Equity & its Principles
Historical Roots
In medieval England royal courts dispensed justice in cases in which important national interests were at stake, such as the ownership of landed estates or violations of the King’s peace. Lesser or local disputes were resolved by other courts, often applying their own special rules. Common to the whole country, the decisions of the royal courts laid the foundations of the English legal system prior to the adoption of any statutes. King Henry II in the twelfth century provided the institutional framework for regular development by organizing an integrated judicial system. Eventually three common law courts emerged: the Court of Common Pleas, the Court of King’s Bench, and the Court of Exchequer—an arrangement that endured until the nineteenth century when the Judicature Acts (1873–75) put the English court system on its modern basis.
The oldest book on the common law, a brief treatise On the Laws and Customs of England, written in Latin, dates to the twelfth century and is attributed to Ranulf de Glanvill, an important figure in King Henry’s government. In keeping with the common law’s origin in judicial decisions, the book is organized around writs, the forms used to initiate legal proceedings and define remedies for specific wrongs.During the centuries between Bracton and Blackstone, the makers of the common law concentrated on filling in the details, especially the almost incredible complexities of the law of real property. Typical of the new emphasis was Sir Thomas Littleton’s short treatise On Tenures, published in 1481. Not in English or even in Latin but in Law French, the argot of English lawyers for centuries after the Norman Conquest, Littleton offered a scientific account of English land law, long the heart of the common law. Practical in organization and emphasis, Littleton was inward looking, wholly unaffected by non-English influences—the perfect example of the common law’s hermetic tendencies. After a century and a half, Littleton’s On Tenures was updated in a voluminous commentary by Sir Edward Coke; Coke on Littleton quickly became a classic of the common law.
Centered on judicial decisions, the common law early developed a tradition of case reports, beginning with the medieval Year Books in Law French. Modern law reporting began in the sixteenth century with the immensely influential reports in English prepared by Sir Edward Coke, the source for such arcane of the common law as the Rule in Shelley’s Case and the Rule in Wild’s Case. Access to the reports was facilitated by a series of books known as “abridgements,..”Born in the decisions of individual cases, the common law continued into the modern period to be developed more by judicial decision than by legislation. Property law, the primary legal interest of the landed aristocracy, evolved slowly as entails gave way to strict settlements, and mortgages facilitated the economic exploitation of land. With the growth of the British Empire and the spread of international trade, novel questions of commercial law required the renovation of the common law of contracts and the development of new legal arrangements such as insurance and joint ventures. Lord Mansfield, chief justice of the Court of King’s Bench in the late eighteenth century, exploited the common law’s flexibility to the full and laid down new law to deal with the unprecedented new realities.
From the beginning, the English legal profession was divided into barristers and solicitors. Barristers had a monopoly on practice before the common law courts, and from their ranks the judges were recruited, forging the link between practice and judging that distinguishes the common law to this day. Legal advice on family settlements, property transactions, and business in general was the preserve of solicitors, earlier referred to as attorneys. Legal education necessarily followed this functional division. Barristers were trained in the Inns of Court, medieval hostelries that developed into a combination law school and professional club. Solicitors had comparable but less prestigious accommodations. After the medieval period the educational functions of the Inns atrophied, although students, including numerous framers of the United States Constitution, continued to visit frequently. Realistically, a form of professional apprenticeship was the only means of legal education until organized curricula in law appeared at English universities in the nineteenth century. Although the professional division into barristers and solicitors was briefly attempted in some of the older American colonies like Virginia, it proved too costly and too deeply rooted in English institutions to survive transplantation to America where a unified bar became the norm.
Maxims of equity
The maxims of equity evolved, in Latin and eventually translated into English, as the principles applied by courts of equity in deciding cases before them.
Among the traditional maxims are:
Equity regards done what ought to be done this maxim means that when individuals are required, by their agreements or by law to have done some act of legal significance, Equity will regard it as having been done as it ought to have, 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 then be entitled to the equitable remedy of specific performance. It also is reflected in how his damages are measured if he pursues a legal, substitution remedy instead of an equitable remedy. At law, he is entitled to the value at the time of breach, whether it has appreciated, or depreciated.
The fact that the buyer may be forced to suffer the depreciation means that he bears the risk of loss if, for example, the improvements on the property he bought burn down whiles he is still in escrow.
Additional Examples: Problems may sometimes arise because, through some lapse or omission, cover 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. 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 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 cover 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.
What Are the Maxims of Equity?
The maxims of equity are affirming formulaic statements of certain broad equitable principles which have emerged during the course of the jurisdiction and its long and varied development. They seem to have been cast into their present form of expression in the late 17th and early 18th centuries and have been described as a symptom, or perhaps of course, in the hardening of equity. Although the maxims are not rules or positive laws and cannot supply specific answers to specific legal problems, they are not without functional value in the modern jurisprudence of equity.
The maxims do sometimes merely justifying or confirm decisions which have in fact been made on the basis of more precise equitable principles, and he perform a simple rhetorical function prejudge demonstrating how the decision is, after all, imbued with the agent values of an ancient jurisdiction. However, the maxims also represent, reflect and disseminate certain fundamental moral ideas and themes which lie at the heart of the equitable jurisdiction. Some of the case law indicates that the maximum equity will not assist a volunteer was described in the High
Maxim 1
Equity will not suffer a wrong to be without a remedy
Meaning: Latin term “Ubi jus ibi remedium”. Where there is a right, there is
remedy.
It means that no wrong should go undressed if it is capable of being remedied by
courts. Where there is a wrong. There is a remedy. Where there is right there is a
remedy. A right without a remedy is a vex thing.
England: 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 also judicial relief is the means with which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes some other court order to impose its will. In equity, this form of remedy is usually one of specific performance or an injunction of Specific performance is an order of a court which requires a party to perform a specific act, usually what is stated in a contract.
It is an alternative to awarding damages, and is classed as an equitable remedy commonly used in the form of injunctive relief concerning confidential information or real property. These are superior remedies to those administered at common law such as damagese, is an award of money to be paid to a person as compensation for loss or injury .
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 hither to unknown, and it is only in a general not in a literal sense that maxim has force.
Illustration
It was on this maxim that equity inserted to enforce use and trusts. Where A Conveyed land to B, to hold to the use of Case C had no remedy at law if B, Claimed to keep the benefit of the land to himself .Equity interfered in favor of C because such an abuse of confidence was a wrong.
Case Law:
Bivens v. Six Unknown Named Agents,
The case in which the United States Supreme Court ruled that an implied cause of action existed for an individual whose, freedom from unreasonable search and seizures had been violated by federal agents. The victim of such a deprivation could sue for the violation of the Amendment itself, despite the lack of any federal statute authorizing such a suit. The existence of a remedy for the violation was implied from the importance of the right violated.
Bivens has been subsequently interpreted to create a cause of action against the federal government similar to the one creates against the states.
Judgment :The Court, in an opinion by Justice Brennan, laid down a rule that it will imply a private right of action for monetary damages where no other federal remedy is provided for the vindication of a Constitutional right, based on the principle that for every wrong, there is a remedy.
Recognition in Bangladesh: The Trust Act 1882, Section 9 of the Civil Procedure Code & the Specific Relief Act in Bangladesh has incorporated the above principle.
The Civil Procedure Code entitles a civil court to entertain all kinds of suits unless they are prohibited. The Specific Relief Act provides for equitable remedies like specific performance of contracts, ratification of instruments, injunction & declaratory suits.
Sec-9 and sec-151 of CPC – CIVIL courts have jurisdictions to try all suits of
civil nature unless there barred.
1. Specific Relief Act:-
2. Specific performance of contract
3. Rectification of instruments
4. Injunctions
Maxim 2
Equity follows the law
Meaning: Latin term “Acquits sequitur legmen”. The equity court observed common law. While administering justice according to conscience.
England: Equity will not allow a remedy that is contrary to law. The court of Chancery never claimed to override the courts of common law. The discretion of the court is governed by the rules of law and equity , which are not oppose, but each ,in turn ,to be subservient to the other , this discretion in some case follows the law implicitly. Thus equity came not to destroy the law but to fulfill it, to supplement it, to explain it. Every jot and every title of the law was to obeyed, but when all this had been done , something might yet need full, something that equity would require Their goal was the same but by there nature and due to historical accident they chose different paths. Equity respected every word of law and every right at law but where the law was defective in that case these common law was controlled by recognition of equitable rights.
Illustration
Where R gives his property in trust to M, H being the beneficiary ,H’s interest though equitable will be governed by a legal rule in the following situation and not by any equitable rule. If the trustee M by a mistake of fact pays somebody a particular amount from trust property ,H can file an action and this he will have to do within a period of six years .H’s interest being equitable equity cannot help him in this respect ,because provisions of law in this regard are very definite and specific.
Case Law:
Stick land V. Aldridge
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 sister equity would have interfered and compelled carry out his promise.
Recognition in Bangladesh: Bangladesh has not recognized the distinction between equitable and legal interest. Equity rules therefore in Bangladesh can not 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 can exception to this or can prolong the time – limit. Similarly no court can confer rights, which can be acquired only by registration of a document, on a party, without getting the document registered
Maxim 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. The plaintiff must recognize & submit to the right of his adversary; you must do unto your neighbors what you wish him to do unto you.
England: If there is discretionary by nature, will be granted to the plaintiff only upon condition that he gives the defendant any corresponding rights that the defendant may be entitled to, in respect of the transaction in which relief is sought. In other words, while a court of law would give relief to the plaintiff as soon as a legal injury is proved, regardless of any corresponding right to relief of the other party, leaving that to be the object matter of a separate suit, a court of equity would not allow the plaintiff to say . ” Give me the equitable relief that I seek, but I am not prepared to make any allowances for the claim or the right of the other party.
Illustration
A, a money lender, advances. 100 to B , an agriculturist, and ,by undue influence ,induce B to execute a bond for rs.200 with interest at 6 per cent per month . The court may set the bond aside ordering B to repay the rs 100 with such interest as may seem just. It means that when a party seeks to set aside a contract on the ground of undue influence, the court may require that party to restore to the other party the benefit that the former has received under the contract, compensate him.
Case laws:
Lodge V. National union investment co. ltd
One B borrowed money from M by mortgaging certain securities to him. M was an 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. This decision was based on the principle of this maxim.
Recognition in Bangladesh :1) The Contract Act, Under section 19-A of The Contract Act contracts entered into under undue influence are void able and therefore a party to a contract who has the potion of getting the contract declared void will have to return the benefits so abstained to the party form whom he abstained it under such contract. This is but proper, because one cannot benefit twice. One cannot opt out the liabilities form such contract.
(2) Under the Transfer of Property Act, Section 35 embodies the principle of election which rests on the principle of “approbate & reprobate” as is known in Scotland, meaning thereby that a men shall not be allowed to approbate & reprobate.
Section 51 of the Transfer of Property Act.
Section 30 of the Specific Relief Act 1877.
Maxim 4
He who comes into equity must come with clean hands
Meaning: Equity, as it was based on good faith and conscience, demanded fairness, uprightness and good faith not only form the defended bit also form the plaintiff. It is therefore aptly said that, “he that hath committed an inequity”. This very idea is expressed in this maxim but in a different terminology. It is well known that ex torpid cause non orator action, no cause of action forma base cause.
England: It is often stated that one who comes into equity must come with clean hands In civil proceedings and criminal prosecutions under the common law, a defendant may raise a defense in an attempt to avoid criminal or civil liability. Besides contesting the accuracy of any allegation made against him or her in a criminal or civil proceeding, a defendant may also make allegations against the prosecutor or plaintiff or raise a defense, arguing that, even if the allegations against the defendant are true, the defendant is nevertheless not liable.
Since a defense is raised by the defendant in a direct attempt to avoid what would otherwise result in liability, the defendant typically holds the burden of proof. For example, if a defendant in an assault and battery case attempts to claim provocation, the victim of said assault and battery would not have to prove that he did not provoke the plaintiff; the defendant would have to prove that the plaintiff did. In criminal law, a defendant is anyone tried under the court of law as the ones who have committed the crime. A defendant in a civil action usually makes his or her first court appearance voluntarily in response to a summons, whereas a defendant in a criminal case is often taken into custody by police and brought before a court, pursuant to an arrest warrant.
The actions of a defendant, and its lawyer counsel, are known as the defense. Historically, a defendant in a civil action could also be taken into custody pursuant to a writ of copies ad respondent and forced to post bail before being released from custody. However, a modern day defendant in a civil action is usually able to avoid most (if not all) court appearances if represented by a lawyer, whereas a defendant in a criminal case (particularly a felony or indictment) is usually obliged to post bail before being released from custody and must be present at every stage thereafter of the proceedings against him or her (they often may have their lawyer appear instead, especially for very minor cases, such as traffic offenses in jurisdictions which treat them as crimes).
Illustration
Tow robbers were partners in their own way .Due to a disagreement in shares one of them filed a bill against another for account of the profits of robbery one of them filed a bill against such a relief in case of partnership but here was a case where the cause of action arose from illegal engagement or occupation. the maxim is ex turip cause non oritur actio, and according to that the equity court refused to help them .
Case laws:
D&C Builders v. Rees (1966)
Small building firm did some work on the house of a couple named Rees. The bill came to 732 s, of which the Rees had already paid 250 pounds. When the builders asked for the balance of 482 pounds, the Rees announced that the work was defective, and they were only prepared to pay 300 pounds. As the builders were in serious financial difficulties (as the Rees knew), they reluctantly accepted the 300 pounds ‘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 outspoundatanding amount. The Rees claimed that the court should apply the doctrine of equitable HYPERLINK “http://en.wikipedia.org/wiki/Equitable_estoppel”estoppels, 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’.
Recognition in Bangladesh: (1) Section 23 of the Trust Act 1882
(2) Sections 17, 18 & 20 of the Specific Relief Act. Where the plaintiffs is guilty of sharp practice, fraud & undue influence as detailed under Section 18 or where there is a contract to sell or let property by a plaintiff who has no title as specified under Section 17, specific performance will not be granted to the plaintiff. The jurisdiction to specific performance under Section 20 is discretionary and the court id not bound to grant such a relief merely because it is lawful to do so. The courts discretion is not arbitrary but sound and reasonable, guided by judicial principle and capable of connection, by a court of appeal.
Maxim 5
Delay defeats equities
Meaning: Latin term “Vigilanibus, non dormentibus, jura subvenient”. It means “Equity aids the vigilant & not the indolent”. It is an undisputed axiom that
eternal vigilance ids the price of liberty if one sleeps upon his right, his right
will slip away form him.
England: Once the party knows they have been wronged, they must act relatively swiftly to preserve their rights. Otherwise, they are guilty of laches.The person invoking laches is asserting that an opposing party has “slept on its rights,” and that, as a result of this delay, that other party is no longer entitled to its original claim. Put another way, failure to assert one’s rights in a timely manner can result in a claim’s being barred by laches.In most contexts, an essential element of laches is the requirement that the party invoking the doctrine has changed its position as a result of the delay. In other words, the defendant is in a worse position now than at the time the claim should have been brought. For example, the delay in asserting the claim may have caused a great increase in the potential damages to be awarded, or assets that could earlier have been used to satisfy the claim may have been distributed in the meantime, or the property in question may already have been sold, or evidence or testimony may no longer be available to defend against the claim.
A defense lawyer raising the defense of laches against a motion for injunctive relief (a form of equitable relief) might argue that the plaintiff comes “waltzing in at the eleventh hour” when it is now too late to grant the relief sought, at least not without causing great harm that the plaintiff could have avoided. In certain types of cases (for example, cases involving time-sensitive matters, such as elections), a delay of even a few days is likely to be met with a defense of laches, even where the applicable statute of limitations might allow the type of action to be commenced within a much longer time period.
This maxim is often displaced by statutory limitations, but even where a limitation period has not yet run, equity may apply the doctrine of “laches,” an equitable term used to describe delay sufficient to defeat an equitable claim. Where a court finds that a party has done something warranting a form of estoppels, that party is said to be “stopped” from making certain related arguments or claiming certain related rights. The defendant is said to be “stopped” from presenting the related defence, or the plaintiff is said to be “stopped” from making the related argument against the defendant. Lord Coke stated, “It is called an estoppels or conclusion, because a man’s own act or acceptance stopped or closets up his mouth to allege or plead the truth.
Illustration
Where A seeks to set aside a contract of purchase he must apply for relief within the limitation period. But where he makes unreasonable delay and during that time other parties have acquired rights or where the property in question has deteriorated in value or where conditions are charged , the court will refuse rescission .
Case laws:
Allcard V. Skinner (1887)
Miss Allcard was introduced by the Revd Mr Nihill to Miss Skinner, a lady superior of a religious order named “Protestant Sisters of the Poor”. She had to observe vows of poverty(Poverty is the lack of basic human needs, such as clean water, nutrition, health care, education, clothing and shelter, because of the inability to afford them) and obedienc.Three days after becoming a member, Miss Allcard made a will bequeathing all property to Miss Skinner, and passed on railway stock that she came into possession of in 1872 and 1874. She then claimed the money back after she left the sisterhood.
Judgment:Lindley LJ, held that she was unduly influenced but barred by laches from getting restitution. And in any case she would only have been able to recover as much of the gift as remained in the defendant’s hands after some of it had been spent in accordance with her wishes.
Recognition in Bangladesh: Article 113 of The Limitation Act 1908, which fixes a period of three years within which a suit for specific performance should be
brought
Section 51 of The Transfer of Act in Bangladesh embodies this doctrine.
Section 56 of the Specific Relief Act, under this section, injunction cannot be granted.
Maxim 6
Equality is equity
Meaning: Plato defines equality as “a sort of justice”. And further pointes out that “if you cannot find any other, equality is the proper basis”. This maxim is explained also as equity delighted in equality”, This maxim is explained also as equity delighted in quality”, which means that as far as possible equity would put the litigating parties on an equal level so far as their and responsibility are concerned. The maxim expresses the object of both law and equity in order to effectuate a distribution of property and losses, proportionate to several claims & liabilities of the parties concerned. Equity therefore means proportionate equality.
England: The English Court of Chancery, incorporated into the Equity jurisprudence of English Law, the concept of acquit as i.e. the notion of equality and impartiality as conceived by the Roman jurists. The equity, thus, so far as possible, puts the parties to a transaction on an equal footing, although the strict rules of law may give one party an advantage over the other. Equality have does not mean literal equality, but it means ‘proportional equality’. Justice Fry said,” When I said quality, I don’t mean necessarily equality in it Simplest form, but which has been something called proportionate equity”.
Illustrations
(1) In case of the assets of insolvent debtor, equity insists on a rate able distribution by abolishing preferential treatment of certain creditors.
(2) A creditor having a single clause against several debtors, can, realize the debt from any of such debtors. But the debtor who had thus been compelled to pay the debt in full, though without any remedy against his co-debtors, could in equity, claim contribution from them in order that the burden passes equally.
(3) In a case where there are two creditors of the same debtors, and one creditor has a right to resort to two funds of the debtors; the other creditor has a right to only one of them. The Court on basis of the maxim shall as ‘Marshall’ the funds that both the creditors are paid as much and as far as possible.
Case law:
Clark -v- Cogge
A grantee of land shall have the benefit of an implied right of way of the grantor’s land where necessary: “the case was, the one sells land and afterwards the vendee, by reason thereof, claims a way over the plaintiff’s land, there being no other convenient way adjoining: and, whether this were a lawful claim was the question. And it was resolved without argument, but the way it remained, and that he might well justify the using thereof, because it is a thing of necessity; for otherwise he could not have any profit of his land: et e converse, if a man hath four closes lying together, and sells three of them, reserving the middle close, and hath not any way thereto but through one of those which he sold, although he reserved not any way, yet he shall have it, as reserved unto him by the law; and there is not any extinguishment of a way by having both lands.”
Recognition in Bangladesh: All these four doctrine resulting form the application
of the maxim is “equality is equity” have been recognized in Bangladesh under
various enactments.
1) The Contract Act, Section 42, illustrates tenancy in common as regards devolution of liabilities.
2) Section 43 illustrates that one of a number of promissory who has performed the promise is entailed to compel the other promissory to contribute equally with him.
3) Section 69 & 70 illustrate the doctrine of marshalling.
Maxim 7
Equity looks to the intent rather than the form
Meaning: As is seen before, Common Law was very rigid and inflexible. It could not
respond favorably to the demands of time. In respect of acquisition and transfer
of property, it regarded the form of a transaction to be more important than its
substance. Moreover it expected the contracting parties to rigidly observe their
agreements and to perform their stipulation to the very letter (litera acripta) of
every promise or agreement.
England: This maxim is characteristic of the greater freedom of action of the equity courts, as compared with the common law courts, and of their efforts to do substantial justice rather than enforce technical rules. The effects of the application of this doctrine are well illustrated in the case of equitable mortgages” The idea of a mortgage and its characteristics have been by some writers ascribed to the Jews; by others it is said that the civil law, which distinguished between pledges and thing hypothecated, is responsible for the mortgage; while yet others look upon it as a corollary of the common law doctrine of estates upon condition.2 However that may be, it is certain that a mortgage, or transaction in the nature thereof, was known to English law at a period anterior to the Norman conquest”
Illustration
The equitable doctrines governing Mortgages. The whole law of mortgage in equity is based upon the conception of the transaction as a mere debt ,as contrasted with the common law view of mortgage as an absolute trasfer ,subject to a condition.
Case Law:
Knight v Knight (1840)
Knight v Knight (1840) is a landmark case in trust law in which the requirements (still followed) for determining whether a trust has been validly constituted were first promulgated. The test allowed the court to determine whether certain assets could be disposed of in the testator’s will, or, in the alternative, whether the wording of the will was too vague to allow the intended beneficiaries to collect what appeared on its face to be theirs. Knight v Knight is still followed in most common law jurisdictions.
Recognition in Bangladesh: The principle contained in the maxim has been recognized under Bangladeshi Law in section 55 and 74, The Contract Act. Section, 114 and 114-A of The Transfer of Property Act.
Maxim 8
Equity looks on that as done which ought to be done
Meaning: A between two persons, where one of them has incurred an obligation and undertaken upon himself to do something for the other, the equity courts look on it as done and as producing the same result as if the obligation or undertaking had been actually performed. Equity treats a contract to do a thing as if the thing were already done, though only in favors of volunteers’. In other words, as to the consequences and incidents of the subject matter of contract, it will betrayed as if the final acts anticipated and contemplated by the parties have been carried out in the same manner as they ought to have been and as they might have been carried out. Equity acts on the conscience of a person. What one has undertaken to do, binding his conscience ought to be done and equity courts therefore look to the acts of the person bound by his conscience and interpret them in such a way that they amount to what ought to be done.
England: This equity arise only in favor of persons entitled to enforce the contract specifically, and not in favor of volunteers ,i.e. persons who have paid no consideration .Thus
1) With regards to an executor contract for lease of land .
2) similarly, as to an agreement for sale of land .
3) According to this maxim, a contract to transfer after -acquired property
Illustration
A contract to sell sultanpurto be B. While the contract is the 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.
Case Law:
Salomon v A Salomon & Co Ltd
Mr. Aron Salomon was a leather boot manufacturer. He was also a shoe manufacturer. His firm was in White chapel High Street, with warehouses and a large establishment. He had had it for 30 years and “he might fairly have counted upon retiring with at least £10,000 in his pocket.” He had a wife, a daughter and five sons. Four of the sons worked with him. The sons wanted to be partners, so he turned the business into a limited company. The wife and five eldest children became subscribers and two eldest sons also directors. Mr. Salomon took 20,001 of the company’s 20,007 shares. The price fixed by the contract was £39,000, which was “extravagant” and not “anything that can be called a business like or reasonable estimate of value.” Transfer of the business happened on June 1, 1892. Purchase money for the business was paid, totaling £20,000, to Mr. Salomon. £10,000 was paid in debentures to Mr. Salomon as well (i.e., Salomon gave the company a loan, secured by a charge over the assets of the company). The balance paid went to extinguish the business’ debts (£1000 of which was cash to SalomoBut soon after Mr. Salomon incorporated his business, there was economic trouble. A series of strikes in the shoe industry led the government, Salomon’s main customer, to split its contracts between more firms (the Government wanted to diversify its supply base to avoid the risk of its few suppliers being crippled by strikes). His warehouse was full of unsold stock. He and his wife lent the company money. He cancelled his debentures. But the company needed more money, and they sought £5000 from a Mr. Edmund Bordered. They gave him a debenture, the loan with 10% interest and secured by a floating charge. But the business still failed, and they could not keep up with the interest payments. In October 1893 Mr. Bordered sued to enforce his security. That was the end. The company was put into liquidation. Mr. Bordered was paid but other unsecured creditors were not.
Judgment :(High Court):Vaughan Williams J said Mr. Borderer’s claim was valid. It was undisputed that the 20,000 shares were fully paid up. He said the company had a right of indemnity against Mr. Salomon. He said the signatories of the memorandum were mere dummies, the company was just Mr. Salomon in another form, an alias, his agent. Therefore it was entitled to indemnity from the principal. The liquidator amended the counter claim, and an award was made for indemnity.
Recognition in Bangladesh: The principle contained in the maxi m has been
recognition in Bangladeshi law under following encasements: Section 12 of The Specific Relief Act relating to the specific performances of part of a contact also illustrates of the maxim. Section 53-A of the Transfer of Property Act illustrates the doctrine of part-
performance as based on this maxim. Section 91 of The Truest Act 1882 dealing with property acquired with notice of existing contract is also illustrative of the application of this maxim.
Maxim 9
Equity imputes an intention to fulfill an obligation.
Meaning: Equity courts came into existence to do justice. They strongly believed that a person must be prepared to do what is right and fair. An old saying goes “one must be just before one professes to be generous. Equity considered 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, the latter will be so regarded, because it is right to put the most favorable construction on a man’s acts and to presume that he be generous.
England: 1) where a man is under an obligation to do an act .
2) The doctrine of performance lays down the following presumption: where a person convent for valuable consideration to purchase the nature of those covenanted to be settled , but he retain such lands unsettled till his death , equity will presume that such lands wee purchased in performance of the covenant and are bound by it .
Illustration
If A , after contracting a debt , makes a will giving the creditor a legacy, the legacy is presumed to be in satisfaction of the debt , if it is equal to or greater than the debt .
CASE:
Sowden V.Sowden
A husband covenanted with the trustees 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 land at D in his own name, for $50,000.he died and could not bring the land in to settlement. Equity courts constructed that he purchase land to fulfill his obligation created by covenant. On principle, the act done may not be exactly the same as agreed upon, but if it bears so resemblance to it that it may fairly be taken to have been his design to satisfy the obligation, equity will impute to such an act an intention to fulfill one’s obligation.
Recognition in Bangladesh: In Bangladesh, the English rule of presumption relation to satisfaction and ad-emption has been discarded. If a testator wants to satisfy his obligation by a subsequent gift, he must do so by express words. Section 177,178 and 179 of the Bangladesh Succession Act make a deliberate departure from the English doctrine of satisfaction section 177 goes.” Where a debtor bequeaths a legacy to his creditor and it does not appear from the will that the legacy is meant as a satisfaction of the debt the creditor shall be entitled to the legacy as well as the debt.”
Maxim 10
Equity acts in Personam.
Meaning: In personam is a Latin phrase meaning “directed toward a particular person”. In a lawsuit in which the case is against a specific individual, that person must be served with a summons and complaint to give the court jurisdiction to try the case, and the judgment applies to that person and is called an “in personam judgment.” In personam is distinguished from in rem, which applies to property or “all the world” instead of a specific person. This technical distinction is important to determine where to file a lawsuit and how to serve a defendant. In personam means that a judgment can be enforceable against the person wherever he/she is. On the other hand, if the lawsuit is to determine title to property (in rem) then the action must be filed where the property exists and is only enforceable
England :There was a distinction in the type of adjudicatory jurisdiction of the courts and the chancery. Courts of law had jurisdiction over property, and their coercive power arose out of their ability to adjust ownership rights. Courts of equity had power over individuals. Their coercive power was the ability, on authority of the crown, to hold a violator in contempt, and take away his or her freedom (or money) until he obeyed.
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. It does not mean that the courts of equity had taken jurisdiction over property. Rather, it required that the applicant be asserting a right of some significance, as opposed to emotional and dignitary interests.
Case Laws:
PENN VS BALTIMORE
This was a legal case involving the boundaries between William Penn’s and Lord Baltimore’s land grants from the crown in America. Charles Calvert, the third Lord Baltimore, met William Penn’s deputy in 1682, William Penn in 1683, but nothing was decided, though William Penn obtained a new grant from the Duke of York reaching into Delaware and even into Maryland; also a letter from the king requesting Baltimore to hasten the adjustment of the boundary. The case was taken to London and decided in William Penn’s favor. A compromise was arranged in 1732, and enforced by the Court of Chancery in 1760, in accordance with which a line was run by Mason and Dixon, fixing the boundary in 1767 as now.
Recognition in Bangladesh: According to opinions of many learned text writers no such jurisdiction is recognized by Bangladesh courts, while according to some , the courts in Bangladesh have limited powers of making a decree in personam, that might be in civil procedure coed section 16.
Maxim 11
Where equities are equal, the first in time shall prevail
Meaning: This rule ‘where equities are equal, the first in time shall prevail’ is applicable in cases only when equities are equal. Therefore, if equities are unequal in the sense that equity on the side of the person otherwise entitled to priority is worse, that is, he is guilty of anything unconscionable or unfair, he would lose his priority.
England: When two parties each have a right to possess something, then the one who acquired an interest first should prevail in equity. For example, a man advertises a small boat for sale in the classified section of the newspaper. The first person to see the ad offers him $20 less than the asking price, but the man accepts it. That person says he or she will pick up the boat and pay for it on Saturday. Meanwhile another person comes by, offers the man more money, and the man takes it. Who owns the boat? Contract law and equity agree that the first buyer gets the boat, and the second buyer gets his or her money back.
Case Laws:
Dearle v Hall
The rule in Dearle v Hall (1828) is an English common law rule to determine priority between competing equitable claims to the same asset. The rule broadly provides that where the equitable owner of an asset purports to dispose of his equitable interest on two or more occasions, and the equities are equal between claimants, the claimant who first notifies the trustee or legal owner of the asset shall have a first priority claim.
Decision: The actual decision in Dearle v Hall, on its facts, is relatively uncontroversial. The beneficial owner of a trust fund assigned it first by way of security to A, and then outright to B, in each case for valuable consideration. A had not given notice of his assignment to the trustees of the fund and, accordingly, when B made enquiries of them, he did not discover the existence of the assignment to A because the trustees were not aware of it. B did give notice of the assignment to the trustees, and then A subsequently also gave notice to them. Plumer MR and, on appeal, Lord Lyndhurst LC each decided that B took priority over A.
Application of the maxim in Bangladesh: Section 48, 78 and 79 of the Transfer of Property Act, provides the example of this maxim.
Section 78 provides that where through the fraud, misrepresentation, gross neglect of a prior mortgagee, another person has been induced to advance money on the security of the mortgaged property the prior mortgagee shall be postponed to the subsequent mortgage.
Maxim 12
Where There Is Equal Equity the Law Shall Prevail
Meaning: When two parties want the same thing and the court cannot in good conscience say that one has a better right to the item than the other, the court will leave it where it is. For example, a company that had been collecting sales tax and turning it over to the state government found that it had overtaxed and overpaid by 2 percent. It applied for a refund, but the state refused. The court upheld the state on the ground that the money really belonged to the customers of the company. Since the company had no better right to the money than the state, the court left the money with the state.
Case law:
Cave v. Cave(1880)
The sole trustee under a marriage settlement was also a solicitor. He and a member of the family fraudulently used the money to purchase the freehold in a house, upon which he raised a legal mortgage, followed by a number of equitable mortgages. When the fraud was discovered the house raised less money than all the claims on it, and the issue was the order in which claimants were to be paid.
Decision:” Where there is equal equity, the law shall prevail.”Because the first mortgagee had no notice, there was equal equity as between him and the beneficiaries. Subsequent mortgagees had only equitable estates, however, which (although they too had no notice of the beneficiaries’ rights) took subject to those (prior) rights. This is an application of the equitable maxim.” Where the equities are equal, the first in time shall prevail.”
Indeed, Fry J. observed” As between persons having only equitable interests, if their equities are in all other respects equal, priority of time gives the better equity, or, ‘Qui prior est. tempore potior est jure.’
Conclusion: The law of equity is as important in Canadian law as statute law and common law. It operates to provide equitable relief when there is a recognizable right but no remedy under the common law. The law of equity has developed over centuries to provide equitable doctrines and equitable maxims. These provide guidelines to the courts of equity in determining whether to exercise its discretion to grant equitable relief with the overriding objective of ensuring justice is met.