Steelvest, Inc. v. Scansteel Service Center, Inc.

• Decision Date: 24 August 1995
• Docket Number: Nos. 94-SC-8-T,94-SC-192-TX,s. 94-SC-8-T
• Citation: 908 S.W.2d 104
• Court: United States State Supreme Court — District of Kentucky
• Parties: STEELVEST, INC., d/b/a Steel Suppliers, Inc., Appellant v. SCANSTEEL SERVICE CENTER, INC.; H & M Investors, and Indiana Partnership Composed of J. William Manning, Sr., Roger Lynn Huncilman, Thomas P. Scanlan, Sr., Individually and as a Partner; Manning Equipment, Inc.; Dealers Truck Equipment, Inc.; J. William Manning, Sr.; R. Lynn Huncilman; Bert R. Huncilman & Son, Inc., Appellees. SCANSTEEL SERVICE CENTER, INC.; Thomas P. Scanlan, Sr., Cross-Appellants, v. STEELVEST, INC., Cross-Appellee.

Page 104

908 S.W.2d 104

STEELVEST, INC., d/b/a Steel Suppliers, Inc., Appellant v. SCANSTEEL SERVICE CENTER, INC.; H & M Investors, and Indiana Partnership Composed of J. William Manning, Sr., Roger Lynn Huncilman, Thomas P. Scanlan, Sr., Individually and as a Partner; Manning Equipment, Inc.; Dealers Truck

Equipment, Inc.; J. William Manning, Sr.; R. Lynn

Huncilman; Bert R. Huncilman & Son, Inc., Appellees.

SCANSTEEL SERVICE CENTER, INC.; Thomas P. Scanlan, Sr., Cross-Appellants, v. STEELVEST, INC., Cross-Appellee.

Nos. 94-SC-8-TG, 94-SC-192-TX.

Supreme Court of Kentucky.

Aug. 24, 1995.

Rehearing Denied Nov. 22, 1995.

Alan N. Linker, Robert V. Waterman, Louisville, for appellants/cross-appellees.

Robert L. Ackerson, W. David Kiser, Louisville, Frank P. Doheny, Jr., Michael M. Hirn, Louisville, Susan Bridges Booker, Louisville, Eugene L. Mosely, Eugene Jeffrey Mosley, Louisville, for appellees/cross-appellants.

M. Austin Mehr, Lexington, amicus curiae, Kentucky Academy of Trial Attorneys and Association of Trial Lawyers of America.

REYNOLDS, Justice.

The denial of a trial by jury fosters this appeal.

The background of the action appears in the opinion of Steelvest, Inc. v. Scansteel Service Center, Inc., Ky., 807 S.W.2d 476 (1991). On remand, the trial court, despite timely demand, denied appellant a trial by jury.

The complaint and amended complaint both alleged a breach of fiduciary duties occasioned by appellee Scanlan. The allegations of the pleadings constituted tortious acts and sought damages, not equitable remedies.

At issue is whether the right to trial by jury, under the Kentucky Constitution, is contravened by Civil Rule 39.01(c), which permits a trial court to deny this right in an action at law for damages upon a determination that the case, because of the peculiar questions involved or because the action involves complicated accounts, or a great detail of facts, is impractical for a jury to intelligently try.

Following this Court's remand order to the trial court, appellees requested that the case be tried without a jury due to its complexity. The trial court, responding, stated that "everybody is going to have to agree to that because everybody is entitled to a jury trial" and the case was so docketed. After the passage of more than a year and on the morning of the scheduled trial, the court sustained appellees' most recent motion to conduct a bench trial pursuant to CR 39.01(c), after determining it impractical for a jury to intelligently try the case due to the great detail of facts and peculiar questions involved.

The Kentucky Constitution, in actions at law, gives the litigant an unqualified right to trial by jury. Section 7 of the Kentucky Bill of Rights provides: "The ancient mode of trial by jury shall be held sacred, and the right thereof remain inviolate, subject to such modifications as may be authorized by this Constitution." To emphasize the Bill of Rights, Section 26 of the Kentucky Constitution provides that "[t]o guard against transgression of the high powers which we have delegated, We Declare that everything in this Bill of Rights is excepted out of the general powers of government, and shall forever remain inviolate; and all laws contrary thereto, or contrary to this Constitution, shall be void." The broad right of preservation is again referenced in CR 38.01; i.e., "the right of trial jury as declared by the constitution of Kentucky or as given by the statute of Kentucky shall be preserved to the parties inviolate."

A deviation/problem arises with Civil Rule 39.01(c) as to whether it is violative of the right to a jury trial as guaranteed under the state constitution.

While the Seventh Amendment to the United States Constitution, along with Section 7 of the Kentucky Constitution, preserves the right to trial by jury as it existed in common law, Rule 39.01(c) is not, at this time, subject to federal constitutional review insofar as the Seventh Amendment right to a jury trial in civil cases has not yet been made applicable to the states through the Fourteenth Amendment. Both constitutions are deemed to guarantee the right of trial by jury as existed in 1791.

State constitutions may offer greater protections for their citizens than the federal constitution and the Kentucky courts are not bound by decisions of the United States Supreme Court when deciding whether a state statute, in this instance a procedural code provision, impermissibly infringes upon individual rights guaranteed by the state constitution, as long as the state constitutional protection does not fall below the federal floor. Because of the profoundly different approaches between the Seventh Amendment to the Constitution of the United States and the provisions of the Kentucky Constitution preserving the right to trial by jury, the federal decisions on this subject are of little utility in Kentucky practice. See Kentucky Practice, Rules of Civil Procedure, Annotated, Bertelsman & Philipps, Ky.Prac., 4th Ed., Vol. 7, Civil Rule 38.01. Appellees' resort to federal authorities to support their arguments to the contrary must fail.

The limitations upon trial by jury are pronounced in Civil Rule 39.01:

When trial by jury has been demanded as provided in Rule 38, the action shall be designated upon the docket as a jury action. The trial of all issues so demanded shall be by jury, unless (a) the parties or their attorneys of record, by written stipulation filed with the court or by an oral stipulation made in open court and entered in the record, consent to trial by the court sitting without a jury, or (b) the court upon motion or of its own initiative finds that a right of trial by jury of some or all of those issues does not exist under the constitution or statutes of Kentucky, or (c) the court upon motion or of its own initiative finds that because of the peculiar questions involved, or because the action involves complicated accounts, or a great detail of facts, it is impracticable for a jury intelligently to try the case.

The constitutionality of Rule 39.01(c) is determinable from whether it was customary at common law in 1791 for a court, acting in its discretion, to deny a jury trial because the action involved peculiar questions, great detail of facts, or complicated accounts.

CR 39.01(c) is a remnant which was condensed from Section 10(4) of the now obsolete Civil Rules of Practice. The General Assembly by act of April 29, 1890, amended Section 10 of the Civil Code by the addition of subsection 4 which provided:

The court may, in its discretion, on motion of either party, or without motion, order the transfer of an action from the ordinary to the equity docket, or from a court of purely common law to a court of purely equity jurisdiction, whenever the court, before which the action is pending, shall be of the opinion that such transfer is necessary because of the peculiar questions involved, or because the case involves accounts so complicated, or such great detail of facts, as to render it impracticable for a jury to intelligently try the case.

The older code section and the current rule mirror one another. Despite the strong constitutional language guaranteeing a trial by jury, some court decisions indiscriminately accepted the use of Civil Rule 39.01(c) and old Code Section 10(4). Several court opinions recited complicated issues as a basis for denial of a jury trial under the subsection of the rule. While neither rule makes reference to "complicated issues," CR 39.01(c) was applied in McGuire v. Hammond, Ky., 405 S.W.2d 191 (1966), wherein a jury trial was denied because of the long period of time anticipated necessary to hear the case and the many and complicated issues of fact involved. The reasoning was adopted erroneously on appeal.

Reusch v. Hemmer, 236 Ky. 546, 33 S.W.2d 618 (1930), admitted that a counterclaim for damages raised common law issues, but upheld a transfer of the entire action to equity because the issues "were so numerous and complicated" in view of the numerous items for which damages were claimed. Another example of where the court spoke of complicated issues as a basis for denial of a jury trial arose in Coy v. King, 199 Ky. 65, 250 S.W. 503 (1923). The denial of a jury trial occurred in City of Shively v. Hyde, Ky., 438 S.W.2d 512 (1969), and was upheld by brief reference to a detail of facts and complicated issues.

The constitutional term "inviolate" means that the right to trial by jury is unassailable. Henceforth, legislation and civil rules of practice shall be construed strictly and observed vigilantly in favor of the right and is not to be abrogated arbitrarily by the courts. The constitutional right to a jury trial cannot be annulled, obstructed, impaired, or restricted by legislative or judicial action. Seymour v. Swart, Okla., 695 P.2d 509, 511-512 (1985).

The jury trial provision of our state constitution has been held in similar light in Commonwealth v. Jones, 73 Ky. (10 Bush) 725, 756 (1874), wherein Judge Lindsay emphasized:

That the rule of construction, whether applied to the constitution or to a statute, which will preserve unimpaired the ancient mode of trial by jury, is the rule which should always govern in interpreting laws involving the forfeiture of a civil or political right, seems to us to be apparent upon the mere statement...