Beacon Theaters, Inc. v. Westover/Dissent Stewart

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United States Supreme Court

359 U.S. 500

Beacon Theaters, Inc.  v.  Westover

 Argued: Dec. 10, 1958. --- Decided: May 25, 1959


Mr. Justice STEWART, with whom Mr. Justice HARLAN and Mr. Justice WHITTAKER concur, dissenting.

There can be no doubt that a litigant is entitled to a writ of mandamus to protect a clear constitutional or statutory right to a jury trial. But there was no denial of such a right here. The district judge simply exercised his inherent discretion, now explicitly confirmed by the Federal Rules of Civil Procedure, to schedule the trial of an equitable claim in advance of an action at law. Even an abuse of such discretion could not, I think, be attacked by the extraordinary writ of mandamus. [1] In any event no abuse of discretion is apparent in this case.

The complaint filed by Fox stated a claim traditionally cognizable in equity. That claim, in brief, was that Beacon had wrongfully interfered with the right of Fox to compete freely with Beacon and other distributors for the licensing of films for first-run exhibition in the San Bernardino area. The complaint alleged that the plaintiff was without an adequate remedy at law and would be irreparably harmed unless the defendant were restrained from continuing to interfere-by coercion and threats of litigation-with the plaintiff's lawful business relationships.

The Court of Appeals found that the complaint, although inartistically drawn, contained allegations entitling the petitioner to equitable relief. [2] That finding is accepted in the prevailing opinion today. If the complaint had been answered simply by a general denial, therefore, the issues would under traditional principles have been triable as a proceeding in equity. Instead of just puting in issue the allegations of the complaint, however, Beacon filed pleadings which affirmatively alleged the existence of a broad conspiracy among the plaintiff and other theatre owners to monopolize the first-run exhibition of films in the San Bernardino area to refrain from competing among themselves, and to discriminate against Beacon in granting film licenses. Based upon these allegations, Beacon asked damages in the amount of $300,000. Clearly these conspiracy allegations stated a cause of action triable as of right by a jury. What was demanded by Beacon, however, was a jury trial not only of this cause of action, but also of the issues presented by the original complaint.

Upon motion of Fox the trial judge ordered the original action for declaratory and equitable relief to be tried separately to the court and in advance of the trial of the defendant's counter-claim and cross-claim for damages. The court's order, which carefully preserved the right to trial by jury upon the conspiracy and damage issues raised by the counterclaim and cross-claim, was in conformity with the specific provisions of the Federal Rules of Civil Procedure. [3] Yet it is decided today that the Court of Appeals must compel the district judge to rescind it.

Assuming the existence of a factual issue common both to the plaintiff's original action and the defendant's counterclaim for damages, I cannot agree that the District Court must be compelled to try the counterclaim first. [4] It is, of course, a matter of no great moment in what order the issues between the parties in the present litigation are tried. What is disturbing is the process by which the Court arrives at its decision-a process which appears to disregard the historic relationship between equity and law.

The Court suggests that 'the expansion of adequate legal remedies provided by the Declaratory Judgment Act * * * necessarily affects the scope of equity.' Does the Court mean to say that the mere availability of an action for a declaratory judgment operates to furnish 'an adequate remedy at law' so as to deprive a court of equity of the power to act? That novel line of reasoning is at least implied in the Court's opinion. But the Declaratory Judgment Act did not 'expand' the substantive law. That Act merely provided a new statutory remedy, neither legal nor equitable, but available in the areas of both equity and law. When declaratory relief is sought, the right to trial by jury depends upon the basic context in which the issues are presented. See Moore's Federal Practice (2d ed.) §§ 38.29, 57.30; Borchard, Declaratory Judgments (2d ed.), 399-404. If the basic issues in an action for declaratory relief are of a kind traditionally cognizable in equity, e.g., a suit for cancellation of a written instrument, the declaratory judgment is not a 'remedy at law.' [5] If, on the other hand, the issues arise in a context traditionally cognizable at common law, the right to a jury trial of course remains unimpaired, even though the only relief demanded is a declaratory judgment. [6]

Thus, if in this case the complaint had asked merely for a judgment declaring that the plaintiff's specified manner of business dealings with distributors and other exhibitors did not render it liable to Beacon under the antitrust laws, this would have been simply a 'juxtaposition of parties' case in which Beacon could have demanded a jury trial. [7] But the complaint in the present case, as the Court recognizes, presented issues of exclusively equitable cognizance, going well beyond a mere defense to any subsequent action at law. Fox sought from the court protection against Beacon's allegedly unlawful interference with its business relationships-protection which this Court seems to recognize might not have been afforded by a declaratory judgment, unsupplemented by equitable relief. The availability of a declaratory judgment did not, therefore, operate to confer upon Beacon the right to trial by jury with respect to the issues raised by the complaint.

The Court's opinion does not, of course, hold or even suggest that a court of equity may never determine 'legal rights.' For indeed it is precisely such rights which the Chancellor, when his jurisdictio has been properly invoked, has often been called upon to decide. Issues of fact are rarely either 'legal' or 'equitable.' All depends upon the context in which they arise. The examples cited by Chief Judge Pope in his thorough opinion in the Court of Appeals in this case are illustrative: '* * * (I)n a suit by one in possession of real property to quiet title, or to remove a cloud on title, the court of equity may determine the legal title. In a suit for specific performance of a contract, the court may determine the making, validity and the terms of the contract involved. In a suit for an injunction against trespass to real property the court may determine the legal right of the plaintiff to the possession of that property. Cf. Pomeroy, Equity Jurisprudence, 5th ed., §§ 138-221, 221a, 221b, 221d, 250.' 252 F.2d 864, 874.

Though apparently not disputing these principles, the Court holds, quite apart from its reliance upon the Declaratory Judgment Act, that Beacon by filing its counterclaim and cross-claim acquired a right to trial by jury of issues which otherwise would have been properly triable to the court. Support for this position is found in the principle that, 'in the federal courts equity has always acted only when legal remedies were inadequate. * * *' Yet that principle is not employed in its traditional sense as a limitation upon the exercise of power by a court of equity. This is apparent in the Court's recognition that the allegations of the complaint entitled Fox to equitable relief relief to which Fox would not have been entitled if it had had an adequate remedy at law. Instead, the principle is employed today to mean that because it is possible under the counterclaim to have a jury trial of the factual issue of substantial competition, that issue must be tried by a jury, even though the issue was primarily presented in the original claim for equitable relief. This is a marked departure from long-settled principles.

It has been an established rule 'that equitable jurisdiction existing at the filing of a bill is not destroyed because an adequate legal remedy may have become available thereafter.' [8] American Life Ins. Co. v. Stewart, 300 U.S. 203, 215, 57 S.Ct. 377, 380, 81 L.Ed. 605. See Dawson v. Kentucky Distilleries & Warehouse Co., 255 U.S. 288, 296, 41 S.Ct. 272, 275, 65 L.Ed. 638. It has also been long settled that the District Court in its discretion may order the trial of a suit in equity in advance of an action at law between the same parties, even if there is a factual issue common to both. In the words of Mr. Justice Cardozo, writing for a unanimous Court in American Life Ins. Co. v. Stewart, supra:

'A court has control over its own docket. * * * In the exercise of a sound discretion it may hold one lawsuit in abeyance to abide the outcome of another, especially where the parties and the issues are the same. * * * If request had been made by the respondents to suspend the suits in equity till the other causes were disposed of, the District Court could have considered whether justice would not be done by pursuing such a course, the remedy in equity being exceptional and the outcome of necessity. * * * There would be many circumstances to be weighed, as, for instance, the condition of the court calendar, whether the insurer had been precipitate or its adversaries dilatory, as well as other factors. In the end, benefit and hardship would have to be set off, the one against the other, and a balance ascertained.' 300 U.S. 203, 215-216, 57 S.Ct. 377, 380. [9]

The Court today sweeps away these basic principles as 'precedents decided under discarded procedures.' It suggests that the Federal Rules of Civil Procedure have somehow worked an 'expansion of adequate legal remedies' so as to oust the District Courts of equitable jurisdiction, as well as to deprive them of their traditional power to control their own dockets. But obviously the Federal Rules could not and did not 'expand' the substantive law one whit. [10]

Like the Declaratory Judgment Act, the Federal Rules preserve inviolate the right to trial by jury in actions historically cognizable at common law, as under the Constitution they must. [11] They do not create a right of trial by jury where that right 'does not exist under the Constitution or statutes of the United States.' Rule 39(a). Since Beacon's counterclaim was compulsory under the Rules, see Rule 13(a), it is apparent that by filing it Beacon could not be held to have waived its jury rights. [12] Compare American Mills Co. v. American Surety Co., 260 U.S. 360, 43 S.Ct. 149, 67 L.Ed. 306. But neither can the counterclaim be held to have transformed Fox's original complaint into an action at law. [13] See Bendix Aviation Corp. v. Glass, D.C., 81 F.Supp. 645.

The Rules make possible the trial of legal and equitable claims in the same proceeding, but they expressly affirm the power of a trial judge to determine the order in which claims shall be heard. Rule 42(b). Certainly the Federal Rules were not intended to undermine the basic structure of equity jurisprudence, developed over the centuries and explicitly recognized in the United States Constitution. [14]

For these reasons I think the petition for a writ of mandamus should have been dismissed.

Notes[edit]

^1  Compare Black v. Boyd, 6 Cir., 248 F.2d 156, with Black v. Boyd, 6 Cir., 251 F.2d 843.

^2  Cf. De Groot v. Peters, 124 Cal. 406, 57 P. 209; California Grape Control Bd. v. California P. Corp., 4 Cal.App.2d 242, 244, 40 P.2d 846. Compare Kessler v. Eldred, 206 U.S. 285, 27 S.Ct. 611, 51 L.Ed. 1065; International News Service v. Associated Press, 248 U.S. 215, 236, 39 S.Ct. 68, 71, 63 L.Ed. 211; Truax v. Raich, 239 U.S. 33, 38, 36 S.Ct. 7, 9, 60 L.Ed. 131.

^3  Rule 42(b) provides: '(b) Separate Trials. The court in furtherance of convenience or to avoid prejudice may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues.'

The Note to Rule 39 of the Advisory Committee on Rules states that, 'When certain of the issues are to be tried by jury and others by the court, the court may determine the sequence in which such issues shall be tried.' This language was at one time contained in a draft of the Rules, but was deleted because 'the power is adequately given by Rule 42(b) * * *.' Moore's Federal Practice (2d. ed.) § 39.12, n. 8.

See also Rule 57, which provides, inter alia, that 'The court may order a speedy hearing of an action for a declaratory judgment and may advance it on the calendar.'

^4  It is not altogether clear at this stage of the proceedings whether the existence of substantial competition between Fox and Beacon is actually a material issue of fact common to both the equitable claim and the counterclaim for damages. The respondent ingeniously argues that determination in the equitable suit of the issue of competition between the theatres would be determinative of little or nothing in the counterclaim for damages.

'The fact issue in the action for equitable and declaratory relief is whether the Fox West Coast California Theatre and the Petitioner's drive-in are substantially competitive with each other. The fact issue in the counterclaim is whether the cross-defendants and co-conspirators therein named conspired together in restraint of trade and to monopolize in the manner alleged in the counterclaim. Absent conspiracy, whether or not the distributors licensed a single first run picture to Petitioner's drive-in, be it in substnti al competition or not in substantial competition with other first run theatres in the San Bernardino area, Petitioner will not have made out a case on its counterclaim. * * * If Petitioner on its counterclaim should fail to prove conspiracy the issue of competition between the theatres is meaningless. If petitioner on the other hand success in proving the allegations of its counterclaim, the conspiracy to monopolize first run and to discriminate against the new drivein, the existence or non-existence of competition between the theatres would exculpate none of the alleged wrongdoers, although if there was an absence of competition between the drive-in and the other first run theatres, as Petitioner contended in its answer to the complaint, it might have some difficulty proving injury to its business.'

^5  State Farm Mut. Auto. Ins. Co. v. Mossey, 7 Cir., 195 F.2d 56, 60; Connecticut General Life Ins. Co. v. Candimat Co., D.C., 83 F.Supp. 1.

^6  Dickinson v. General Accident F. & L. Assur. Corp., 9 Cir., 147 F.2d 396; Hargrove v. American Cent. Ins. Co., 10 Cir., 125 F.2d 225; Pacific Indemnity Co. v. McDonald, 9 Cir., 107 F.2d 446, 131 A.L.R. 208.

^7  Moore's Federal Practice (2d ed.) § 57.31(2). 'Transposition of parties' would perhaps be a more accurate description. A typical such case is one in which a plaintiff uses the declaratory judgment procedure to seek a determination of nonliability to a legal claim asserted by the defendant. The defendant in such a case is, of course, entitled to a jury trial.

^8  The suggestion by the Court that 'This was because the subsequent legal action, though providing an opportunity to try the case to a jury, might not protect the right of the equity plaintiff to a fair and orderly adjudication of the controversy' is plainly inconsistent with many of the cases in which the rule has been applied. See, e.g., Beedle v. Bennett, 122 U.S. 71, 7 S.Ct. 1090, 30 L.Ed. 1074; Clark v. Wooster, 119 U.S. 332, 7 S.Ct. 217, 30 L.Ed. 392.

^9  It is arguable that if a case factually similar to American Life Ins. Co. v. Stewart were to arise under the Declaratory Judgment Act, the defendant would be entitled to a jury trial. See footnote 7. But cf. 5 Moore's Federal Practice (2d ed.), p. 158.

^10  Congressional authorization of the Rules expressly provided that 'Said rules shall neither abridge, enlarge, nor modify the substantive rights of any litigant.' 48 Stat. 1064. See 28 U.S.C. § 2072, 28 U.S.C.A. § 2072.

^11  'In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.' U.S.Const., Amend. VII. See Rules 38, 39, Fed.Rules Civ.Proc.

^12  This is not, of course, to suggest that the filing of a permissive 'legal' counterclaim to an 'equitable' complaint would amount to a waiver of jury rights on the issues raised by the counterclaim.

^13  Determination of whether a claim stated by the complaint is triable by the court or by a jury will normally not be dependent upon the 'legal' or 'equitable' character of the counterclaim. See Borchard, Declaratory Judgments (2d ed.), p. 404. There are situations, however, such as a case in which the plaintiff seeks a declaration of invalidity or non-infringement of a patent, in which the relief sought by the counterclaim will determine the nature of the entire case. See Moore's Federal Practice (2d ed.) § 38.29.

^14  'The judicial Power shall extend to all Cases, in Law and Equity. * * *' Art. III, § 2.

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).