Maxims of EquityMaxims of Equity

 

1. EQUITY WILL NOT SUFFER A WRONG TO BE WITHOUT A REMEDY

 

Meaning

Where there is a right there is a remedy. This idea is expressed in the Latin Maxim ubi jus ibi remedium. It means that no wrong should go unredressed if it is capable of being remedied by courts. This maxim indicates the width of the scope and the basis of on which the structure of equity rests. This maxim imports that where the common law confers a right, it gives also a remedy or right of action for interference with or infringement of that right.

 

Application and cases

In Ashby v. White, wherein a qualified voter was not allowed to vote and who therefore sued the returning officer, it was held that if the law gives a man a right, he must have a means to maintain it, and a remedy, if he is injured in the enjoyment of it.

In cases where some document was with the defendant and it was necessary for the plaintiff to obtain its discovery or production, a recourse to the Chancery Courts had to be made for the Common Law becoming ‘wrongs without remedies’.

 

Limitation

a)   If there is a breach of a moral right only.

b)   If the right and remedy both were in within the jurisdiction of the Common Law Courts.

c)   Where due to his own negligence a party either destroyed or allowed to be destroyed, the evidence in his own favour or waived his right to an equitable remedy.

 

Recognition

i) The Trust Act

ii) Section 9 of CPC- entitles a civil court to entertain all kinds of suits unless they are prohibited.

iii) The Specific Relief Act- provides for equitable remedies like specific performance of contracts, injunction, declaratory suits.

 

 

2. EQUITY FOLLOWS THE LAW

 

Meaning

The maxim indicates the discipline which the Chancery Courts observed while administering justice according to conscience. As has been observed by Jekyll. M.R: ‘The discretion of the court is governed by the rules of law and equity, which are not to oppose, but each, in turn, to be subservient to the other.” Maitland said, “Thus equity came not to destroy the law but to fulfill it, to supplement it, to explain it .” The goal of equity and law is the same, but due to their nature and due to historic accident they chose different paths. Equity respected every word of law and every right at law but where the law was defective, in those instances, these Common Law rights were controlled by recognition of equitable Rights. Snell therefore explained this maxim in slightly different way: “Equity follows the law, but not slavishly, nor always.”

 

Application and cases

At common law, where a person died intestate who owned an estate in fee-simple, leaving sons and daughters, the eldest son was entitled to the whole of the land to the exclusion of his younger brothers and sisters. This was unfair, yet no relief was granted by Equity Courts. But in this case it was held that if the son had induced his father not to make a will by agreeing to divide the estate with his brothers and sisters, equity would have interfered and compelled him to carry out hi promise, because it would have been against conscience to allow the son to keep the benefit of a legal estate which he obtained by reason of his promise. This decision was held in Stickland v. Aldridge.

Equity follows the law and even if by analogy law can be followed, it should be followed.

 

Limitation

i) Where a rule of law did not specifically and clearly apply

ii) Where even by analogy the rule of law did not apply

 

Recognition

Bangladesh has not recognized the well-known distinction between legal and equitable interests. Equity rules in Bangladesh, therefore, cannot override the specific provisions of law. As for example, every suit in Bangladesh has to be brought within the limitation period and no judge can create an exception to this or can prolong the time-limit or stop the rule from taking effect on principles of equity. Such a decision was held in Indian Appa Narsappa Magdum case.

 

 

3. HE WHO SEEKS EQUITY MUST DO EQUITY

 

Meaning

The maxim means that to obtain an equitable relief the plaintiff must himself be prepared to do ‘equity’, that is, a plaintiff must recognize and submit to the right of his adversary. Scriptures of Islam also inform us to be conscientious:

“Woe to those who stint the measure:

Who when they take by measure from others, exact the full;

But when they mete to them or weigh to them, minish…”

 

Application and cases

This maxim has application in the following doctrines-

i) Illegal loans

ii) Doctrine of Election

iii) Consolidation of mortgages

iv) Notice to redeem mortgage

v) Wife’s equity to settlement

vi) Equitable estoppel

vii) Restitution of benefits on cancellation of transaction

viii) Set-off

 

i)      Illegal loans: In Lodge v. National Union Investment Co. Ltd.,the facts were as follows. One B borrowed money from M by mortgaging certain securities to him.

M was a unregistered money-lender. Under the Money-lenders’ Act, 1900, the contract was illegal and therefore void. B sued M for return of the securities. The court refused to make an order except upon the terms that B should repay the money which had been advanced to him.

 

ii)     Doctrine of election: Where a donor A gives his own property to B and in the same instrument purports to give B’s property to C, B will be put to an election, either accept the benefit granted to him by the donor and give away his own property to C or retain his own property and refuse to accept the property of A on condition. But B can not retain his property and at the same time take the property of A.

 

iii)    Consolidation of mortgages: Where a person has become entitled to two mortgages from the same mortgagor, he may consolidate these mortgages and refuse to permit the mortgagee to exercise his equitable right to redeem one mortgage unless the other is redeemed. The right of consolidation now exists in England but after the enactment of the Law of Property Act, 1925, it can exist only by express reservation in one of the mortgage deeds.

 

iv)    Notice to redeem mortgage: Notice to a mortgagor to redeem one’s mortgage is an equitable right of the mortgagor.

 

v)     Wife’s equity to a settlement: There was a time when woman’s property was merged with that of her husband. She had no property of her own. Equity court imposed on the husband that he must make a reasonable provision for his wife and her children. But, now, Under the Law Reform (Married Women and Tortfeasors) Act, 1935, married women has full right on her property and it is not consolidated with her husband’s property.

 

vi)    Equitable estoppel: A promissory estoppel arises where a party has expressly or impliedly, by conduct or by negligence, made a statement of fact, or so conducted himself, that another would reasonably understand that he made a promise thereon, then the party who made such promise has to carry out his promise.

 

vii)   Restitution of benefits on cancellation of transaction: It is proper justice to return the benefits of a contract which was voidable, and, equity enforced this principles in cases where it granted relief of rescission of a contract. A party can not be allowed to take advantage of his own wrong.

 

viii) Set-off:  Where there have been mutual credits, mutual debts or other natural dealings between the debtor and any creditor, the sum due from one party is to be set-off against any sum due from the other party, and only the balance of the account is to be claimed or paid on either side respectively.

 

Limitation

i) The demand for an equitable relief must arise from a suit that is pending.

ii) This maxim is applicable to a party who seeks an equitable relief.

 

Recognition

i) Under sec 19-A of the Contract Act, 1872 if a contract becomes voidable and the party who entered into the contract voids the contract, he has return the benefit of the contract.

ii) sec 35 of the Transfer of Property Act embodies the principle of election.

iii) Sec 51 and 54 of the Transfer of Property Act.

iv) In Order 8, Rule 6 of the CPC, the doctrine of Set-off is recognized.

 

 

4. HE WHO COMES INTO EQUITY MUST COME WITH CLEAN HANDS

 

Meaning

Equity demands fairness not only from the defendant but also from the plaintiff. It is therefore said that “he that hath committed an inequity, shall not have equity.” While applying this maxim the court believed that the behavior of the plaintiff was not against conscience before he came to the court.

 

Application and cases

In Highwaymen case, two robbers were partners in their own way. Due to a disagreement in shares one of them filed a bill against another for accounts of the profits of robbery. Courts of equity do grant relief in case of partnership but here was a case where the cause of action arose from an illegal occupation. So, the court refused to help them.

The working of this maxim could be seen while giving the relief of specific performance, injunction, rescission or cancellation.

 

Limitation

General or total conduct of the plaintiff is not to be considered. It will be seen whether he was of clean hands in the same suit he brought or not. Brandies J. in Loughran v. Loughran said that “Equity does not demand that its suitors shall have led blameless lives.”

 

Exception

i) If the transaction is a against public policy

ii) if the party repents for his conduct before his unjust plans are carried out.

 

Recognition

i) Section 23 of the Indian Trust Act- An infant can not setup a defence of the invalidity of the receipt given by him.

ii) Section 17, 18 and 20 of the Specific Relief Act, 1877- Plaintiff’s unfair conduct will disentitle him to an equitable relief of specific performance of the contract.

 

Distinction between maxim no. 3 and 4-

He who seeks equity must do equity He who comes into equity must come with clean hands

i) It is applicable when both the plaintiff and the defendant have claims of equitable relief against each other.

i) It is applicable when the defendant has no separate claim to relief and the plaintiff’s conduct is unfair.

ii) It exposes the condition subsequent to the relief sought.

ii) It is a condition precedent to seeking equitable relief.

iii) It refers to the plaintiff’s conduct as the court thinks it ought to be, after he comes to the court.

iii) It refers to the plaitiff’s conduct before he  approaches the court.

iv) The plaintiff has to mould his behavior according to the impositions by the court.

iv) If the plaintiff’s conduct is unfair, it would not entitle him to the relief sought.

v) The plaintiff has an option or a choice before him either to submit to the conditions put by the court, or to get

v) The conduct of the plaintiff snatched his choice from him. His equitable right therefore neither be recognized nor

out of the court. enforced.

vi) This maxim looks to the future. vi) This maxim looks at the past.

 

 

5. DELAY DEFEATS EQUITIES

 

Meaning

A Latin term in this regard is “Vigilantibus, non dormentibus, jura subvenient.” which means “Equity aids the vigilant and not the indolent”. So, if one sleeps on his rights, his rights will slip away from him. Legal claims are barred by statutes of limitation and equitable claims may be barred not only by limitation law but also by unreasonable delay, called laches.

 

Application and cases

To cases which are governed by statutes of limitation either expressly or by analogy the maxim will not apply. Such cases fall into three categories-

i) Those equitable claims to which the statute applies expressly.

ii) to which the statute applies by analogy.

iii) Equitable claims which are covered by ordinary rules of laches.

Doctrine of laches- Plaintiff’s unreasonable delay is a weapon of defence by the defendant against the plaintiff.

In a Bombay case, the plaintiff allowed his land to be occupied by the defendant and this was acquiesced  by him even beyond the period of limitation. On a suit of the land it was decided that as the period of limitation to recover possession had expired, no relief could  be granted. Also the case of Allcard v. Skinner is worth mentioning here.

 

Limitation

This maxim does not apply when-

i) where the law of limitation expressly applies

ii) where it applies by analogy, and

iii) where the law of limitation does not apply but the cases are governed by ordinary rules of laches.

 

Recognition

The English doctrine of delay and laches showing negligence in seeking relief in a court of equity can not be imported into the Bangladeshi law in view of Article 113 of the Limitation Act, 1908, which fixes a period of one year (previously three years) within which a suit for specific performance should be brought.

Section 51 of the Transfer of Property Act embodies this doctrine but with a difference.

 

 

6. EQUALITY IS EQUITY

 

Meaning

Plato defined that “If you cannot find any other, equality is the proper basis.” This maxim is also explained as “equity delighteth in equality”, which means that as far as possible equity would put the litigating parties on an equal level so far as their rights and responsibilities are concerned.

Justice Fry said, “When I say equality, I do not mean equality in its simplest form, but which has been sometimes called proportionate equity.”

 

Application and cases

Application of this maxim can be understood from the following:

i)    Equity’s dislike for joint tenancy and presumption of tenancy-in-common

ii)   Equal distribution of joint funds and joint purchases

iii)   Contribution between co-trustees, co-sureties and co-contractors

iv) Ratable distribution of legacies

v)   Marshalling of assets

 

 

7. EQUITY LOOKS TO THE INTENT RATHER THAN THE FORM

 

Meaning

 

Common law was very rigid and inflexible. It could not respond favourably to the demand of time. It regarded the form of a transaction to be more important than its substance. It looked to the very letter of the agreement and not the intention behind it. On the other hand, Equity looks to the spirit not to the letter, it looks to the intention of parties and not to the words.

 

Application and cases

In case of sale of land, if a party fails to complete it within the fixed for it, he is at Common Law, in breach of the contract, but equity does not take this rigid attitude. It allows a reasonable time to the party to complete it.

The application can be seen in the following instances-

i)    Relief against penalties and forfeitures

ii)   Relief in regard to precatory trust

iii)   Relief in regard to mortgages, the doctrine of equity of redemption and the doctrine of clogs on redemptions

iv) Attitude in regard to statute of frauds.

 

i) Relief against penalties and forfeitures- Common Law courts insisted on the literal form of the contract that if the contract is breached, certain amount must be given as compensation, though the actual loss is not that much. Equity interpret the purpose and intent of the contract itself. The principal object of the contract is to perform it and not the compensation. The compensation is a subsidiary matter.

 

ii) Precatory trust- A trust is created with- (1) an intention on his part to create a trust thereby, (2) the purpose of the trust, (3) the beneficiary, and (4) the trust property. Where an author uses words such as ‘I hope’, ‘I request’ or ‘I recommend’ the first condition is missing. In cases where subsequent ingredients are found, in early days, it was held by the equity courts that he had the intention. This view is in use now but not as liberally as before.

 

iii) Relief in regard to mortgages- The mortgagor has a right to obtain his property back by payment of the debt and that is his right of redemption. The mortgagor’s right of

redemption is guarded by courts and this has been expressed in a well-known legal maxim, “Once a mortgage, always a mortgage, and nothing but a mortgage”.

iv) Attitude in regard to statute of frauds-

 

Recognition

i) Sec 55 of the Contract Act- If time is the essence of the contract, and it is not performed within the stipulated time, the contract or part of it which is unperformed would be voidable. If time is not theessence, the contract will not be voidable but entitles the promisee to damages.

ii) Section 74 of the Contract Act- only a reasonable compensation can be claimed.

iii) Sec 114-A of the Transfer of Property Act- Forfeiture clauses in a lease.

 

 

8. EQUITY LOOKS ON THAT AS DONE WHICH OUGHT TO BE DONE

 

Meaning

If someone undertakes an obligation for the other, equity courts look on it as done and as producing the same results as if the obligation had been actually performed. Equity courts therefore look to the acts of the person bound by his conscience and interpret and construe them in such a way that they amount to what ought to be done.

 

Application and cases

If A makes T trustee leaving 50,000 Taka to purchase a land for the use of B. T does not purchase the land and by the time, B dies leaving all immovable property to X and all movable property to Y. Now, who should get the 50,000 Taka? Equity in such cases would definitely regard the purchase of land which ought to have been made as made. The money thus goes to X.

The working of this maxim can be seen-

i) the doctrine of conversion

ii) Executory contracts

iii) doctrine of part performance

 

i)   Doctrine of conversion- In the case of Lachmere v. Lady Lachmere, money was taken as land. Doctrine of conversion can convert the money into immovable property and immovable property into money.

ii) Executory contracts-

(a) Assignment of future property: When an assignment of property was made for consideration equity treated it as a contract to assign. When the property came into existence in such a contract it was treated as a complete assignment. As a leading case on this point, Holroyd v. Marshall can be cited.

(b)  Agreement for a transfer: In Walsh v. Lonsdale, it was decided that an agreement for lease could be treated as a lease in equity.

iii) Doctrine of part performance: Under the equitable doctrine of part performance contracts pertaining to land were allowed to be formed by oral evidence  where one of the parties did acts of pats performance. Maddison v. Alderson is a leading case on this point.

 

Recognition

Many of the doctrines of English equity have taken statutory form inBangladesh. Insofar as equitable assignments are concerned no equitable estate is recognized in Bangladesh. A transfer of future property for consideration operates as a contract to be performed in future.

i) The Transfer of Property Act- A Contracts to sell Sultanpur to B. While the contract is still in force, he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A.

ii) The Specific Relief Act- Section 12 relating to the specific performance of part of a contract also illustrates the application of the maxim.

iii) The Trust Act- Where a person acquires property with notice that another person has entered into an existing contract affecting that property, the former must hold the property for the benefit of the latter.

 

 

9. EQUITY IMPUTES AN INTENTION TO FULFILL AN OBLIGATION

 

Meaning

Equity considered and estimated acts of parties. Thus where a person is under an obligation to do a certain act, and he does some other act which is capable of being

regarded as an act in fulfillment of his obligation. In other words a person is presumed to do what he is bound to do.

In Sowden v. Sowden, a husband covenanted with the trustee of his marriage settlement to pay to them £50,000 to be laid out by them in purchase of land in a particular area D. He, in fact, never paid the sum, but after marriage purchased the land at D in his own name, for £50,000. He died and could not bring the land into settlement. Equity courts construed that he purchased land to fulfill his obligation.

 

Application and cases

i) Doctrine of performance and satisfaction

ii) Ademption

iii) Doctrine of presumption of advancement

iv) Relief against defective execution of power of appointment.

 

i) Doctrine of performance and satisfaction- Sowden v. Sowdenand Lachmere v. Lady Lachmere cases are examples of performance. Satisfaction is the donation of a thing with it is to be taken in extinguishment of some prior claim of donee. This maxim is helpful where the presumed intention of the testator is to be found out; where the intention is express the maxim has no application.

ii) Ademption- Ademption is a transfer of property which operates as a complete or pro tanto substitution for a gift previously made by the will of the donor.

e.g. X by his will leaves his daughter Y one-third of his residuary estate. Thereafter on Y’s marriage X gives Y 20,000 Taka. X dies. 20,000 Taka is an ademption -complete or proportionately to the gift of one-third share of the residuary estate of X.

iii) Presumption of advancement- When a purchase or transfer of property without consideration is made by a father or a person in loco parentis, to or in the name of a child, a presumption arises. And the presumption is that it was for the benefit of the child. Such presumption, is known as ‘advancement’. The doctrine applies to cases of parent and child, husband and wife, of mother and child and even to illegitimate child, but not to a man and his mistress.

iv) Relief against defective execution of power of appointment- A power is an authority vested in a person to deal with or dispose of property not his own. A power may be legal or equitable but after 1925 all powers of appointment are necessarily equitable.

e.g. A holds 50,000 Taka upon trust to divide among a certain class of persons. A has no option is this matter He is bound to carry out the trust. On his failing to do so, the court will see that the property is duly divided.

A defective execution will always be aided in equity under the circumstances mentioned, it being the duty of every man to pay his debts, and a husband or a father to provide for child.

 

Recognition

i) The Succession Act- Presumption against satisfaction is mentioned here. In Hasanali v. Popatal, a testator, who had a sum of Rs 9000 as deposit from his brother, gave to is brother a legacy of Rs 9000 and it was held that the brother was entitled to both, the legacy and his deposit. But as decided in Rajmanuar case where a will contained a clear indication that the legacy was meant as a satisfaction of the debt due to X, X could not claim both as the section explains.

ii) The Trust Act- Where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract. Equity thus imputes an intention to fulfill an obligation.

The twelve equitable maxims are:

1. Equity will not suffer a wrong without a remedy.

2. Equity follows the law.

3. Where there is equal equity, the law shall prevail.

4. Where the equities are equal, the first in time shall prevail.

5. He who seeks equity must do equity.

6. He who comes into equity must come with clean hands.

7. Delay defeats equities.

8. Equality is equity.

9. Equity looks to the intent rather than the form.

10. Equity looks on that as done which ought to be done.

11. Equity imputes an intention to fulfil an obligation.

12. Equity acts in personam.

Equity sees that as done what ought to be done

This maxim means that when individuals are required, by their agreements or by law, to perform

some act of legal significance, equity will regard that act as having been done as it ought to have

been done, even before it has actually happened. This makes possible the legal phenomenon

of equitable conversion. Sometime this is phrased as "equity regards as done what should have

been done".

The consequences of this maxim, and of equitable conversion, are significant in their bearing on

the risk of loss in transactions. When parties enter a contract for a sale of real property, the buyer

is deemed to have obtained an equitable right that becomes a legal right only after the deal is

completed.

Due to his equitable interest in the outcome of the transaction, the buyer who suffers a breach

may be entitled to the equitable remedy of specific performance (although not always, see

below). If he is successful in seeking a remedy at law, he is entitled to the value of the property at

the time of breach regardless of whether it has appreciated or depreciated.

The fact that the buyer may be forced to suffer a depreciation in the value of the property means

that he bears the risk of loss if, for example, the improvements on the property he bought burn

down while he is still in escrow.

Additional examples[edit source | edit beta ]

Problems may sometimes arise because, through some lapse or omission, insurance coverage is

not in force at the time a claim is made. If the policyholder has clearly been at fault in this

connection, because, for example, he has not paid premiums when he should have, then it will

normally be quite reasonable for an insurer to decline to meet the claim. However, it gets more

difficult if the policyholder is no more at fault than the insurer. The fair solution in the

circumstances may be arrived at by applying the principle that equity regards that as done that

ought to be done. (See paragraph 1 above.) In other words, what would the position have been if

what should have been done had been done?

Thus, in one case, premiums on a life insurance policy were overdue. The insurer's letter to the

policyholder warning him of this fact was never received by the policyholder, who died shortly

after the policy consequently lapsed. It was clear that if the notice had been received by the

policyholder, he or his wife would have taken steps to ensure the policy continued in force,

because the policyholder was terminally ill at the time and the coverage provided by the policy

was something his wife was plainly going to require in the foreseeable future. Since the

policyholder would have been fully entitled to pay the outstanding premium at that stage,

regardless of his physical condition, the insurer (with some persuasion from the Bureau) agreed

that the matter should be dealt with as if the policyholder had done so. In other words, his widow

was entitled to the sum assured less the outstanding premium. In other similar cases, however, it

has not been possible to follow the same principle because there has not been sufficiently clear

evidence that the policy would have been renewed.

Another illustration of the application of this equitable principle was in connection with motor

vehicle insurance. A policyholder was provided with coverage on the basis that she was entitled

to a "no claims" discount from her previous insurer. Confirmation to this effect from the previous

insurer was required. When that was not forthcoming, her coverage was canceled by the brokers

who had issued the initial coverage note. This was done without reference to the insurer

concerned whose normal practice in such circumstances would have been to maintain coverage

and to require payment of the full premium until proof of the no claims discount was forthcoming.

Such proof was eventually obtained by the policyholder, but only after she had been involved in

an accident after the cancellation by the brokers of the policy. Here again, the fair outcome was to

look at what would have happened if the insurer's normal practice had been followed. In such

circumstances, the policyholder would plainly have still had a policy at the time of the accident.

The insurer itself had not acted incorrectly at any stage. However, in the circumstances, it was

equitable for it to meet the claim.

Equity will not suffer a wrong to be without a remedy

When seeking an equitable relief, the one that has been wronged has the stronger hand. The

stronger hand is the one that has the capacity to ask for a legal remedy (judicial relief). In equity,

this form of remedy is usually one of specific performance or an injunction (injunctive relief).

These are superior remedies to those administered at common law such as damages.

The Latin legal maxim is ubi jus ibi remedium' ("where there is a right, there must be a remedy"),

sometimes cited as ubi jus ibi remediam.

The maxim is necessarily subordinate to positive principles and cannot be applied either to

subvert established rules of law or to give the courts a jurisdiction hitherto unknown, and it is only

in a general not in a literal sense that the maxim has force.

Case law dealing with principle of this maxim at law include Ashby v White (1703) 92 ER 126

and Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971). The application of this principle

at law was key in the decision of Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803) wherein it

was necessary to establish that Marbury had a right to his commission in the first place in order

for Chief Justice Marshall to make his more wide-ranging decision.

Equity delights in equality

Where two persons have an equal right, the property will be divided equally. Thus equity will

presume joint owners to be tenants in common unless the parties have expressly agreed

otherwise. Equity also favours partition, if requested, of jointly held property.

One who seeks equity must do equity

To receive equitable relief, the petitioning party must be willing to complete all of its own

obligations as well. The applicant to a court of equity is just as much subject to the power of that

court as the defendant. This maxim may also overlap with the clean hands maxim (see below).

Equity aids the vigilant, not those who slumber on their rights

Vigilantibus non dormientibus aequitas subvenit.

A person who has been wronged must act relatively swiftly to preserve their rights. Otherwise,

they are guilty of laches, an untoward delay in litigation with the presumed intent of denying

claims. This differs from a statute of limitations, in that a delay is particularized to individual

situations, rather than a general prescribed legal amount of time. In addition, even where a

limitation period has not yet run, laches may still occur. The equitable rule of laches and

acquiescence was first introduced in Chief Young Dede v. African Association Ltd. (1910) 1 N.L.R

130 at 133.

Alternatives:

Delay defeats equity

Equity aids the vigilant, not those who sleep on their rights

Equity imputes an intent to fulfill an obligation

Generally speaking, near performance of a general obligation will be treated as sufficient unless

the law requires perfect performance, such as in the exercise of an option. Text writers give an

example of a debtor leaving a legacy to his creditor equal or greater to his obligation. Equity

regards such a gift as performance of the obligation so the creditor cannot claim both the legacy

and payment of the debt.

Equity acts in personam

In England, there was a distinction drawn between the jurisdiction of the law courts and that of the

chancery court. Courts of law had jurisdiction over property as well as persons and their coercive

power arose out of their ability to adjust ownership rights. Courts of equity had power

over persons. Their coercive power arose from the ability, on authority of the crown, to hold a

violator incontempt, and take away his or her freedom (or money) until he or she purged himself

or herself of his or her contumacious behavior. This distinction helped preserve a separation of

powers between the two courts.

Nevertheless, courts of equity also developed a doctrine that an applicant must assert a "property

interest". This was a limitation on their own power to issue relief. This does not mean that the

courts of equity had taken jurisdiction over property. Rather, it means that they came to require

that the applicant assert a right of some significant substance as opposed to a claim for relief

based on an injury to mere emotional or dignitary interests.

Equity abhors a forfeiture

Today, a mortgagor refers to his interest in the property as his "equity". The origin of the concept,

however, was actually a mirror-image of the current practice.

At common law, a mortgage was a conveyance of the property, with a condition subsequent, that

if the grantor paid the secured indebtedness to the grantee on or before a date certain (the "law"

day) then the conveyance would be void, otherwise to remain in full force and effect. As was

inevitable, debtors would be unable to pay on the law day, and if they tendered the debt after the

time had passed, the creditor owed no duty to give the land back. So then the debtor would run to

the court of equity, plead that there was an unconscionable forfeiture about to occur, and beg the

court to grant an equitable decree requiring the lender to surrender the property upon payment of

the secured debt with interest to date. And the equity courts granted these petitions quite

regularly and often without regard for the amount of time that had lapsed since the law day had

passed. The lender could interpose a defense of laches, saying that so much time had gone by

(and so much improvement and betterment had taken place) that it would be inequitable to

require undoing the finality of the mortgage conveyance. Other defenses, including equitable

estoppel, were used to bar redemption as well.

This unsettling system had a negative impact on the willingness of lenders to accept real estate

as collateral security for loans. Since a lender could not re-sell the property until it had been in

uncontested possession for years, or unless it could show changed circumstances, the value of

real estate collateral was significantly impaired. Impaired, that is, until lawyers concocted the bill

of foreclosure, whereby a mortgagee could request a decree that unless the mortgagor paid the

debt by a date certain (and after the law date set in the mortgage), the mortgagor would

thereafter be barred and foreclosed of all right, title and equity of redemption in and to the

mortgaged premises.

To complete the circle, one needs to understand that when a mortgagor fails to pay an installment

when due, and the mortgagee accelerates the mortgage, requiring immediate repayment of the

entire mortgage indebtedness, the mortgagor does not have a right to pay the past-due

installment(s) and have the mortgage reinstated. In Graf v. Hope Building Corp., 254 NY 1

(1930), the New York Court of Appeals observed that in such a case, there was no forfeiture, only

the operation of a clause fair on its face, to which the mortgagor had freely assented. In the latter

20th Century, New York's lower courts eroded the Graf doctrine to such a degree that it appears

that it is no longer the law, and that a court of conscience has the power to mandate that a default

be excused if it is equitable to do so. Of course, now that the pendulum is swinging in the

opposite direction, we can expect courts to explain where the limits on the newly expanded equity

of redemption lie...and it is probably not a coincidence that the cases that have eroded Graf v.

Hope Building Corp. have been accompanied by the rise of arbitration as a means for enforcing

mortgages. See, generally, Osborne, Real Estate Finance Law (West, 1979), Chapter 7.

Equity does not require an idle gesture

Also: Equity will not compel a court to do a vain and useless thing. It would be an idle gesture for

the court to grant reformation of a contract and then to deny to the prevailing party an opportunity

to perform it as modified.

He who comes into equity must come with clean hands

It is often stated that one who comes into equity must come with clean hands (or alternatively,

equity will not permit a party to profit by his own wrong). In other words, if you ask for help about

the actions of someone else but have acted wrongly, then you do not have clean hands and you

may not receive the help you seek. For example, if you desire your tenant to vacate, you must

have not violated the tenant's rights.

However, the requirement of clean hands does not mean that a "bad person" cannot obtain the

aid of equity. "Equity does not demand that its suitors shall have led blameless lives." Loughran v.

Loughran, 292 U.S. 216, 229 (1934), (Brandeis, J.). The defense of unclean hands only applies if

there is a nexus between the applicant's wrongful act and the rights he wishes to enforce.

For instance, in Riggs v. Palmer (1889) 115 N.Y. 506, a man who had killed his grandfather to

receive his inheritance more quickly (and for fear that his grandfather may change his will) lost all

right to the inheritance.

In D & C Builders Ltd v Rees [1965] EWCA Civ 3, a small building firm did some work on the

house of a couple named Rees. The bill came to £732, of which the Rees had already paid £250.

When the builders asked for the balance of £482, the Rees announced that the work was

defective, and they were only prepared to pay £300. As the builders were in serious financial

difficulties (as the Rees knew), they reluctantly accepted the £300 "in completion of the account".

The decision to accept the money would not normally be binding in contract law, and afterwards

the builders sued the Rees for the outstanding amount. The Rees claimed that the court should

apply the doctrine of equitable estoppel, which can make promises binding when they would

normally not be. However, Lord Denning refused to apply the doctrine, on the grounds that the

Rees had taken unfair advantage of the builders' financial difficulties, and therefore had not come

"with clean hands".

Equity delights to do justice and not by halves

When a court of equity is presented with a good claim to equitable relief, and it is clear that the

plaintiff also sustained monetary damages, the court of equity has jurisdiction to render legal

relief, e.g., monetary damages. Hence equity does not stop at granting equitable relief, but goes

on to render a full and complete collection of remedies.

Equity will take jurisdiction to avoid a multiplicity of suits

Thus, "where a court of equity has all the parties before it, it will adjudicate upon all of the rights of

the parties connected with the subject matter of the action, so as to avoid a multiplicity of

suits."Burnworth v. Hughes, 670 P.2d 917, 922 (Kan. 1983). This is the basis for the procedures

of interpleader, class action, and the more rarely used Bill of Peace.

Equity follows the law

Acquits sequitur legem

Equity will not allow a remedy that is contrary to law.

The court of Chancery never claimed to override the courts of common law. Story states "where a

rule, either of the common or the statute law is direct, and governs the case with all its

circumstances, or the particular point, a court of equity is as much bound by it as a court of law,

and can as little justify a departure from it."[3] According to Edmund Henry Turner Snell, “It is only

when there is some important circumstance disregarded by the common law rules that equity

interferes.”[4] Cardozo wrote in his dissent in Graf v. Hope Building Corporation, 254 N.Y 1 at 9

(1930), "Equity works as a supplement for law and does not supersede the prevailing law."

Maitland says, “We ought not to think of common law and equity as of two rival

systems."[5] "Equity had come not to destroy the law, but to fulfil it. Every jot and every tittle of law

was to be obeyed, but when all this had been done yet something might be needful, something

that equity would require."[6] The goal of law and equity was the same but due to historical reason

they chose a different path. Equity respected every word of law and every right at law but where

the law was defective, in those cases, equity provides equitable right and remedies.

Equity will not aid a volunteer

Equity cannot be used to take back a benefit that was voluntarily but mistakenly conferred without

consultation of the receiver. This maxim protects the doctrine of choice.

This maxim is very important in restitution. Restitution developed as a series of writs called

special assumpsit, which were later additions in the courts of law, and were more flexible tools of

recovery, based on equity. Restitution could provide means of recovery when people bestowed

benefits on one another (such as giving money or providing services) according to contracts that

would have been legally unenforceable.

However, pursuant to the equitable maxim, restitution does not allow a volunteer or "officious

intermeddler" to recover. A volunteer is not merely someone who acts selflessly. In the legal (and

equitable) context, it refers to someone who provides a benefit regardless of whether the recipient

wants it. For example, when someone mistakenly builds an improvement on a home, neither

equity nor restitution will allow the improver to recover from the homeowner.

An exception to this maxim can be seen in cases where the doctrine of estoppel applies.

Where equities are equal, the law will prevail

Equity will provide no specific remedies where the parties are equal, or where neither has been

wronged.

The significance of this maxim is that applicants to the chancellors often did so because of the

formal pleading of the law courts, and the lack of flexibility they offered to litigants. Law courts and

legislature, as lawmakers, through the limits of the substantive law they had created, thus

inculcated a certain status quo that affected private conduct, and private ordering of disputes.

Equity, in theory, had the power to alter that status quo, ignoring the limits of legal relief, or legal

defenses. But courts of equity were hesitant to do so. This maxim reflects the hesitancy to upset

the legal status quo. If in such a case, the law created no cause of action, equity would provide

no relief; if the law did provide relief, then the applicant would be obligated to bring a legal, rather

than equitable action. This maxim overlaps with the previously mentioned "equity follows the law."

Between equal equities the first in order of time shall prevail

This maxim operates where there are two or more competing equitable interests; when two

equities are equal the original interest (i.e., the first in time) will succeed.

Equity will not complete an imperfect gift

If a donor has made an imperfect gift, i.e. lacking the formalities required at common law, equity

will not assist the intended donee. This maxim is a subset of equity will not assist a volunteer .

Note the exception in Strong v Bird (1874) LR 18 Eq 315. If the donor appoints the intended

donee as executor of his/her will, and the donor subsequently dies, equity will perfect the

imperfect gift.

Equity will not allow a statute to be used as a cloak for fraud

Equity prevents a party from relying upon an absence of a statutory formality if to do so would

be unconscionable and unfair. This can occur in secret trusts and also constructive trusts and so

on.

Equity will not allow a trust to fail for want of a trustee

If there is no trustee, whoever has legal title to the trust property will be considered the trustee.

Otherwise, a court may appoint a trustee. In Ireland, the trustee may be any administrator of a

charity to which the trust is related.