## Facts

- Kansas City Life Insurance Company loaned \$450,000 to the Colclasures, evidenced by an installment promissory note and secured by a mortgage on the borrowers’ farm.
- The Colclasures defaulted on an annual installment payment.
- The lender accelerated the debt, demanded payment, and filed a foreclosure action in chancery court.
- The borrowers filed an answer in chancery and separately sued in circuit court, alleging the lender represented a prospective buyer could assume the loan but later refused to allow an assumption.
- The borrowers sought to transfer the foreclosure action to circuit court, consolidate the cases, and obtain a jury trial.
- The trial court consolidated the matters in chancery, treated the circuit complaint as a counterclaim in the foreclosure case, and denied a jury trial.
- The day before trial, the borrowers moved for default judgment; notice to the lender’s counsel was served on the day of trial.
- The chancery court denied default judgment, entered judgment for the lender on the debt, and ordered foreclosure sale if the judgment was not paid within 20 days.

## Issues

1. Whether borrowers have a right to a jury trial in a mortgage-foreclosure proceeding where the court also enters an in personam money judgment.
2. Whether the chancery court erred by denying a motion for default judgment when notice was served on the day of the application.

## Decision

- Affirmed.
- Mortgage foreclosure is an equitable proceeding, and the addition of an in personam money judgment does not convert it into a jury-triable action at law.
- The Arkansas Rules of Civil Procedure do not create a jury-trial right where none existed at common law.
- The chancery court properly resolved the borrowers’ related legal claims under the clean-up doctrine after acquiring equity jurisdiction over foreclosure.
- The Seventh Amendment did not require a jury trial in this state equity proceeding.
- The default-judgment motion was properly denied because Arkansas Rule of Civil Procedure 55(b) required at least three days’ notice, and notice was not served until the day of trial.

## Legal Principles

- Mortgage foreclosure is an equitable proceeding under Arkansas common law.
- The state constitutional right to jury trial extends only to actions that were triable to a jury at common law; foreclosure was not.
- Foreclosure remains equitable even when the court also enters an in personam money judgment on the underlying debt.
- Under the clean-up doctrine, once equity jurisdiction properly attaches, the court may decide incidental or related legal issues without a jury.
- The Seventh Amendment preserves jury trial only for common-law actions, does not apply to equity, and is not incorporated against the states through the Fourteenth Amendment.
- Under Arkansas Rule of Civil Procedure 55(b), a party seeking default judgment against an appearing opponent must provide at least three days’ notice; failure to do so warrants denial.

## Conclusion

The court upheld chancery jurisdiction and the denial of a jury trial because foreclosure is an equitable action even when accompanied by a personal money judgment, and it affirmed denial of default judgment because the borrowers failed to provide the three-day notice required by Rule 55(b).


Colclasure v. Kansas City Life Ins. Co., 290 Ark. 585, 720 S.W.2d 916 (1986)