Maxwell’s Maxim of Equity
August 11, 2015 § 3 Comments
“It has been said: ‘[E]quity must follow the law. But where the law provides no remedy, equity may do so.’ To that we would add: Since ‘equity must follow the law,’ where the law prohibits a remedy, equity may not do so.”
That is the first sentence (footnote omitted) of the COA’s opinion in Mosley v. Triangle Townhomes, LLC, penned by Judge Maxwell, and decided July 28, 2015.
In that case, Harold Mosley had filed suit in chancery court for specific performance against Triangle Townhomes, LLC, who, he alleged, had promised to pay him “a fair and equitable finder’s fee if he found a buyer” for that company’s apartment complex. Mosley did find a buyer, who paid $6 million. Mosley, who was not a licensed real estate broker, claimed that he had repeatedly demanded that Triangle pay him, but the entity refused. He wanted the chancery court to award him a finder’s fee of between 3% and 5% ($180,000 – $300,000), since a licensed realtor would have charged 6% to 10% ($360,000 – $600,000).
Now, this would seem on the surface to be the quintessential case for equitable relief. A promise, upon which another acted in good faith, producing monetary benefit to the promisor, followed by a refusal to pay. Equity to the rescue, right?
Not so fast.
Triangle filed a R12(b)(6) motion to dismiss for failure to state a claim because MCA 73-35-33(1) prohibits any person without a license from filing suit to recover a real estate broker’s fee. Judge Maxwell described how the chancellor ruled:
¶6. The chancellor agreed that no equitable doctrine or quasi-contract theory could prevail over the clear public policy that anyone performing real-estate-broker services, even just one time, must be duly licensed. See Miss. Code Ann. § 73-35-1 (Rev. 2012); Miss. Code Ann. § 73-35-3(1), (3) (Rev. 2012). Mosley was not a licensed real estate broker. Nor did he fall under a statutory exception. See Miss. Code Ann. § 73-35-3(8) (Rev. 2012). So because section 73-35-33(1) prohibited him from suing for any fee connected with real-estate-broker services, the chancellor dismissed Mosley’s action.
Mosley appealed, and in an eight-page opinion, the COA affirmed, concluding essentially the same as had the learned chancellor.
This case illustrates that equity does, indeed, follow the law. The law prohibited Mosley from bringing his suit, and the chancellor followed the law that dictated that result. In doing so, the chancellor followed one of equity’s most ancient and keystone maxims. Judge Maxwell’s corollary: ” … where the law prohibits a remedy, equity may not do so (i.e., provide a remedy)” is the flip side of that maxim.
I’m always heartened when I see maxims and equitable principles at the heart of our appellate court decisions. I take it as a sign that maybe equity is still viable, after all. So in honor of the occasion, I propose adoption of a new maxim of equity, which I will call Judge Maxwell’s Maxim: “Where the law prohibits a remedy, equity may not provide that remedy.” Hear, hear!
Maxims: Follows the Law
September 24, 2013 § Leave a comment
“Equity follows the law” is one of the most misunderstood and misapplied maxims.
I have heard this maxim incorrectly invoked for the proposition that equity may not act unless there is a specific law, or that equity is inferior to the law.
I stated in a prior post on the maxims that, although equity will not suffer a wrong without a remedy, that concept is not unrestricted:
Over centuries the idea of “wrong” has been refined to include matters that are actionable, and to exclude those that the law deems not actionable. Judge Griffith explained it this way: ” … the maxim at this day is subordinate to positive institutions, and cannot be applied either to subvert established rules of law or to give a court of equity a jurisdiction beyond established principles.”
As I also said in that earlier post, “When the law bestows a right, it also extends a remedy that can be granted in equity. Conversely, a court of equity will not supply a cause of action where none exists in the law.” If a cause of action is recognized in either the common law or by statute, equity will give a remedy and forum to enforce it.
Here’s what Judge Griffith said on the subject:
“Whatever may have been the course of action in the formative period of the law, courts of equity no longer assume to annul or directly disregard the positive provisions of the established law: courts of equity are now as much bound by express rules of law concerning property and its interests as are courts of law, and particularly this is true of constitutional and valid statutory requirements and provisions. Wherever the rights or duties of the parties in a given state of facts are definitely defined and established by law, statutory or common, equity must enforce those rights and enforce those duties; and it is only when some countervailing, dominant, and equally well established equitable principle intervenes that a court of equity can assail or abrogate the legal right or duty. Therefore, in adjudicating questions of legal right, title or interest equity follows the legal rules, and even in adjudicating equitable titles, interests and estates, equity will follow the law where any clear analogy exists …” Griffith, § 40, p. 42.
In any case where the law does not preclude a remedy, equity will follow the law as far as the law goes, and if the law stops short in securing the rights of the parties. equity will continue the remedy until complete justice is done. Senter v. Propst, 190 Miss. 190, 207, 197 So. 100 (1940); Griffith, § 40, p. 42, fn 33a.
The maxim has even been interpreted so that a transaction that is invalid at law may be cognizable in equity. In Coffey v. Land, 176 Miss. 114, 120, 167 So. 49, 50 (1936), the Mississippi Supreme Court, with Justice Griffith himself writing, addressed the principle in a case involving mortgages on future crops, the statute providing for which had been repealed:
“Whenever it is declared under any long line of judicial precedents that a transaction is invalid at common law and yet is valid and enforcible in equity, it will be found that the distinction is preserved out of consideration of the fact that if such a transaction were bound up in the inflexible rules of the common law, injustice and hardship and general insecurity might result, whereas, if left to equity with its broader and more flexible powers and processes, a more perfect justice may be attained and the general security better served. We shall later herein seek by illustration to show that this is precisely the case as to annual crops to be produced in subsequent years. And as to any advancements made under our decisions, on the precise subject now under discussion beyond the strict bounds of the ancient common law, we would call attention to the fact that the common law is not an institution of exact and unchangeable rules, but is a system which progresses so as to accord with the general customs, usages, habits, and necessities of the people of the state, so far as agreeable to justice and reason; and this is at the same time to say that no court may, under the notion of making progress under the common law, pronounce any rule as being an allowable advancement upon the ancient common law rule, when the effect of it would be mischievous in its operation, contrary to the substantial interests of our people, and which in its tendencies would be subversive of their freedom.”
I am willing to concede that a decision like Coffey is a rare result, but it demonstrates the scope and power of equity vis a vis the law. It presented one of those infrequent occasions where ” … some countervailing, dominant, and equally well established equitable principle …” intervened and trumped the common law.
The spirit of equity is to ensure that justice is done.
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