What is Equity?

A Little History to Lead Up to Modern Day Divorce

The United States of America was the outgrowth of thirteen British colonies. One of the many aspects of life from England that also settled in America along with the colonists was the law of England. Thus, in the 1700’s, the law of America were derived from the laws of England.

In our present day civil court system, there are two types of remedies: legal and equitable. Legal remedies generally deal with money damages (like a car accident). Equity was developed to introduce fairness into the legal system or where money was not a viable option. In early England, the Kings established “Courts of Law” and appointed Judges to administer the King’s law. The distinction between “law” and “equity” came about because the King’s subjects were seeking an alternative to what was perceived to be unjust rulings by the King’s Judges in a Court of law. When a ruling was deemed to be “not fair”, a party would appeal the ruling to the King to do what was “just and right”. As the ultimate ruler, the King held sole and absolute power over all persons and property within his realm. It was the who King was solely responsible to do what was “just and right” for his subjects.

It is important to note that as the ultimate ruler, the King owned all property within the realm. If there was a contract dispute between subjects, the Kings courts would rarely hand down monetary damages. Instead, the Courts would attempt to undo the contract to place the parties in the position they held before contracting (“recession”). However, the King would not always rescind a contract and thus the right to rescind a contract was deemed (as it remains today) discretionary. Rescission soon became known as an equitable (read “equity”) remedy as the King (or his Court) would attempt to do what was just and right on a case by case basis.

Equitable remedies were the province of the Courts of Chancery in England. Courts of Chancery remain available today in some jurisdictions. In most jurisdictions however, legal and equitable remedies have been merged into a single court that can rule upon cases arising under law or equity (equity and law were merged in Maryland in 1992). Despite the judicial merger of law and equity, the distinction between equitable and legal remedies remains relevant in significant number of instances, like those cases that involve family law.

The Growth of Courts of Equity

Eventually, as Kingdoms grew, and as the King’s available time to judge disputes became scarce, the King delegated his rights/duty as the just and right appeal Judge to his Chancellor(s). Early Chancellors were often members of the Church Clergy because they were supposed to be the King’s conscience. As a result of their theological and clerical education and training, Chancellors heavily influenced the development of what is known today as Courts of Equity. Eventually these “Chancellors” grew to what became known as the “Courts of Chancery”. Today, in many states, equity cases are still heard in Chancery Courts by Chancellors.

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.

It is said that a Court of Equity attempts to do what is just and right for the party litigants. Equity Court place their emphasis on what the parties know, their conduct, and their motives. It is supposed to be relevant to an Equity Court Judge to determine whether to grant a party litigant the relief requested as being “just and right”.

Maxims of Equity

Over time, Equity Courts acquired several maxims, (a/k/a rules or principles). These maxims of equity work to both assist the good and to frustrate the wrongdoer. Maxims work to limit the granting of equitable relief to an unjust or undeserving party.

The standard that was established for an equity court to guide it in fashioning a decree was: equity attempts to do what is just and right.” To assist the Court in determining what is, or is not, just and right, several maxims of equity were established to be applied by the Court. Some of those maxims include:

a.  He who seeks equity must do equity: This is also sometimes referred to as the doctrine of unclean hands. Equity will not reward a wrongdoer. This maxim recognizes the necessity that in order for a party Plaintiff to obtain equitable relief, that party must be prepared to do what is just and right for/to their adversary. In divorce, this includes the right that both parties are to do equity in the settlement/division of marital property.

b.  He who seeks equity must come before the Court with clean hands: 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.” An Equity Court will not assist a claimant who is in the wrong or acting for improper motives. (As an example: the party who commits adultery cannot petition for a divorce based upon their adulterous affair.)

c.  Equity delights in equality: This is the bedrock for principle of the equitable distribution of marital property on a 50-50 basis.

d.  Equity aids the vigilant and will not reward those who slumber on their rights. Not to be confused with modern day statutes of limitations, the Rule of Laches is that a party who suffers a wrong must timely pursue their rights in a Court of Equity or they risk being barred from obtaining relief. (As an example: the party whose spouse committed adultery decides to file for divorce a year later risks having the Court declare that the “injured spouse” slept on their rights.)

e.  Equity acts “in personam:” Equity Courts have the power to declare that a party must perform specific acts.

f.  Equity never loses jurisdiction. Equity Courts have the ability to retain its power over party litigants well after their underlying case has been resolved. This maxim is the basis for why issues involving children in divorce are not over until the child reaches the age of majority.

g.  Equity looks to the intent rather than the form: The law of the Kings was rigid and in most cases, inflexible. The King’s law and the King’s Judges would look to the very letter of an agreement and not parties intentions when contracting. The Equity Courts however, looked to the spirit and intention of parties at the time of contracting, and not to the letter of the parties agreement.

h.  Equity looks on that as done which ought to be done. Courts of Equity 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. Between two parties, where one party has incurred an obligation and undertaken to do something for the other, a court of equity looks on the obligation as being done and as producing the same result as if the obligation or undertaking had been actually performed.