## Facts

- A receiver sued in federal district court to recover an unpaid balance for coal sold and delivered, supported by a lengthy schedule of account items.
- The defendant largely admitted the listed items but asserted additional deliveries, payments, and allowances, and filed a counterclaim for damages based on alleged failures to perform coal contracts.
- After a demand for particulars, the defendant submitted schedules containing more than 200 items offered in defense.
- Over the plaintiff’s objection, the district judge appointed an auditor to investigate, hear witnesses, examine accounts, and file a report intended to simplify issues for the jury, while leaving final factfinding to the jury.
- The order contemplated that the auditor would separate disputed from undisputed items and state opinions on certain disputed deductions and allowances; the auditor could compel witness attendance and administer oaths.
- The order directed that the auditor’s fees and stenographer expenses be paid by one or both parties as later determined by the trial judge.
- The plaintiff sought extraordinary writs (mandamus/prohibition), arguing the appointment exceeded the court’s power, infringed the Seventh Amendment jury-trial right, and improperly treated auditor and stenographer expenses as taxable, apportionable costs.

## Issues

1. Whether a federal district court may, without party consent, appoint an auditor in an action at law to simplify issues and make a report (including opinions on disputed items) that may be treated as prima facie evidence, consistent with the Seventh Amendment.
2. Whether, absent controlling legislation or rules, a federal district court has inherent authority at law to order a compulsory reference to an auditor to clarify issues and make tentative findings.
3. Whether an auditor’s fees and stenographer expenses may be taxed as costs, and whether such costs may be apportioned against the party who ultimately prevails.
4. Whether any error in the cost component justified relief by mandamus or prohibition.

## Decision

- The Supreme Court denied the petition and discharged the rule.
- The Court held that a federal district court has inherent authority, in a complicated law action involving numerous items of account, to appoint an auditor without the parties’ consent to assist the court and jury by separating items and making tentative findings.
- The Court held that the auditor procedure, including use of the report as prima facie evidence subject to court control and full adversarial testing at trial, does not deprive a party of the Seventh Amendment right to trial by jury.
- The Court held that, absent a statute or rule excluding them, auditor fees and stenographer expenses are taxable as costs in a law action.
- The Court stated that federal practice at law does not permit taxing such costs in whole or part against the prevailing party through apportionment; however, it declined to correct any such error through extraordinary writs because adequate remedies existed in the trial court or on review after final judgment.

## Legal Principles

- Federal district courts possess inherent power, in the absence of controlling congressional enactments, to adopt reasonable procedures necessary to manage complex litigation, including compulsory reference to an auditor in actions at law.
- Appointment of an auditor to examine records, hear testimony, compute figures, and report findings to simplify issues for the jury is permissible when it aids—rather than replaces—the jury’s ultimate factfinding role.
- A procedure does not violate the Seventh Amendment merely because it departs from historic forms; the constitutional requirement is preservation of the substance of jury trial, not retention of all prior procedural mechanisms.
- An auditor’s report may be treated as prima facie evidence if the court retains supervisory control and the parties remain free to present and challenge evidence before the jury.
- Auditor fees and related stenographic expenses may be taxable as costs unless excluded by statute or rule, but trial courts at law lack power to apportion costs against the prevailing party under the governing federal cost rule.
- Mandamus and prohibition are inappropriate to correct cost-allocation errors when an adequate remedy exists through ordinary trial-court application or appellate review after final judgment.

## Conclusion

The Court sustained a district court’s authority to appoint an auditor in a complex action at law as an aid to the jury and court, holding that such a reference and use of a prima facie report do not obstruct the Seventh Amendment, and that auditor-related expenses are taxable as costs though not apportionable against the party who ultimately prevails.


In re Peterson, 253 U.S. 300 (1920)