Section 723, Rev.Stat., declaring that suits in equity shall not
be sustained where a plain, adequate and complete remedy may be had
at law, by its own terms applies only to courts of the United
States, and does not apply to a territorial court, the procedure of
which has been prescribed according to the law of an adjoining
state, and to c. 18, Rev.Stat., which does not include § 723.
Even if a demurrer in an action in the United States Court of
Indian Territory, on the ground that the action should be at law
instead of in equity, does amount to an assertion of right under §
723, Rev.Stat., that section is so plainly inapplicable to the
practice in such court that no substantial federal question is
raised that would warrant
Page 229 U. S. 200
this Court in reviewing, under § 709, Rev.Stat., the judgment of
the the court to which the case was transferred on statehood.
Demurrer in the territorial court, on the ground that the action
should be at law and not in equity, is not such a demand for a jury
trial as to amount to specially setting up a right under the trial
by jury provision of the federal Constitution.
In order to entitle plaintiff in error to have this Court review
a judgment of the state court in an action transferred to that
court from the territorial court after statehood, the federal
question should be specially set up in the state court at the
proper time; he cannot rely on a premature assertion of the right
in the territorial court.
Writ of error to review, 27 Okl. 584 dismissed.
The facts, which involve the jurisdiction of this Court to
review judgments of the state court under § 709, Rev.Stat., and
Judicial Code, § 237, and whether a federal question exists and was
properly and specially set up in the state court, are stated in the
opinion.
MR. JUSTICE PITNEY delivered the opinion of the Court.
This writ of error brings before us a judgment of the Supreme
Court of the State of Oklahoma affirming a judgment rendered by the
District Court of Okfuskee County holding the plaintiff in error
liable for the amount of an unpaid subscription made by him to the
capital stock of a bank of which the defendant in error is the
receiver.
The case is brought here under § 709, Rev.Stat., Judicial Code,
§ 237, and the jurisdictional question is raised.
The action was commenced in the United States Court
Page 229 U. S. 201
for the Western District of the Indian Territory on September
17, 1906, by Ebey, as receiver of the Citizens Bank & Trust
Company, against Dill, the plaintiff in error, and four others, by
the filing of a complaint in equity setting forth that the
defendants had organized the bank and caused it to be incorporated
for the purpose of transacting a general banking and trust business
at Stonewall, in the Indian Territory; that the articles of
incorporation and certificate required by law were properly filed,
setting forth the objects and purposes of the corporation and
reciting that the capital stock was $25,000, divided into shares of
$25 each, and that $10,000 thereof had been actually paid in by the
subscribers, who were the defendants, and that they had severally
taken certain shares of stock, of which 80 shares, of the par value
of $2,000 were issued to Dill; that he had not paid any part of
this par value, or anything of value, for the stock subscribed for
by and issued to him; that defendants organized the bank without
any purpose or intent to pay for its capital stock, except $2,000
paid in by one of the other defendants, and that this latter sum
was paid in with the distinct understanding that it should be
returned, and it was returned, after the corporation became a going
concern; that the bank was and is insolvent, and, on the petition
of one of its creditors, the plaintiff was appointed by the United
States court for the Southern District of the Indian Territory,
receiver to take charge of all its property and effects, and
administer them for the benefit of its creditors; that the
liabilities, as shown by its books, were $15,179.02; that a great
deal of its paper was worthless, and a very small sum could be
realized from the same and the rest of its assets; that, after six
months' effort, the plaintiff had only been able to collect on
notes $60.50, and to realize on other property the sum of $100;
that all of the capital stock represented as paid, namely, $10,000,
and the assets in the hands of the plaintiff as
Page 229 U. S. 202
receiver, would not be sufficient to pay the creditors; that, on
a partial presentation of these facts to the judge, an order was
made directing the plaintiff as receiver to institute proper
proceedings against the defendants as subscribers to the capital
stock, to recover the respective amounts remaining unpaid on said
subscription, or for the stock issued to them, for the benefit of
all the creditors of the bank, and that this suit was commenced in
compliance with that order.
"That the plaintiff has no adequate remedy at law, and unless
this Court takes jurisdiction of this suit in equity, he will be
driven to a multiplicity of actions in trying to enforce the
liability of said defendants at law, and the funds of said estate
will be greatly depleted in paying the additional costs and
expenses necessary in filing and prosecuting such actions."
November 4, 1907, Dill filed a demurrer to the complaint, upon
the following grounds: (a) that it did not state sufficient facts
to authorize a court of equity to assume jurisdiction; (b) that it
showed upon its face that plaintiff had a plain, adequate, and
complete remedy at law, and (c) that defendant was entitled to a
trial by jury under the laws and Constitution of the United States,
of which he would be deprived should the cause be tried in equity.
The demurrer was overruled, and he took an exception.
Thereafter, and on November 16, 1907, by proclamation of the
President (35 Stat. 2160), the State of Oklahoma, including the
former Territory of Oklahoma and Indian Territory, was admitted
into the Union by virtue of the Enabling Act of June 16, 1906, 34
Stat. 267, c. 3335. By § 20 of this act (34 Stat. 277), as amended
by act of March 4, 1907, 34 Stat. 1287, c. 2911, it was provided
that all causes pending in the district courts of Oklahoma
Territory and in the United States courts in the Indian Territory
at the time said territories should become a state, not transferred
to the United States circuit or
Page 229 U. S. 203
district courts under previous sections, should be
"proceeded with, held, and determined by the courts of said
state, the successors of said district courts of the Territory of
Oklahoma, and the United States courts in the Indian Territory;
with the right to prosecute appeals or writs of error to the
supreme or appellate court of said state, and also with the same
right to prosecute appeals or writs of error from the final
determination in such cases made by the supreme or appellate court
of such state to the Supreme Court of the United States, as is
provided by law for appeals and writs of error from the supreme or
final appellate court of a state to the Supreme Court of the United
States."
Upon statehood, the present action was transferred to the
District Court of Okmulgee County, and the defendant Dill, now
plaintiff in error, obtained its transfer from that court to the
District Court of Okfuskee County. There he answered upon the
merits, admitting the organization and incorporation of the bank,
and that he subscribed for 80 shares of its capital stock, but
alleging that he paid the consideration therefor to the bank at the
time, and denying any indebtedness to the plaintiff on the
stock.
If any of the other defendants pleaded to the action, the
transcript presented here does not show it. The cause, however,
came on for trial before the court without a jury, the plaintiff,
the defendant Dill, and another defendant named Malott appearing
respectively in person and by attorney. The issue as between the
plaintiff and Malott was declared to be whether the latter had in
fact subscribed for 80 shares of the stock of the bank for the par
value of which the plaintiff sought to hold him liable. The trial
court found in favor of the defendant Malott, and against the
defendant Dill, and rendered a decree against the latter for
$2,000, together with interest and costs.
Page 229 U. S. 204
Dill moved for a new trial on several grounds, the only one here
significant being "Error of the court in trying the said cause
without submitting the same to a jury, when the parties thereto had
not waived a jury trial."
This motion having been denied, he appealed to the Supreme Court
of Oklahoma, renewing there the insistence that the cause of action
alleged in the complaint was cognizable at law, and not in equity,
and that, under the Constitution and laws of the United States, he
was entitled to a trial by jury. The court overruled this
contention, and on rehearing adhered to the same view, so that the
judgment of the district court was affirmed (27 Okl. 584), and the
case comes here.
It is insisted that whatever rights or immunities under the laws
of the United States had been asserted by defendant in the course
of the litigation prior to statehood were preserved to him after
statehood by the clause above quoted from § 20 of the Enabling Act,
together with § 1, of the schedule to the state constitution
(Okl.Comp.Laws 1909, p. 137), the language of which is:
"No existing rights, actions, suits, proceedings, contracts, or
claims shall be affected by the changes in the forms of government,
but all shall continue as if no change in the forms of government
had taken place."
Without passing upon the soundness of this proposition, we may,
for present purposes, assume it to be sound.
Blanchard v.
Ezell, 25 Okl. 434;
Garnsey v. State, 4 Okl.Crim.
547;
Pacific Mutual Life Ins. Co. v. Adams, 27 Okl. 496;
Choctaw Electric Co. v. Clark, 28 Okl. 399;
St. Louis
& S.F. R. Co. v. Cundlieff, 171 F. 319, 322.
Next, the insistence is that, by his demurrer, filed before
statehood, and specifying, as one of the grounds, that the
plaintiff had "a plain, adequate, and complete remedy at law," the
defendant clearly asserted a right or immunity under § 723,
Rev.Stat., which declares that
"suits in
Page 229 U. S. 205
equity shall not be sustained in either of the courts of the
United States in any case where a plain, adequate, and complete
remedy may be had at law."
This section, however, by its own terms, applies only to "courts
of the United States;" and when afterwards a United States court
was established in the Indian Territory by the Act of March 1,
1889, c. 333, 25 Stat. 783, it was by the sixth section enacted
"that the provisions of chapter eighteen, title thirteen, of the
Revised Statutes of the United States, shall govern such court, so
far as applicable;
Provided, That the practice, pleadings,
and forms of proceedings in civil causes shall conform, as near as
may be, to the practice, pleadings, and forms of proceeding
existing at the time in like causes in the courts of record of the
State of Arkansas, any rule of court to the contrary
notwithstanding."
Chap. 18 of Title 13, Rev.Stat., includes some sections
prescribing the forms of procedure, but not § 723. However, the
proviso making the practice, pleadings, and forms of procedure
conformable to those existing in the State of Arkansas must, of
course, be given effect. Moreover, in the Act of May 2, 1890,
enlarging the jurisdiction of the court (c. 182, 26 Stat. 81, 95),
it was in § 31 enacted that certain provisions of the Arkansas
statutes, as contained in Mansfield's Digest of 1884 should be
extended over and put in force in the Indian Territory, among them
being c. 119, relating to pleadings and practice. That chapter
(Mans.Dig. §§ 4914 etc.) abolishes forms of action; provides that
there shall be but one form of civil action; enacts that the
proceedings therein may be of two kinds at law or in equity (§
4925); that
"an error of the plaintiff as to the kind of proceedings adopted
shall not cause the abatement or dismissal of the action, but
merely a change into the proper proceedings by an amendment in the
pleadings and a transfer of the action to the proper docket,"
and (§ 4926) that such error may be corrected on motion. Section
5028 provides that the
Page 229 U. S. 206
defendant may demur to the complaint for want of jurisdiction of
the court over the person or the subject matter, the plaintiff's
want of legal capacity, the pendency of another action, a defect of
parties, plaintiff or defendant, or "Fifth. That the complaint does
not state facts sufficient to constitute a cause of action."
Evidently, under this mode of pleading, the objection that the
action is in equity, whereas it ought to be in law, is not a ground
of demurrer. The liberality of the system is illustrated in
Zufall v. United States, 1 Ind.Terr. 638, 643;
Sparks
v. Childers, 2 Ind.Terr. 187, 198;
Hampton v. Mayes,
3 Ind.Terr. 65, 72;
Rogers v. Nidiffer, 5 Ind.Terr. 55,
58. In
Indian Land & Trust Co. v. Shoenfelt, 135 F.
484, the Circuit Court of Appeals for the Eighth Circuit, in an
action commenced by bill in equity in the United States court in
the Indian Territory, seems to have held that § 723, Rev.Stat., was
applicable.
But see a later decision by the same court in
St. Louis & S.F. R. Co. v. Cundieff, 171 F. 319,
321.
Upon this question, we hold that, if the demurrer may be deemed
an assertion by the defendant of a right, under § 723, Rev.Stat.,
to have the case determined in equity, yet that section was so
plainly inapplicable to the practice in the territorial court that
no substantial federal question is raised such as would warrant a
review here under § 709, Rev.Stat.
It is, however, next insisted that the demurrer amounted also to
a demand for a trial by jury, and an assertion of a right thereto
under the federal Constitution (extended to the territory by c.
182, § 31, 26 Stat. 96), and that this right was denied by the
subsequent decision of the state court, sustaining the judgment
notwithstanding the demurrer.
We deem this untenable, for two reasons --
viz., (a)
because the demurrer was not a proper demand for trial by jury, and
(b) the right to such a trial, if it existed, and
Page 229 U. S. 207
was properly demanded prior to statehood, was subsequently
waived.
(a) We have already pointed out that, under the Code, as
contained in Mansfield's Digest, the grounds of demurrer are
limited, and the contention that defendant will be deprived of a
jury trial is not one of them. Indeed, since a demurrer has the
necessary effect of admitting the facts alleged in the complaint, a
demand for a trial by jury is quite incongruous; for a jury has no
function to perform where the facts are admitted. It is evident
that, under the local practice, the court of the territory was
warranted in overruling this ground of demurrer, and that no
question of federal right is raised by its action in doing so.
(b) As already pointed out, the defendant afterwards answered in
the state court, denying the facts set up in the complaint. But he
did not in his answer, nor at any other time, so far as the record
discloses, demand a jury trial until after the court had found
against him on the facts and rendered judgment accordingly. He did
then move for a new trial upon the ground, among others, that there
was error in trying the cause without submitting it to the jury,
"when the parties thereto had not waived a jury trial."
While it is conceded that, under Mansfield's Digest, § 5105, and
also under § 5785 of the state Code (Okl.Comp.Laws 1909), a jury
might be waived, it is insisted that, since the case was tried
after statehood, and pursuant to the procedure prescribed by the
state law, § 5808 (Okl.Comp.Laws 1909) applied, which prescribes
the manner in which trial by jury may be waived;
viz.,
"By the consent of the party appearing, when the other party
fails to appear at the trial by himself or attorney. By written
consent, in person or by attorney, filed with the clerk. By oral
consent, in open court, entered on the journal. "
Page 229 U. S. 208
The record shows no written consent, nor any entry upon the
journal of oral consent. It does show that the action was in form
an action in equity, normally triable without jury, and it further
shows a trial of the issues before the court without a jury, in
which trial the now plaintiff in error participated in person and
by attorney, without taking any exception to the mode of trial.
The state courts did not pass upon the question whether, under
the local practice, this amounted to a waiver of a demand for jury
trial; both courts having entertained the view that the cause was
properly brought in equity, in which case there was no right to
trial by jury.
We deem it clear that, in order to entitle himself to a review
here under § 709, Rev.Stat., on the ground of a deprivation of the
right to trial by jury, plaintiff in error should have "specially
set up" his alleged right in proper time in the state court, and
should not have relied upon a premature assertion of that right,
contained in a demurrer, where it had no proper place, and not
reiterated at any time when there was an issue of fact to be
tried.
Writ of error dismissed.