Equity (law)
In the field of jurisprudence, equity is the particular body of law, developed in the English Court of Chancery, with the general purpose of providing legal remedies for cases wherein the common law is inflexible and cannot fairly resolve the disputed legal matter. Conceptually, equity was part of the historical origins of the English common law system, yet is a field of law separate from common law because it has its own distinct rules and principles and was administered by courts of equity.
Equity exists in domestic law, both in civil law and in common law systems, as well as in international law. The tradition of equity begins in antiquity with the writings of Aristotle and with Roman law. Later, in civil law systems, equity was integrated in the legal rules, while in common law systems it became an independent body of law.
Equity in common law jurisdictions (general)
In jurisdictions following the English common law system, equity is the body of law which was developed in the English Court of Chancery and which is now administered concurrently with the common law.For much of its history, the English common law was principally developed and administered in the central royal courts: the Court of King's Bench, the Court of Common Pleas, and the Exchequer. Equity was the name given to the law which was administered in the Court of Chancery. The Judicature Acts of the 1870s effected a procedural fusion of the two bodies of law, thereby ending their institutional separation. The reforms did not fuse the actual bodies of law however. As an example, this lack of fusion meant it was still not possible to receive an equitable remedy for a purely common law wrong. Judicial or academic reasoning which assumes the contrary has been described as a "fusion fallacy".
Jurisdictions that have inherited the common law system differ in their treatment of equity. Over the course of the twentieth century some common law systems began to place less emphasis on the historical or institutional origin of substantive legal rules. In England and Wales, Australia, New Zealand, and Canada, equity remains a distinct body of law. Modern equity includes, among other things:
- the law relating to express, resulting, and constructive trusts;
- fiduciary law;
- equitable estoppel ;
- relief against penalties and relief against forfeiture;
- the doctrines of contribution, subrogation and marshalling; and
- equitable set-off.
For most purposes, the U.S. federal system and most states have merged the two courts.
The latter part of the twentieth century saw increased debate over the utility of treating equity as a separate body of law. These debates were labelled the "fusion wars". A particular flashpoint in this debate centred on the concept of unjust enrichment and whether areas of law traditionally regarded as equitable could be rationalised as part of a single body of law known as the law of unjust enrichment.
History of equity in common law jurisdictions
After the Norman Conquest of England in the 11th century, royal justice came to be administered in three central courts: the Court of King's Bench, the Court of Common Pleas, and the Exchequer. The common law developed in these royal courts, which were created by the authority of the King of England, and whose jurisdiction over disputes between the King's subjects was based upon the King's writ. Initially, a writ was probably a vague order to do right by the plaintiff, and it was usually a writ of grace, issued at the pleasure of the King.During the 12th and 13th centuries, writ procedure gradually evolved into something much more rigid. All writs to commence actions had to be purchased by litigants from the Chancery, the head of which was the Lord Chancellor. After writs began to become more specific and creative, Parliament responded in 1258 by providing in the Provisions of Oxford that the Chancellor could no longer create new writs without permission from the King and the King's Council. Pursuant to this authorization, litigants could purchase certain enumerated writs de cursu which later became known as writs ex debito justitiae. Each of these writs was associated with particular circumstances and led to a particular kind of judgment. Procedure in the common law courts became tightly focused on the form of action, rather than what modern lawyers would now call the cause of action.
Because the writ system was limited to enumerated writs for enumerated rights and wrongs, it sometimes produced unjust results. Thus, even though the King's Bench might have jurisdiction over a case and might have the power to issue the perfect writ, the plaintiff might still not have a case if there was not a single form of action combining them. Lacking a legal remedy, the plaintiff's only option would be to petition the King.
Litigants began to seek relief against unfair judgments of the common law courts by petitioning the King. Such petitions were initially processed by the King's Council, which itself was quite overworked, and the Council began to delegate the hearing of such petitions to the Lord Chancellor. This delegation is often justified by the fact that the Lord Chancellor was literally the Keeper of the King's Conscience, although Francis Palgrave argued that the delegation was initially driven by practical concerns and the moral justification came later. The moral justification went as follows: as Keeper of the King's Conscience, the Chancellor "would act in particular cases to admit 'merciful exceptions' to the King's general laws to ensure that the King's conscience was right before God". This concern for the King's conscience was then extended to the conscience of the defendant in Chancery, in that the Chancellor would intervene to prevent "unconscionable" conduct on the part of the defendant, in order to protect the conscience of the King.
By the 14th century, it appears that Chancery was operating as a court, affording remedies for which the strict procedures of the common law worked injustice or provided no remedy to a deserving plaintiff. Chancellors often had theological and clerical training and were well versed in Roman law and canon law. During this era, the Roman concept of aequitas influenced the development of the distinctly different but related English concept of equity: "The equity administered by the early English chancellors ... confessedly borrowed from the aequitas and the judicial powers of the Roman magistrates." By the 15th century, the judicial power of Chancery was clearly recognised.
Early Chancery pleadings vaguely invoked some sort of higher justice, such as with the formula "for the love of God and in way of charity". During the 15th century, Chancery pleadings began to expressly invoke "conscience", to the point that English lawyers in the late 15th century thought of Chancery as a court of "conscience", not a court of "equity". However, the "reasoning of the medieval chancellors has not been preserved" as to what they actually meant by the word "conscience", and modern scholars can only indirectly guess at what the word probably meant. The publication of the treatise The Doctor and Student in the early 16th century marked the beginning of Chancery's transformation from a court of conscience to a court of equity.
Before that point in time, the word "equity" was used in the common law to refer to a principle of statutory interpretation derived from aequitas: the idea that written laws ought to be interpreted "according to the intention rather than the letter" of the law. What was new was the application of the word "equity" to "the extraordinary form of justice administered by the chancellor", as a convenient way to distinguish Chancery jurisprudence from the common law.
A common criticism of Chancery practice as it developed in the early medieval period was that it lacked fixed rules, varied greatly from Chancellor to Chancellor, and the Chancellor was exercising an unbounded discretion. The counterargument was that equity mitigated the rigour of the common law by looking to substance rather than to form.
The early chancellors were influenced by their training in theology and canon law, but the law of equity they applied was not canon law, but a new kind of law purportedly driven by conscience. Whatever it meant in the medieval era, the word "conscience" clearly carried a subjective connotation. Complaints about equity as an arbitrary exercise of conscience by nonlawyer Chancellors became quite frequent under the chancellorship of Thomas Wolsey, who "had no legal training, and delighted in putting down lawyers".
In 1546, Chancellor Thomas Wriothesley, a nonlawyer, was accused of trying to inject the civil law into Chancery. This was a "wild exaggeration", but as a result, the Crown began to transition away from clergy and nonlawyers and instead appointed only lawyers trained in the common law tradition to the position of Lord Chancellor. The last person without training in the common law before 2016 to serve as Lord Chancellor was Anthony Ashley Cooper, 1st Earl of Shaftesbury, who served briefly from 1672 to 1673.
The development of a court of equity as a remedy for the rigid procedure of the common law courts meant it was inevitable that the two systems would come into conflict. Litigants would go "jurisdiction shopping" and often would seek an equitable injunction prohibiting the enforcement of a common law court order. The penalty for disobeying an equitable injunction and enforcing an unconscionable common law judgment was imprisonment.
The 1615 conflict between common law and equity came about because of a "clash of strong personalities" between Lord Chancellor Ellesmere and the Chief Justice of the King's Bench, Sir Edward Coke. Chief Justice Coke began the practice of issuing writs of habeas corpus that required the release of people imprisoned for contempt of chancery orders. This tension reached a climax in the Earl of Oxford's case where a judgment of Chief Justice Coke was allegedly obtained by fraud. Chancellor Ellesmere issued an injunction from the Chancery prohibiting the enforcement of the common law order. The two courts became locked in a stalemate, and the matter was eventually referred to the Attorney General, Sir Francis Bacon. Sir Francis, by authority of King James I, upheld the use of the equitable injunction and concluded that in the event of any conflict between the common law and equity, equity would prevail.
Chancery continued to be the subject of extensive criticism, the most famous of which was 17th-century jurist John Selden's aphorism:
After 1660, Chancery cases were regularly reported, several equitable doctrines developed, and equity started to evolve into a system of precedents like its common law cousin. Over time, equity jurisprudence would gradually become a "body of equitable law, as complex, doctrinal, and rule-haunted as the common law ever was".
One indicator of equity's evolution into a coherent body of law was Lord Eldon's response to Selden in an 1818 chancery case: "I cannot agree that the doctrines of this court are to be changed with every succeeding judge. Nothing would inflict on me greater pain, in quitting this place, than the recollection that I had done anything to justify the reproach that the equity of this court varies like the Chancellor's foot."
Equity's primacy over common law in England was later enshrined in the Judicature Acts of the 1870s, which also served to fuse the courts of equity and the common law into one unified court system.