Rowell v. Kaplan

• Decision Date: 06 November 1967
• Docket Number: No. 7-A,7-A
• Citation: 103 R.I. 60,235 A.2d 91
• Parties: Catherine K. ROWELL v. Jacob KAPLAN et al. ppeal.
• Court: Rhode Island Supreme Court

Page 91

235 A.2d 91

103 R.I. 60

Catherine K. ROWELL v. Jacob KAPLAN et al.

No. 7-Appeal.

Supreme Court of Rhode Island.

Nov. 6, 1967.

Pat Nero, Thomas W. Pearlman, Providence, for plaintiff

Ernest L. Shein, Providence, for Isabella R. Kaplan, Jacob Kaplan and Jackson Land Co.

James E. Murphy, Providence, for Northeast Capital Corporation.

OPINION

JOSLIN, Justice.

This bill in equity was commenced prior to the January 10, 1966 effective date of the superior court's new rules of civil procedure and subsequent to that date was tried on its merits to a justice of that court sitting without a jury. The case, although commenced as a bill in equity, was heard on a complaint which had been amended in an attempt to make it conform to the new rules. At the conclusion of the presentation of the plaintiff's evidence, the defendants, without either resting or waiving their right to offer evidence in the event their motion was denied, jointly moved that the complaint be dismissed and that a judgment on the merits be entered in their favor. That motion was granted, and the case is now here on the plaintiff's appeal from the judgment which thereupon entered for the defendants.

The litigation centers about plaintiff's seven-acre tract of real estate which has a dwelling situated thereon and is located in the city of Warwick, Kent county. The only evidence as to its worth came from a real estate expert who testified that its fair market value was $40,000. In August of 1964, the mortgages on the property were in default, foreclosure was being threatened, the property was under attachment, unpaid creditors were pressing for payment, and plaintiff was otherwise in financial difficulties. When her attempt to obtain conventional refinancing through local banking institutions proved unsuccessful, she somehow came in contact with defendant Jacob Kaplan, hereinafter called Kaplan and to be distinguished from his wife Isabella R. Kaplan, also a defendant. She was referred be Kaplan to Northeast Capital Corporation, a small business investment corporation, and she applied to that company for a loan of $30,000. Her negotiations there were with Arnold Kilberg who, in addition to being an officer of that company, was Kaplan's auditor. Northeast agreed to refinance with a mortgage loan of approximately $22,000 provided Kaplan would guarantee the obligation. He consented, but conditioned his consent upon plaintiff's agreeing to convey a one- half interest in her property to his wife, defendant Isabella R. Kaplan. The plaintiff, while acceding to that demand, testified that their agreement also contemplated that the one-half interest in her property would be reconveyed to her upon payment of the loan.

Effectuation of the foregoing arrangements took place at the office of a local title company on November 25, 1964, at which plaintiff was represented by competent counsel. While plaintiff received only $22,608.70 from Northeast, her mortgage note was in the face amount of $26,000. It was payable in equally monthly installments of $618.54 each commencing on December 25, 1965, and continuing monthly thereafter until paid in full. The difference between what was received and the face amount of the note represents one year's interest, in advance, computed at the rate of one and one quarter per cent per month on the principal sum as well as interest at the same rate on the unpaid installment balances. In addition and in furtherance of the earlier arrangements, plaintiff mortgaged her property to Northeast, and Kaplan guaranteed the payment of the Northeast Note. A deed was also executed by which plaintiff conveyed an undivided one-half interest in her property to Isabella R. Kaplan. There were no documentary stamps affixed and it contained the following recital: 'The nature of and consideration for this conveyance are such that no revenue stamps are required.' When it appeared that the advance from Northeast would be insufficient to discharge the indebtedness then due on plaintiff's property, defendant Jackson Land Company, a corporation controlled by Kaplan, loaned plaintiff $1,000, which more than covered the deficiency. That loan was evidenced by plaintiff's promissory note. It was payable one year from date, carried interest at the rate of 6 per cent per year, and was secured by a second mortgage on her then interest as a tenant in common of her real estate.

In October of 1965, plaintiff advised Kaplan that she was ready to repay her loans and, relying on the alleged agreement with Kaplan, asked for a reconveyance of Mrs. Kaplan's interest in her property. When Kaplan refused, she consulted counsel. He advised all of the defendants by letter dated November 24, 1965, that arrangements had been made to pay the outstanding loans, requested advice as to the exact amounts due, and demanded a reconveyance from Mrs. Kaplan. That letter produced no results, and plaintiff, by then fearful of a possible foreclosure, commenced this suit on December 10, 1965. On that date the note to Jackson was in default, and the first installment on the obligation to Northeast would fall due fifteen days hence. The theory upon which plaintiff proceeded both at trial and before us was that the substance of the transactions, rather than their from, should control. Those transactions, so viewed, she argues, evidence that defendants acted in concert, that Northeast and Jackson were Kaplan's alter egos whose identities were merged into his, and that he was the sole lender. Upon those factual premises, she bases her legal conclusion that the transactions were usurious and otherwise unconscionable. By way of relief she asks generally: for money damages for the alleged usury; for $23,608.70, that being the exact total of the sum advanced by Northeast and Jackson; for cancellation and rescission of the notes, mortgages and deed; and for an injunction restraining the respective defendants from foreclosing their respective mortgages or from transferring the notes securing same.

When defendants, at the conclusion of plaintiff's case, moved for an involuntary dismissal, the trial justice, in a bench decision, found that the bill '* * * was not originally brought in good faith,' and that plaintiff had not established her theory that the identities of the several defendants had been merged with that of Kaplan. Upon those findings, he concluded that the action should be dismissed on its merits and the judgment ¹ so provided.

In her appeal plaintiff's arguments are addressed primarily to procedural rather than to substantive matters. Two of those arguments are (1) that the action was not ripe for dismissal because defendants' case had not been finally closed, and (2) that the action which concerned real estate should have been tried in Kent rather than in Providence county. While the first would be tenable if SUNDLUN V. VOLPE, 62 R.I. 55, 2 A.2D 875 (1938)², were still the rule, that case was rendered nugatory originally by the enactment of P.L.1951, chap. 2745 (later § 9-14-22), and later by rule 41(b)(2) of the superior court rules of civil procedure. Both statute and rule in substance specifically permit a defendant in an action tried by the court without a jury to move for a dismissal on the merits at the conclusion of plaintiff's presentation of evidence without waiving his right to offer evidence in the event his motion is denied.

As authority for the second contention she relies on G.L.1956, §§ 9-4-2 and 9-4-6, as amended. In substance, and insofar as pertinent to her position, they provide that an action concerning realty or any right or interest therein, shall be dismissed if not brought in the county where the land is located. This action, however, although tried in Providence county, was brought in Kent county, the situs of the land. Additionally the holding of the trial in Providence county gained validity under § 8-2-27, ³ as amended, from a stipulation agreed to by all of the parties and approved by the judge, which provided that the '* * * Matter may be heard in Providence County on merits.'

The plaintiff also argues that it was error for the trial justice to deny her request to frame issues for trial by a jury. The request, as we understand it, was for a jury as of right under rule 38; it was not for the advisory jury provided for by rule 39. In point of time, it was originally made when she filed her bill of complaint, and was repeated when she filed her amended complaint and again at the commencement of the hearing on the merits. Inasmuch as defendants have not brought the question into issue, we assume, although we do not decide, that at least one of these requests was timely as well as procedurally without fault.

The nature and extent of the right to a jury trial provided for in rule 38 become conceptually more clear if considered within the context of the principles underlying the rules. Under those principles, law and equity are united; the splitting of a cause into two actions, one for legal and the other for equitable relief is prohibited; the fusion of all claims, whether legal or equitable, or even both, into a single action is required; and the right to obtain all of the relief to which a party may be entitled in a single action is made possible.

It is within the context of these basic principles that we consider rule 38. It preserves inviolate the right of trial by jury as declared by the constitution and as given by statute, and it prescribes the procedures whereby such a trial may be had if the right to it exists, Arnstein v. Twentieth Century Fox Film Corp., D.C., 3 F.R.D. 58, 59; it continues to a limited extent and in appropriate circumstances the difference between law and equity for the purpose of determining the right to a jury trial even though those differences are otherwise generally abolished by the rules, Orenstein v. United States, 1 Cir., 191 F.2d 184; Groome v. Steward, 79 U.S.App.D.C. 50, 142 F.2d 756; it neither...