Ex Parte Peterson
253 U.S. 300, 40 S. Ct. 543, 1920 U.S. LEXIS 1424 (1920)
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Rule of Law:
Federal courts have the inherent power to appoint an auditor in actions at law with complex accounts to simplify issues for the jury and make a prima facie report without violating the Seventh Amendment right to a jury trial, provided the ultimate determination of facts remains with the jury; however, the auditor's expenses in such actions must generally be taxed as costs against the losing party, as courts lack discretion to apportion them in common law cases.
Facts:
- Walter Peterson, receiver of the Interstate Coal Company, brought an action at law against Arthur Sidney Davison in a federal District Court to recover $21,014.43 for coal sold and delivered, providing a long schedule of items.
- Davison's answer admitted some items but denied the schedule was a full account, alleging other deliveries, payments, and additional allowances were due to him.
- Davison also filed a counterclaim asserting that Peterson was indebted to him for $9,999.10 due to failure to perform coal contracts.
- In response to a demand for a bill of particulars, Davison filed schedules containing over 200 items that he intended to establish as defenses.
- The District Court found that the numerous and complex items made an intelligent consideration of the case by court and jury impossible without the aid of an auditor.
Procedural Posture:
- Walter Peterson, receiver of the Interstate Coal Company, filed an action at law in the District Court of the United States for the Southern District of New York against Arthur Sidney Davison to recover a balance for coal sold and delivered.
- Davison filed an answer, counterclaim, and a bill of particulars detailing over 200 items in dispute.
- Upon Davison's motion and Peterson's objection, Judge Augustus N. Hand of the District Court appointed an auditor to make a preliminary investigation, hear witnesses, examine accounts, and file a report with opinions on disputed items, intended to simplify issues for the jury, but not to determine issues finally.
- Peterson applied to the Supreme Court of the United States for leave to file a petition for writs of mandamus and/or prohibition against Judge Hand and the appointed auditor, arguing the District Court lacked power to make the order and that it violated the Seventh Amendment.
- The Supreme Court granted leave to file the petition on January 12, 1920, and issued an order to show cause.
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Issue:
Does a federal District Court have the inherent power, consistent with the Seventh Amendment right to a jury trial, to appoint an auditor without the parties' consent to conduct a preliminary investigation, hear witnesses, examine accounts, express opinions on disputed items, and present a prima facie report to simplify complex issues for a jury, and if so, may it tax the auditor's expenses in the discretion of the trial judge upon either party?
Opinions:
Majority - Mr. Justice Brandeis
Yes, a federal District Court has the inherent power, consistent with the Seventh Amendment right to a jury trial, to appoint an auditor without the parties' consent to conduct a preliminary investigation, hear witnesses, examine accounts, express opinions on disputed items, and present a prima facie report to simplify complex issues for a jury. However, the court does not have the power to tax the auditor's expenses in the discretion of the trial judge upon either party, as costs in actions at law generally must be borne by the losing party. The Court first established its jurisdiction, stating that if the auditor's proceedings would violate a jury trial right, it should be addressed immediately. The Seventh Amendment preserves the right to a jury trial but does not prohibit the introduction of new methods to determine facts or new rules of evidence, provided the enjoyment of the right is not obstructed and the ultimate determination of issues of fact by the jury is not interfered with. An auditor's role in defining and simplifying issues is analogous to pleading. A preliminary hearing before an auditor, even if it delays a jury trial or explores adversary evidence, does not unduly obstruct the right. Furthermore, admitting the auditor's report as prima facie evidence, which merely shifts the burden of proof, does not unconstitutionally interfere with the jury's role because parties remain free to call, examine, and cross-examine witnesses. Federal courts possess inherent power to provide themselves with appropriate instruments for performing their duties, including appointing non-court personnel like auditors, a practice historically used in equity and now extensible to law cases where complex accounts or voluminous evidence require aid. This aid helps judges define issues and juries perform their specific duty. Regarding costs, while federal courts can tax necessary litigation expenditures, in actions at law, the prevailing party is entitled to all costs as a matter of right. Unlike equity proceedings where cost apportionment is discretionary, courts at law lack the power to apportion costs based on partial success or other fairness considerations. Therefore, the District Court's clause allowing the trial judge to determine cost allocation between parties was erroneous. However, this error concerning costs was not severe enough to warrant extraordinary writs of mandamus or prohibition; the petitioner could seek redress through modification in the District Court or appeal after final judgment.
Dissenting - Mr. Justice McKenna
Justices McKenna, Pitney, and McReynolds dissented without writing a separate opinion. Their dissent likely indicates a belief that the appointment of an auditor with the power to make prima facie findings, even if not explicitly final, constituted an infringement upon the Seventh Amendment right to a trial by jury, or that such an appointment exceeded the inherent powers of the federal District Court in an action at law.
Dissenting - Mr. Justice Pitney
Justices McKenna, Pitney, and McReynolds dissented without writing a separate opinion. Their dissent likely indicates a belief that the appointment of an auditor with the power to make prima facie findings, even if not explicitly final, constituted an infringement upon the Seventh Amendment right to a trial by jury, or that such an appointment exceeded the inherent powers of the federal District Court in an action at law.
Dissenting - Mr. Justice McReynolds
Justices McKenna, Pitney, and McReynolds dissented without writing a separate opinion. Their dissent likely indicates a belief that the appointment of an auditor with the power to make prima facie findings, even if not explicitly final, constituted an infringement upon the Seventh Amendment right to a trial by jury, or that such an appointment exceeded the inherent powers of the federal District Court in an action at law.
Analysis:
This case significantly clarified and expanded the inherent power of federal courts to manage complex litigation in common law actions. By affirming the use of auditors to simplify highly detailed factual disputes, the Supreme Court provided a crucial tool for efficiency while safeguarding the fundamental right to a jury trial. The decision underscores that procedural innovations are permissible as long as they do not obstruct the jury's ultimate fact-finding role. Critically, the Court also delineated the limits of judicial discretion regarding costs in actions at law, reinforcing the long-standing principle that costs generally follow the outcome, thereby curbing judicial flexibility in fee allocation.
