City of Morgantown v. Royal Insurance Company/Opinion of the Court

This case raises two questions: The appealability of an order denying a demand for trial by jury in a federal court, and whether the constitutional right to a jury applies to the trial of an issue of mutual mistake.

The facts are these. Petitioner in August of 1947 was carrying insurance with respondent on a hangar at its Municipal Airport. The policy by its terms insured petitioner against loss by fire or lightning in the amount of $22,000. On August 20, the hangar was completely destroyed by fire. Petitioner filed proof of loss. Shortly thereafter respondent instituted an action in the District Court for the Northern District of West Virginia for reformation and correction of the policy. It alleged in substance that during the preceding year petitioner had carried only windstorm insurance on the hangar, in the same amount; that the policy currently in force was intended by the parties to be a renewal of the rior policy; that the premium paid was the same as had been paid for windstorm insurance, an amount much less than the premium for fire insurance; and the policy had been written as a fire policy through the inadvertence of both parties and did not express the intent of either. It prayed for reformation to correct the mutual mistake and for a declaration of no liability for the loss by fire. Petitioner answered, denying mistake, and filed a counterclaim to recover on the policy as written. Respondent answered the counterclaim, alleging the same facts as in its complaint. Petitioner filed a demand for jury trial under Rule 38(b), Federal Rules of Civil Procedure, 28 U.S.C.A.; respondent moved to strike the demand; the court granted the motion and set the case for trial to the court without a jury. Petitioner appealed from this ruling. On motion of respondent, the Court of Appeals dismissed the appeal, 169 F.2d 713, and the case is here on a writ of certiorari. 335 U.S. 890, 69 S.Ct. 249.

In this posture of the case, we are first confronted with the question of the appealability of the trial court's order denying jury trial. Not being a final decision, it is appealable if at all only as an interlocutory decree granting or refusing an injunction under § 129 of the Judicial Code, 28 U.S.C.A. § 227. Petitioner urges Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, and Ettelson v. Metropolitan Life Ins. Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176, upon us as conclusive in favor of appealability. In each of those cases, the plaintiff had commenced an action to recover according to the terms of an insurance policy; in each of them the insurance company denied liability, alleging fraud in the procurement of the policy, and moved that the issue of fraud be tried to the court without a jury. The trial court in each case granted the motion, and this Court held on review that the rulings thus made were appealable under § 129.

The substance of § 129 has been a part of federal law since 1891, 26 Stat. 828, and its relation to other aspects of procedure has not been rigid. Since 1912 the history of the law governing procedure in the federal courts has manifested a slow but consistent process of coalescing of the practice in the law and equity sides of the courts. In that year this Court adopted new equity rules, of which rule 22 and rule 23 made a significant start in procedural unification. A major step occurred in 1915, with the enactment of the Law and Equity Act, 38 Stat. 956, which added §§ 274a and 274b to the Judicial Code. The net effect of these additions was to allow transfer of action begun on either side of the court to the other side, without the necessity of commencing a new action, to permit determination of law questions arising in equity actions in those actions, and to allow equitable defenses to be offered and equitable relief to be granted in an action at law.

In this state of a partly blended law and equity procedure arose the Enelow case, supra. The Court there held, with regard to an order denying trial by jury, that by analogy to practice at common law the order was one granting an injunction within the meaning of § 129.

The coalescing of law and equity procedure was completed in 1938, with the adoption of the Rules of Civil Procedure. Their purpose, among others, was 'to secure the just, speedy, and inexpensive determination of every action,' rule 1, and to that end they prescribed identical procedure for all actions, whether cognizable formerly at law or in equity. After their adoption, the identical problem present d by the Enelow case arose in Ettelson v. Metropolitan Life Ins. Co., supra. It was argued that the adoption of the rules had so unified the federal procedure that the type of order in question could no longer be considered an injunction and appealable. We held the order appealable, since the rules had not changed it substantial effect, noting that the position of the parties was the same as it would have been if a state equity court had enjoined an action at law.

Whatever the present validity of the analogy to common-law practice which supported those cases, it is of no help here. This is not a situation where a 'chancellor' in denying a demand for jury trial can be said to be enjoining a 'judge' who has cognizance of a pending action at law. This is rather a case of a judge making a ruling as to the manner in which he will try one issue in a civil action pending before himself. The fiction of a court with two sides, one of which can stay proceedings in the other, is not applicable where there is no other proceeding in existence to be stayed. The ruling from which the appeal in this case was prosecuted is an order interlocutory in form and substance. Nothing in the language of the rules or the Judicial Code brings it within the class of appealable decisions, and distinctions from common-law practice which supported our conclusions in the Enelow and Ettelson cases supply no analogy competent to make an injunction of what in any ordinary understanding of the word is not one.

Trial by jury is a vital and cherished right, integral in our judicial system. It is argued that the importance of an interlocutory order denying or granting jury trial is such that it should be appealable. Many interlocutory orders are equally important, and may determine the outcome of the litigation, but they are not for that reason converted into injunctions. The Constitution guarantees to litigants in the federal courts the right to have their case tried by a jury, and Rule 38 of the Rules of Civil Procedure explicitly implements that guarantee. Denial of the right in a case where the demanding party is entitled to it is of course error. The rulings of the district courts granting or denying jury trial are subject to the most exacting scrutiny on appeal.

But piecemeal appeals have never been encouraged. The growth of the law of procedure in the United States during the last half-century has been steadily in the direction of simplicity and directness in the administration of justice. To that end, and with careful regard for the constitutional rights of the parties, this Court, pursuant to specific authorization by Congress, adopted the Rules of Civil Procedure, abolishing procedural distinctions between law and equity and establishing a single unified practice. We would ill serve the stated purposes of the Rules of Civil Procedure were we to perpetuate by analogy distinctions which the rules expressly disavow. The Court of Appeals was correct in dismissing the appeal and its judgment is affirmed.

With the case disposed of in this manner, we do not reach the second question presented: whether petitioner is entitled to a jury on the issue of mutual mistake.

Affirmed.