Lynch v. Schemmel

Evans, C. J. Concededly, the practical effect of the ruling of the trial court was to set down the case to be heard in its entirety upon the equity side of the court, and to deprive the plaintiff of the right of jury trial upon any issue in the case. While the order in form only ordered the trial of the equitable issues first, the argument in support of the ruling is that such trial will necessarily dispose of every issue in the ease. This action was commenced in January, 1914. The notes sued on did not appear on their face to be due when the action was brought. The notes were drawn to fall due respectively on the following dates: March 15, 1914; December 1, 1914; March 15, 1917; November 1, 1920. Each note, however, contained the following proviso : “All interest and principal not paid when due shall draw interest at 8 per cent per annum, semiannually, and a failure to pay interest when due or in case of my. removal or attempt to remove from the county in which I now reside shall cause this note to become due at the option of the holder thereof. ’ ’ The petition averred that the defendant had removed [502] out of Kossuth County, the same being the county of his residence at the time of the execution of the notes. This latter allegation is specially traversed in the answer. The order appealed from was entered in the district court in September, 1914; and the defendant’s answer and his motion to set down the equitable issues to be first tried were each filed on September 15, 1914. Division II of defendant’s answer was as follows: “Division II. “For cross petition and cause of action in equity against the plaintiff herein, the defendant shows to the court: “Par. 1. That on or about the 25th day of November, A. D. 1913, this defendant signed his name to certain promissory notes amounting in the aggregate to $10,000, being the same promissory notes purported copies, of which are attached to the petition herein, and upon which the plaintiff is seeking to recover in this action. “Par. 2. That on or about the 25th day of November, A. D. 1913, the plaintiff entered the residence of the defendant in Bancroft, Iowa, and then and there orally accused the defendant of .having committed fornication with the wife of the said plaintiff prior to her marriage to the plaintiff. “Par. 3. That the plaintiff was then and there armed with a heavy stick or cane and the defendant was unarmed, and the plaintiff then and there menaced the defendant with said stick or cane and made demonstrations thereof over the defendant and threatened that he would maim, injure and kill the defendant. “Par. 4. That the defendant was then and there a priest of the Catholic church and a teacher in the parochial school at Bancroft, and as such priest had charge of the Catholic church at Bancroft,' Iowa, and parochial school connected therewith; and the defendant [plaintiff] further threatened ft said time and place to expose the defendant’s alleged erimirdl relations with the plaintiff’s wife and to bring about a [503] great scandal and to ruin this defendant in his reputation and his standing as a priest and teacher. “Par. 5. That thereupon the plaintiff did demand of the defendant money and did further demand of the defendant that if he could not pay any money that he execute to the plaintiff his promissory notes aggregating $10,000, and the plaintiff threatened the defendant that unless the defendant complied with his said demands for money or promissory notes, he would maim, injure and kill the defendant as aforesaid and further threatened that he would make the exposure and create the scandal as aforesaid, but orally promised the defendant that, if the defendant would comply with said demands, the plaintiff would keep the same a secret and would not bring about or publish the said scandal or the plaintiff’s said claims, and did orally promise that upon such compliance no one would be informed of the plaintiff’s said accusations. “Par. 6. That the defendant was in a highly nervous and excited condition and by reason of said threats his will was overcome and the defendant was by the means aforesaid put in duress by the plaintiff and while under such duress, he did sign his name to the said promissory notes, which were thereupon taken by the plaintiff, and the defendant says that the defendant was placed under restraint and duress and his will was overcome and said promissory notes were through such constraint and duress secured by the plaintiff. “Par. 7. And the defendant further says that the plaintiff, soon after procuring said promissory notes, did publish his said alleged charges to various people in Bancroft and vicinity and did create a public scandal and did bring disgrace upon this defendant and upon the said church and school. “Par. 8. And the defendant further says that the plaintiff’s said accusations were false and untrue and were known by the plaintiff at the time to be false and untrue. This defendant says that he had not' committed fornication with the plaintiff’s said wife and had not had immoral or illegal [504] relations with her of any kind, and that the plaintiff falsely and maliciously made said charges, threats and promises for the fraudulent and malicious purpose of extorting money or the said promissory notes from this defendant. “Par. 9. That the defendant has received no value or consideration of any kind for or on account of the said promissory notes or either of them and the same are wholly without consideration. “Par. 10. That the plaintiff is insolvent and the said promissory notes at the time of the commencement of this action were not due and were not by their terms due, and that only one of them is now by its terms due, and the same are negotiable and are in the possession of the plaintiff and that the plaintiff intends and purposes by any means within his power to harass and annoy the defendant and to continue to bring and keep him in public scandal and disgrace and to worry him into making payment or settlement, or failing in that that the plaintiff will, as the defendant believes and charges the fact to be, negotiate the said promissory notes to third persons in order that they may hold the same as apparent bona fide purchasers and continue to annoy and harass the defendant therewith. “Par. 11. That this action is unfounded and the plaintiff will by himself and through others bring other unfounded actions in the premises unless he is restrained by the court therefrom, and the plaintiff will continue to agitate and orally publish the said scandal and will orally defame and slander the defendant therewith and bring him into public disgrace and will scandalize and will continue to scandalize the Catholic church and the said school and community for the purpose of extorting money from this defendant unless he is restrained by the court, knowing that he is insolvent, and that the defendant has no recourse at law., “Par. 12. That the plaintiff [defendant] has no adequate remedy at law in the premises. [505] “Wherefore, defendant prays judgment dismissing .the •.plaintiff’s petition at plaintiff’s costs, and further that a temporary injunction issue restraining the.plaintiff from negotiating or parting with the possession of said promissory notes, or either of them, and restraining him from publishing the. said false charges against this defendant, and from defaming and slandering the defendant by said charges and repetition thereof, and restraining him from bringing further suits and litigation in the premises either in his own name, or in the names of others, and further prays that upon final hearing herein, the said promissory notes be decreed to be surrendered into court and that the same be adjudged to be void and cancelled by the court, and that the said injunction be made permanent and that defendant have judgment for costs, and for all and such other relief as to the court may seem just and equitable. ’ ’ The above defenses set forth in Division II were incorporated into Division I of the answer, by reference to Division II. Sec. 3435, Code, 1897, is as follows: 1. ofwaifprayer transfer0if equity. “Where the action has been properly commenced by ordinary proceedings, either party shall have the right, by motion, to have any issue heretofore exclusively cognizable in equity tried in the manner hereinafter prescribed in cases of equitable proceedings; and all the issues were such, though none were exclusively so, the defendant shall be entitled to have them all tried as in eases of equitable proceedings.” It will be noted from inspection of the allegations of the answer above set forth that the only defenses pleaded as against the validity of the notes sued on are duress and want of consideration. Neither of such defenses present any issue “heretofore exclusively cognizable in equity.” These defenses are without question available to the defendant as a defense at law. It is urged,, however, that the defendant prayed for [506] equitable relief in the form of a cancellation of the notes, and that such relief could be had only in equity. But we have frequently held that the mere prayer of a cross-petition asking for a cancellation of the instrument sued on by the plaintiff will not of itself entitle the defendant to a trial of the issues on the equity side. This is squarely held in Gray v. Coan, 36 Iowa 296; Biermann v. Guaranty Mutual Life Ins. Co., 142 Iowa 341; Dille v. Longwell, 169 Iowa 686. The following discussion in the Biermann case is applicable to the present case: “I. Error is assigned upon the refusal of the court tn separate the issues, and try the matters, alleged in the cross-petition as in equity, before proceeding with the main action. It would hardly seem necessary to go into extended argument to demonstrate the unsoundness of this claim. The defendant had been brought into a court of law to answer to an action upon its contract. If that contract had been procured by fraud or false representations, such fact was a full, complete and perfect defense to the action, and, if that defense was made good, the policy would be deprived of all vitality as fully as could have been accomplished by a decree in equity formally canceling it. The appropriate law issue for that purpose had already been joined, and was waiting trial before the cross-bill was filed. Generally speaking, equity has no-jurisdiction where there is an adequate remedy at law. 16 Cyc. 30. Of course, there is a certain field in which law and equity are said to have concurrent jurisdiction, and this jurisdiction includes a class of cases growing out of alleged accident, mistake or fraud. But even in this common field courts of equity, though recognizing the existence of their jurisdiction, are generally reluctant to exercise it where the remedy at law appears to be adequate and complete. Gorman v. Low, 2 Edw. Ch. (N. Y.) *324; Robinson v. Chesseldine, 5 Ill. 332; Hales v. Holland, 92 Ill. 494; Knight v. Hardeman, 17 Ga. 253. This court has held that equity will not enter [507] tain an action to rescind a contract for mistake, unless it appears that an injury will result for which the aggrieved' party will have no adequate remedy at law. Morse v. Beale, 68 Iowa 463. So, too, where a court of law has already obtained jurisdiction of a controversy involving an alleged fraud, equity will not interfere. Nash v. McCathern, 183 Mass. 345 (67 N. E. 323); Eaton v. Trowbridge, 38 Mich. 454; Sweeny v. Williams, 36 N. J. Eq. 627. To sustain the position of the appellant herein would be to sanction a practice by which the plaintiff in every action upon an insurance policy, or, indeed, upon every simple matter of contract, may be deprived of his constitutional right to have his cause submitted to a jury. The attempt so to do is by no means without precedent in this state. In the early case of Smith v. Short, 11 Iowa 523, Short brought an action at law to recover the price of certain land sold by him to Smith. The latter then sued put an injunction to enjoin the proceeding at law on the ground that the contract had been procured by fraud, and that Short had no title to’ the land he pretended to sell. In holding that the injunction was improperly issued, this court said: ‘ For aught that is shown, every matter stated in the bill can be made as fully available in answer and defense to the action at law as by an appeal to equity. Under such, circumstances, the parties should be left to their legal remedies and defenses.’ Practically the same question was raised: in Smith v. Griswold, 95 Iowa 684. There an action at law was brought upon a due bill and upon cross-petition to reform the instrument a motion to transfer the issue to equity for trial to the court was overruled. Affirming this ruling, the opinion says: ‘ The ■ sufficiency of the facts pleaded as a defense was not questioned, and, if they were established, the law forum gave the same relief as was sought in equity. The facts which would reform the instrument would defeat a recovery on it. Under such circumstances, equity has no jurisdiction. This is elementary. ’ Further discussion of this [508] branch of the ease is unnecessary. The court did not err in overruling the defendant’s motion. Indeed, it might well have sustained the plaintiff’s motion to strike the cross-bill as it is a mere repetition of matters already pleaded in defense, and, as we have seen, the prayer for equitable relief was of no avail to defeat or interfere with the trial of the issues already joined.” In the Dille case, we said: “This plea is defensive, and does not present an equitable issue in the case, and if proven, may be effectively used in resistance to the action at law upon the written instrument. It is a general rule that a defense asking cancellation may not be made in a pending suit at law upon a written instrument, where the determination of the issue in the law case will definitely settle the rights of the parties. 6 Cyc. 292; 1 Pomeroy, Eq., Sec. 179.” In Smith v. Griswold, 95 Iowa 686, we said: “Had the agreement been reformed, the legal effect would have been no more than the legal effect of the facts pleaded in the law action. The sufficiency of the facts pleaded as a defense was- not questioned, and, if they were established, the law forum gave the same relief as was sought in equity. The facts that would reform the instrument would defeat a recovery on it. Under such circumstances, equity has no jurisdiction. This is elementary.” It is urged, however, that the case at bar is differentiated from the cited cases in two respects: (1) That the notes did not appear upon their face to be due, and the defendant denied the facts alleged by plaintiff as causing their maturity; and (2) that the notes were negotiable in form, and that, if the present action were dismissed by plaintiff, or were abated as a result of trial, the plaintiff could transfer the notes to innocent third parties and thus annoy and harass the defendant. [509] 2. Trial : method of trial: remedy at law as hearing on transfer. [508] The argument is that it was appropriate to set the equi [509] table issues to be first tried because every issue would be thereby tried, whereas a trial at law might result in a mere abatement without an adjudication of the merits of the defense or the validity of the notes, and that the defendant would thereby, be left without any remedy to bring his defense to an issue. It is also urged that a multiplicity of suits would be thereby avoided. Many of the allegations of the defendant’s answer were contradicted by the very proceedings pending before the court at the time of the ruling. No multiplicity of suits was threatened. No delay of litigation was attempted by plaintiff. He brought one action upon all of the notes and was pressing his action to trial. The case had been assigned for trial to a jury before defendant’s final answer and motion to transfer were filed. The order appealed from prevented the jury trial which was about to begin. In resistance to the defendant’s motion, the plaintiff brought the notes into court and placed them in the custody of the clerk and caused the record to show that they were to be left in the custody of the clerk until the final adjudication as to their validity was had. The first note had become due without question on March 1st preceding. As to that note, therefore, there could have been no abatement for want of maturity. True, the action was begun before March 1st. Such fact might subject the plaintiff to costs, but it would not abate his action. Gribben v. Clement, 141 Iowa 144. As to such note, therefore, a complete adjudication as to its validity could be had upon a jury trial. It appears from the defendant’s cross-petition that all the notes were given at the same time and as a part of the samé transaction, and were all subject to the same defense, if any. An adjudication, therefore, as to the validity of the defense as to one note would operate as an adjudication of such defense as to every note. Watson v. Richardson, 110 Iowa 698; Reynolds v. Lyon County, 121 Iowa 733; Aultman v. Mount, 62 Iowa 674; Whit [510] aker v. Johnson County, 12 Iowa 595. A trial at law, therefore, would furnish to the defendant a plain, speedy and adequate opportunity to attack the validity of the notes. 3. ofEtriai issues iñequity\ede°ly truo.°f3ury It is urged, however, that, if the action should be abated as to any of the notes for want of maturity, the plaintiff could transfer the notes to third parties and thereby avoid the adjudication. This argument is predicated uPon the theory that the notes are negotiable. Whether they are negotiable upon their face a question into which we will not now enter. Such negotiability will be assumed for the purpose of our present consideration. We are brought, therefore, up against the one pivotal question whether a defendant may prevent a jury trial in a law action by praying for equitable relief in a cross-petition where no issue is presented which was “heretofore exclusively cognizable in equity,” and where every issue presented is available to the defendant as a defense at law. The cases which we have already cited hold to the negative. In support of the affirmative, however, the appellee cites and relies upon Weseman v. Graham, 157 Iowa 430. In that case, the plaintiff sued for a penalty for liquidated damages under a contract. The contract was one for the exchange of lands. The defendant filed a cross-bill, asking to set aside the contract on the ground of fraud' and for other reasons. These defenses could have been used as a defense at law against the action for a penalty. ..But the defeat of the penalty might have been had without necessarily vitiating the contract itself. That might -still have remained valid and specifically enforceable. The issue made by the cross-petition therein involved the removal of a cloud in title to real estate, and in that sense was, therefore, an issue “heretofore exclusively cognizable in equity.” It must be conceded, however, that our discussion in that ease and the reasons given in the opinion for sustaining the trial court do give support to the present contention of the appellee. [511] In that respect, the case is somewhat out oí line with both our previous and our subsequent cases. Whether the result leached could be justified on grounds consistent with our other cases is not wholly clear. Our discussion therein would indicate that we did not intend to go further than the previous cases cited therein. The cited case of Twogood v. Allee, 125 Iowa 59, was a case where the plaintiff himself had brought two actions simultaneously, one at law and one in equity. Both involved the same subject-matter and alleged substantially the same facts. In each case, the plaintiff asked for an accounting from the defendant, and asked that a certain note and mortgage held by the defendant should be .deemed paid and' discharged, and that the defendant be ordered to surrender the same, and that they be canceled. The defendant filed a cross-bill, setting up the note and mortgage referred to, and asking a foreclosure thereof. Upon motion of the defendant, the two actions were consolidated and were ordered to be tried on the equity side. In Johnston & Son v. Robuck, 104 Iowa 523, the plaintiff brought an action at law for alleged conversion. The defendant was a mortgagee under a second mortgage, who had taken possession of the mortgaged property thereunder and bad reduced the property in part to money. A mortgagee bolding a third mortgage intervened, asking, in effect, a foreclosure of his mortgage and that the surplus proceeds, if any, in the hands of the defendant, bé applied upon such mortgage. We held in that ease that the plaintiff’s petition at law failed to state any cause of action, and that the issues made by the pleadings of the defendant and intervener were equitable and triable as such. In the case of Carey v. Gunnison, 65 Iowa 702, the action of the trial court in refusing to set the issues for trial in 'equity was sustained. The discussion, however, contains language which is favorable to appellee’s present contention. The motion to transfer to equity was by the plaintiff, not by [512] the defendant. The right of plaintiff, therefore, to demand a jury was not considered. The foregoing are the cases cited in the Weseman case, supra. In the case before us, we think it must be held that none of the issues presented in the cross-petition were necessarily triable in equity; that the mere prayer for the cancellation of the notes sued on is not enough to justify the trial of the issues on the equity side; that, even though the prayer for such cancellation might have been permitted to stand as a protection to the defendant against future dismissal by the plaintiff, the issues at law as made should have been set first for trial at law. We so expressly held in Morris v. Merritt, 52 Iowa 496; Gibson v. Seney, 138 Iowa 383, 386; Eller v. Newell, 159 Iowa 711. No question of reformation was involved. To hold otherwise would put an end to jury trials upon written instruments except by the consent of the defendant. The order of the trial court setting the case to be first tried upon the equitable issues is therefore reversed.— Reversed and Remanded. Ladd, Weaver, Gaynor, Preston and Salinger, JJ., concur. Deemer, J., dissents.