In re Peterson

Decision Date01 June 1920
Docket NumberNo. 28,28
Citation253 U.S. 300,40 S.Ct. 543,64 L.Ed. 919
PartiesIn re PETERSON
CourtU.S. Supreme Court

Mr. Abram J. Rose, of New York City, for petitioner.

[Argument of Counsel from pages 301-303 intentionally omitted] Mr. George Zabriskie, of New York City, for respondent.

Mr. Justice BRANDEIS delivered the opinion of the Court.

This is a petition for a writ of mandamus and/or prohibition brought by Walter Peterson, receiver of the Interstate Coal Company, against the Honorable Augustus N. Hand, Judge of the District Court of the United States for the Southern District of New York. The facts and the specific relief sought are these:

Peterson had brought an action at law in that court against Arthur Sidney Davison to recover a balance of $21,014.43, alleged to be due for coal sold and delivered as shown by a long schedule annexed. The answer substantially admitted the items set forth in the schedule filed by plaintiff, but denied that it presented a full account of the transactions between the parties, and alleged that there were other deliveries of coal and other payments which the defendant had made, and also that he was entitled to additional allowances. It further alleged, by way of counterclaim, that the plaintiff was indebted to him for failure to perform its contracts for coal in the sum of $9,999.10. In response to a demand for a bill of particulars, defendant filed schedules containing more than 200 items which he proposed to establish by way of defense.

Upon motion of defendant and against the objection of plaintiff, Judge Hand appointed an auditor (254 Fed. 625), with instructions——

'to make a preliminary investigation as to the facts, hear the witnesses, examine the accounts of the parties, and make and file a report in the office of the clerk of this court, with a view to simplifying the issues for the jury, but not to finally determine any of the issues in the action, the final determination of all issues of fact to be made by the jury on the trial, and the auditor to have power to compel the attendance of, and administer the oaths to, witnesses, the expense of the auditor, including the expense of the stenographer, to be paid by either or both parties to this action, in accordance with the determination of the trial judge.'

The auditor ws further ordered to report on certain facts under 10 classifications. The design of this was largely to separate items in dispute from those as to which there was no real dispute, and also to set forth the detailed facts on which the specific claims made were rested but the auditor was also thereby required to express his opinion on disputed issues thus:

'6. The various penalties, commissions, cash discounts, and other deductions which defendant claims to be entitled to deduct from the invoice price of the various shipments, the items thereof which are admitted by plaintiff as proper deductions, and the items in dispute, with his opinion as to each of such disputed items.

'7. His opinion as to the net amount due on each invoice of coal sold and delivered to defendant.'

Thereupon application was made here for leave to file this petition. It prays that Judge Hand and the auditor named be prohibited from proceeding under the order appointing him; and it prays, also, that Judge Hand, or such other judge who may at the time hold the trial term of that court, be commanded to restore the case to the trial calendar, and that the same be tried in the regular and usual way. Leave to file the petition was granted (40 Sup. Ct. 178, 64 L. Ed. ——), and an order to show cause issued. The petitioner insists that the District Court is without power to make the order appointing the auditor, and that proceedings thereunder would violate the Seventh Amendment to the Federal Constitution.

First. Objection is made by respondent to the jurisdiction of this court. It is insisted that the District Court had jurisdiction of the parties and of the cause of action; that if the auditor should proceed to perform the duties assigned to him, and his report should be used at the trial before the jury, the plaintiff could protect his rights by exceptions which would be subject to review by the Circuit Court of Appeals; and that the writs prayed for may not be used merely to correct errors. But if proceedings pursuant to the appointment of an auditor would deprive petitioner of his right to a trial by jury, the order should, as was said in Ex parte Simons, 247 U. S. 231, 239, 38 Sup. Ct. 497 (62 L. Ed. 1094) 'be dealt with now, before the plaintiff is put to the difficulties and the courts to the inconvenience that would be raised by' a proceeding 'that ultimately must be held to have been required under a mistake.' The objection to our jurisdiction is unfounded. We proceed, therefore, to the consideration of the merits of the petition.

Second. The question presented is one of power in the District Court. If, under any circumstances, it could appoint an auditor with the duties here prescribed without the consent of the parties, the facts clearly warranted such action in this instance. The plaintiff sued for a balance alleged to be due on an account annexed containing 298 items. The defendant set up another account containing 402 items. Included in the latter, besides certain charges against defendant for additional deliveries, were over 30 cash items of credit not allowed for in the plaintiff's account. These 402 items were alleged to arise out of 123 different deliveries of cargoes (or partial cargoes) of coal made on 91 different days during a period of 11 months. The coal delivered was of various kinds and the invoice prices for the same kind differed from time to time. In respect to most of these deliveries, there were claims for allowances by way of penalties, commissions, and cash discounts; and, as to some, there were claims for allowances on account of freight.

The District Court found that, in order to render possible an intelligent consideration of the case by court and jury, it was necessary to appoint an auditor and confer upon him two functions. The first was to segregate those itmes upon which the parties agreed and to classify those actually in controversy, and thus, having defined the issues, to aid court and jury by directing their attention to th matters in dispute. The second function of the auditor was to form a judgment and express an opinion upon such of the items as he found to be in dispute. In order to perform these functions, the auditor would be required, not merely to examine books, vouchers, and other papers, and to make computations, but to hear and pass upon conflicting testimony of the parties and of other witnesses. This full hearing, while obviously necessary to enable the auditor to form a trustworthy judgment on the disputed items, would serve also to narrow the field of controversy. For such a tentative trial acts as a sifting process, by which misunderstandings and misconceptions as to facts are frequently removed. In the course of it many contentions or assumptions made by one party or the other are abandoned. Agreement is thus reached as to some of the facts out of which liability is alleged to arise, even when the items to which they relate remain in dispute. See Fair v. Manhattan Ins. Co., 112 Mass. 329.

The order expressly declared that the auditor should not 'finally determine any of the issues in this action, the final determination of all issues of fact to be made by the jury at the trial'; but it did no provide affirmatively what use should be made of the report at the trial. It may be assumed that, if accepted by the court, the report would be admitted at the trial before the jury as prima facie evidence both of the evidentiary facts and of the conclusions of fact therein set forth. The report, being evidence sufficient to satisfy the burden of proof (Wyman v. Whicher, 179 Mass. 276, 60 N. E. 612), would tend to dispense with the introduction at the trial before the jury of evidence on any matter not actually in dispute. The appointment of the auditor would thus serve to shorten the jury trial, by reducing both the number of facts to be established by evidence and the number of questions in controversy. A more intelligent consideration of the issues submitted to the jury for final determination would result.

Third. Prior to the adoption of the federal Constitution there did not exist in England, or so far as appears in any of the colonies, any officer, permanent or temporary who, in connection with trials by jury, exercised the powers of an auditor above described. An official called 'auditor' had long been known as part of the judicial machinery in certain cases brought in the commonlaw courts both of England and of the colonies; but the functions of the auditor in those cases were different. In the commonlaw action of account auditors were appointed in England, from the earliest times, to take the account, after the interlocutory judgment quod computet had been entered. But the parties were entitled to a jury trial before the interlocutory judgment was rendered; and further issues of fact arising before the auditor were not passed upon by him, but were certified to the court for trial by a jury. The use of this form of action was limited to cases where the defendant was under obligation to account to the plaintiff as guardian, bailiff, or receiver of his property.1 In Maryland, by Acts 1785, c. 80, § 12, the power of the court to appoint auditors was extended to all cases in which it might be necessary to examine and determine accounts; but the jury trial was not affected thereby, for the proceedings thereon were to be 'as in cases of account.'2 In Connecticut auditors were appointed by the court in actions of 'book debt,' and the same practice was early introduced in Vermont and other states; but in this action the report of the auditor, if accepted by the court, is a substitute for the jury and operates to...

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    ...of the claim that the court should have found the interrogatory dispositive, the defendant also cites Ex Parte Peterson, 253 U.S. 300, 310, 40 S. Ct. 543, 64 L. Ed. 919 (1920), Seals v. Hickey, 186 Conn. 337, 351, 441 A.2d 604 (1982), State v. Alonzo, 131 Conn. App. 1, 6, 26 A.3d 109, cert.......
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