Adoption of the Federal Rules of Civil Procedure in 1938
Seventh Amendment:
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 re-examined in any
Court of the United States, than according to the rules of the common law.
The Seventh Amendment uses the term common law to refer to cases in which the right to jury
trial was preserved. This term’s use reflected the division of the English and United States legal
systems into separate law and equity jurisdictions, in which actions subject to the former but not
the latter were triable to a jury. In the early federal court system, courts had jurisdiction over
both suits in law and equity, but the suits occupied separate sides of a federal court’s civil docket
and were subject to distinct law and equity procedures, including the use or nonuse of the jury.1
Adoption of the Federal Rules of Civil Procedure in 1938 merged law and equity into a single
civil jurisdiction and established uniform rules of procedure.2 Legal and equitable claims that
previously were brought as separate causes of action on different sides of the court could now be
joined in a single action, and in some cases, such as those with compulsory counterclaims, had to
be joined in one action.3 However, the courts retained the traditional distinction between law and
equity for purposes of determining when there was a constitutional right to trial by jury, which
led to some difficulty.4
The Supreme Court resolved the difficulty by stressing the fundamental nature of the jury trial
right and protecting it against diminution through resort to equitable principles. In Beacon
Theatres v. Westover, a plaintiff sought a declaratory judgment and an injunction barring the
defendant from instituting an antitrust action against it; the defendant filed a counterclaim
alleging violation of the antitrust laws and asking for treble damages.5 The Supreme Court held
that the district court erred in denying the defendant a jury trial on all issues in the antitrust
controversy because the complaint for declaratory relief presented basically equitable issues.6
The trial court’s error, in the Court’s view, would compel the defendant to split its antitrust case
in two, trying part to a judge and part to a jury, impermissibly delaying and subordinating its
counterclaim that it was required by the Federal Rules of Civil Procedure to bring within the
same action.7 Long-standing equity principles, according to the Court, dictated that only under
the most imperative circumstances which in view of the flexible procedures of the Federal Rules
we cannot now anticipate, can the right to a jury trial of legal issues be lost through prior
determination of equitable claims.8
Later, in Dairy Queen v.Wood, the Supreme Court reversed a district court’s order striking a
plaintiff’s demand for jury trial.9 There, the plaintiff-trademark owner sought several types of
relief against the defendant-licensee for the licensee’s alleged breach of a licensing contract,
including an injunction and an accounting for money damages.10 The Court held that, even
though the claim for legal relief was characterized by the district court as incidental to the
equitable relief sought, the Seventh Amendment required that the factual issues pertaining to
whether there had been a breach of contract to be tried before a jury.11 Thus, the rule emerged
that legal claims must be tried before equitable ones, and before a jury if the litigant so wished.12
In Ross v. Bernhard, the Court further held that the right to a jury trial depends on the nature of
the issue to be tried, rather than the procedural framework in which it is raised.13 The case
involved a stockholder derivative action, which had always been considered to be a suit in
equity.14 The Court agreed that the action was equitable, but concluded that it involved two
separable claims. The first, the stockholder’s standing to sue for a corporation, was an equitable
issue; the second, the corporation’s claim asserted by the stockholder, may be either equitable or
legal.15 Because the Federal Rules of Civil Procedure merged law and equity in the federal
courts, there was no longer any procedural obstacle to transferring jurisdiction to the law side
once the equitable issue of standing was decided. Thus, the Court continued, if the corporation’s
claim that the stockholder asserted was legal in nature, it should be heard on the law side and
before a jury.16
Footnotes
1. <Jump to essay-1See Kristin A. Collins, A Considerable Surgical Operation: Article III,
Equity, and Judge-Made Law in the Federal Courts, 60 Duke L.J. 249, 253 (2010).
2. <Jump to essay-2See Ross v. Bernhard, 396 U.S. 531, 539 (1970).
3. <Jump to essay-3See 8 Moore’s Federal Practice - Civil § 38.12 (2022).
4. <Jump to essay-4Under the old equity rules, an absolute right to a trial of the facts by a
jury could not be impaired by any blending with a claim, properly cognizable at law, of a
demand for equitable relief in aid of the legal action or during its pendency. Hipp v.
Babin, 60 U.S. (19 How.) 271, 278 (1857). The Supreme Court interpreted the Seventh
Amendment to prohibit the trial of equitable and legal issues in the same suit, so that aid
in the federal courts had to be sought in separate proceedings. Scott v. Neely, 140 U.S.
106, 109 (1891); Bennett v. Butterworth, 52 U.S. (11 How.) 669 (1850); Lewis v. Cocks,
90 U.S. (23 Wall.) 466, 470 (1874); Killian v. Ebbinghaus, 110 U.S. 568, 573 (1884);
Buzard v. Houston, 119 U.S. 347, 351 (1886). If an action at law evoked an equitable
counterclaim, the trial judge would order the legal issues to be separately tried after the
disposition of the equity issues. In this procedure, however, res judicata and collateral
estoppel could operate so as to curtail the litigant’s right to a jury finding on factual
issues common to both claims. However, priority of scheduling was considered to be a
matter of discretion. Federal statutes prohibiting courts of the United States from
sustaining suits in equity if the remedy was complete at law served to guard the right of
trial by jury and were liberally construed. Schoenthal v. Irving Trust Co., 287 U.S. 92, 94
(1932). Nor was the distinction between law and equity to be obliterated by state
legislation. See Thompson v. Railroad Cos., 73 U.S. (6 Wall.) 134 (1868). If state law, in
advance of judgment, treated the whole proceeding upon a simple contract, including
determination of validity and of amount due, as an equitable proceeding, it brought the
case within the federal equity jurisdiction upon removal. However, the Supreme Court
determined that when an action at law in state court furnished an adequate and complete
remedy, the existence of a potential cause of action in courts of equity pursuant to a
separate state statute could not enlarge the federal courts’ equity jurisdiction. This
jurisdictional rule applies even if, under state law, the equity court could summon a jury
on occasion. Whitehead v. Shattuck, 138 U.S. 146 (1891); Buzard, 119 U.S. 347; Greeley
v. Lowe, 155 U.S. 58, 75 (1894). Furthermore, when state law provides an equitable
remedy, such as to quiet title to land, the federal courts enforce it, if it does not obstruct
the rights of the parties as to trial by jury. Clark v. Smith, 38 U.S. (13 Pet.) 195 (1839);
Holland v. Challen, 110 U.S. 15 (1884); Reynolds v. Crawfordsville Bank, 112 U.S. 405
(1884); Chapman v. Brewer, 114 U.S. 158 (1885); Cummings v. Nat’l Bank, 101 U.S.
153, 157 (1879); United States v. Landram, 118 U.S. 81 (1886); More v. Steinbach, 127
U.S. 70 (1888). Cf. Ex parte Simons, 247 U.S. 321 (1918). The transfer of cases to the
other side of the court was made possible through the inclusion in the Law and Equity
Act of 1915 of § 274(b) of the Judicial Code, 38 Stat. 956. The new procedure permitted
legal questions arising in an equity action to be determined without sending the case to
the law side. This section also permitted equitable defenses to be interposed in an action
at law. The same order was preserved as under the system of separate courts. The
equitable issues were disposed of first; if a legal issue remained, it was triable by a jury.
Enelow v. N.Y. Life Ins. Co., 293 U.S. 379 (1935). See also Liberty Oil Co. v. Condon
Bank, 260 U.S. 235 (1922). There was no provision for legal counterclaims in an
equitable action because Equity Rule 30 required the answer to a bill in equity to state
any counterclaim arising out of the same transaction, which was not intended to change
the line between law and equity and was construed as referring to equitable counterclaims
only. Am. Mills Co. v. Am. Sur. Co., 260 U.S. 360, 364 (1922); Stamey v. United States,
37 F.2d 188 (W.D. Wash. 1929). Equitable jurisdiction existing at the time of a bill’s
filing was not disturbed by the subsequent availability of legal remedies, and the
scheduling was discretionary. Am. Life Ins. Co. v. Stewart, 300 U.S. 203 (1937).
5. <Jump to essay-5359 U.S. 500, 501–04 (1959).
6. <Jump to essay-6Id. at 504–07.
7. <Jump to essay-7Id. at 509. The Supreme Court later observed, in Parklane Hosiery Co. v.
Shore, 439 U.S. 322, 334 (1979), that Beacon Theatres reflected the Court’s concern that
when legal and equitable claims are joined in the same action, res judicata or collateral
estoppel may foreclose relitigation of an issue common to both sets of claims before a
jury if such an issue was first determined by a judge. The Court explained, however, that
this concern merely reflected a general prudential rule that a trial judge has limited
discretion in determining the sequence of trial and that discretion must, wherever
possible, be exercised to preserve jury trial. Parklane, 439 U.S. at 334 (internal quotations
omitted). Thus, in Parklane, the Court held that the plaintiff stockholders’ use of
offensive collateral estoppel in that case-which precluded the defendants from relitigating
certain issues that had resolved adversely against them in a prior governmental
enforcement action-did not violate the defendants’ Seventh Amendment right to a jury
trial. Id. at 336–37.
8. <Jump to essay-8Beacon Theatres, 359 U.S. at 510–11.
9. <Jump to essay-9369 U.S. 469, 479–80 (1962).
10. <Jump to essay-10Id. at 475.
11. <Jump to essay-11Id. at 479–80.
12. <Jump to essay-12If legal and equitable claims are joined, and the court erroneously
dismissed the legal claims and decides common issues in the equitable action, the
plaintiff cannot be collaterally estopped from relitigating those common issues in a jury
trial. Lytle v. Household Mfg., Inc., 494 U.S. 545 (1990).
13. <Jump to essay-13396 U.S. 531 (1970).
14. <Jump to essay-14The stockholders’ derivative action is a creation of equity made
necessary by the traditional concept of the corporate entity or the concept of separate
personality. That is, the corporation is an entity distinct and separate from its
shareholders. Thus, while shareholders were relieved from unlimited liability for
corporate liabilities, the complementary result was that harm to the corporation did not
confer any right of action upon a shareholder to sue to right that harm. However, if the
harm were caused by the abuse of those who managed and controlled the corporation, the
corporation naturally would not proceed against them, and the common law courts would
not allow the shareholders to bring an action running to the separate personality of the
corporation. Accordingly, equity permitted a derivative action in which the shareholder
was permitted to set in motion the adjudication of a cause of action belonging to the
corporation. Bert S. Prunty, The Shareholders’ Derivative Suit: Notes on Its Derivation,
32 N.Y.U. L. Rev. 980 (1957).
15. <Jump to essay-15Ross, 396 U.S. at 538.
16. <Jump to essay-16Id. at 539–41. Justices Potter Stewart and John Marshall Harlan and
Chief Justice Warren Burger dissented, arguing that the Seventh Amendment did not
expand the right to a jury trial, that the Rules simply preserved the right as it had existed,
and that it was error to think that the two could somehow magically interact to enlarge the
right in a way that neither did alone. Id. at 543 (Stewart, J., dissenting).
