be construed so as to give them practical effect according to the intention of the framers. See Fletcher v. Gifford, 20 Idaho 18, 115 P. 824 (1911); Grice v. Clearwater Timber Co., 20 Idaho 70, 117 P. 112 (1911); Engelking v. Investment Bd., 93 Idaho 217, 458 P.2d 213 (1969) (motion denied, 93 Idaho 739, 471 P.2d 594 (1969)).

Rule 13(a) states Idaho’s law for compulsory counterclaims:

Compulsory counterclaims. — A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.... (Emphasis added).

This rule is identical to Federal Rule 13(a) and is mandatory in its directive. Although we are not bound by the federal rule, inasmuch as the Idaho rule is based upon a federal rule of the same nature, the federal court’s interpretation of the rule is persuasive. Folkner v. Collins, 249 Iowa 1141, 91 N.W.2d 545 (1958).

The leading case with respect to Federal Rule 13(a) is Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959). That case is identical to the case at bar in that Beacon Theatres, Inc. also sought by mandamus to require a district court to vacate an order striking its demand for a jury trial upon legal issues found in its compulsory counterclaim. Therein the Supreme Court stated:

The holding in Beacon Theatres was that where both legal and equitable issues are presented in a single case, “only under the most imperative circumstances, circumstances which in view of the flexible procedures of the Federal Rules we cannot now anticipate, can the right to a jury trial of legal issues be lost through prior determination of equitable claims. [Beacon Theatres, Inc., 359 U.S. at 510-511, 79 S.Ct. at 957.] That' holding, of course, applies whether the trial judge chooses to characterize the legal issues presented as “incidental” to equitable issues or not. [Footnote omitted.] Consequently, in a case such as this where there cannot even be a contention of such “imperative circumstances,” Beacon The-atres requires that any legal issues for which a trial by jury is timely and properly demanded be submitted to a jury.

Dairy Queen, Inc. v. Wood, 369 U.S. 469, 473, 82 S.Ct. 894, 897, 8 L.Ed.2d 44 (1962), quoting Beacon Theatres, Inc. See also Evans Financial Corp. v. Strasser, 99 N.M. 788, 664 P.2d 986 (1983); Sanguinetti v. Strecker, 94 Nev. 200, 577 P.2d 404 (1978); Hightower v. Bigoney, 156 So.2d 501, 17 A.L.R.3d 1308 (Fla.1963).

While stressing the right to a jury trial on legal issues, the Court explained in Beacon Theatres, Inc.:

The basis of injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal remedies. At least as much is required to justify a trial court in using its discretion under the Federal Rules to allow claims of equitable origins to be tried ahead of legal ones, since this has the same effect as an equitable injunction of the legal claims. And it is immaterial, in judging if that discretion is properly employed, that before the Federal Rules and the Declaratory Judgment Act were passed, courts of equity, exercising a jurisdiction separate from courts of law, were, in some cases, allowed to enjoin subsequent legal actions between the same parties involving the same controversy. This was because the subsequent legal action, though providing an opportunity to try the case to a jury, might not protect the right of the equity plaintiff to a fair and orderly adjudication of the controversy. See, e.g., New York Life Ins. Co. v. Seymour, 6 Cir., 45 F.2d 47, 73 A.L.R. 1523. (Emphasis added).

Id. 359 U.S. at 506-507, 79 S.Ct. at 954-955.

If there should be cases where the availability of declaratory judgment or joinder in one suit of legal and equitable causes would not in all respects protect the plaintiff seeking equitable relief from irreparable harm while affording a jury trial in the legal cause, the trial court will necessarily have to use its discretion in deciding whether the legal or equitable cause should be tried first. Since the right to jury trial is a constitutional one, however, while no similar requirement protects trials by the court, that discretion is very narrowly limited and must, wherever possible, be exercised to preserve jury trial. As this Court said in Scott v. Neely, 140 U.S. 106, 109-110, 11 S.Ct. 712, 714, 35 L.Ed. 358: “In the Federal courts this [jury] right cannot be dispensed with, except by the assent of the parties entitled to it; nor can it be impaired by any blending with a claim, properly cognizable at law, of a demand for equitable relief in aid of the legal action, or during its pendency.” This long-standing principle of equity dictates that only under the most imperative circumstances, circumstances which in view of the flexible procedures of the Federal Rules we cannot now anticipate, can the right to a jury trial of legal issues be lost through prior determination of equitable claims. See Leimer v. Woods, 8 Cir., 196 F.2d 828, 833-836. As we have shown, this is far from being such a case. (Footnotes omitted, emphasis added).

Id. at 510-511, 79 S.Ct. 956-957.

We abide in the authority and the clear analysis of the Court in Beacon Theatres, Inc. Thus, it is irrelevant whether the legal issues are “incidental” to the equitable claims, since the right to a jury trial is specifically guaranteed under both Idaho Constitution art. 1 § 7 and I.R.C.P. 38(a).¹ Further, in the instant case, the Bank has only claimed that the case beginning in equity must lie in equity, since the legal issues are “incidental” to the equitable, and both legal and equitable issues are “inextricably intertwined.” The Bank has made no showing of “imperative circumstances” in its case which would deprive it of equitable relief if the legal issues were tried to a jury. We can thus find no reason to deny Petitioner Steed his most precious constitutional right to trial by jury.

In the final analysis, the most persuasive argument is that Rule 13(a) would be unconstitutional “if it compelled a party either to waive his right to a jury by pleading the counterclaim or waive the claim by not pleading it....” Hightower, 156 So.2d at 508, 17 A.L.R.3d at 1318, quoting Barron & Holtzoff, Federal Practice and Procedure, § 405. Since the right to a trial by jury is “inviolate” under the Constitution of the State of Idaho, a party to an equity action has a right to a jury trial on the legal causes of action raised pursuant to his compulsory counterclaim, unless there is a clear showing of “imperative circumstances” which would cause the equity claimant “irreparable harm while affording a jury trial in the legal cause.” Beacon Theatres, Inc., supra.²

III.

The Bank also claims that a writ of mandate was an improper vehicle to bring this case before the Court, since mandamus is inappropriate when judicial discretion is involved and should only be used when the party seeking the writ has a “clear legal right” to have the petitioned act performed. Felton v. Prather, 95 Idaho 280, 506 P.2d 1353 (1973). In those instances in which a party is entitled to a trial by jury, no discretion lies in the court to deny a “clear legal right” required both by the Idaho Constitution and the Idaho Rules of Civil Procedure.

The alternative writ is made permanent insofar as it requires the district judge to vacate his order striking the demand for jury trial, and the case is remanded for further proceedings consistent herewith. Costs to Petitioners, no attorney fees awarded.

BISTLINE, J., concurs.

1 . Idaho Rule 42(b) also provides the statutory method for separating trials when there is a risk of prejudice to a party:

Separate trials. — The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of

any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues, always preserving inviolate the right of trial by jury as declared by the Constitutions, statutes or rules of the court. (Emphasis added).

2 . This court in its earliest cases ruled that a party in an equity action is entitled to a jury trial on legal counterclaims or cross-claims. Robertson v. Moore, 10 Idaho 115, 77 P. 18 (1904); Sandstrom v. Smith, 12 Idaho 446, 86 P. 416 (1906); and Penninger Lateral Co. v. Clark, 22 Idaho 397, 126 P. 524 (1912). Those cases were overruled and the contrary rule asserted in Dover Lumber v. Case, 31 Idaho 277, 170 P. 108 (1918); Johnson v. Niichels, 48 Idaho 654, 284 P. 840 (1930); Fogelstrom v. Murphy, 70 Idaho 488, 222 P.2d 1080 (1950); and Anderson v. Whipple, 71 Idaho 112, 227 P.2d 351 (1951). To the extent the latter four cases are inconsistent herewith they are overruled.