General Elec. Credit Corp. v. Richman, 10432

• Decision Date: 03 October 1983
• Docket Number: No. 10432,10432
• Citation: 338 N.W.2d 814
• Parties: GENERAL ELECTRIC CREDIT CORPORATION, Plaintiff and Appellee, v. Merwyn E. RICHMAN and Elizabeth G. Richman, Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 814

338 N.W.2d 814

GENERAL ELECTRIC CREDIT CORPORATION, Plaintiff and Appellee, v. Merwyn E. RICHMAN and Elizabeth G. Richman, Defendants and Appellants.

Civ. No. 10432.

Supreme Court of North Dakota.

Oct. 3, 1983.

Vogel, Brantner, Kelly, Knutson, Weir & Bye, Fargo, for plaintiff and appellee; argued by Carlton J. Hunke, Fargo.

Wegner, Fraase, Nordeng & Johnson, Fargo, for defendants and appellants; argued by Mervin D. Nordeng, Fargo.

PEDERSON, Justice.

Asserting that they were improperly denied a jury trial, the Richmans appeal from a judgment entered in favor of General Electric Credit Corporation. We affirm in part, reverse in part and remand for further proceedings.

In May 1979, the Richmans made a promissory note to General Electric in the amount of $112,900.00, with a floating interest rate of 1.5% over the greater of the prime rate or the prime commercial paper rate. Payment was to be in 48 equal consecutive monthly installments of $3,042.77, except that the final installment was to be in the amount of the total outstanding unpaid principal and interest. The note recited that time was of the essence.

The note was secured by a chattel mortgage covering two 1979 Kenworth trucks and a 1975 Mack truck. In a separate hand-written agreement, General Electric agreed that "Upon completion of 12 payments, made in a satisfactory manner, G.E. Credit agrees to release the 1975 Mack from the chattel."

General Electric brought suit against the Richmans alleging that the Richmans defaulted in making payments when due, making $74,427.27, plus interest, attorney's fees, late charges and other costs of collection immediately due and payable. General Electric also alleged that it had a right to immediate possession of the collateral.

In its prayer for relief, General Electric demanded judgment for $74,427.52, plus interest, plus costs of collection and reasonable attorney's fees. General Electric also prayed for judgment ordering the Richmans to deliver the collateral and authorizing it to proceed in accordance with Chapter 41-09, N.D.C.C.

The Richmans' answer denied default and General Electric's right to possession of the collateral. They counterclaimed for return of the property and damages if the property were taken from them.

Concluding that the action was a mortgage foreclosure action, the trial court granted General Electric's motion to strike the Richmans' demand for jury trial. After trial, the court made findings of fact, conclusions of law, and order for judgment.

Judgment was entered: (1) That General Electric recover from the Richmans $77,708.51 (which included principal, past-due interest, late charges, insufficient funds check charges, and interest from June 13, 1982, until January 27, 1983, at a rate of 13.25%); (2) that the chattel mortgage be foreclosed; (3) requiring the Richmans to assemble the collateral and deliver it to the sheriff for transfer of possession to General Electric; (4) authorizing General Electric to sell, lease, or dispose of the collateral in accordance with Chapter 41-09, N.D.C.C.; (5) specifying that the proceeds of any disposition of the collateral be applied first, to expenses of transporting, holding, repairing or preparing the collateral for sale or lease, second, to satisfaction of the judgment, and third, to paying to the Richmans any amounts remaining after satisfaction of the judgment; and (6) dismissing the Richmans' counterclaim.

The Richmans seek reversal of the judgment on the ground that it was error of law to deny them a jury trial. As an alternative, the Richmans object to the award of interest at a rate not supported by any evidence.

An order denying a jury trial is reviewable when there is an appeal from a final judgment. United Hospital v. Hagen, 285 N.W.2d 586 (N.D.1979).

The provision in our Constitution [Art. I, Sec. 13 (formerly Sec. 7), N.D. Const.] that the right of trial by jury shall remain inviolate preserves the right as it existed when the Constitution was adopted. C.I.T. Corporation v. Hetland, 143 N.W.2d 94, 101 (N.D.1966). The Constitution preserves a trial by jury in all cases in which it was a right at common law. Dorgan v. Kouba, 274 N.W.2d 167 (N.D.1978).

While one form of action has been substituted for actions at law and in equity (see Rule 2, N.D.R.Civ.P.), the distinction between law and equity is still important in determining whether or not one has a right to a jury trial. Northwestern Bell Telephone Co. v. Cowger, 303 N.W.2d 791 (N.D.1981); Dobervich v. Central Cass Public School District No. 17, 283 N.W.2d 187 (N.D.1979); Landers v. Goetz, 264 N.W.2d 459 (N.D.1978); Ziebarth v. Kalenze, 238 N.W.2d 261 (N.D.1976).

Trial by jury belongs to the common law and not to the equity side of the court. Gull River Lumber Co. v. Keefe, 6 Dakota 160, 41 N.W. 743 (1889). The right to a trial by jury in actions at law is a basic and fundamental part of our system of jurisprudence. C.I.T., supra.

An action at law for the recovery of money only is triable to a jury as a matter of right. Hanson v. Carlblom, 13 N.D. 361, 100 N.W. 1084 (1904). Absent express constitutional or statutory provision, there is no right to a jury trial in suits in equity. Gresens v. Martin, 27 N.D. 231, 145 N.W. 823 (1914). Generally, the right to trial by jury has been denied in equitable actions, even where a defendant has raised legal defenses. Ask, Inc. v. Wegerle, 286 N.W.2d 290 (N.D.1979). See also, Northwestern Bell Telephone Co. v. Cowger, supra; Eck v. City of Bismarck, 302 N.W.2d 739 (N.D.1981); Alfson v. Anderson, 78 N.W.2d 693 (N.D.1956); Blakemore v. Cooper, 15 N.D. 5, 106 N.W. 566 (1905); Avery Manufacturing Co. v. Smith, 14 N.D. 57, 103 N.W. 410 (1905). There is no right to demand a jury trial in a statutory action in the nature of an equitable proceeding. Gull River Lumber Co. v. Keefe, supra.

The right to a trial by jury is determined by the character of the issues as framed by the complaint [C.I.T., supra; Ziebarth v. Kalenze, supra ] or appearing on the face of the pleadings. Ziebarth v. Kalenze, supra. Equity jurisdiction cannot be predicated upon the prayer for relief only, but must be based upon the allegations of fact in the complaint. Kilgore v. Farmers Union Oil Co., 74 N.D. 640, 24 N.W.2d 26 (1946). Courts are not bound, however, by the pleadings, but by the real, meritorious controversy between the parties as shown by all the pleadings in the case. First National Bank of Dickinson v. Kling, 65 N.D. 264, 257 N.W. 631 (1934). An action begun as an equity case may be changed to a jury case by subsequent pleadings outlining the issues in dispute. Northwestern National Bank v. Howlett, 63 N.D. 163, 247 N.W. 57 (1932).

Where a complaint prays for both legal and equitable relief but only legal relief is warranted by the facts pleaded, it is error to deny a defendant's demand for trial by jury. Kilgore v. Farmers Union Oil Co., supra. A defendant in an action for damages cannot be deprived of a trial by jury because the plaintiff prays that defendant be required to account. Id. A defendant whose answer in an equitable action to foreclose a chattel mortgage admits all of the allegations and pleads a counterclaim for the recovery of money only cannot be denied a jury trial. Lehman v. Coulter, 40 N.D. 177, 168 N.W. 724 (1917). See also, Landers v. Goetz, supra. If a plaintiff in an action to foreclose a mortgage or other lien brings in a third party, a stranger to the mortgage, the third party is entitled to a jury trial. First National Bank of Dickinson v. Kling, supra. The same is true with regard to third-party intervenors who claim to own the property involved. Northwestern National Bank v. Howlett, supra.

An action to foreclose a chattel mortgage is an equitable action, for which there is no right to a trial by jury [C.I.T., supra; Gresens v. Martin, supra ], but a claim of title and right to possession of specific personal property is triable to a jury. First National Bank of Dickinson v. Kling, supra. The mere fact that a personal judgment is permitted to be rendered in an equitable action does not change or affect the character of the action. Gull River Lumber Co. v. Keefe, supra. Generally, where both damages and an injunction are sought, the parties are entitled to a jury trial as to the damage claim unless it is merely incidental to and dependent on the right to an injunction. Dobervich v. Central Cass Public School District No. 17, supra.

We said in Tower City Grain Co. v. Richman, 232 N.W.2d 61, 66 (N.D.1975)...