ATTORNEYS FOR APPELLANTS: ATTORNEY FOR APPELLEE:
John G. Forbes L. R. Wheatley
Bruce A. Kotzan Danville, Indiana
Julie Z. Schmitt
Indianapolis, Indiana ATTORNEY FOR AMICUS CURIAE
FEDERAL HOME LOAN BANK OF
Maggie L. Smith INDIANAPOLIS:
Sommer & Barnard, PC
Indianapolis, Indiana Jonathan R. West
Indianapolis, Indiana
ATTORNEYS FOR AMICUS CURIAE
INDIANA BANKERS ASSOCIATION,
INC.:
Theodore J. Nowacki
Brian H. Babb
Bose McKinney & Evans LLP
Indianapolis, Indiana
IN THE
SUPREME COURT OF INDIANA
STEPHEN A. SONGER and COUNTRY )
CONCRETE, INC., )
)
Appellants (Defendants), ) No. 23S01-0207-CV-360
) in the Supreme Court
v. )
) No. 23A01-0004-CV-132
CIVITAS BANK F/K/A CITIZENS BANK ) in the Court of Appeals
OF WESTERN INDIANA, )
)
Appellee (Plaintiff). )
APPEAL FROM THE FOUNTAIN CIRCUIT COURT
The Honorable Thomas K. Milligan, Special Judge
Cause No. 23C01-9801-CP-011
July 2, 2002
SHEPARD, Chief Justice
Recent practice and case law has inclined toward denying a request
for trial by jury whenever a complaint joins claims in law and equity on
the theory that any claim in equity “draws the whole lawsuit into equity.”
We think this narrows the right to trial by jury as guaranteed by the
Indiana Constitution.
Facts and Procedural History
Appellant Stephen A. Songer is chairman of the board and chief
executive officer of CentreBank of Veedersburg (CentreBank). He and his
wife Jahn own about one-third of CentreBank’s stock. Songer and Jahn also
serve as directors and sole shareholders of Country Concrete, Inc. (CCI).
In late 1996, CentreBank made a loan of just over a million dollars,
its largest outstanding loan at the time, to Battleground Hybrids, Inc.
(BHI). In 1997, BHI’s sister company, Prairie Production, Inc. (PPI),
sought additional financing.[1] BHI’s ability to repay CentreBank’s
initial loan depended on PPI’s financial health.
In April 1997, representatives of CentreBank, Civitas Bank, and PPI
met to discuss the possibility of Songer investing in PPI. Songer agreed
to provide financial assistance to PPI though proceeds provided by Civitas.
For the purpose of investing in PPI, Songer personally executed two
promissory notes in which he promised to pay Civitas approximately $500,000
plus interest. Songer also granted Civitas a lien on his shares of
CentreBank, executed an irrevocable stock power and delivered the stock
certificates to Civitas. Furthermore, Songer granted Civitas a mortgage on
real property owned by CCI and assigned rental income from it.
Civitas deposited the loans’ proceeds, in the form of two cashiers’
checks, into PPI’s checking account. The cashiers’ checks were made
payable to Songer but were never endorsed by him. Songer made only one
payment on the promissory notes and subsequently defaulted.
Civitas filed suit against Songer and CCI. The complaint listed two
counts, one styled “Complaint on Note” and the other “Replevin.”[2] In
count one, Civitas sought to collect the principal on the notes, accrued
interest, costs and attorneys’ fees. In count two, it sought an order
“authorizing [Civitas] to liquidate the collateral granted to it by Stephen
A. Songer, a determination of lien priority in said collateral if required,
an extinguishment of rights of all parties claiming an interest in the
collateral and for all other relief just and proper under the premises.”
(R. at 13.)
In their answer, Songer and CCI asserted six affirmative defenses:
(1) lack of consideration, (2) conversion, (3) forgery, (4) estoppel, (5)
fraud, and (6) lack of holder-in-due-course status. They requested a jury
trial on the entire subject matter of Civitas’ complaint. The trial court
denied the request.
After a bench trial, the court awarded judgment to Civitas on the
promissory notes plus interest and attorneys’ fees. It also ordered
foreclosure of the mortgages and liens Songer had given Civitas as
security.
Songer and his company appealed, arguing that their right to a jury
trial was violated, that a notice of foreclosure action was not given, that
the right of redemption was violated, that Civitas improperly distributed
the money from the promissory notes, and that the evidence did not support
the trial court’s conclusions of law. The Court of Appeals found that CCI
was entitled to a three-month redemption period before execution of
foreclosure, but found for Civitas on all other issues. Songer v. Civitas
Bank, No. 23A01-0004-CV-132, slip op. at 15 (Ind. Ct. App. Jan. 11, 2001).
We grant transfer.
I. Indiana’s Guarantee of Trial by Jury
Article I, section 20 of the Indiana Constitution reads, “In all
civil cases, the right of trial by jury shall remain inviolate.” The right
to a jury trial holds a special place in the system of justice, and we
guard it against encroachment.
That said, it has long been agreed that Article I, section 20 serves
to preserve the right to a jury trial only as it existed at common law.
See City of Crown Point v. Newcomer, 204 Ind. 589, 595, 185 N.E. 440, 443
(1933) (citing Wright v. Fultz, 138 Ind. 594, 38 N.E. 175 (1894); Allen v.
Anderson, 57 Ind. 388 (1877)). Drawing as we do from English common law
roots and England’s symbiotic system of law courts and equity courts, it is
a well-settled tenet that a party is not entitled to a jury trial on
equitable claims. Dean v. State ex rel. Bd. of Med. Registration &
Examination, 233 Ind. 25, 16 N.E.2d 503 (1954); W.A. Flint Co. v. John V.
Farwell Co., 192 Ind. 439, 134 N.E. 664 (1922). This principle is embodied
in Ind. Trial Rule 38(A):
(A) Causes triable by court and by jury. Issues of law and issues of
fact in causes that prior to the eighteenth day of June, 1852, were of
exclusive equitable jurisdiction shall be tried by the court; issues
of fact in all other causes shall be triable as the same are now
triable. In case of the joinder of causes of action or defenses
which, prior to said date, were of exclusive equitable jurisdiction
with causes of action or defenses which, prior to said date, were
designated as actions at law and triable by jury – the former shall be
triable by the court, and the latter by a jury, unless waived; the
trial of both may be at the same time or at different times, as the
court may direct.
II. The History of Joining Law and Equity Claims
Trial Rule 38(A) is thus necessarily the starting point. The policy
described by Rule 38(A) has existed in substantially the same form for over
120 years, commencing as a legislative enactment. See Rev. St. 1894, §
412; Rev. St. 1881, § 409 (nearly identical statutory forerunners of Trial
Rule 38(A)). This legislative enactment and the later judicial rule have
informed the historic understanding of the Constitution’s meaning on the
subject.
Rule 38(A) and its statutory predecessors generally set out three
principles. First, suits for which jurisdiction was exclusively equitable
prior to June 18, 1852, are to be tried by the court. Second, issues of
fact in all other suits are to be tried “as the same are now triable.”
T.R. 38(A). Finally, when both equitable and legal causes of action or
defenses are joined in a single case, the equitable causes of action or
defenses are to be tried by the court while the legal causes of action or
defenses are to be tried by a jury. Id.
One of the earliest decisions on joinder of legal and equitable
causes of action was Carmichael v. Adams, 91 Ind. 526 (1883), involving a
mortgage foreclosure. The Court ruled that the defendant was not entitled
to a jury trial on the amount of the note due. Id. at 528. In reasoning
remarkably applicable to the case at hand, the Court stated:
There could, in such a case as this – a suit upon a note and mortgage
– be no decree without an ascertainment of the amount due on the note,
and, therefore, the whole matter was necessarily for the decision of
the court. In order to determine whether the plaintiff was entitled
to the relief sought, it was absolutely necessary to ascertain that
there was a debt secured by the mortgage, for, if there was no debt,
there was nothing upon which the power of the court could be
exercised. It was not possible to make a step of progress in the
decree without settling the question of the defendants’ indebtedness.
Id. at 527. See also Evans v. Nealis, 87 Ind. 262, 263, 266-67 (1882) (in
action to encumber specific property with judgment lien, a jury trial was
proper only if verdict was advisory).
In Hendricks v. Frank, 86 Ind. 278 (1882), a debtor conveyed his only
unencumbered property to avoid payment to his creditors, and the creditors
filed suit to rescind the conveyance. Id. at 279-80. The case was tried
before a jury, to which a creditor objected. Id. at 282. This Court
concluded that a jury trial was improper, endorsing the opinion of Supreme
Court Commissioner John Morris,[3] who wrote, “Upon the general subject of
fraud courts of equity have concurrent jurisdiction with courts of law; but
in a cause or suit to rescind a contract for fraud, [courts of equity] had,
in June, 1852, exclusive jurisdiction.” Id. at 283.
Soon after Hendricks, we decided Brown v. Russell, 105 Ind. 46, 4
N.E. 428 (1886). There, Russell sought (1) to foreclose a chattel mortgage
which secured certain promissory notes and (2) to collect the debt
evidenced by the promissory notes. 105 Ind. at 47, 4 N.E. at 429. The
trial was before the bench, and Brown appealed. The Court held “that there
was no error in the [trial] court’s refusal of a jury trial.” 105 Ind. at
55, 4 N.E. at 433 (citations omitted).[4]
In Towns v. Smith, 115 Ind. 480, 16 N.E. 811 (1888), this Court
considered another case instructive to the issue now before us. The suit
involved an action on a promissory note and an action to set aside an
allegedly fraudulent conveyance made for the purpose of avoiding the debt.
115 Ind. at 481, 16 N.E. at 812. The Court held:
One feature of the case, it is true, was an action on a promissory
note, and the relief demanded was merely of a pecuniary character. To
that extent the proceeding resembles an ordinary action at law. In
order to obtain final and more effectual relief, however, the suit
combined a proceeding in the nature of a creditors’ bill to set aside
and cancel a fraudulent conveyance, which belongs exclusively to the
procedure and jurisdiction of chancery.
115 Ind. at 481, 16 N.E. at 812.
After Towns came Albrecht v. C.C. Foster Lumber Co., 126 Ind. 318, 26
N.E. 157 (1890), in which Foster Lumber sought to enforce a lien against
Albrecht’s property. In response, Albrecht asserted that Foster Lumber’s
notice of foreclosure was deficient and requested a jury trial. 126 Ind.
at 319-20, 26 N.E. at 157. The trial court denied the request, and
Albrecht appealed. This Court affirmed, holding that only a court of
equity can foreclose mechanics’ liens and liens on real property. 126 Ind.
at 320, 26 N.E. at 157 (citations omitted).
If the case history stopped here, our decision today would be
relatively simple. We would hold that Songer and CCI had no right to a
jury trial. Unfortunately, subsequent decisions and changes in the
pleading system have muddied the waters significantly.
Six years after Albrecht, this Court considered a similar issue. In
Field v. Brown, 146 Ind. 293, 45 N.E. 464 (1896), Field filed a three-count
complaint. The first sought recovery for money, the second sought an
accounting, and the third alleged fraud in settlement agreements. 146 Ind.
at 294, 45 N.E. at 464. Field requested a jury trial but was denied. The
Court concluded that while the last two counts stated equitable claims, the
first count was triable at law by a jury. 146 Ind. at 294, 45 N.E. at 464.
Relying on a statute that is now Trial Rule 38(A), the Court held that the
two equitable claims did not necessarily draw the third cause of action
into equity. 146 Ind. at 295-96, 45 N.E. at 464-65; see also Abernathy v.
Allen, 132 Ind. 84, 31 N.E. 534 (1892) (in suit to set aside two
conveyances and order partition, defendants were entitled to jury trial on
issue of partition).
Nevertheless, the Field Court reaffirmed that “where equity takes
jurisdiction of the essential features of a cause, it will determine the
whole controversy, though there may be incidental questions of a legal
nature.”[5] 146 Ind. at 295, 45 N.E. at 464 (emphasis added). The Court
cautioned, however, that “none of [our past holdings] can be construed as
holding that numerous causes of action, stated in various paragraphs of
complaint, may not be severed, and those of an equitable nature tried by
the court, and those of a legal character tried by a jury.” 146 Ind. at
295, 45 N.E. at 465.
From this correct statement of law, Songer and CCI try to prove too
much. They argue that the Court’s statement that “where equity takes
jurisdiction of the essential features of a cause, it will determine the
whole controversy” is limited to one-count complaints. (See Appellants’
Resp. to Amici at 4.) We disagree. As the U.S. Supreme Court said in Ex
parte Milligan, 71 U.S. 2, 112 (1866), the terms “cause” and “suit” are
interchangeable. The same is not necessarily true for “cause” and “cause
of action.”[6] A “cause,” as noted, is a lawsuit. As illustration,
lawsuits are assigned “cause numbers” to track their progress through trial
and appeal.
On the other hand, a “cause of action” is a legal theory of a
lawsuit. See Black’s Law Dictionary 213, 214 (7th ed. 1999). Several
“causes of action” can potentially be encompassed within a single “cause.”
Thus, a single “cause” might consist of a contract “cause of action” and a
tort “cause of action.”
As such, Field’s holding is that where the essential features of a
suit sound in equity, the entire controversy is drawn into equity,
including incidental questions of a legal nature.
The inverse must also be true. Where equity does not take
jurisdiction of the essential features of a cause, a multi-count complaint
may be severed, and different issues may be tried before either a jury or
the court at the same proceeding. This is consistent with the language and
spirit of Rule 38(A).
The subsequent case of Sweigart v. State, 213 Ind. 157, 12 N.E.2d 134
(1938), supports this conclusion. In Sweigart, the State brought suit
against Sweigart, Clerk of the Lake Circuit Court, seeking penalties for
unlawful issuance of marriage licenses and a temporary and final
injunction. 213 Ind. at 159, 12 N.E.2d at 136. The trial court issued the
injunction, and a jury trial was held on the penalties. 213 Ind. at 160,
12 N.E.2d at 136. Sweigart appealed and alleged that he was entitled to a
jury trial on the injunction as well. The Court held:
The equitable relief prayed for in the complaint was separate and
apart from the legal relief sought and was properly an issue for the
court to try. . . . The fact that the plaintiff joins legal and
equitable causes of action in a complaint does not deprive a defendant
of the right to a trial by jury on the purely legal issues.
213 Ind. 162-63, 12 N.E.2d at 137 (emphasis added).
Sweigart and Field can therefore be read together and harmonized with
past decisions. Where the essential features of a suit sound in equity,
such that the equitable relief asked for is not separate and apart from the
legal relief sought, the entire action is drawn into equity. And in the
prior decisions from Carmichael to Albrecht, the Court adjudged the
controversies as having essentially equitable features.[7]
III. Modern Detours
Modern decisions on this topic reflect the difficulty of parsing
through the issue. A fair amount of case law, including some of our own,
demonstrates the risks of a shorthand, imprecise recitation of the rule.
See, e.g., Fager v. Hundt, 610 N.E.2d 246, 253 n.5 (Ind. 1993) (“Despite
the longstanding rule that whenever a cause of action is in equity the
entire action is drawn into equity, thus extinguishing the right to a jury
trial, the converse is also true.”).
An overview of recent appellate decisions reveals continuing
disagreement and a multitude of tests used for determining a litigant’s
right to jury trial. We accepted transfer to restate the basic principles.
Much of this modern inconsistency can be traced to misuse of Hiatt v.
Yeargin, 152 Ind. App. 497, 284 N.E.2d 834 (1972), overruled on other
grounds, Erdman v. White, 411 N.E.2d 653, 656 (Ind. Ct. App. 1980). While
much of the prior case law involved interpretation of the statutory
guarantee, Hiatt was the first case to consider Trial Rule 38(A) as it was
adopted in 1970. 152 Ind. App. at 512, 284 N.E.2d at 842. The case
involved a breach of contract claim which sought specific performance of
the agreement. 152 Ind. App. at 526, 284 N.E.2d at 850. Appellants’
request for a jury trial had been denied.
The Court of Appeals examined several prior decisions, much as we
have done today. It cited both Towns, 115 Ind. at 480, 16 N.E. at 811, and
Hendricks, 86 Ind. at 278, for the proposition that “if any essential part
of a cause [i.e., suit] is exclusively of equitable cognizance, the whole
is drawn into equity.” Hiatt, 152 Ind. App. at 517, 284 N.E.2d at 845.
After a thoughtful analysis, the court held that “[t]o determine if an
action with mixed issues of fact sounds in equity or law, the court must
turn to the complaint and pleadings as a whole.” 152 Ind. App. at 518, 284
N.E.2d at 846 (citing Monnett v. Turpie, 132 Ind. 482, 32 N.E. 328 (1892)).
The court concluded by saying that the “right to trial by jury is
determined by reference to the essential character and nature of the claim
for relief sought.” 152 Ind. App. at 525, 284 N.E.2d at 850.
Unfortunately, later decisions misconstrued Hiatt’s holding, prying
it loose from the rule of Towns, Hendricks, and Field. For instance, in
Jones v. Marengo State Bank, the court cited Hiatt for the proposition that
“if an essential part of a cause of action is equitable the rest of the
case is drawn into equity.” 526 N.E.2d at 713 (emphasis added). Like the
appellants in this case, the court failed to recognize the distinction
between a “cause” and a “cause of action.” Some subsequent decisions have
done likewise. See, e.g., Baker v. R & R Const., Inc., 662 N.E.2d 661, 665
(Ind. Ct. App. 1996); Levinson v. Citizens Nat’l Bank of Evansville, 644
N.E.2d 1264, 1267 (Ind. Ct. App. 1994); Weisman v. Hopf-Himsel, Inc., 535
N.E.2d at 1229. As we said above, the two are not interchangeable.
If the essential features of a suit as a whole are equitable and the
individual causes of action are not distinct or severable, the entitlement
to a jury trial is extinguished. The opposite is also true. If a single
cause of action in a multi-count complaint is plainly equitable and the
other causes of action assert purely legal claims that are sufficiently
distinct and severable, Trial Rule 38(A) requires a jury trial on the legal
claims.
A review of Rule 38(A) and more than 120 years of decisions reveals
that Songer is correct in arguing that the simple inclusion of an equitable
claim, standing alone, does not warrant drawing an entire case into equity.
Such an approach violates Rule 38(A), and we disapprove cases holding
otherwise. Something more than the mere presence of an equitable claim is
necessary.[8]
The appropriate question is whether the essential features of the suit
are equitable. To determine if equity takes jurisdiction of the essential
features of a suit, we evaluate the nature of the underlying substantive
claim and look beyond both the label a party affixes to the action and the
subsidiary issues that may arise within such claims. Courts must look to
the substance and central character of the complaint, the rights and
interests involved, and the relief demanded. In the appropriate case, the
issues arising out of discovery may also be important.[9]
IV. The Current Dispute
With this framework in mind, we move to the current controversy and
decide whether Songer and CCI were entitled to a jury trial.
The crux of Songer’s argument is that Civitas’ desire to foreclose
the lien was only “incidental” to its primary goal of “recover[ing] a
monetary judgment against Appellants for the collection of certain
promissory notes.” (Appellants’ Trans. Pet. at 7.) While we agree that
Civitas’ core objective was to regain the funds it lent, this was not
through a money judgment. The purpose of count one was to establish the
amount Civitas was entitled to collect out of the collateral it possessed,
including interest and attorneys’ fees. See Carmichael, 91 Ind. at 527
(“In order to determine whether the plaintiff was entitled to the relief
sought, it was absolutely necessary to ascertain that there was a debt
secured by the mortgage.”).
In the instant case, Civitas lent Songer $500,000 secured by
CentreBank stock and real property owned by CCI. It was not a judgment
lien Civitas sought, but rather court authorization to liquidate the
collateral it held. It would be nonsensical for Civitas to ask for a
$500,000 money judgment and then be forced to seek attachment of its
judgment lien to unencumbered property when it already possessed properly
attached collateral.
Instead, the essence of the claim was for a judicial pronouncement
that Civitas’ possessory lien was perfected and that the collateral could
be liquidated. At its heart, this was a suit to foreclose a lien on
property.
As we observed above, the vast weight of authority holds that
foreclosure actions are essentially equitable. See, e.g., Skendzel v.
Marshall, 261 Ind. 226, 240, 301 N.E.2d 641, 650 (1973) (foreclosure
“denotes an equitable proceeding for the enforcement of a lien against
property in satisfaction of a debt”) (quoting 55 Am. Jur. 2d Mortgages §
549 (1971)).[10] And being essentially equitable, the whole of the claim
is drawn into equity, including related legal claims and counterclaims.
Appellants additionally argue that denying them a jury trial was
unjust because Civitas could have liquidated the collateral without a
judicial pronouncement. (Appellants’ Trans. Pet. at 6.)
The provisions of former Article 9 govern this transaction and provide
secured parties with options in enforcing their security interests. First,
Ind. Code Ann. § 26-1-9-501 (West 1995) states that a secured party “may
reduce his claim to judgment, foreclosure, or otherwise enforce the
security interest by any available judicial procedure.” Alternatively,
Ind. Code Ann. § 26-1-9-504 (West 1995) allows “[a] secured party after
default [to] sell, lease, or otherwise dispose of any or all of the
collateral in its then condition or following any commercially reasonable
preparation or processing.”
Before acting without judicial intervention, though, a secured party
must assure that the security interest has attached and is enforceable
against the debtor. Ind. Code Ann. § 26-1-9-203 (West 1995). Attachment
generally occurs when (1) a debtor signs a security agreement describing
the collateral, (2) value is given, and (3) the debtor retains rights in
the collateral. Id. Given the highly contested nature of this case,
including Songer’s claim that value was not given for the security
interest, (see Appellant’s Br. at 22), Civitas did well to seek a judicial
pronouncement before enforcing their security agreement.
Civitas’ decision to seek court approval through foreclosure rather
than run the risks associated with liquidation did not alter the nature of
the lawsuit. As the Court of Appeals stated, “[O]nce [Civitas] sought to
reduce this claim to judgment, the cause of action depended on the equity
jurisdiction of the trial court.” Songer, slip op. at 8-9.
V. The Court of Appeals Was Otherwise Correct
As for the other issues Songer and CCI raised before the Court of
Appeals, we summarily affirm that court’s decision. Ind. Appellate Rule
58(A)(2). While CCI was entitled to a three-month period of redemption,
Appellants waived the issues of notice of mortgage foreclosure and statute
of frauds by failing to raise these issues at trial, and the trial court’s
conclusions of fact and law were supported by the evidence.
Conclusion
We affirm the judgment of the trial court.
DICKSON, SULLIVAN, BOEHM, and RUCKER, J.J., concur.
-----------------------
[1] The two companies were both operated by Stephen Ratcliff. (R. at 331-
32, 550-51.)
[2] While Civitas styled count two as “Replevin,” this is clearly the wrong
label. Replevin is an “action for the repossession of personal property
wrongfully taken or detained by the defendant.” Black’s Law Dictionary
1302 (7th ed. 1999). Civitas could not have been seeking replevin because
it already had possession of the stock certificates. It is a well-settled
rule that in determining whether a claim is legal or equitable, “Indiana
courts look beyond the label given a particular action and evaluate the
nature of the underlying substantive claim.” Weisman v. Hopf-Himsel, Inc.,
535 N.E.2d 1222, 1228 (Ind. Ct. App. 1989).
[3] In 1881, the legislature created five Commissioners, one to be
appointed by each of the five members of the Supreme Court. Act 1881, Ch.
XVII, p. 92. The Commissioners prepared opinions for consideration by the
Court.
[4] See also Jones v. Marengo State Bank, 526 N.E.2d 709, 713 (Ind. Ct.
App. 1988) (“An action to foreclose a security interest is essentially
equitable.”).
[5] Cf. McCoy v. Oldham, 1 Ind. App. 372, 376-77, 27 N.E. 647, 649 (1891)
(“In determining what suits are triable by jury the court must look to the
character of the questions to be decided, and, if they are essentially of
an equitable nature, or if some essentially equitable remedy is invoked, as
contradistinguished from legal questions and remedies, the cases should be
tried by the court; otherwise the parties will be entitled to a jury.”)
(emphasis added) (citing Martin v. Martin, 118 Ind. 227, 20 N.E. 763
(1889)).
A somewhat different test was set out in Robertson v. McPherson, 4
Ind. App. 595, 597, 31 N.E. 478, 478 (1892) (citations omitted), where the
court stated, “The question whether or not the cause is one in which a jury
may be demanded depends upon the jurisdiction invoked. If the remedy
sought be equitable the court cannot be required to call a jury. If it be
legal the trial is by jury, unless a jury be waived.”
[6] This conclusion is buttressed by the wording of Trial Rule 38(A)
itself. The first part of Rule 38(A) refers to “causes that prior to the
eighteenth day of June, 1852, were of exclusive equitable jurisdiction.”
T.R. 38(A) (emphasis added). Further on, the rule discusses “joinder of
causes of action or defenses, which prior to said date, were of exclusive
equitable jurisdiction.” Id. (emphasis added). “Causes” and “causes of
action” cannot be read as interchangeable terms. The holding in Field is
not “where equity takes jurisdiction of the essential features of a cause
of action, it takes jurisdiction over the entire suit.” Rather, the better
understanding of the Field Court’s holding is that “where equity takes
jurisdiction of the essential features of a suit, the entire proceeding is
drawn into equity” though there may be incidental questions of a legal
nature.
[7] See, e.g., Carmichael, 91 Ind. at 527 (“Where questions are so closely
blended and so firmly interlaced as in a suit upon a note and mortgage,
there can be no severance and no separate trials. One trial, or, to speak
more accurately, one hearing, ends the whole controversy.”) (emphasis
added). Some subsequent Court of Appeals decisions have properly applied
the rule as well. See Lewandowski v. Beverly, 420 N.E.2d 1278, 1282 (Ind.
Ct. App. 1981) (“[T]he legal and equitable issues were ‘so closely blended
and so firmly interlaced’ that there could be no severance.”) (quoting
trial court determination).
[8] Saying this, we also recognize that this position is not without
support in the law. For instance, Professor Pomeroy stated:
Where a court of equity has obtained jurisdiction over some portion or
feature of a controversy, it may, and will in general, proceed to
decide the whole issues, and to award complete relief, although the
rights of the parties are strictly legal, and the final remedy granted
is of the kind which might be conferred by a court of law.
1 Pomeroy, Equity Jurisprudence, § 231, at 410 (5th ed. 1941) (footnote
omitted), quoted in Kruse, Kruse & Miklosko, Inc. v. Beedy, 170 Ind. App.
373, 417, 353 N.E.2d 514, 541 (1976)).
[9] Examination of the pleadings alone will likely not end the inquiry.
The Supreme Court decisions we discussed earlier were all decided under the
rigid requirements of code pleading. The current system of notice pleading
requires only a short, plain statement of the claim showing that the
pleader is entitled to relief and a demand for such relief. See T.R. 8(A).
Although notice pleading has significantly eased the litigant’s initial
pleading burden, it has also made our decision-making process more
difficult regarding equitable and legal claims. As the Hiatt court
discussed:
[A]scertainment of the theory of a complaint or other pleading to
determine if the right to a jury trial exists is hampered.
Particularly where little or no discovery has been availed of by the
parties, the effect of modern pleading may often be to obscure the
theory of a pleading when a jury trial is demanded. At least for the
purpose of demanding a jury trial, a pleader should bear in mind the
traditional distinction between law and equity. We say this
recognizing that the pleadings no longer necessarily serve the
function of formulating issues, having in large part been replaced by
discovery procedure.
152 Ind. App. at 516-17, 284 N.E.2d at 845.
[10] See also Puterbaugh v. Puterbaugh, 131 Ind. 288, 298, 30 N.E. 519, 521
(1892) (“[W]here the purpose of the action is primarily to establish an
equitable right to acquire a legal title to the land through such right by
a decree of the court, as by a specific enforcement of an agreement . . .
the case is of equitable cognizance.”) (quoting Spencer v Robbins, 106 Ind.
580, 5 N.E. 726 (1886)); Reichert v. Krass, 13 Ind. App. 348, 351-52, 40
N.E. 706, 707 (1895) (holding that in an action to foreclose a mechanic’s
lien, a defendant’s legal counterclaim stemming from the same transaction
is drawn into equity) (citations omitted).
Songer v. Civitas Bank
Combined Opinion