Treating Equity Like Law: A Post‐Merger Justification of Unclean Hands

• Date: 01 September 2008
• DOI: http://doi.org/10.1111/j.1744-1714.2008.00062.x
• Published date: 01 September 2008

Treating Equity Like Law:

A Post-Merger Justification of

Unclean Hands

T. Leigh Anenson

n

How absurd for us to go on until the year 2000 obliging judges and lawyers to

climb over a barrier which was put up by historical accident in 14

th

century

England and built higher by the eagerness of three extinct courts to keep as

much business as possible in their own hands, so that these hands might be full

of fees!

FZechariah Chafee, Jr.

1

r2008, Copyright the Author

Journal compilation r2008, Copyright the Author

455

American Business Law Journal

Volume 45, Issue 3, 455–509, Fall 2008

n

J.D., LL.M., University of Maryland Robert H. Smith School of Business and Reminger Co.,

L.P.A. This manuscript was awarded the Holmes-Cardozo Distinguished Paper at

the 2007 Annual Conference of the Academy of Legal Studies in Business. Many thanks

to the members and attendees of the conference for their comments and critique. Thanks

also to Tom Rutledge for his careful review of an earlier draft of the article and to

Jamie Prenkert for his editorial assistance. The article was written as part of my doctoral

thesis in conjunction with fulfilling the writing requirement for a Ph.D. degree at Monash

University.

1

Zechariah Chafee, Jr., Foreword to SELECTED ESSAYS ON EQUITY iii, iv (Edward D. Re ed., 1955)

[hereinafter Chafee, Foreword]. Zechariah Chafee, Jr. was a practitioner and a professor

at the Harvard Law School who was known for his work in equity jurisprudence. See ZECH-

ARIAH CHAFEE,JR., SOME PROBLEMS OF EQUITY (1950) (Thomas M. Cooley Lectures Second

Series) [hereinafter CHAFEE,PROBLEMS]; see also Edgar N. Durfee, Foreword to ZECHARIAH

CHAFEE,JR., SOME PROBLEMS OF EQUITY ix–xi (1950) (Thomas M. Cooley Lectures Second

Series). See generally DONALD L. SMITH,ZECHARIAH CHAFEE,JR.: DEFENDER OF LIBERTY AND

LAW (1986) (discussing the work of Zechariah Chafee). The Thomas M. Cooley Lectures

Chafee delivered at the University of Michigan Law School in 1949 continue to be the primary

source of the American experience with the equitable defense of unclean hands. See Zechariah

Chafee Jr.,Coming Into Equity With Clean Hands,47M

ICH.L.REV.877 (1949)[hereinafter Chafee

I]; Zechariah Chafee Jr., Coming Into Equity With Clean Hands,47MICH.L.REV. 1065 (1949)

[hereinafter Chafee II].

I. INTRODUCTION

The New York Field Code of 1848 marked the beginning of the end of a

split system of law and equity in this country.

2

The merger sparked a rev-

olution culminating in the Federal Rules of Civil Procedure almost one

hundred years later.

3

Following the unification in many states, the federal

rules called for one form of action to which all defensesFlegal and

equitableFcould be pled.

4

This declaration reunited law and equity

after five centuries of separation.

5

It was heralded as the ‘‘triumph of

2

Credit for the reform is given to David Dudley Field and his promulgation of the Field Code

in New York that abolished common law forms and united law and equity in a simplified

procedure in 1848. See generally Mildred Coe & Lewis Morse, Chronology of the Development of

the David Dudley Field Code,27C

ORNELL L.Q. 238 (1942); Stephen N. Subrin, David Dudley Field

and the Field Code: An Historical Analysis of an Earlier Procedural Vision,6L.&HIST.REV. 311

(1988). A proliferation of procedural codes soon followed in the other states and territories. See

CHARLES E. CLARK,HANDBOOK OF THE LAW OF CODE PLEADING 19–20 (1928). The jurisdictions that

did not model the procedural merger of law and equity on the New York Field Code amended

their pleading rules to allow the assertion of equitable defenses in actions at law. See id.; Thomas

O. Main, TraditionalEquity and Contemporary Procedure,78W

ASH.L.REV. 429, 467 (2003). For a

discussion of the historical evolution of the separate judicial systems, see ROSCOE POUND,THE

SPIRIT OF THE COMMON LAW 27 (1921).

3

The formal separation of law and equity in the federal system was not eliminateduntil 1938

when the Federal Rules of Civil Procedure went into effect. See generally Stephen N. Subrin,

How Equity Conquered the Common Law: The Federal Rules of Civil Procedure in Historical Perspec-

tive, 135 U. PA.L.REV.909, 929 (1987). The 1938 Federal Rules of Civil Procedure were pro-

mulgated by the Supreme Court pursuant to congressional authority. RALPH A. NEWMAN,EQUITY

AND LAW:ACOMPARATIVE STUDY 51 (1961). Federal reform resulted in ‘‘essentially the same re-

forms’’ as the states. Id.

For an account of the virtually simultaneousreform effort underway in England culminating in

the abolishment of the Court of Chancery, see, for example, Gunther A. Weiss, The Enchantment

of Codification in the Common-Law World,25Y

ALE J. INT’LL. 435, 486–88 (2000) (discussing an

1828 speech by Lord Brougham as the catalyst for procedural change); Justice Lurton, The Op-

eration of the Reformed Equity Procedure in England,26HARV.L.REV. 99, 100–01 (1912).

4

Armistead Dobie, The Federal Rules of Civil Procedure,25VA.L.REV.261 (1939); see also FED.R.

CIV. P. 2. Congress also merged law and equity into one court in the federal system with the courts

acquiring different procedures for their administration. See Charles T. McCormick, The Fusionof

Law and Equity, 6 N.C. L. REV. 283, 284 (1928); Robert von Moschzisker, Equity Jurisdiction in the

Federal Courts,75U.PA.L.REV. 287 (1927).

5

Equity and law began in one system but were gradually split into two systems in the four-

teenth century. See NEWMAN,supra note 3, at 22–23; George Burton Adams, The Origin of

English Equity,16C

OLUM.L.REV.87 (1916), reprintedin SELECTED ESSAYS ON EQUITY 5 (Edward D.

Re ed., 1955) (‘‘Common Law and Equity originated together as one undifferentiated system in

the effort of the king to carry out his duty of furnishing security and justice . ..’’). The split was the

result of power struggles between the English barons and the king. See Robert Severns, Nineteenth

456 Vol. 45 / American Business Law Journal

equity’’ that leveled jurisdictional and procedural barriers to the pursuit of

substantive justice.

6

In surveying American jurisprudence since that time, Douglas Lay-

cock declared in his article, ‘‘The Triumph of Equity,’’ that the war between

law and equity was over.

7

He explained how features once associated ex-

clusively with equity had been absorbed in all areas of the law: remedies,

procedure, and substance.

8

While cautioning that distinctions still exist in theory as well as in

practice, Laycock’s principal point was to recast the debate between law

and equity as simply a dialogue about the law.

9

Like Roscoe Pound,

10

Zechariah Chafee,

11

and other advocates of equity since unification,

12

he

maintained that the content and application of a particular law in any given

controversy should not depend on the historical happenstance of whether

Century Equity: A Study in Law Reform,12CHI.-KENT L. REV. 81, 91 (1934); William F. Walsh,

Equity Prior to the Chancellor’s Court,17GEO. L.J. 97, 100–06 (1929).

Early American courts were modeled upon the dual English system with separate courts given

jurisdiction to administer law and equity. See,e.g.,W

ILLIAM F. WALSH,OUTLINES OF THE HISTORY

OF ENGLISH AND AMERICAN LAW 69–70 (1923). The federal system, along with most state systems,

gradually integrated law and equity within one court but allowed for their administration by

separate procedural rules. See McCormick, supra note 4, at 284; Moschzisker, supra note 4. Six

states (Delaware, Illinois, New Jersey, South Carolina, Tennessee, and Mississippi) retained sep-

arate courts (or divisions) of law and equity. Ultimately, the English and American courts united

law and equity in a simplified procedure. E.g., Justice Lurton, supra note 3, at 100–01 (discussing

the English Judicature Acts of 1873 and 1875); Subrin, supra note 3, at 929 (discussing the Federal

Rules of Civil Procedure of 1938).

6

Many of the procedures adopted under the unified rules were products of equity. See,e.g,

USH Venturesv. Global Telesystems Group, Inc., 796A.2d 7 (Del. Super. Ct. 2000) (describ-

ing various rules of civil procedure such as notice pleading and class actions as products of

equity); Subrin, supra note 3, at 973–74. The rules also mandated that, when a conflict arises

between law and equity, equity wins. See, e.g., Main, supra note 2, at 474; see also Robinson v.

Fife, 3 Ohio St. 551, 572 (1854) (‘‘Our own Kent allows himself to rise into a sort of ecstasy in

celebrating this triumph of equity over strict law.’’); Roscoe Pound, The Decadence of Equity,5

COLUM.L.REV.20, 29 (1905) (‘‘statute or no statute’’ equity should prevail).

7

Douglas Laycock, The Triumph of Equity,56LAW &CONTEMP.PROBS.53, 53 (Summer 1993).

8

See id. at 54.

9

See id. at 78.

10

See Pound, supra note 6, at 35.

11

See, e.g., Chafee, Foreword,supra note 1, at iii–iv.

12

See NEWMAN,supra note 3, at 29–30; John L. Garvey, Some Aspects of the Merger of Law and

Equity,10CAT H.U.L.REV.59, 67 (1961).

2008 / Treating Equity Like Law 457