Equity (Law)
United States
In modern practice, perhaps the most important distinction between law and equity is the set of remedies each offers. The most common civil remedy a court of law can award is monetary damages. Equity, however, enters injunctions or decrees directing someone either to act or to forbear from acting. Often, this form of relief is in practical terms more valuable to a litigant; for example, a plaintiff whose neighbor will not return his only milk cow, which had wandered onto the neighbor's property, may want that particular cow back, not just its monetary value. However, in general, a litigant cannot obtain equitable relief unless there is "no adequate remedy at law"; that is, a court will not grant an injunction unless monetary damages are an insufficient remedy for the injury in question. Law courts can also enter certain types of immediately enforceable orders, called "
writs" (such as a writ of
habeas corpus), but they are less flexible and less easily obtained than an
injunction.
Another distinction is the unavailability of a jury in equity: the judge is the
trier of fact. In the American legal system, the right of
jury trial in civil cases tried in federal court is guaranteed by the
Seventh Amendment in Suits at common law, cases that traditionally would have been handled by the law courts. The question of whether a case should be determined by a jury depends largely on the type of relief the plaintiff requests. If a plaintiff requests damages in the form of money or certain other forms of relief, such as the return of a specific item of property, the remedy is considered legal, and a jury is available as the fact-finder. On the other hand, if the plaintiff requests an
injunction,
declaratory judgment,
specific performance, modification of contract, or some other non-monetary relief, the claim would usually be one in equity.
Thomas Jefferson explained in 1785 that there are three main limitations on the power of a
court of equity: "If the legislature means to enact an injustice, however palpable, the court of Chancery is not the body with whom a correcting power is lodged. That it shall not interpose in any case which does not come within a general description and admit of redress by a general and practicable rule."
[43] The US Supreme Court, however, has concluded that courts have wide discretion to fashion relief in cases of equity. The first major statement of this power came in
Willard v. Tayloe, 75 U.S. 557 (1869). The Court concluded that "relief is not a matter of absolute right to either party; it is a matter resting in the discretion of the court, to be exercised upon a consideration of all the circumstances of each particular case."
[44] Willard v. Tayloe was for many years the leading case in
contract law regarding intent and enforcement.
[45][46] as well as equity.
[45][47]
In the United States, the federal courts and most state courts have merged law and equity into courts of general jurisdiction, such as county courts. However, the substantive distinction between law and equity has retained its old vitality.
[48] This difference is not a mere technicality, because the successful handling of certain law cases is difficult or impossible unless a temporary restraining order (TRO) or preliminary injunction is issued at the outset, to restrain someone from fleeing the jurisdiction taking the only property available to satisfy a judgment, for instance. Furthermore, certain statutes like the
Employee Retirement Income Security Act specifically authorize
only equitable relief, which forces American courts to analyze in lengthy detail whether the relief demanded in particular cases brought under those statutes would have been available in equity.
[49]
Equity courts were widely distrusted in the northeastern United States following the American Revolution. A serious movement for merger of law and equity began in the states in the mid-19th century, when
David Dudley Field II convinced New York State to adopt what became known as the
Field Code of 1848.
[50][51] The federal courts did not abandon the old law/equity separation until the promulgation of the
Federal Rules of Civil Procedure in 1938.
Three states still have separate courts for law and equity:
Delaware, whose
Court of Chancery is where most cases involving
Delaware corporations (which includes a disproportionate number of multi-state corporations) are decided;
Mississippi; and
Tennessee.
[52] However, merger in some states is less than complete; some other states (such as Illinois and
New Jersey) have separate divisions for legal and equitable matters in a single court. Virginia had separate law and equity dockets (in the same court) until 2006.
[53] Besides
corporate law, which developed out of the
law of trusts, areas traditionally handled by chancery courts included
wills and
probate,
adoptions and
guardianships, and
marriage and
divorce.
Bankruptcy was also historically considered an equitable matter; although
bankruptcy in the United States is today a purely federal matter, reserved entirely to the
United States Bankruptcy Courts by the enactment of the
United States Bankruptcy Code in 1978, bankruptcy courts are still officially considered "courts of equity" and exercise equitable powers under Section 105 of the Bankruptcy Code.
[54]
After US courts merged law and equity, American law courts adopted many of the procedures of equity courts. The procedures in a court of equity were much more flexible than the courts at common law. In American practice, certain devices such as
joinder,
counterclaim,
cross-claim and
interpleader originated in the courts of equity.
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