KD 674.B59 e " Unlversl, v Library Eq ^!jf..iS,a?,S«ons.tp | cornrnonlaw 3 1924 021 865 047 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924021865047 EQUITY in its Relations to Common Law A STUDY IN LEGAL DEVELOPMENT BY \ be appointed for the purpose by the court, -ewin on Trusts (1st Am. from 8th Eng. ed.), 818-20. 204 Equity and Common Law the radical change which we have seen taking place or at least culminating in the reign of Charles II, whereby the trust became binding upon the husband, wife, and credi- tors of the trustee, and came to be known as an estate in the land. Prior to that time confessedly, property escheated free from the obligation of any trust. After that, professional opinion upon the subject seems to have been so divided that it was still an open question when put at rest upwards of a century later by the statutes presently to be mentioned. The singular failure of equitable doctrine to crystallize upon this subject was probably due to the fact that nearly always the claimant of the escheat was the King. Four centuries had elapsed since the creation of new mesne lords had been made impossible by the statute Quia Emptores, during which a very large percentage of all lands in the kingdom had reverted to the King by forfeiture or escheat and had been regranted to be held directly of him. Even the few remote mesne lords that still subsisted were likely to find insuperable difficulties in proving their relations to the land. 42 These conditions had two effects. Litigation over escheats was rare, owing to the same difficulty in finding a remedy against the King which has just been noticed in connection with forfeitures for high treason. It seems also to have been the custom of the King to respect the just claims of the cestui que trust upon es- cheated lands. The provision in Statute 39 & 40 Geo. Ill, c. 88, sec. 12, authorizing him to respect such claims, recites that it was enacted because of doubts whether certain former statutes may not have deprived him of the power to do so. That a point had been reached when, in principle, a trust upon escheating property would follow it into the * 8 Sol. J. & Rep. 877. Uses and Trusts hands of the lord, and that such would have been juridical as it was finally the legislative upshot conditions been favorable to a thorough threshing 01: the subject, appear to be now fairly demonstrable ; positions, although there never has been any lacl reputable support for the contrary view. Probably the earliest direct deliverance upon the : ject was by Sir J. Trevor, Master of the Rolls, whc way of argument only, in Eales v. England, 43 in 1702 w the doctrine of equitable estates was still young, remai that "if the trustee die without heir, the lord by esc] will have the land at law, yet subject to the trust he In 1846 in White v. Baylor, 44 it was definitely so adjuc in Ireland, which seems to be the only direct deci pro or con upon the specific point. In 1741 the ques was regarded by Lord Hardwicke as still an open o: A little later in the notable case of Burgess v. Whet where the point was material only for purposes of a ment, the three eminent judges divided, Lord Mans: holding that the trust was binding upon escheated 1; Sir Thomas Clarke holding the contrary, and I Keeper Henley not committing himself. There is, however, a line of cases bearing indire upon the question which when fairly applied are c sive of it. When, as originally, feuds were granted < for the life of the tenant, there remained in the lo] true reversionary interest, and paramount title, wi the tenant was incompetent to impair or incum So it was when afterwards the feuds came to run to tenant and his heirs, whether the heirs were deeme< 43 Prec. Ch. 200; 1 Eq. Cas. Abr. 384. 44 10 Ir. Eq. Rep. 54. 45 Reeve v. Ally. Gen., 2 Atk. 223. 46 1 Eden 177. 206 Equity and Common Law take by purchase, as they were at first, or by inheritance, as they were later. By the ultimate interpolation in the feoffment of the words "and assigns" after the word "heirs," the nature of the transaction was radically, modified. The lord no longer had an interest either truly reversionary or truly paramount. Although he had a possibility of reverter in the event of there being at any time neither tenant, heirs, nor assigns to perform the stipulated services, the land would come back to his hands not as it left them, but as it was left after running the gauntlet of the absolute powers of disposition with which the tenant, his heirs, and assigns had been clothed. For it became recognized law that the power to assign included the powers to incumber and devise. In deter- mining in any given case what was the extent of the interest left available for escheat to the lord, were the principles of the common law alone to be consulted, or might the tenant's interests available for escheat be expanded or contracted by appeal to the doctrines of equity? It goes without saying that the benefits of equity must be either accorded or denied to both parties alike. If equity would operate in some cases to enlarge the escheatable interest and in others diminish it, it must be permitted to do both or neither. Whether equity could be appealed to for such purposes was the question presented in 1685 in Thruxton v. Attor- ney General. 4 - 1 It was the case of a fee owner who died without heirs or devisees after having carved out of his fee a hundred-year term to be held in trust for such purposes as he should appoint and, in the absence of appointments, to attend the inheritance. Although at law the escheatable interest of the deceased had been curtailed by the alienation of the hundred-year term to " 1 Vern. 340. Uses and Trusts 207 ustee, subpoena was held to lie to secure to the Le benefit of the term thus equitably attendant upon :heating fee. The authority of the decision remains aired; and if in gauging the escheatable interest heirless tenant his trust relations are to be con- i, they must be equally reckoned with whether itus is that of cestui que trust or trustee. Thruxton case was followed by Wigram, V. C, in when by analogy to it a lord taking the freehold by ,t from one who had given a mortgage upon a term rs in the property was held to take also the equity emption from the mortgage. 48 rinciple to which this was in the nature of a recipro- as indeed even older than the Thruxton case. For 8, in Pawlett v. Attorney General,® it had been con- i that the lord taking the legal title by escheat on of the mortgagee of the land without heirs must take :t to the mortgagor's equity of redemption. The i assigned for this conclusion was that an equity of ption is an equitable estate in the land. This ted unmistakably: (1) that the lord's title upon it is not paramount or elder in such a sense as :arily to prevail against equities by which the legal Lad come to be affected while in the hands of the t; (2) that an equity which constitutes an equitable will follow and bind the land in the hands of the aking by escheat, just as will an outstanding legal brance or minor legal estate. Probably, therefore, ould have been accepted as decisive of the force of generally against lords taking by escheat had octrine been developed then as it is now, that stui que trust has an estate in the land. That it was scount Downe v. Morris, 3 Hare 394, 404. ird. 465. 208 Equity and Common Law not then so developed is evidenced, among other ways, by the opinion of Hale, C. B., in that case; for by way of dic- tum, he expressly contrasts an equity of redemption and a trust as being the one an estate and the other not an estate in the land. In all of which he was justified by the law of the day. If when Lord Hale thus spoke, the right of the cestui que trust had ever been ranked as an equitable estate in the land, it has escaped the writer's notice. That conception was then close at hand but had not arrived, or at all events had not yet become generally current. It will be observed that chronologically the Pawlett case fell midway between the binding of the trustee's wife by the trust and the binding of the trustee's husband and creditors; and it was not until the latter were bound that in culmination of the long line of developments already traced and others yet to be noticed, the trust was definitely reinterpreted to be an estate in the land. From the time of that new departure, it was a foregone conclusion that sooner or later, though difficult to foresee how soon or how late, the line that the dictum of Sir Matthew Hale had drawn between the equity of redemp- tion and the trust must be recognized as having been effaced, so as to leave the latter in the same class with the former with respect to escheating lands. There then remained no vestige of foundation in either morals or logic for discriminating between them in cases of escheat, or for according to the trust any less force against the lord than against the wife, husband, or creditors of the trustee. However, as owing largely to the peculiar conditions already indicated the subject failed to clarify as a matter of equitable doctrine, it was finally put at rest by Parlia- ment as already noticed, at first through acts confirming the King in his practice of recognizing the claims of the cestui que trust, and later by acts expressly authorizing Uses and Trusts 209 the Court of Chancery to decree the conveyances necessary for that purpose. 60 These statutes, if not simply declaratory of an existing equity, were in the nature of a legislative extension of one, since which, if not before, a trust is as good against a lord taking the pro- perty by escheat as against the original trustee. So that the supposed exemption of the lord from the force of a trust can no longer be appealed to in derogation of the proprietary character of the beneficial interest. The normal substitute right of the lord to take by escheat the equitable estate of the cestui que trust upon his death without heirs, equity had been incapacitated to recognize by the decision in Burgess v. Wheate, bl which, by placing the right of escheat upon the absence of any one to perform the services rather than upon the absence of heirs, had made it inapplicable to equitable estates, as the trustee was always present to perform the services. Nor had equitable estates ever been so far incorporated into the system of tenure as to be deemed escheatable even apart from that particular difficulty. The lord's just claim to a compensatory right to the escheat of equitable estates was finally recognized by sec. 4 of the Intestate's Estate Act of 1884. With these problems respecting the peculiar rights of the feudal lord, our American equity has never been vexed, as our law of escheat is not of feudal derivation but rests on the universal principle which entitles the sovereign to all unclaimed property. With us confessedly the state, in the absence of heirs, succeeds to the title of a deceased owner, without any claim of paramount rever- sionary or seigniorial interest in itself, and so has always 60 Stats. 39 & 40 Geo. Ill, c. 88, sec. 12; 59 Geo. Ill, c. 94; 4 & 5 Will. IV, c. 23; 13 & 14 Vict., c. 60; 1 & 2 Vict., c. 69. 61 1 VA*r> 1 77 9m 91 9 949_7 9K1 210 Equity and Common Law taken in acknowledged subordination to outstanding trusts — a high tribute to the actuality of equitable ownership. And this principle and its correlative, the doctrine that equitable estates should be escheatable, have been recognized in the statutory regulations of the subject in nearly all of the states. 52 Thus finally we reach the case of the simple trespasser upon the trust property, and the case of the disseisor and the like — the stranger who without any relation of priv- ity to the trustee takes adverse possession of the land. As against them, is the cestui que trust so deficient in rights as to make inappropriate the ascription to him of an equitable ownership? Practically he has never been defenseless against any of these intruders since the early day when the defense of the land came to be reckoned a duty which by subpoena the trustee, nolens volens, could be compelled to perform. But it may be argued that this denotes, not any right in the cestui que trust as against such intruders, but only that for his benefit equity compels an exercise of the rights of the trustee. Such no doubt was the view originally taken. It was, however, but a transitory view, for experience seems to show it a law of thought that rights generally, whether substantive or remedial, held by one person, which he is compellable to exercise for the use or benefit of another, tend gradually to be deemed the rights of that other. The same intellectual processes that have developed the cestui que trust into equitable owner of what were origin- ally the trustee's rights of beneficial enjoyment have in- vested him equitably with what were originally the trustee's remedial rights against wrongful intruders. The action for trespass or in ejectment, though in the name of the trustee, is seen to be for the use and benefit 62 Stimson's Am. Stat. Law, sees. 1151, 1152, Uses and Trusts of the cestui que trust, who is the real party in inte and who comes ultimately to be thought of as in ; stance or effect suing the trespasser or disseisor in trustee's name. So that now in case of refusal b trustee to bring an action proper for the collection, ; tection, or recovery of trust property, action in name may by order be authorized to be brought by cestui que trust,™ or the latter may be authorized to in equity in his own name, making the trustee a p; defendant. 54 Indeed, generally now without spt order the cestui que trust may, in equity, in his own na have relief though legal in character whenever, owin the trustee's refusal to sue, or to his incompetency, or vacancy in the office, or to other special circumstari relief cannot conveniently be pursued through trustee. 55 And even apart from these special difncul if the requisite relief against the wrongdoer is equit in character, such as an injunction against a tres] that is destructive of the substance of the estate w' 53 Sharpe v. San Paulo Ry. Co., L. R. 8 Ch. App. at p. 610. 64 Meldrum v. Scorer, 56 L. T. N. S. 471. See Jerdein v. B; 2 J. & H. 324, and Laws of England, vol. 28, pp. 172, 183, and > cited. 65 Western Ry. Co. v. Nolan, 48 N. Y. 513, 518; Robinsi Adams, 81 App. Div. N. Y. 20, 25; Anderson v. Daley, 38 App. N. Y. 505, 510; Chicago, etc., Ry. Co. v. Fosdick, 106 U. S. at p Hammond v. Messenger, 9 Sim. 327; Arnett v. Bailey, 60 Ala. 438; Zimmerman v. Makepeace, 152 Ind. 199; 1 Perry on T: (6th ed.), sec. 328, note. "The bondholders [secured by trust deed] are the real pa in interest; it is their right which is to be redressed, and theii which is to be prevented." Ellinger v. Persian Rug Co., 142 J 189. "If for any cause the legal ownership could not be I effectual for the protection of the wife's equitable right, the c< would have administered appropriate equitable relief." Richai v. Lewis. 22 Mo. 495. 212 Equity and Common Law- there are not conflicting claims of title or the injunction is temporary, the cestui que trust may have it in his ownname. The plain meaning of all this is that the old linked up rights of trustee against invading stranger and of cestui que trust against trustee have fused in the melting pot of experience; that the right to redress against the invader has come to be regarded in equity as essentially the right of the cestui que trust, and none the less his right because in deference to the common law it is pursuable only in common law courts, and therefore only in the name of the common law owner, so far as in that way the ends ' of justice can be conveniently and adequately attained. Although the cestui que trust is thus assured of the bene- fit of all appropriate legal and equitable remedies neces- sary for the protection of his beneficial interest against trespass and dispossession, there are those who find in the intermediacy of the trustee, even when thus qualified as being non-essential, enough to deprive the cestui que trust of that directness of relation to the property which no doubt is a very general characteristic of ownership. In that connection, however, the essential matter is not directness of remedy, but immediacy of right. The presence of the former is important only so far as it may be due to the absence of the latter. And since in modern equity a cestui que trust has, demonstratively as we have seen, a direct right against trespassers and disseisors capable of direct enforcement when necessary, its proprie- tary character is not impaired by the fact that owing to our uniquely divided jurisdiction his remedy, so far as practicable, must be sought through or in the name of his trustee as a real or nominal intermediary, as a remedial device for gaining access to the legal forum appropriate for the trial of trespasses and disseisins. The beneficial interest of the cestui que trust being thus amply protected against disseisins, it is immaterial Uses and Trusts for our purposes whether or not he may at his op hold a disseisor liable as trustee. As a criterion of ] .prietary right, several remedies against a disseisor wc be no better than one. Yet a glance at the subject r not be amiss. About the close of the sixteenth century, in the cas Sir Moyl Finch,™ it was said of a disseisor that he "subject to no trust, nor was any subpoena maintain; against him, not only because he was in the post, because the right of inheritance or freehold was delermin at the common law and not in the Chancery," which is same thing that a few years before had been said Popham, C. J., in Chudleigh's case. 57 Singularly, the specific question seems never to h been re-examined judicially from that day to this, i withstanding the subsequent classification of the ri of the cestui que trust as an equitable estate and shaking up that the principle of privity received dui the reign of Charles II. This no doubt is due largel; the fact that since the defense of the land became of the enforceable duties of a trustee, the ability of cestui que trust to compel the trustee to eject a wron invader has dispensed with the practical necessity any more direct remedy against the latter. Ejec would be the natural and favored remedy agains disseisor and his kind, however clear might be the al native remedy of adopting him as trustee, and existence of the former remedy must have tended retard the development of the latter by making it t unnecessary to the ends of justice. The moral neces that led to the attenuation or abandonment of the conception of privity in order to bring into subjec 66 4 Inst. 85. "1 Rpn. 139. h. 214 Equity and Common Law to the trust the wife, husband, and creditors of the trustee has not been felt therefore in dealing with the case of the disseisor. It is probably fair to say that so far . as the subject has been adverted to in professional thought, which is to a very limited extent, the general current of assumption has been that the doctrine of Sir Moyl Finch's case never having been specifically over- ruled still holds or may hold good- — although never reaffirmed: that the later developments, while binding as privies to the trust many not falling within the circle of privity as originally defined, have not imported an entire abandonment of privity to the trustee as a limita- tion upon the force of a trust. If it is still true at this day that subpoena will not he against the disseisor to compel him to perform the trust, the question yet remains whether now this is for the first of the two reasons assigned in the Finch case, or for the second, or for both. Is it because equity refuses to raise a trust against the disseisor owing to lack of the necessary privity, or only because the latter's claim of paramount title raises an issue upon which he is entitled to a jury trial in a court of law? It cannot be said with certainty that something like the second of these reasons is not still effective to prevent the charging of a disseisor as trustee, even though the limitations of the trust to privies may have been abandoned. It is conceivable for instance that the situation might be regarded as analogous to those in which equity refuses to permanently enjoin a trespass or act of waste, no matter how destructive or irreparable, committed by one in possession claiming title, and enjoins only long enough to enable the plain- tiff to try his title at law. 58 6a Erhardt v. Boaro, 113 U. S. 537, 539; Leroy v. Wright, 4 Sawy 530, 535. Uses and Trusts In the absence of some such special objection as having regard to the form of the remedy or to the for the writer believes the time not far away when it wil recognized that there is no subsisting reason for not ch; ing the disseisor as trustee at the option of the benefici. While space is not available for a full discussion of subject, two recent doctrines bearing upon the ma from different standpoints may be noticed as stror premonitory of the suggested change of view. They the doctrines that the equity created by a negative co\ ant restricting the use of land is binding upon a disse of the covenantor, 69 and that equity will charge a, t as trustee of the chattels he has stolen and of ot properties into which they may have been converte even though the conversion is into land. 61 One rea assigned in the Court of Appeals for the former of tl doctrines was the injustice of so limiting the eqi "that the squatter could as against the covenantee ; cessfully plead his own trespass as putting him i: better position than if he had gone upon the land right." Similarly the second doctrine was evolved by following reasoning in the first of the New York ca "It would seem to be an anomaly in the law, if the ow who has been deprived of his property by a larc should be less favorably situated in a court of equit] respect to his remedy to recover it, or the property i which it had been converted, than one who by an at of trust has been injured by the wrongful act of a tru to whom the possession of trust property has been ( tided. The law in such a case will raise a trust in invi 69 Nisbet-Potts Contract, 1905, 1 Ch. 391 ; affirmed C. A. in 1 1 Ch. 386. 60 Newton v. Porter, 69 N. Y. 133, 139; Lightfoot v. Davis, N. Y. 261, 270. 216 Equity and Common Law out of the transaction for the very purpose of subjecting the substituted property to the purposes of indemnity and recompense." Although this reasoning is now applicable in full force to the disseisor of a trustee, it is important to notice that it did not become applicable until long after the period of the Finch decision. At the date of that case, the conception of privity for the purposes now in hand was such that the drawing of a line between privies of the trustee and a disseisor, to the advantage of the latter, was explicable morally. For then, with the exception of the heir whose peculiarity of status has been noticed, only those were bound as privies who came in in the per; i.e. by the voluntary act of a faith-breaking trustee, and with an actual or legally presumed knowledge of the trust, which made them the accomplices in his perfidy. The disseisor had no connection with any breach of trust and there was no inconsistency in distinguishing between his wrong and the corrupt breach of faith in which every- one was a participant who was then ranked as a privy, excepting only the innocent purchaser for value of the legal title, and the confessedly eccentric case of the heir. But since the time when during the reign of Charles II the theory of the subject was rebuilt, the old distinction between those in the per and those in the post ignored, and the trust held binding upon persons succeeding to the trustee's estate by operation of law and without breach of faith on the part of anyone, as in the case of the wife, husband, or creditor of the trustee, discrimination in favor of disseisors as compared with this new class of innocent privies has been destitute of moral basis. However, as remarked, though a disseisor should not be chargeable as trustee, the fact would not be inconsistent with the proprietary character of a cestui que trust's right, as the latter is protected by other remedies. Uses and Trusts 217 We have now followed the right of the cestui que trust from its inception as a right against a particular person through the prolonged processes of development that gradually have made it good against the world generally, and so have raised it to the rank of a right in rem, accord- ing to the standards of general jurisprudence rationally construed and applied. We have identified as the three principal phases of the development: (1) a progres- sive refinement in the standards of fair-dealing enforced by equity against successors in interest of the trustee, until all such successors were bound except innocent purchasers for value of the legal title; (2) a reconception of the right to redress for trespass upon or disseisin of the trust property, as essentially the right of the cestui que trust, enforceable by him at law in the name of the trustee, or in equity in his own name whenever, for any reason, action by the trustee himself for the cestui que trust's benefit is not a reasonably available remedy; and (3) the adoption, broadly, of the doctrine that a trust divides ownership into its formal and its sub- stantial elements, of which only the former pass to the trustee, while the latter, constituting true or beneficial or equitable ownership, vest in the cestui que trust. In the first two of these developments we have the pro- duct of the interworking of equity's compulsory process with her exacting morality and with her searching pursuit of substance with indifference to form, while in the third we have the theoretical rounding out of the meaning and effect of. the first two of the developments, and the modern reinterpretation of the trust relation in their combined light. How literally expressive to equity's true meaning the doctrine of equitable ownership is, how variously fortified the doctrine is against reduction to a mere figure of speech, have incidentally appeared in 218 Equity and Common Law the course of this review. There remain a few corrobora- tive points yet to be noticed. If the right of the cestui que trust were really a right in personam, it would follow of course that in equity as well as at law all elements of ownership, both formal and beneficial, must be vested in the trustee, and that upon the death of the cestui que trust without heirs, they must remain in the trustee, freed from the extinct trust obliga- tion. The acknowledged rule is the contrary of this; and proceeding upon the principle that only the formal elements of title are in the trustee, the beneficial elements under such circumstances are held to escheat to the estate as unowned property. 62 The significance of this rule is not impaired by the fact that in England it is not applied to lands, as that idiosyncrasy is due, as already noticed, to the peculiarly feudal interpretation there placed upon the law relative to the escheat of lands, whereby the condition of escheat is held to be the absence of any person to whom the lord can look for the perform- ance of the services. 63 As he can look to the trustee for such performance, the death of the cestui que trust without heirs works no feudal escheat, and escheat of lands as bona vacantia has not been established as a principle of English law. Personalty held in trust there is, however, recognized as bona vacantia when the trust is terminated either by death of the cestui que trust without heirs, or by fulfillment of the trust without exhaustion of the trust property and with no one living in whose favor a trust as to the residue can result. 64 One noteworthy token of ownership in the cestui que trust has been the gradual fading out of the appearance of 62 1 Perry on Trusts (6th ed.), sec. 327 and cases cited. ^Burgess v. Wheate, 1 Eden 177, 201, 212, 242-7, 251. 64 Middleton v. Spicer, 1 Bro. C. C. 201; Underhill on Trusts (7th ed.), 207. Uses and Trusts 219 ownership in the trustee, until the latter has come to re- semble not so much a proprietor as a functionary used by the courts in administering the trust property for the benefit of the cestui que trust as its real owner. The powers of control exercised by the Court of Chancery over the trustee and trusteeship in the interest of the cestui que trust proved, when fully unfolded, to be incom- patible with any theory of real or substantial ownership in the trustee. Nor was this only because in an owner- ship without the benefits of ownership, the substance of the relation is wholly missing. Power to control the trustee in his dispositions of the property proved to carry with it the power to remove him from its custody when disobedient or unfaithful, and to nominate his successor. The power to fill a vacancy thus arising was held applicable to a vacancy occasioned by failure of the creator of a trust to name a trustee, or by refusal or incapacity of the person named to act. Thus it is that equity will never suffer a trust to fail for want of a trustee, will shift the office from hand to hand as justice to the cestui que trust may seem to demand, irrespective of com- plete lapsings of the formal title, and in cases of necessity will administer the property directly without the instru- mentality of a trustee. These juridical manipulations of the trusteeship are suggestive that the trustee is something very different from veritable owner; and every erosion from the ownership of the trustee has meant a corre- sponding accretion to the ownership of the cestui que trust. Those who deny that the cestui que trust's right is pro- prietary generally insist that there are inherent in the nature of the equity jurisdiction and in the personal character of the process, limitations that incapacitate equity from creating rights in rem. The inaccuracy of this assumption is evidenced by several doctrines not dependent upon the trust principle, though generally of 220 Equity and Common Law such a nature as to be reinforceable by that principle as occasion may arise. Among them is the doctrine of the equity of redemption. At its inception a mere boon from the Chancellor, or a personal privilege 65 of redeeming mortgaged lands from forfeiture by reason of default in payment at the stipulated date, it had grown before the middle of the seventeenth century into "a right inherent in the land," 66 i.e. into an interest then some- what ^determinate and nondescript no doubt, yet in the nature of an estate. During the ensuing century that estate of the mortgagor became well denned as the same that he had before executing the mortgage, except that it is now equitable because cognizable only by a court of equity, the estate remaining with him upon the principle that in the estimation of equity the mortgage, despite its language of actual conveyance, was operative only to impose a Hen. 67 Thus, however radically the equity of redemption may differ from an ordinary trust estate in mode of origin and development, it illustrates aptly both the capacity and the tendency of a personal right touching realty, conferred as a boon by the Chancellor, to develop into a veritable estate in the land to which it relates. Another instance of the raising of an equitable estate by denying, though upon different grounds, the efficiency in equity of a conveyance operative at law, is seen in the case of a deed obtained by fraud, in which case the vendor in the view of equity "remains the owner." ** 65 Roscarick v. Barton, 1 Ch. Cas. 217. See Lord Blackburn's remarks in Jennings v. Jordan, 6 A. C. at p. 714. 66 Pawlett v. Atty. General, Hardr. 465. 67 Casborne v. Scarf e, 1 Atk. 603 ; Fairclough v. Marshall, 4 Exch. Div. 37; Van Gelder v. Sowerby Society, 44 Ch. Div. 374, 390, 393; Strode v. Russell, 2 Vern. 625. 68 Lord St. Leonards in Stump v. Gaby, 2 DeG. M. & G. 630; Gresley v. Mousley, 4 DeG. & J. 78, 92. Uses and Trusts 221 One of the most decisive tests to which the meaning of equity in affirming the existence of equitable interests in land has been subjected occurred in 1882, in London &» 5. TF. Ry. Co. v. Gomm. 69 A conveyance of land con- tained a contract by the grantee for himself, his heirs, and assigns to reconvey at a stipulated price whenever the vendor company should need the land for its business. The suit was to enforce the contract against an assign of the vendee who had taken with notice of the contract, and who defended upon the ground that the contract was void as creating a perpetuity. By the lower court, this defense was overruled upon the theory that contracts to buy or sell land do not run with the land and are not binding upon an assign unless he takes with notice; that they are not, properly speaking, estates or interests in land, and are therefore not within the rule against per- petuities. 70 The Court of Appeal broadly negatived the supposition that the defendant could be charged upon the. theory that he took with notice of a personal contract to sell, 71 and held that the contract was capable of binding him only because it invested the contractee with an interest in the land, and that it was therefore void as creating a perpetuity. 72 It was said that in the view of equity it was the same as though the estate had been conveyed subject to the conditional limitation that it should revest in the vendor whenever he should pay to the vendee, his heirs, or assigns a specified sum. Equally significant are the cases already cited in another connection 73 holding an executory contract for the sale of a ship to be an instrument transferring the 69 20 Ch. Div. 562. 70 lb. 576. 71 lb. 580. 72 lb. 582-8. 73 See chap, v, supra, where the cases are more fully stated. 222 Equ'ity and Common Law property in the ship within the meaning of a statute requiring instruments of transfer to recite the certificate of registration, 74 and holding valid an equitable charge although of a kind prohibited by statute passed between the date of the contract for the charge and the time of the suit, overruling a contention that an equitable charge is only a right to secure a legal charge by specific perform- ance, and that what the court was asked to do was to create a charge contrary to the statute. 75 The capacity of an equitable right to become pro- prietary has been proven nowhere more decisively than in connection with the evolution of equitable easements which has occurred wholly since about the middle of the last century. Down to that time a covenant by a land- owner restricting the uses to which his land should be put, analogously to the original conception of a trust obligation, was deemed purely personal to the covenan- tor and not binding upon his successors in the occupation of the land. Then, by Lord Cottenham in Tulk. v. Moxhay,™ the covenant was held binding upon one purchasing property with notice of it. Then gradually there were applied the principles of presumptive and con- structive notice that had been worked out in connection with trusts and other equitable interests, with the result of binding by the covenant all who succeeded to the covenantor's estate either gratuitously or with notice; i.e. all privies except innocent purchasers for value of the land. It was perhaps the general supposition that this repre- sented the maximum force of the restrictive covenant. But when the question was presented it was held by Far- 74 Hughes v. Morris, 2 DeG. M. & G. 349. 76 Metcalfe v. Archbishop of York, 1 My. & Cr. 547. 16 2 Phill. 774. Uses and Trusts 223 well, J., and affirmed by the Court of Appeal, as hereto- fore noticed, that all subsequent occupants of the land irrespective of privity are bound, except innocent purchasers for value; that the covenant binds the land itself, and not merely the consciences of the covenantor and his successors in interest; that the right that it creates is in the nature of an equitable easement which, without reference to his knowledge of it, is binding even upon a squatter or disseisor before the statute of limitations has run in his favor, and even afterwards when during the limitation period the occupancy has been such as not to involve a violation of the covenant. 77 To the judges who decided the above cited Gomm case and the Nisbet-Potts Contract case, the profession owe " Nisbet-Potts Contract, 1905, 1 Ch. 391; affirmed C. A. 1906, 1 Ch. 386. See chap, v supra for extracts from opinions. To many members of the profession these decisions appear to have come as a surprise. By the Solicitors' Journal and Reporter they were criticized as "in fine disregard of old real property law," and were said to have occasioned "uncommon interest and prodigious dis- cussion at Lincoln's Inn." By the Law Quarterly, on the other hand, they were welcomed as "plain good sense." Vol. 22, p. 124. To the writer their principle appears to have been implicit in concep- tions of equitable right that have been administered by equity from the time of Charles II. Those desiring to pursue the subject will find the decisions adversely discussed in editorials in the Solicitors' Journal, vol. 49, p. 275, vol. 50, pp. 123, 186, and in articles by Mr. T. Cyprian Williams in vol. 51, pp. 141, 155. Mr. Williams, while criticizing the Court for holding the squatter bound, insists, and justly as it seems to the writer, that the argument for binding him by an equitable estate is even stronger than that for holding him to a restrictive covenant. For, as Mr. Williams says (p. 155), "of all equities, an express trust imposed on the owner of land to hold it for the use of another in fee, is the most powerful, the most intense, and the most adverse to the owner's legal right." He further points out that if occasion were to arise, the doctrine of restrictive covenant could be subsumed appropriately under the doctrine of trusts, 143, 155. 224 Equity and Common Law a debt of gratitude for their explicit renunciation of the anachronous theory that it is because of actual or implied notice that equity binds an assign of property by a covenant or obligation of his assignor respecting it; a debt which is perhaps all the greater, rather than less, because the renunciation was overdue by upwards of two centuries. It was a theory to which early equity had recourse in order that the then novel liabilities it was introducing might be subsumed under the principle of fraud. At the best it was a scaffolding to facilitate the erection of a doctrine of equitable interests and estates, and has been only confusing and obscuring rubbish since that doctrine was practically completed shortly after the Restoration, so as to bind irrespectively of notice all successors in interest except innocent pur- chasers for value of the legal title. The bearing of notice in the case of a trust is identical with its bearing in case of a restrictive covenant, and that, confessedly now, is no bearing at all except in determining whether a given assign is a purchaser for value and in good faith of the legal title. "The question of notice to the purchaser has nothing whatever to do with the question whether the covenant binds him, except insofar as the absence of notice may enable him to raise the plea of purchaser for valuable consideration without notice. ' ' 78 These two decisions avouch what for a long time has been manifest, that in the view of modern equity the trouble with one who takes trust property as an innocent volunteer is not that he is conclusively presumed to have taken fraudulently, but simply that he has no affirmative equity with which to unclasp the prior hold of the cestui 78 2 Dart's Vendors & Purchasers (7th ed.), 769. A full review of the history of this subject in its connections with restrictive covenants will be found in the opinions in London County Council v. Allen, 1914, K. B. Div. 664-72, and in 49 Sol. J. & Rep. 275. Uses and Trusts 225 que trust or restrictive covenantee upon the land. The same substantially is true even of the purchaser with notice. Of him it is now enough to say that the affirma- tive equity which otherwise would have arisen from the payment of his purchase money is spoiled by his guilty knowledge. From the sheer fact of being thus left with- out equity, he is defenseless against the equitably vested interest of the cestui que trust or restrictive covenantee. One other feature of the decisions on the Nisbet-Potts Contract is worthy of remark. In mechanical adherence to the old formula, it has always been customary to de- scribe an equitable Hen or charge as binding upon the party against whom it originally arises and all persons claiming under him as volunteers or with notice. These decisions show the formula to be too narrow and that such a charge or lien is not dependent for its force upon relations of privity. • For the reasoning of Farwell, J., in the lower court, which was approved unreservedly by each member of the Court of Appeal, inferred the efficiency of a restrictive covenant against a disseisor largely from its analogy to an equitable charge upon land, the freedom of the latter from restriction to privies being assumed throughout. The conclusions that seem to be justified by this too protracted review are that, as now conceived and treated, equitable estates and interests generally are fairly classi- fiable as proprietary rights according to the standards of general jurisprudence; that, what is of more practical importance, they are, whether rightly or wrongly, con- sistently so conceived, reasoned about, and dealt with by equity; that the gradual development of the old personal right of the beneficiary of a trust into the proprietary right with which he is now accredited is one of equity's most signal and beneficent accomplishments, whereby 226 Equity and Common Law an institute once good for little else than illicit purposes of evading law by detaching the benefits of ownership from its burdens has been made over into a new and qualified but legitimate ownership, in which burdens and benefits are reunited, with only for purposes of convenience the powers of active management detached; and that equity is confused rather than elucidated by those who would reinstate archaic conceptions of the cestui que trust's right, upon the supposition that in all of the multitudinous reiterations of the doctrine of equitable estates during the last two centuries, it has spoken either mistakenly by or way of indulgence in a mere figure of speech. Index Accident and Mistake equity the principal elaborator of the doctrines of, 95 equitable supply of formal defects, 133 mistake may furnish ground for raising a use, 175 Accord and Satisfaction, 140 Agency, 167 Austin, 23, 57, 184 Bacon, 59, 172, 173, 187, 188, 190 Bailment, 167 Bentham, 7 Blackstone, 5, 10, 41, 144, 145, 166 Brae ton, 41 Canon Law, 64, 75, 172 Charity, Objects of (see Dependent Classes), 95, 109, 132 Children, see Dependent Classes, Infants Coke, 188, 190, 191 Common Law filtration of principle from equity into, 7 defects of, in early times, 17-19 influence of the Roman law on, 18 stunted by a dwarfed law of evidence, 20 conditions preventing early fusion of equity with, 52 innovations of equity on, in construing intention, 99ff. judgments, execution of restrained by equity, 157 attitude of equity toward, in matters of free agency and good faith, 161 reasons for failure of, to enforce uses, 167-9 Comparative Jurisprudence, 13 Consideration (see Contract) attitude of equity toward, 78 kind of, necessary to raise a use, 173 Contract (see Consideration, Specific Performance) in Roman law, 22 antenuptial, 66-8, 91, 138-9 attitude of equity toward, 75-92, 99ff., 117, 221, 222 equity the guardian against oppressive applications of the principle of, 95 attitude of equity toward performance, 136ff backwardness of common law actions of, indicative cf crudity in the substantive law, 168 Conversion, equitable, 134 228 Index Convey, Covenants to, 77, 79-92, 114 Conveyance formal defects in, 133 unregistered, 157 influence of equity upon, 170 assimilation of use to, 180 obtained by fraud, 220 Covenants to convey, 77, 79-92, 114 running with the land, 85, 86, 221 negative, restricting use of land, 215, 222ff. Corporations, 173 Court of Requests, 52 Creditors (see Dependent Classes, Joint Creditors) ,66, 125, 132, 140, 154 183, 187, 190, 192, 193, 197, 198, 200, 204, 208 Curtesy, 187, 193, 196-8 Custom distinctive vice of, 35 triple alliance of, with magisterial authority and natural right, 38 Cy-Pres Doctrine, 108ft, 122 Deceit (see Fraud), 183 Dependent Classes (see Charily, Creditors, Heirs, Infants, Married Women), ingenuity of equity in protecting interests of, 95 Dicey, A. T., 56 Discovery, 74 Disseisin of the trustee (see Trespass), 210ff. Dower, 138-9, 187, 193, 196, 198, 200 Drunkenness, 160 Easements, equitable, 222ff. Equities creation of new, by exacting the waiver of a legal right, 96 doctrine of uses an agency for enforcing practically all, 174 Equity nine chief forms of the relief of, against the law's substantive imper- fections, iv, 94-6, 172 hardening of, into law, 7, 9 distinctive origin and nature of, 15-16 Maine's conception of, 38 less sharply contrasted with law in Rome than in England, 45ff . conditions which prevented early fusion of, with the common law, 52 attitude of, toward merger of estates, 123-8, 129 attitude of, toward fraud, 143ff . creation of uses and trusts by, 167ff. Equity Jurisdiction, Theories of as supplementing the law only in respect to its procedural deficien- cies, see Processual Theory as supplementing the law in respect to its substantive deficiencies, see Traditional Theory of Equity as having unlimited power to innovate in interest of good conscience, see Ethical Theory Index 229 Escheat, 187, 193, 203-10, 218 Estates, Merger of, 123-8, 129, 177 Estoppel, equitable, 152 Ethical Theory of Equity Jurisdiction (see Morals, Natural Law) Pomeroy on, 11 Sir Henry Maine affected by, 38 Evidence, crudity of the law of, in early times, 19-20 Executor, rule giving him absolute ownership of personalty, 177 Fiction of non-substantive character of Praetorian innovations, 47ff. of consistency between existence of a right at law and restriction of its use by equity, 69-73 of the volunteer's notice of a use or trust, 199 Folly, relief of equity against losses due to, 95 Forfeitures, 187, 193, 201-3, 204 Fraud insensibility of the common law to certain forms of, 66 not the ground for enforcement of covenants to convey, 82 development of principles of, one of the chief functions of equity, 94 liability for misrepresentation apart from warranty, 144-8 in connection with the consideration of a specialty, 149-50 liability of third party for misrepresentation, 148, 151 redress for, through principle of equitable estoppel, 152-3 relief against transactions legal under the Statute of Frauds, 155-7 in obtaining common law judgments, 157 consequences of equity's assuming jurisdiction over, 157ff. transactions binding in law treated by equity as voidable, 161ff. equity's standard of good faith, 165 relation between doctrine of uses and equitable notions of, 171, 175, 186, 187 deed obtained by, 220 Good Faith, equity's standard of, 165 Grace, dispensations of , gradually systematized into a jurisprudence, 17 Grace, Prerogative of the root of equity, iii powers of King and Praetor in respect to, 16 debt of Roman law to, 22ff . conditioned by the social environment, 23 not a legislative function, 3 Iff . a substantive law-producing agency, 34ff. field of, narrowed in a well-matured system of law, 35 evolutional value of, consists wherein, 36 reinforced by authority of natural justice, 37 of the Praetor and Chancellor compared, 45ff . early predilection in favor of, 51 Hardwicke, 5, 22, 126, 139, 149, 174, 205 Heirs, Heirship (see Dependent Classes) , 47, 115ff., 155, 205-6 Sobbes, 57 230 Index Husband and Wife (see Curtesy, Dower) extinction of a bond by intermarriage, 66, 129-30 secret dispositions of wife's property, 154 fraudulent claim of the husband to mortgaged property, 156 husband or wife of the feofee bound by the use, 190, 196, 198, 199, 200, 204, 208 Illusory Appointments, rule against, 103-4 Independent Judiciary, 56 Infants, 95, 132, 173, 183 Intention (see Cy-Pris Doctrine), liberality of equity in construing, 99-136 International Law, Private, 19, 32 Interpretation of Instruments, 93, 99ff. Joint Creditors, releases given collusively to one of several, 8 Joint Tenancy, 177 Judicial Interpretation late development of the art of, 21 effect of the development of, on administrative discretion, 34 Praetorian, 46ff. English aversion to government by administrative discretion, 58 Jury Trial, 19, 20 King (see Escheat) , powers of, to innovate on the law, 16, 21 Langdell, 10, 12-14, 38, 69, 77, 83, 101, 180, 182 Law Merchant, 7, 32 Leases, 110 Legislation shortcomings of, 21 should not be confused with magisterial discretion, 31-2 edictal law was not necessarily, 32-3 Lien, 78, 95, 97, 106, 170, 220, 225 Locke, 57 Loss of Remedies, relief of equity against, 95 Lunatics, 159 Maine, Sir Henry, 21, 38 Maitland, F. W., 10. 64, 69-70, 180, 182 Mansfield, Lord, 7, 9. 10, 22, 202, 205 Marriage (see Husband and Wife, Married Women) powers of the Praetor, 47 conditions against marriage without consent, 107-8 brokerage contracts, 154 Marriage Settlements, 114-16 Married Women (see Dependent Classes, Husband and Wife) enforcement of a bond not valid at law, 66 creation of the wife's equity to a settlement, 96 executions of powers in favor of, 132 could be bound by a use, 173 separate property of, introduced by equity, 178 Index 231 Montesquieu, 54 Morals (see Substance and Form) equity's endeavor to enforce a superior morality, iii reinforcement of the prerogative of grace by, 37 maxims of, applicable at the court's discretion, 39 jealous separation of law from, by the English, 58 equity's relief against losses viewed as matter of, 95 initiative of equity in taking advanced positions on law of fraud, 153 equity's standards of, fair-dealing, 162, 217 regard of equity for moral content of transactions, as regards uses and trusts, 171ff. Mortgage as illustrating the triumph of moral substance over verbal form, 106-7 pledge of deeds construed as, 112 defective, 113 in relation to survivorship, 119 in relation to Statute of Frauds, 156 defective as lacking livery, perfected in equity and enforced against creditors, 197 charged against the heir of the would-be mortgagor, 201 in connection with escheat, 207-8 doctrine of equitable redemption, 220 Mortmain, 173, 180 Natural Law prerogative of grace reinforced by, 37 triple alliance of, with grace and custom, 38 sanction of equity found by Sir Henry Maine in, 38 distaste of the English for, 57-8 Negligence, 148 Nuisance, 183 Ownership (see Property, Uses and Trusts) Praetorian, 47 division of, into formal and substantial, 170, 199, 217 freedom of the cestui que use from ordinary incidents of, 180 in the trustee, fading of, 219 Penalties and Forfeitures, 104-6 Peregrin Law, 24, 32 Performance (see Specific Performance), attitude of equity toward, 136ff., 186 Perpetuities, 84, 221 Pledge, 112 Pollock, Sir Frederick, 64 Pomeroy, 11 Procedure exaggeration of the part played by, in history of English equity, 61 sophistry of assigning procedural sources for equitable doctrines, 66ff . equitable, influence of on substantive doctrines of equity, 74 common law actions upon covenants and assumpsits undeveloped when uses began to be enforced, 168 232 Index Processual Theory of Equity Jurisdiction elaborated by Blackstone, 5, 10 conditions making for plausibility of, 9 exponents of, 10 Langdell on, 10, 12-14, 69 excesses of, 12, 66ff. tempts by its plausibility, 61 Maitland's views'on consistency of law and equity, 69-70 inadequacy of, with respect to attitude of equity toward contracts, 75-92 error of, in regarding equitable estates as rights only in personam, 180-85 Property (see Ownership, Uses and Trusts) , need of a new law of, with the passing of feudal society, 19 Public Policy, 95, 185 Reciprocality and Equality, solicitude of equity for, 95, 97 Remedies, see Loss of Remedies, Unconscientious Roman Law influence of, on the common law, 18 indebted to the prerogative of grace, 22ff. extra-legal powers of the early Praetors, 46 influence of the political system on, 52ff . Sea Law, 32 Separation of Governmental Powers, 54-5 Sohm, 184 Specific Performance substantive doctrines of equity involved in, 75-92 uses and trusts prepared the way for, 171 factor in evolution of the doctrine of trusts, 186 Star Chamber, Court of, 37, 52 Stare Decisis, a principle comparatively absent from Roman law, 49 Statutes 18 Edw. I, St. I (QuiaEmptores), 204 1 Ric. Ill, c. 1 (Trusts), 192, 196 19 Hen. VII, c. 15 (Uses), 196 26 Hen. VIII, c. 13, 196 27 Hen. VIII, c. 10 (Statute of Uses), 139, 189-96 33 Hen. VIII, t. 1 (Embezzlement), 143 , c. 20 (Uses), 203 29 Car. II, c. 3 (Statute of Frauds), 155, 156 12 & 13 Will. Ill, c. 2 (Settlement Act), 56 7 Anne, c. 20 (Land Registry), 156 39 & 40 Geo. Ill, c. 88, 203, 204, 209 59 Geo. Ill, c. 94, 209 4 & 5 Will. IV, c. 23 (Escheat of Trust Property), 203, 209 1 & 2 Vict., c. 69, 209 13 & 14 Vict., c. 60, 209 38 & 39 Vict., c. 77 (Judicature Act), 174 47 &48 Vict., k.. 71 (Intestate's Estate Act), 209 Index 233 Substance and Form, Equity's Revaluation of one of the chief functions of equity, 94 relief of equity against tyranny of legal forms, 97-141 in law of fraud, 157ff. not the only factor in developing doctrines of uses and trusts, 171 in enforcing standards of fair-dealing against successors of the trus- tee, and in affording redress for trespass and disseisin, 217 Succession law of intestate, broadened by the Praetors, 25-7, 33 intestate, in England, 134 Survivorship, 119, 177 Tactical Expedients available to the Chancellor, 68, 95 Theft, 179, 215 Traditional Theory of Equity, defined, iii, 10, 11 Trespass cestui que use sued for, 169 cestui que use protected against, 210ff., 217 refusal of equity to enjoin, 214 Trusts, see Uses and Trusts Unconscientious use of legal rights, relief of equity against, 69-73, 95, 102-3, 172 Uses and Trusts a subject untouched by the Praetors, 22 procedural hypothesis of origin of, 66 doctrine of, harmonized with the common law by Maitland, 69-70 one of the creations of equity, 94 trusts under wills, 116 implied and constructive trusts, 121, 170, 173-9 failure of common law to recognize, due to substantive rather than merely remedial incapacity, 167—9 observations on course of development of, 170-72 enforcement of uses extended by Chancellor's recognition of implied trusts, 173-9 equitable estates rights in rem rather than in personam, 180-85, 217ff. factors in evolution of doctrine of, 186 enforcement of, against successors of the feoffee to uses, 187-9 just before Statute of Uses, 190-93 effect of Statute of Uses, 193-5 treatment given to new trusts after the statute, as to interests derived through the ordinary successors of the trustee, 195-203 interests in the trust property acquired by way of escheat, 203-10 interests acquired by disseisin of the trustee, 210-16 summary of the development of equitable estates as rights in rem, 217-226 Utilitarianism, influence of, on equity, 7 Warranty, 144-51 234 Index Waste equitable, 101-2, 105 action of, 192 refusal of equity to enjoin act of, 214 Wills (see Cy-Pres Doctrine) in Roman law, 22 attitude of equity in safeguarding intention, 108ff Writs Habeas Corpus, 52 Deceit, 144 Subpoena, 186, 207, 210, 213, 214 Formedon, 192 Ejectment, see Trespass The. 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