RIGHT TO JURY MAY BE 'INVIOLATE,' BUT IT'S NOT ALWAYS GUARANTEED

September 13, 2004

Steven P. Garmisa
Hoey & Farina Attorney
garmisa@hoeyfarina.com
1-888-425-1212

Asking for money from a defendant does not guarantee that you will be entitled to a jury trial. A crucial question is whether the general type of proceeding involved in your case was handled exclusively by chancellors, without juries, back when the Illinois Constitution first locked in the right to trial by jury.

In a case where a beneficiary demanded money from a trustee for alleged breach of fiduciary duty, the Illinois Appellate Court, unimpressed with the reasoning of a 1956 case, concluded there was no right to a jury trial.

Although the modern trend permits beneficiaries to pursue actions for damages against trustees, "this modern trend was not the law at the time that the Illinois Constitution was originally adopted." Bank One N.A. v. Borse, 2004 WL 1576400 (2d Dist., July 8).

Bank One, as trustee of a trust established by Anton Borse, filed a complaint seeking construction of the terms of the trust. Susan Clontz, a beneficiary of the trust, filed a claim accusing Bank One of breach of fiduciary duty. Her complaint was accompanied by a jury demand.

The DuPage County Circuit Court granted Bank One's motion to strike the jury demand. After a two-week bench trial, judgment was entered in favor of Bank One.

Clontz appealed, arguing that she had a right to trial by jury on her demand for money from the trustee. The Appellate Court disagreed. Here are some highlights of Justice Susan F. Hutchinson's opinion (with various omissions not noted in the quoted text):

"Clontz argues that her counterclaim was initially filed in the Law Division of the Circuit Court and sought money damages from Bank One. Clontz thus argues that her complaint sought a legal remedy and that she was entitled to a jury trial pursuant to Article I, section 13, of the Illinois Constitution.

"Bank One responds that a complaint alleging breach of fiduciary duty is an equitable action for which no constitutional right to a jury trial exists.

"Section 13 of Article I of the Illinois Constitution provides: 'The right of trial by jury as heretofore enjoyed shall remain inviolate.' Our Supreme Court has construed this provision as guaranteeing the right of trial by jury as it existed at common law. Martin v. Heinold Commodities Inc., 163 Ill.2d 33, 72 (1994). The Illinois Constitution thus provides a right to a jury trial only in those cases where such right existed at common law at the time the Constitution was originally adopted.

"Contrary to Clontz's assertions, the right to a jury trial does not depend on whether money damages are sought. Instead, the right to a jury trial requires an examination of English common law. A litigant's right to a jury trial is a legal determination that we review de novo.

"At common law, equitable claims were creations of the courts of chancery and were tried without the right to a jury. As our Supreme Court has previously noted, at common law, actions brought against a trustee by beneficiaries seeking damages resulting from the trustee's breach of trust could be heard only in a court of equity. Hopkins v. Granger, 52 Ill. 504, 510 (1869) ('It is one of the oldest heads of chancery jurisdiction, to execute and control trusts and trust funds').

"Article 197 of the Restatement (Second) of Trusts acknowledges this historical classification for such an action, stating that 'the remedies of the beneficiary against the trustee are exclusively equitable.'

"Legal scholars have similarly noted that courts of equity have original and complete jurisdiction over trusts and are the sole forum to enforce the rights of a beneficiary because they arose out of a trust. See G. Bogert and G. Bogert, Trusts & Trustees 870, at 136 (rev. 2d ed. 1995).

"In more recent decisions, Illinois courts have similarly recognized that an action seeking damages for breach of fiduciary duty is an equitable action.

"For example, in Kinzer v. City of Chicago, 128 Ill.2d 437, 445 (1989), our Supreme Court expressly rejected the Restatement's view that an action for breach of fiduciary duty is a tort (see Restatement (Second) of Torts, section 874 (1979)). Instead, the Supreme Court regarded a claim for breach of fiduciary duty as controlled by the substantive laws of agency, contract and equity.
"Relying on Kinzer, reviewing courts have consistently characterized complaints for breach of fiduciary duty as equitable actions.

"Relying on In re Estate of O'Donnell, 8 Ill.App.2d 348, 132 N.E.2d 74 (1956), Clontz argues that courts of equity do not have exclusive jurisdiction over all actions for breach of trust against trustees. In O'Donnell, the reviewing court held that a beneficiary's action seeking damages for breach of trust against the deceased trustee's estate was a legal action and that the beneficiary was entitled to a jury trial. In O'Donnell, the trustee's alleged breach was her failure to place the trust corpus in an interest bearing account.

"As exemplified in O'Donnell, modern courts have been more willing to permit beneficiaries to pursue actions at law for certain types of breaches of trust. See Restatement (Second) of Trusts, section 198 (1959) (providing that a beneficiary may maintain an action at law against the trustee if the trustee has breached its duty to pay money or transfer property immediately and unconditionally to the beneficiary); G. Bogert and G. Bogert, Trusts, section 157, at 563 (5th ed. 1973). However, this modern trend was not the law at the time that the Illinois Constitution was originally adopted; instead, as detailed above, actions for breach of trust were equitable proceedings to which the right to a jury trial did not attach.

"We note that the reviewing court in O'Donnell did not review English common law in reaching its decision and instead limited its inquiry to the relief requested in the beneficiary's complaint. Courts must not focus on the nature of the remedy sought by the litigant in determining whether the right to a jury trial attaches.

"Because the reviewing court in O'Donnell did not limit its inquiry to the status of the law at the time the Illinois Constitution was adopted, we decline to follow that court's resolution of this issue. Instead, we conclude that Clontz did not have a constitutional right to a jury trial on her counterclaim alleging breach of fiduciary duty."

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