Equity (law)
In jurisdictions following the English common law tradition, equity is the set of legal
principles that supplement strict rules of law where their application would operate
harshly. In civil legal systems, broad “general clauses” allow judges to have similar leeway
in applying the code.
Equity is commonly said to “mitigate the rigor of common law”, allowing courts to use
their discretion and apply justice in accordance with natural law. In practice, modern
equity is limited by substantive and procedural rules, and English and Australian legal
writers tend to focus on technical aspects of equity. There are 12 “vague ethical
statements”, known as the Maxims of equity,that guide the application of equity, and an
additional five can be added.
As noted below, a historical criticism of equity as it developed was that it had no fixed
rules of its own, with the Lord Chancellor occasionally judging in the main according to
his own conscience. The rules of equity later lost much of their flexibility, and from the
17th century onwards equity was rapidly consolidated into a system of precedents much
like its common-law cousin.
History
Equity was developed two or three hundred years after common law as a system to resolve
disputes where damages are not a suitable remedy and to introduce fairness into the legal
system. The distinction between “law” and “equity” is an accident of history. The law
courts or “courts of law” were the courts in England that enforced the king’s laws in
medieval times. Here the King’s Judges, educated in law rather than theology, administered
the universal law of the realm.This body of law evolved on the basis of previously set
precedent into what is recognised as the Common law of England. However, if changes
were not quick enough, or if decisions by the judges were regarded as unfair, litigants
could still appeal directly to the King, who, as the sovereign, was seen as the ‘fount of
justice’ and responsible for the just treatment of his subjects. Such filings were usually
phrased in terms of throwing oneself upon the king’s mercy or conscience. Eventually, the
king began to regularly delegate the function of resolving such petitions to the Chancellor,
an important member of the King’s Council. The early Chancellors were often clergymen
or nobles, acting as the King’s confessor and thereby literally as keeper of the King’s
conscience. As a result of their theological and clerical training, Chancellors were well
versed in the Latin and French languages as well as in classical Roman civil and canon
law, which heavily influenced equity. Soon the Chancery, the Crown’s secretarial
department, began to resemble a judicial body and became known as the “Court of
Chancery”.
By the 15th century, the judicial power of Chancery was recognized. Equity, as a body of
rules, varied from Chancellor to Chancellor, until the end of the 16th century. After the end
of the 17th century, only lawyers were appointed to the office of Chancellor.
One area in which the Court of Chancery assumed a vital role was the enforcement of uses,
a role which the rigid framework of land law could not accommodate. This role gave rise
to the basic distinction between legal and equitable interests.
Development of equity in England
It was early provided that, in seeking to remove one who wrongfully entered another’s land
with force and arms, a person could allege disseisin (dispossession) and demand (and pay
for) a writ of entry. That writ not only gave him the written right to re-enter his own land,
but it also established this right under the protection of the Crown if need be, whence its
value. In 1253, to prevent judges from inventing new writs, Parliament provided that the
power to issue writs would thereafter be transferred to judges only one writ at a time, in a
“writ for right” package known as a form of action. However, because it was limited to
enumerated writs for enumerated rights and wrongs, the writ system 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. Therefore, lacking a legal remedy,
the plaintiff’s only option would be petitioning the King.
People started petitioning the King for relief against unfair judgments and as the number of
petitioners rapidly grew, the King delegated the task of hearing petitions to the Lord
Chancellor. As the early Chancellors had no formal legal training, and were not guided by
precedent, their decisions were often widely diverse. However, in 1529 a lawyer, Sir
Thomas More, was appointed as Chancellor, marking the beginning of a new era. After
this time, all future Chancellors were lawyers, and from around 1557 onwards, records of
proceedings in the Courts of Chancery were kept, leading to the development of a number
of equitable doctrines. Criticisms continued, the most famous being 17th century jurist
John Selden’s aphorism: ‘Equity is a roguish thing: for law we have a measure, know what
to trust to; equity is according to the conscience of him that is Chancellor, and as that is
larger or narrower, so is equity. ‘Tis all one as if they should make the standard for the
measure we call a foot, a Chancellor’s foot; what an uncertain measure would this be? One
Chancellor has a long foot, another a short foot, a third an indifferent foot: ‘tis the same
thing in a Chancellor’s conscience.’
As the law of equity developed, it began to rival and conflict with the common law.
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 ‘common injunction’ and enforcing a common law judgment was imprisonment.
The Chief Justice of the King’s Bench, Sir Edward Coke, began the practice of issuing
writs of habeas corpus that required the release of people imprisoned for contempt of
chancery orders.
This tension grew to an all-time high in the Earl of Oxford’s case (1615), where a
judgment of Chief Justice Coke was allegedly obtained by fraud. The Lord Chancellor,
Lord Ellesmere, issued a common injunction out of 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 common injunction and concluded that
in the event of any conflict between the common law and equity, equity would prevail.
Equity’s primacy 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 (although emphatically not the
systems themselves) into one unified court system.
Once equity became a body of law, rather than an arbitrary exercise of conscience, there
was no reason why it needed its own courts. Consequently the Judicature Act was
established, which is the basis of the court structure in England to this date, to ensure that
there would no longer be different procedures for seeking equitable and common law
remedies. The Judicature Acts fused only the administration of common law and equity;
there is still a body of rules of equity which is quite distinct from that of common law
rules, and acts as an addition to it. Although they are implemented by the same courts, the
two branches of the law are separate. Where there is conflict, equity still prevails.
Statute of Uses 1535
In order to avoid paying land taxes and other feudal dues, lawyers developed a primitive
form of trust called ‘the use’. This trust enabled one person (who was not required to pay
tax) to hold the legal title of the land for the use of another person. The effect of this trust
was that the first person owned the land under the common law, but the second person had
a right to use the land under the law of equity.
Henry VIII enacted the Statute of Uses in 1535 (which became effective in 1536) in an
attempt to outlaw this practice and recover lost revenue. The Act effectively made the
beneficial owner of the land the legal owner, and liable for feudal dues.
The response of the lawyers to this Statute was to create the ‘use upon a use’. The Statute
recognised only the first use, and so land owners were again able to separate the legal and
beneficial interests in their land.
For an example, see Godwyne v. Profyt (after 1393): a petition to the Chancellor
United States
In modern practice, perhaps the most important distinction between law and equity is the
set of remedies each offers. The most common civil remedy a court of law can award is
monetary damages. Equity, however, enters injunctions or decrees directing someone
either to act or to forbear from acting. Often this form of relief is in practical terms more
valuable to a litigant; for example, a plaintiff whose neighbor will not return his only milk
