By Maury Holland & Robert L. Sokol
With the effectiveness in 1980 of the Oregon Rules of Civil Procedure (ORCP)1 it has now been more than a quarter century since Oregon belatedly brought about the procedural merger of law and equity. This momentous step reflected a growing awareness in this state, which had already borne fruit in most other American jurisdictions, that the numerous, often cumbrous, procedural distinctions that had evolved over the many centuries when law and equity were administered by separate courts had, by the middle of the 20th century, become intolerable impediments to efficient conduct of civil litigation.2
How to account, then, for the hardy persistence, decades after this merger, of what must count as among Oregon’s most anachronistic statutes, a veritable museum piece of an enactment, which provides as follows: "ORS 19.415(3). Upon an appeal from a judgment in a case that constituted a suit in equity under common law, the Court of Appeals shall try the cause anew upon the record"?3 The wording of this provision is itself a dead give-away of its antiquated, high-button-shoes provenance, a relic of the High Court of Chancery as famously depicted by Charles Dickens in his novel, Bleak House.4
The continued presence of ORS 19.415(3) in Oregon law raises at least two questions worth considering. The first is whether this statute serves any useful purpose, in the modern era of merged procedure, with its unitary civil action in lieu of the "a suit in equity" as contrasted with an action at common law. The second is if, as the authors believe, it does not, how to account for its survival.
Prior to the aforementioned procedural merger, there was certainly nothing peculiar or idiosyncratic about Oregon’s having a statutory provision establishing what is commonly referred to as "de novo" appellate review of fact-findings in equity cases. Indeed, although there were, until well into the 20th century, marked variations among the states regarding many aspects of equity procedure, including standards of appellate review, the concept of unusually searching review of trial court fact-findings was a standard feature of that procedure.5
This dated from the earliest methods by which equity was administered in England. These methods bore no resemblance to common law litigation, in large part because the equity administered by the English chancellors was originally thought to be derived from the "royal prerogative," an important component of which was the power of the king to dispense with, or modify, the ordinary workings of the common law in the interest of individuated justice in particular cases.
The evolution of equity jurisprudence and procedure over the course of English history cannot be recapitulated here. Suffice it to say that the procedures characteristic of English equity by the 18th century provided the basic pattern generally adhered to by federal courts and those of most states until the wave of procedural mergers occurred at various times in the 20th. ORS 19.415(3) is a lonely relic of one notable feature of that pattern.
One feature of classic equity, which so starkly distinguished it from common law procedure, was that any form of appellate review of chancery decrees was regarded, not as a phase in the litigation of a case separate and distinct from the proceedings in the court of first instance, but as a seamless continuation of those proceedings in a higher court. Thus, the notion, deeply embedded in common law procedure, that trial courts enter judgments that are final and enforceable unless reversed in appeal, was wholly alien to equity procedure. Appeals in equity automatically vacated, with no need for a supersedeas or the like, any decree that might have been awarded by the chancellor, and effectively removed the case to the superior tribunal. Moreover, and most surprisingly at odds with modern appeals under merged procedure, review of equity decrees was not limited to evidence and other matters apparent from the record made at trial. Rather, the evidence of record would often be supplemented in the reviewing tribunal by new evidence, not offered at trial, in the form of deposition transcripts, and occasionally even by live witness testimony.
Although a great deal more detail could be said about this feature of equity appeals, what has been just stated sufficiently explains why appellate courts came to regard themselves as in no way bound by any findings of fact made below. After many fits and starts, this feature of equity procedure, though without allowance of entirely new evidence being admitted on appeal, became firmly established in Oregon law no later than a 1896 decision of the Supreme Court.6
De novo review of fact-findings is further explained by the peculiar institutional setting in which English 18th century equity was administered, a setting that shaped the procedures employed by equity in 19th-century America. The High Court of Chancery was the only court of first instance in equity and, until augmented by such "puisne judges" as vice-chancellors and masters of the rolls, the lord chancellor the only trial judge of that court.
But the "trial" of equity cases bore very little resemblance to common law trials. Although the chancellor could, at his discretion, receive additional evidence, including live, "ora tenus" testimony, the normal procedure consisted of rummaging through, upon their being "submitted" by chancery barristers representing the litigants, the typically numerous transcripts of oral depositions taken by masters in chancery, subordinate officers of the court who were not judges authorized to make any legal rulings, much less decide a case themselves, but who resembled the modern referee or special master. Masters’ certifications of these deposition transcripts were typically accompanied in their reports by recommended findings of fact and legal conclusions, but chancellors were in no way bound by either, since the chancellor was the first, and usually the last, judge before whom cases would come for determination and entry of a decree.
In explaining why the standard of de novo review of fact findings in equity cases became solidly entrenched in American equity procedure, including Oregon’s, one possibility might be that American lawyers were confused by supposing that the function of English chancery masters just described corresponded to that of modern American trial judges, and therefore mistakenly concluded that chancellors were appellate judges reviewing masters’ findings as though they were findings of a trial court judge. Since the standard used in such review was de novo, that was perhaps assumed to be the appropriate one whenever an equity decree was subject to review. That would be a serious misunderstanding of classic equity practice, however, since the chancellor was not functioning as an appellate judge, but as a judge of the court of first instance dealing with merely recommended, nonbinding findings of a subordinate official of that court, just was with referees or special masters today.
This possible explanation is an unlikely one, however. The individuals most influential in shaping the early civil procedure of this state, such as the ubiquitous Judge Matthew Deady, were learned and sophisticated jurists, amazingly so given their lack of formal legal education and the paucity of law library materials available to them. Much the same was probably true of their counterparts in other states, where de novo review tended to become as firmly established as in Oregon.
A more plausible explanation for de novo review is that it was the practice of classic English equity, whereby appeals from chancery decrees lay only to the House of Lords. This was because the judge initially determining the facts in equity cases; the chancellor typically did not hear live witness testimony, but instead relied upon whatever depositions were submitted and received. In case of an appeal to the House of Lords, that body, specifically its judicial committee of judges, had no hesitation in retrying the facts de novo "on the record" because it had before it precisely the same factual materials as did the chancellor, namely, the depositions. In other words, the principal reason why modern appellate courts accord considerable deference to fact findings by trial courts — the ability of the latter, whether a jury or a judge, to observe the demeanor of witnesses and thereby assess their credibility — was typically absent in equity appeals.
It hardly needs stating that these historical encrustations of classic English equity jurisprudence have absolutely no relevance to the way modern equity is administered in Oregon under merged procedure. Moreover, there now remains nothing inherent or characteristic about what ORS 19.415(3) awkwardly refers to as "suit(s) in equity under common law" that warrants appellate judges substituting their views of the facts of a case for those of the trial judge, any more so than with the judge’s findings when what is historically classified as an action at common law is tried to the court, where such findings are nearly "bullet-proof" on appeal.7 In other words, the present situation in Oregon is that when civil actions are tried to the court, the standard of factual review on appeal is either extremely deferential, or almost totally non-deferential,8 depending solely upon whether, prior to the merger intended to consign all historic procedural distinctions between them to the dustbin of legal antiquities, a particular action was classified as one at common law or as a suit in equity.
Given the way civil actions are today tried in Oregon, and have been since 1980, ORS 19.415(3)’s quaint insistence on preserving this one procedural distinction from the pre-merger past makes no sense and serves no useful purpose, except perhaps in a single field of law, as discussed below. In actions tried to the court, the trial judge’s superior opportunity to observe the demeanor of witnesses, and thereby assess their credibility, as well as to develop a "feel" for the facts of a case, is not the slightest bit diminished simply because the proceeding would have been historically been classified as a suit in equity rather than an action at law. Although a good deal of trial evidence these days comes in by way of "perp deps," with witnesses not personally present in court, that is no less true in common law actions than in equity suits. Put another way, since Oregon’s merged procedure employs the entirely unitary civil action at the trial court level, it seems anomalous that ORS 19.415(3) preserves in amber this particular ancient legacy of the distinction between law and equity at the appellate level.
This legal antiquarianism is not without considerable disadvantages to Oregon’s judicial system. One of them is that it requires the Court of Appeals almost wholly to supersede the trial courts as finder of fact, but only in cases historically denominated as "suits in equity." An early Oregon Supreme Court opinion characterized this mis-allocation of fact-finding from trial to appellate courts as "arduous and oftentimes burdensome, , , , , ."9 Of course, appellate courts have an important role in judicial fact-finding, but that role should be limited, as it is with actions at law, to ensuring that trial court findings, whether by a judge or in the form of a jury verdict, are supported by sufficient record evidence.
A second disadvantage of this bifurcated treatment of fact-finding at the appellate level is that de novo review as mandated by ORS 19.415(3) requires classifying a given action as a whole as either "at common law" or "a suit in equity." Even if there were some characteristic of contested factual questions peculiarly relevant to equitable claims or defenses, the differentiation called for by the statute is both under- and over-inclusive. For example, a breach of contract action would be treated as "a suit in equity" if the remedy sought were specific performance, but as "an action at law" if only damages were sought, and, if the former, the requirement of de novo review of fact-findings would be triggered even if the only contested facts concerned whether a contract was formed or breached. An example of the statute’s under-inclusiveness would be a breach of contract action where the plaintiff sought only damages, but the only contested facts pertained to such equitable defenses as unconscionability or equitable fraud, in which event the action as a whole, being "at common law," de novo review of the pertinent findings would not be required, or even permissible.10
If ORS 19.415(3) is a dysfunctional holdover from a discarded procedural regime, why has it so far remained on the books? Part of the answer to that question probably is nothing more elaborate than simple institutional inertia. Reform of something as remote from the concerns of most legislators and citizens as standards of review on appeal tends to have only a miniscule constituency. After all, the signs on interstates entering Oregon do not warn:
TAKE NOTICE THAT IN THIS STATE CIVIL ACTIONS FORMERLY DEEMED SUITS IN EQUITY ARE TRIED ANEW UPON THE RECORD ON APPEAL! PAUL J. DE MUNIZ, CHIEF JUSTICE.
And, in the absence of lobbying by any significant interest group, the initiative to repeal or narrow the scope of ORS 19.415(3)’s application seems unlikely to originate with the Legislative Assembly itself. As far as the Oregon’s bench and bar are concerned, if this statute is indeed something of a squeaky wheel, its squeaks apparently have not been loud enough to prompt the legal profession to advocate its being junked.
However, an informal survey of the opinions of family law practitioners strongly suggests that more than mere inertia might be involved.11 The returns from this survey indicate that, for a variety of reasons, litigators in this field attach considerable value to the de novo review of fact findings which ORS 19.415(3) makes available in this area, because family law is correctly regarded as substantively equitable both by nature and historical derivation.12
Given the certain determined opposition of the domestic relations bar, there seems little point in proposing the total repeal of this statutory antique. But outside the family law area, there are many kinds of equity cases to which it arbitrarily applies to no good purpose, particularly those that are deemed equitable only because of the equitable nature of the remedy sought. Obviously, ORS 19.415(3) could be amended to limit its application to family law cases. Perhaps this is a matter warranting some attention by the Oregon Law Commission, an agency whose principal function is to consider and propose to the Legislative Assembly legal reforms, usually quite technical in nature, that are unlikely to be lobbied for by any particular interest group.
1. Thus ORCP 2 provides: "There shall be one form of action known as a civil action. All procedural distinctions between actions at law and suits in equity are hereby abolished, except for those distinctions specifically provided for by these rules, by statute, or by the Constitution of this state." The original ORCP were drafted by the Council on Court Procedures, using both pre-existing Oregon procedural statutes and the Federal Rules of Civil Procedure as models, and were statutorily adopted by the Legislative Assembly in 1979 to become effective Jan.1, 1980.
2. One highly important distinction—the right to jury trial in actions at law, but not in equity suits—could not be abolished by merger because that right was, and of course remains, enshrined in Oregon’s Constitution, specifically Art. VII (amended), § 3.
3. In equity cases the Oregon Supreme Court is authorized, but not required, to "try the cause anew upon the record," ORS 19.415(4), an authorization seldom utilized since the creation of the Oregon Court of Appeals in 1969.
4. The authors have traced back the history of this provision to a territorial statute entitled: An Act to Regulate Proceedings in Suits in Equity, § 76 (Jan. 23, 1854), and to a decision of the Oregon Supreme Court of the same year, Cutler v. S. S. Columbia, 1 Or 101, 101 (1854). Ten years after statehood the Oregon Supreme Court cited § 533 of the Civil Code of 1862 for the proposition that appeals in equity cases were more akin to retrials, whereby they would be "tried anew upon and regard to all questions both of law and fact presented by the transcript," Heatherly v. Hadley, 4 Or 1, 9 (1869), than to appeals of common law cases wherein appellate review of fact findings was, and remains, severely circumscribed by Article VII (amended), § 3 of the Oregon Constitution.
5. See generally Tucker Bispham, The Principles of equity: A Treatise on The System of Justice Administered in Courts of Chancery (6th. ed., 1899).
6. Nessley v. Ladd, 29 Or 354, 360 ("(U)pon an appeal from a decree (as judgments in equity were called) given in any court, the suit shall be tried anew upon the transcript and evidence accompanying it.")
7. Thus ORCP 62 F provides: "In an action tried without a jury, except as provided in ORS 19.425(3), the findings of the court upon the facts shall have the same force and effect, and be equally conclusive, as the verdict of a jury." A jury verdict is reversible upon appeal on the basis of facts necessarily found in support of the verdict only if the appellate "court can affirmatively say there is no evidence to support the verdict." Or. Const., art. VII (amended), § 3.
8. This statement requires one important qualification, which is that Oregon’s appellate courts typically accord considerable deference in equity cases to trial court findings concerning so-called "evidentiary facts," such as whether one person spoke certain abusive words to another, in contrast to "inferential facts," such as whether one person exerted undue influence on another. This distinction accords with classic equity practice.
9. Nessley, 29 Or at 363.
10 . Because the action as a whole would be "at law," Article VII (amended) § 3 of the Oregon Constitution would limit review of fact findings to the minimalist "sufficiency of the evidence" standard.
An instructive example of ORS 19.415(3)’s under-inclusiveness is Amfac Foods, Inc. v. International Systems & Controls Corporation, 294 Or 94, 654 P2d 1092 (1982), where damages were sought against a parent corporation for breach of contract by its corporate subsidiary. The opinion makes no mention of de novo review even though defendant’s liability turned almost solely on contested facts as to whether it was the subsidiary’s "alter ego" because of its alleged abuses of the corporate form, a doctrine purely of equity, not on whether the contract had been breached, which was not seriously contested. More generally, the point as to which Amfac provides merely one illustration is that when procedure has been merged at the trial court level, so that any single civil action can include a mixture of claims and defenses, some historically deemed equitable and others legal, ORS 19.415(3)’s insistence that every action must be fitted into one of these formerly mutually exclusive categories cannot be made to work sensibly.
11. At the authors’ request, Prof. Harris kindly sent a brief questionnaire to members of the Family Law Section of the OSB by list serve, asking for their attitudes about de novo review of fact findings in domestic relations cases. However, she bears no responsibility for any errors, or opinions expressed, in this article.
The relatively few responses to this questionnaire made this informal survey decidedly less than scientific, but the vehement agreement among them on the question of de novo review of findings suggests that they are probably fairly representative of the views of family law practitioners generally.
12. Among the reasons prominently stated in responses were that family law cases far more often turn on findings of fact rather than on rulings of law, especially such ultimate or inferential facts as the best interests of a child whose custody is contested or what constitutes an equitable division of marital property on divorce. More than one respondent stated, in one way or another, that the availability of de novo fact review on appeal affords essential protection against occasionally idiosyncratic or ill-considered factual conclusions by individual trial judges. About why this should more of a problem in family law than in other kinds of equity cases, or at least perceived as such by experienced practitioners in the field, the authors are not prepared to speculate. Moreover, the authors do not regard themselves qualified to assert that family law practitioners are wrong in placing the high value on de novo review they apparently do.
ABOUT THE AUTHORS
Maury Holland is Professor of Law and James O. and Alfred T. Goodwin Senior Fellow, University of Oregon, and Executive Director, Oregon Council on Court Procedures 1992-2005. Robert L. Sokol is an associate of Reinisch Mackenzie Healey Wilson & Clark, PC. The authors wish to acknowledge the important contribution which Prof. Leslie J. Harris, of the University of Oregon School of Law, made to the research for this article as described in endnote 11 below.
© 2006 Maury Holland and Robert L. Sokol