First Nat. Bank of Philip v. Temple

• Decision Date: 13 March 2002
• Docket Number: No. 21811.,21811.
• Parties: FIRST NATIONAL BANK OF PHILIP, South Dakota, Plaintiff and Appellee, v. Doug TEMPLE, Defendant and Appellant, and Merle Temple, Defendant and Appellee.
• Court: South Dakota Supreme Court

642 N.W.2d 197

2002 SD 36

FIRST NATIONAL BANK OF PHILIP, South Dakota, Plaintiff and Appellee, v. Doug TEMPLE, Defendant and Appellant, and Merle Temple, Defendant and Appellee.

No. 21811.

Supreme Court of South Dakota.

Argued October 3, 2001.

Decided March 13, 2002.

Ralph Kemnitz, Philip, for plaintiff and appellee.

Thomas W. Stanton and Michael V. Wheeler of Demersseman, Jensen, Rapid City, for defendant and appellant.

Kenneth R. Dewell of Viken, Viken, Pechota, Leach & Dewell, Rapid City, for defendant and appellee.

STEELE, Circuit Judge.

[¶ 1.] Doug Temple appeals from a judgment ordering that First National Bank of Philip held a perfected security interest in and to certain livestock as a result of loan instruments executed by Merle Temple. We affirm.

FACTS

[¶ 2.] Beginning in 1990, Merle Temple (Merle) obtained loans from First National Bank in Philip, South Dakota (FNB). To secure the loans, he pledged as collateral cattle bearing one or more brands owned by him. FNB perfected a security interest in all the cattle so branded, their products and proceeds, after first determining that no other security interest appeared of record to suggest any prior lien.

[¶ 3.] In 1992 Doug Temple (Doug),¹ Merle's father, delivered thirty head of cattle bearing Doug's brand to Merle. These cattle were to be cared for by Merle. In exchange Merle would be entitled to all calves produced from these thirty head. Merle was also expected to work for Doug from time to time in general ranching activities.

[¶ 4.] In December 1993 Doug purchased twenty heifers which were branded with Merle's brand at Doug's direction. In October 1995 Doug purchased an additional twenty-nine heifers, again branding them with Merle's brand. All cattle were branded at their location of purchase and then delivered to Range Unit # 508, under Merle's control.

[¶ 5.] In his 1996 financial statement, Merle reported that he owned seventy-six cows and ten replacement heifers. This reflected an increase over the thirty-one cows and six replacement heifers reported in the 1995 financial statement. Merle claimed that the twenty head acquired in 1993 and the twenty-nine head acquired in 1995, all branded with his brand, were his cows. FNB understood that Merle was running thirty cows for his father and that Merle received all of the increase.

[¶ 6.] The relationship between Doug and Merle began to deteriorate. In March 1999 Doug removed part of the original thirty cows bearing his brand from Merle's care.

[¶ 7.] In early September 1999 Doug made his first and only contact with FNB, and apprised FNB of his claim of an ownership interest in Merle's cattle. He claimed that the livestock acquired in 1993 and 1995 were to remain his cows. They were only branded with Merle's brand to distinguish the pasture to which they were assigned, despite the fact that Doug already had thirty head branded with his own brand in the same pasture. Shortly thereafter, Doug obtained an ex parte order from the Ogalala Sioux Tribal Court authorizing seizure of forty-nine to fifty head of cattle. These cattle were seized and sold at Belle Fourche Livestock Auction. The proceeds of the sale were paid into escrow and this action for declaratory judgment was brought in circuit court.

STANDARD OF REVIEW

[¶ 8.] We review the circuit court's findings of fact under the clearly erroneous standard. City of Deadwood v. Summit, Inc., 2000 SD 29, ¶ 9, 607 N.W.2d 22, 25. "Clear error is shown only when, after a review of all the evidence, `we are left with a definite and firm conviction that a mistake has been made.'" Id. "The trial court's findings of fact are presumed correct and we defer to those findings unless the evidence clearly preponderates against them." Id. Conclusions of law are reviewed under a de novo standard, giving no deference to the circuit court's conclusions of law. Sherburn v. Patterson Farms, Inc., 1999 SD 47, ¶ 4, 593 N.W.2d 414, 416.

ISSUE ONE

[¶ 9.] Was Doug denied a constitutional or statutory right to a jury trial in this case?

[¶ 10.] Whether a party to a civil action is entitled to a jury trial has been considered by this Court on a number of occasions. The general rule is:

The right to a jury trial is guaranteed both litigants in Article VI, § 6 of the South Dakota Constitution and SDCL 15-6-38(a), (b). This right, however, does not exist in all civil cases. In cases where the pleadings seek equitable relief or where the legal relief is incidental, a jury trial is a matter for the trial court's discretion. Conversely, when the action is at law, either party has a right to a jury trial.

First Western Bank, Sturgis v. Livestock Yards, 466 N.W.2d 853, 856 (S.D.1991) (quoting Nizielski v. Tvinnereim, 453 N.W.2d 831, 832-33 (S.D.1990)).²

Whether an action is legal or equitable must be determined by the real, meritorious controversy between the parties. Mere characterizations will be disregarded, and the courts should look beyond the form in which the action is brought. As a matter of practice, the court looks to the ultimate and entire relief sought, as presented by the pleadings, including the complaint, answer, cross-complaint and prayer for relief.

Arlt v. Langley, 56 S.D. 79, 88, 227 N.W. 469, 473 (1929)(quoting 2 Bancrofts, Code Practice and Remedies, § 1107.)

[¶ 11.] In this case Doug is claiming title and ownership to the cattle. He argues FNB knew or should have known of this interest and, therefore, cannot claim a superior right in the cattle by way of the alleged security interest. This Court will look not only to the complaint, answer, cross-complaint and prayer for relief but also to the real, meritorious controversy between the parties. Id. FNB brought this action in the nature of a declaratory judgment action under SDCL ch. 21-24 in order to resolve its rights to the proceeds of the sale of the cattle. Accordingly,

A litigant is not necessarily deprived of a jury trial merely because it is a party to a declaratory judgment action. Although the declaratory judgment procedure largely originated in equity, declaratory relief per se is neither legal nor equitable. The fact that a declaratory judgment is sought neither restricts nor enlarges any right to a jury trial that would exist if the issue were to arise in a more traditional kind of action for affirmative relief. To determine whether there is a right to a jury trial in a declaratory judgment action, it is necessary first to determine the nature of the action in which the issue would have arisen absent the declaratory judgment procedure. In other words, if there would have been a right to a jury trial on the issue had it arisen in an action other than one for declaratory judgment, then there is a right to a jury trial in the declaratory judgement action; conversely, there is no right to a trial by jury if, absent the declaratory judgment procedure, the issue would have arisen in an equitable proceeding.

Northgate Homes, Inc. v. City of Dayton, 126 F.3d 1095, 1098-1099 (8th Cir.1997) (internal citations omitted).

[¶ 12.] In the absence of the declaratory judgment procedure this action would have arisen as an action to foreclose. A complaint seeking foreclosure of a mortgage is unquestionably an equitable action. Alma Group, L.L.C. v. Weiss, 2000 SD 108, 616 N.W.2d 96. We adopt the analysis set forth in Northgate Homes, Inc. The trial court did not err in denying Doug's demand for a jury trial.³

ISSUE TWO

[¶ 13.] Did the trial court err in failing to dismiss this case based upon the doctrine of comity?

[¶ 14.] Doug and Merle are enrolled members of the Ogalala Sioux Indian Tribe and reside on the Pine Ridge Indian Reservation. The tribal court issued an ex parte order involving them. Because of these facts Doug contends that the circuit court should have deferred to the tribal court to adjudicate the dispute between the parties under the doctrine of comity.

[¶ 15.] The United States Supreme Court has recognized comity as:

The extent to which the law of one nation, as put in force within its territory, whether by executive order, by legislative act, or by judicial decree, shall be allowed to operate within the dominion of another nation, depends upon what our greatest jurists have been content to call `the comity of nations.' Although the phrase has been often criticized, no satisfactory substitute has been suggested.

`Comity,' in the legal sense, is neither a matter of absolute obligation on the one hand, nor of mere courtesy and good will upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.

Kwongyuen Hangkee Co. v. Starr Fireworks, 2001 SD 113, ¶ 8, 634 N.W.2d 95, 96 (quoting Hilton v. Guyot, 159 U.S. 113, 163-64, 16 S.Ct. 139, 143, 40 L.Ed. 95, 108 (1895)). Pursuant to SDCL 1-1-25:

No order or judgment of a tribal court in the state of South Dakota may be recognized as a matter of comity in the state courts of South Dakota, except under the following terms and conditions:

(1) Before a state court may consider recognizing a tribal court order or judgment the party seeking recognition shall establish by clear and convincing evidence that:

(a) The tribal court had jurisdiction over both the subject matter and the parties;

(b) The order or judgment was not fraudulently obtained;

(c) The order or judgment was obtained by a process that assures the requisites of an impartial administration of justice including but not limited to due notice and hearing;

(d) The order or judgment complies with the laws, ordinances and regulations of the jurisdiction from which it was obtained; and

(e) The order or judgment does not contravene the public policy of the state of South Dakota.

(2) If a court is satisfied that all of the

...