Amendment 7 — Cases Combining Law And Equity

prev | next

Seventh Amendment :

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

The Seventh Amendment uses the term “common law” to refer to cases in which the right to jury trial was preserved. This term’s use reflected the division of the English and United States legal systems into separate law and equity jurisdictions, in which actions subject to the former but not the latter were triable to a jury. In the early federal court system, courts had jurisdiction over both suits in law and equity, but the suits occupied separate sides of a federal court’s civil docket and were subject to distinct law and equity procedures, including the use or nonuse of the jury.[1](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn1amd7 " See Kristin A. Collins, “A Considerable Surgical Operation” : Article III, Equity, and Judge-Made Law in the Federal Courts, 60 Duke L.J. 249, 253 (2010). ")

Adoption of the Federal Rules of Civil Procedure in 1938 merged law and equity into a single civil jurisdiction and established uniform rules of procedure.[2](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn2amd7 " See Ross v. Bernhard, 396 U.S. 531, 539 (1970). ") Legal and equitable claims that previously were brought as separate causes of action on different “sides” of the court could now be joined in a single action, and in some cases, such as those with compulsory counterclaims, had to be joined in one action.[3](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn3amd7 " See 8 Moore’s Federal Practice - Civil § 38.12 (2022). ") However, the courts retained the traditional distinction between law and equity for purposes of determining when there was a constitutional right to trial by jury, which led to some difficulty.[4](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn4amd7 " Under the old equity rules, an absolute right to a trial of the facts by a jury could not 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. Hipp v. Babin, 60 U.S. (19 How.) 271, 278 (1857). The Supreme Court interpreted the Seventh Amendment to prohibit the trial of equitable and legal issues in the same suit, so that aid in the federal courts had to be sought in separate proceedings. Scott v. Neely, 140 U.S. 106, 109 (1891); Bennett v. Butterworth, 52 U.S. (11 How.) 669 (1850); Lewis v. Cocks, 90 U.S. (23 Wall.) 466, 470 (1874); Killian v. Ebbinghaus, 110 U.S. 568, 573 (1884); Buzard v. Houston, 119 U.S. 347, 351 (1886). If an action at law evoked an equitable counterclaim, the trial judge would order the legal issues to be separately tried after the disposition of the equity issues. In this procedure, however, res judicata and collateral estoppel could operate so as to curtail the litigant’s right to a jury finding on factual issues common to both claims. However, priority of scheduling was considered to be a matter of discretion. Federal statutes prohibiting courts of the United States from sustaining suits in equity if the remedy was complete at law served to guard the right of trial by jury and were liberally construed. Schoenthal v. Irving Trust Co., 287 U.S. 92, 94 (1932). Nor was the distinction between law and equity to be obliterated by state legislation. See Thompson v. Railroad Cos., 73 U.S. (6 Wall.) 134 (1868). If state law, in advance of judgment, treated the whole proceeding upon a simple contract, including determination of validity and of amount due, as an equitable proceeding, it brought the case within the federal equity jurisdiction upon removal. However, the Supreme Court determined that when an action at law in state court furnished an adequate and complete remedy, the existence of a potential cause of action in courts of equity pursuant to a separate state statute could not enlarge the federal courts’ equity jurisdiction. This jurisdictional rule applies even if, under state law, the equity court could summon a jury on occasion. Whitehead v. Shattuck, 138 U.S. 146 (1891); Buzard, 119 U.S. 347; Greeley v. Lowe, 155 U.S. 58, 75 (1894). Furthermore, when state law provides an equitable remedy, such as to quiet title to land, the federal courts enforce it, if it does not obstruct the rights of the parties as to trial by jury. Clark v. Smith, 38 U.S. (13 Pet.) 195 (1839); Holland v. Challen, 110 U.S. 15 (1884); Reynolds v. Crawfordsville Bank, 112 U.S. 405 (1884); Chapman v. Brewer, 114 U.S. 158 (1885); Cummings v. Nat’l Bank, 101 U.S. 153, 157 (1879); United States v. Landram, 118 U.S. 81 (1886); More v. Steinbach, 127 U.S. 70 (1888). Cf. Ex parte Simons, 247 U.S. 321 (1918). The transfer of cases to the other side of the court was made possible through the inclusion in the Law and Equity Act of 1915 of § 274(b) of the Judicial Code, 38 Stat. 956. The new procedure permitted legal questions arising in an equity action to be determined without sending the case to the law side. This section also permitted equitable defenses to be interposed in an action at law. The same order was preserved as under the system of separate courts. The equitable issues were disposed of first; if a legal issue remained, it was triable by a jury. Enelow v. N.Y. Life Ins. Co., 293 U.S. 379 (1935). See also Liberty Oil Co. v. Condon Bank, 260 U.S. 235 (1922). There was no provision for legal counterclaims in an equitable action because Equity Rule 30 required the answer to a bill in equity to state any counterclaim arising out of the same transaction, which was not intended to change the line between law and equity and was construed as referring to equitable counterclaims only. Am. Mills Co. v. Am. Sur. Co., 260 U.S. 360, 364 (1922); Stamey v. United States, 37 F.2d 188 (W.D. Wash. 1929). Equitable jurisdiction existing at the time of a bill’s filing was not disturbed by the subsequent availability of legal remedies, and the scheduling was discretionary. Am. Life Ins. Co. v. Stewart, 300 U.S. 203 (1937). ")

The Supreme Court resolved the difficulty by stressing the fundamental nature of the jury trial right and protecting it against diminution through resort to equitable principles. In Beacon Theatres v. Westover, a plaintiff sought a declaratory judgment and an injunction barring the defendant from instituting an antitrust action against it; the defendant filed a counterclaim alleging violation of the antitrust laws and asking for treble damages.[5](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn5amd7 " 359 U.S. 500, 501–04 (1959). ") The Supreme Court held that the district court erred in denying the defendant a jury trial on all issues in the antitrust controversy because the complaint for declaratory relief “presented basically equitable issues.” [6](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn6amd7 " Id. at 504–07. ") The trial court’s error, in the Court’s view, would compel the defendant to split its antitrust case in two, trying part to a judge and part to a jury, impermissibly delaying and subordinating its counterclaim that it was required by the Federal Rules of Civil Procedure to bring within the same action.[7](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn7amd7 " Id. at 509. The Supreme Court later observed, in Parklane Hosiery Co. v. Shore, 439 U.S. 322, 334 (1979), that Beacon Theatres reflected the Court’s concern that when legal and equitable claims are joined in the same action, res judicata or collateral estoppel may foreclose relitigation of an issue common to both sets of claims before a jury if such an issue was first determined by a judge. The Court explained, however, that this concern merely reflected a general prudential rule that a trial judge “has limited discretion in determining the sequence of trial and that discretion must, wherever possible, be exercised to preserve jury trial.” Parklane, 439 U.S. at 334 (internal quotations omitted). Thus, in Parklane, the Court held that the plaintiff stockholders’ use of offensive collateral estoppel in that case—which precluded the defendants from relitigating certain issues that had resolved adversely against them in a prior governmental enforcement action—did not violate the defendants’ Seventh Amendment right to a jury trial. Id. at 336–37. ") Long-standing equity principles, according to the Court, dictated that “only under the most imperative 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.” [8](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn8amd7 " Beacon Theatres, 359 U.S. at 510–11. ")

Later, in Dairy Queen v.Wood, the Supreme Court reversed a district court’s order striking a plaintiff’s demand for jury trial.[9](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn9amd7 " 369 U.S. 469, 479–80 (1962). ") There, the plaintiff-trademark owner sought several types of relief against the defendant-licensee for the licensee’s alleged breach of a licensing contract, including an injunction and an accounting for money damages.[10](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn10amd7 " Id. at 475. ") The Court held that, even though the claim for legal relief was characterized by the district court as “incidental” to the equitable relief sought, the Seventh Amendment required that the factual issues pertaining to whether there had been a breach of contract to be tried before a jury.[11](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn11amd7 " Id. at 479–80. ") Thus, the rule emerged that legal claims must be tried before equitable ones, and before a jury if the litigant so wished.[12](https://www.law.cornell.edu/constitution-conan/amendment-7/cases-combining-law-and-equity#fn12amd7 " If legal and equitable claims are joined, and the court erroneously dismissed the legal claims and decides common issues in the equitable action, the plaintiff cannot be collaterally estopped from relitigating those common issues in a jury trial. Lytle v. Household Mfg., Inc., <a href