in submitting to the jury in a personal injury case the question as to whether the release set up as a bar was voidable for fraud or the incompetency of the deceased victim of the accident. It cannot be successfully contended that such procedure is peculiar to the New Hampshire district, for G. L. Mass. c. 231, § 35, expressly provides for like procedure in this district. It reads:

"The plaintiff may, in reply to a defense alleged by the defendant, allege any facts which would in equity avoid such defense or which would entitle the plaintiff to be absolutely and unconditionally relieved in equity against such defense."

But, apart from state statutes and local procedure, we are constrained to regard the Act of March 3, 1915 (Judicial Code, § 274b [Comp. St. § 1251b]), as requiring us to approve the procedure here adopted by the plaintiff.1

We think the words, "In all actions at law equitable defenses may be interposed by . . . replication, without the necessity of filing a bill on the equity side of the court," mean that when, as in the present case, a legal defense is set up in the answer, the plaintiff has by replication the same right to meet such legal defense by equitable reply as a defendant has to set up in his answer an equitable defense to a legal claim set up in the declaration. We cannot believe that Congress intended to prevent circuity of action when a defendant, sued at law, has an equitable defense, and did not intend to prevent circuity of action when a plaintiff needs to interpose a reply grounded on equity in order to meet a legal defense set up in the answer. We are aware that a majority of the Court of Appeals of the Second Circuit reached a different conclusion in Keatley v. U. S. Trust Co., 249 Fed. 296; but our views as to the scope and meaning of this statute accord with those of Judge Learned Hånd, who, dissenting, said:

"It seems to me that we should not construe so narrowly section 274b. The phrase, 'equitable defenses may be interposed by replication without the necessity of filing a bill on the equity side of the court,' can only mean, I think, this: that where the defendant interposes a bar valid at law, the plaintiff may set up in his next pleading facts avoiding the bar in equity. The suggestion is that it might give the plaintiff the right to plead to the defendant's 'equitable defenses' set up in the answer, but that is independently provided for in the fourth sentence of the act. Besides, the defendant's answer to a suit in equity cannot properly be said to be interposed by 'filing a bill on the equity side of the court,' which is the language .of the first sentence.

"So far as we may look to the purpose of the section I cannot think there is any doubt. Congress can hardly be thought to have any predilection for plaintiffs' suits in equity rather than defendants',

1 Here the court quoted the statute, p. 805, supra.

and we must leave a capricious exception in practice, if we do not include a case like this. I agree that the language of the section is not what a Mitford or a Langdell would have used; but the purpose seems to me perfectly plain, and we ought, I think, to try to effect it if we can.'

See, also, the Knickerbocker Trust Case, 247 Fed. 833, 837.

Defendant's contention that, so construed, the statute is unconstitutional, is plainly untenable. The decision in Scott v. Neely, 140 U. S. 106, so far as now pertinent, is merely to the effect that legal and equitable remedies cannot be so blended in equity suits as to impair the constitutional right to jury trial given by the Seventh Amendment. Stockbridge v. Mixer, 215 Mass. 415, is to the same effect. Compare State v. Saunders, 66 N. H. 39, 76, et seq. There is no constitutional guaranty of permanent circuity of action.

Whether issues of fact involved in such equitable relief should be submitted to a jury or determined by the court is, in our opinion, a question of judicial discretion. We are not able to accord with the view that the issue calling for equitable relief must first be tried by the court alone, sitting as a court of equity. Compare Union Pacific R. R. v. Syas, 246 Fed. 561. While the verdict of a jury may in the equitable issue be advisory only, yet when such issue is, as in this case, simple and one eminently fit for submission to a jury, we think the practice adopted in the Barrett and Knickerbocker Trust Cases, supra, is the preferable practice, and the one most consonant with the spirit and purpose of the statute. The statute is remedial, and should be liberally construed in favor of a single, direct, and speedy trial of all issues involved in the litigation.

We find it difficult to appreciate the importance apparently attached by learned counsel to mere form of procedure in this case; for, even if we were required to sustain the defendant's contention against combining equitable relief in a law suit, the most that could result would be an order made under the provisions of Judicial Code, § 274a (Comp. St. § 1251a), to amend the present law suit into a bill in equity. It seems to us too plain for argument that, assuming such amendment, the plaintiff, on the allegations in these pleadings, would be entitled to a trial of the issue of fraud concerning his settlement with Burrage, and prevailing on such issue, to an account under the contract. Compare Reid v. Shaffer, 249 Fed. 553, and cases cited.1

[Reversed.] 2

1 The remainder of the opinion is omitted.

2 As to equitable replications in jurisdictions which allow equitable "defenses" by statute, see Nelson v. Chesapeake Constr. Co., 159 Md. 20, 24 (1930). Cf. McIsaac v. McMurray, 77 N. H. 466, 470 (1915).

LIBERTY OIL CO. v. CONDON NATIONAL BANK.

SUPREME COURT OF THE UNITED STATES. 1922.

260 United States 235.

CERTIORARI to the Circuit Court of Appeals for the Eighth Circuit. This suit was begun as an action at law in the District Court of Kansas by the Liberty Oil Company, a corporation organized under the laws of Virginia, and a citizen of that State, against the Condon National Bank, a corporation organized under the banking laws of the United States and resident and doing business in Kansas. Plaintiff by its petition averred that it had made a contract with the Atlas Petroleum Company of Oklahoma, C. M. Ball, Isadore Litman, P. G. Keith and J. H. Keith, residents of Kansas, by which it agreed to purchase and they agreed to sell 160 acres more or less of oil lands in Butler County, Kansas, for $1,150,000. By the contract, the purchaser was required to deposit $100,000 with the Liberty National Bank simultaneously with a deposit of the contract, and this sum, together with the assignments, transfers and conveyances under the contract, was to be held by the bank and by it to be delivered in accordance with the conditions of the contract. The main conditions, and the only ones here material, were that the vendors should furnish an abstract of the title to the property contracted to be sold showing a good and marketable title in them, that the vendee should have seven days in which to examine the abstract, and that if its examination should show a good and marketable title, the vendee should pay the bank $1,050,000, the remainder of the purchase money, and the bank should deliver the deeds of assignments and transfers to the vendee and the vendor should deliver possession of the land. If the examination showed a good and marketable title and the vendee should refuse to pay the money then due from it, the $100,000 was to be delivered to the vendors as liquidated damages and the contract was to become null and void. In the event that the examination should disclose that the title was not good and marketable, the vendee was to notify the vendors and they were to have thirty days in which to perfect the title and should they neglect in that time to do so, the $100,000 on deposit was to be returned to the vendee and the contract was to become null and void.

The petition averred that the money and the contract were deposited in the defendant bank, that the abstract of title was submitted, that an examination of the abstract submitted showed that the title of the vendors was not good and marketable, in that in the chain of title the vendors claimed under the deed of an assignee for the benefit of creditors filed in a Colorado court and taking effect. by the laws of that State but never authorized or confirmed by a court of competent jurisdiction under the laws of Kansas as required

by the law of the latter State, that this defect was not remedied by the vendors within the time required by the contract, and on July 11, 1918, the plaintiff duly notified the defendant bank of this and demanded payment of the money deposited, that the defendant refused and appropriated the sum to its own use to the damage of the plaintiff in the sum of $100,000 and interest at six per cent. from the date of the demand and refusal.

The defendant bank answered admitting all the facts averred in the petition except those as to the character of the title shown by the abstract, and alleged that the vendors in the contract of sale had also demanded that the deposit of $100,000 be paid to them on the ground that the vendee had refused without right to accept a good and marketable title to the land sold, that the defendant bank had no interest in the deposit and offered to pay the sum into court or to such person as the court should order. The defendant asked that the vendors be made parties and required to set up their claim to the deposit, that the court make proper order as to the disposition of the money, and that the defendant upon compliance with the order be discharged from all liability in connection therewith. The court granted the prayer of the answer and "ordered, adjudged and decreed" that vendors be made parties, and set up their claim within. twenty days. The vendors waived summons and filed an answer and cross petition in which they averred that the petition of the plaintiff did not state a cause of action, and denied as much of the petition as averred that there were defects in the abstract of title which prevented it from being good and marketable. By the cross petition they asked for the payment of the $100,000 deposit and also a judgment for $1,050,000 as the purchase price for the land, title to which they had tendered, and for general relief. This cross petition the plaintiff answered making the same issue as that in the petition and answer. A jury was waived in writing. A bill of exceptions was taken embodying all the evidence, which was signed by the judge, and the same evidence was included in a transcript also certified to by the judge.

The District Court on the evidence found generally for the vendors, and from its opinion it appeared that it found the title good and marketable, and that upon plaintiff's refusal to accept the same the vendors became entitled to the $100,000 as liquidated damages. Accordingly it was "considered, ordered and adjudged" that the vendors, interveners, recover $10,750.00 as interest on the $100,000 from June 30, 1918, that the Condon Bank, defendant, be discharged from further liability, and that the interveners have judgment for the $100,000 then in the registry of the court. There is nothing in the record to show that the defendant bank was dismissed until this final judgment, although, under some authority not made a matter of record, it had turned the money into the registry of the court.

An appeal was taken to the Circuit Court of Appeals and a su

persedeas bond given. The Circuit Court of Appeals held that the action was a suit at law, that under § 4 of the Act of September 6, 1916, c. 448, 39 Stat. 727, to amend the Judicial Code, it had the power and it was its duty to consider the appeal taken as a writ of error, and that as the bill of exceptions showed no special findings of fact in a cause in which a jury had been waived but only a general finding for the interveners, it was not within the power of the court in a law case to consider the sufficiency of the evidence to sustain the finding. It therefore affirmed the judgment of the District Court. • A certiorari brings the case here for consideration.

MR. CHIEF JUSTICE TAFT, after stating the case, delivered the opinion of the Court.

We differ with the Circuit Court of Appeals in its holding that, as brought in review before it, this cause was an action at law. We think the cause was then equitable and the proper review was by appeal. The case began as an action at law for money had and received. When the defendant bank claimed to be only a stakeholder of the deposit, disclaimed interest therein and offered to pay it into court, and asked that the other claimants of the fund be made parties, its answer and cross petition became an equitable defense and a prayer for affirmative equitable relief in the nature of a bill for interpleader. Section 274b of the Judicial Code as amended by Act of March 3, 1915, c. 90, 38 Stat. 956, provides:

"That in all actions at law equitable defenses may be interposed by answer, plea, or replication without the necessity of filing a bill on the equity side of the court. The defendant shall have the same rights in such case as if he had filed a bill embodying the defense of [sic] seeking the relief prayed for in such answer or plea. Equitable relief respecting the subject matter of the suit may thus be obtained by answer or plea. In case affirmative relief is prayed in such answer or plea, the plaintiff shall file a replication. Review of the judgment or decree entered in such case shall be regulated by rule of court. Whether such review be sought by writ of error or by appeal the appellate court shall have full power to render such judgment upon the records as law and justice shall require."

This section applies to the case before us. The proceeding was changed by defendant's answer and cross petition from one at law to one in equity, with all the consequences flowing therefrom. The better practice would perhaps have been, on the defendant's filing its answer and cross petition, to order the cause transferred to the equity side of the court. Under Equity Rule No. 22, a suit in equity which should have been brought at law must be transferred to the law side of the court. There is no corresponding provision in rule or statute which expressly directs this to be done when the action begun at law should have been by a bill on the equity side, but we think the power of the trial court to order a transfer in a case like this is implied from