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!

Joint Custody and the Consent Divorce, and a Maxim Bonus

March 20, 2014 § 1 Comment

The COA decision in Keyes v. Keyes, handed down March 11, 2014, is noteworthy for a couple of points.

Melanie and Dustin Keyes entered into a consent for an irreconcilable differences divorce, leaving custody of their two children to the judge to decide. After a hearing, the chancellor awarded the parties joint physical and legal custody.

Melanie appealed, raising two issues: (1) the chancellor erred in failing to determine whether the parties could cooperate, which is a prerequisite to joint custody; and (2) the chancellor’s decision violated the maxim of equity that “equity delights to do complete justice, and not by halves.”

The COA affirmed. Judge Carlton wrote the opinion for a unanimous court (James not participating). Here’s her take on the first issue:

¶13. [MCA] Section 93-5-24(2) provides that in an irreconcilable-differences divorce the chancellor may, at her discretion, award joint custody “upon application of both parents.” In Crider [v. Crider], the parties filed a written consent to an irreconcilable-differences divorce and asked the chancellor to decide the issues of primary custody, property settlement, and support. Crider, 904 So. 2d at 143 [(Miss. 2005)] (¶3). The supreme court held “that when parties consent in writing to the court’s determination of custody, they are consenting and agreeing to that determination.” Id. at 148 (¶15). The supreme court further stated:

It is logical and reasonable that “application of both parties” exists when both parties consent to allowing the court to determine custody. The fact that the parties request that the court determine which parent is to receive “primary custody” does not alter this. The parties are allowing the court to determine what form of custody is in the best interest of the child. If joint custody is determined to be in the best interest of the child using court-specified factors, i.e., the Albright factors, the parties should not be able to prohibit this by the wording of the consent. . . . To be sure, unless the parents are capable of sharing joint custody cooperatively, it is incumbent upon a chancellor not to award joint custody. This is for the chancellor to determine as he or she is in the best position to evaluate the credibility, sincerity, capabilities[,] and intentions of the parties.

Id. at 147 (¶¶12-13). “The Crider court held that it is logical that when both parties consent for the court to determine custody, they fulfill the ‘application of both parents’ requirement of section 93-5-24(2).” Phillips, 45 So. 3d at 695 (¶33) (citation omitted).

¶14. In the present case, the parties do not dispute that they both consented to the chancellor’s determination of custody and that the “application of both parents” requirement discussed in Crider was met. Therefore, we turn our focus to whether the chancellor erred in awarding joint custody because of the parents’ inability to “shar[e] joint custody cooperatively.” Crider, 904 So. 2d at 147 (¶13). The supreme court has concluded that section 93-5-24(2) “should be interpreted to allow the chancellor to award joint custody in an irreconcilable[-]differences divorce if it is in the best interest of the child.” Phillips, 45 So. 3d at 695 (¶33) (citing Crider, 904 So. 2d at 148 (¶16)).

The decision goes on to find that the chancellor did, in her analysis of the facts, adequately weigh the parties’ ability to cooperate, and that she was in the best position as the trier of fact to determine how to resolve conflicting evidence at trial for the best interest of the minor children. The court concluded that this issue lacked merit.

As for the maxim argument, Judge Carlton addressed it as follows:

¶18. Melanie next argues that the award of joint custody essentially ensures future litigation; therefore, the chancellor violated the maxim that “[e]quity delights to do complete justice, and not by halves.” Melanie asserts that future litigation is likely because the chancellor failed to determine in which county the children should reside or where they should reside once they begin kindergarten. Melanie and Dustin reside in different counties, and Melanie contends that the children will be put “in the unenviable position of shifting back and forth from home to home during the school year.”

¶19. In support of her argument, Melanie relies on this Court’s decision in Daniel v. Daniel, 770 So. 2d 562 (Miss. Ct. App. 2000). The chancellor in Daniel awarded both parents joint legal custody of their minor child, with custody alternating every two weeks. Id. at 563 (¶2). This arrangement was to continue until the child turned five and entered kindergarten, at which time the father would receive physical custody. Id. In affirming the chancellor’s determination of the custody arrangement, we stated:

We are aware of the fact that a practice of constantly alternating a child back and forth to each parent is not a habit that should be encouraged. The Mississippi Supreme Court has spoken on this issue on more than one occasion, ruling that it is not in the best interest of a small child to be shifted from parent to parent. However, in this case, we are mindful that the child is nearing the age of five[-]year[-]old kindergarten and has been subjected to the rotating custody order since the chancellor’s judgment was handed down on December 15, 1998. We therefore can see no reason why what has become the child’s regular routine should be interrupted. Nonetheless, we agree with the chancellor that at such time as the child begins kindergarten, it will be necessary for the child to maintain the stability that is crucial at the beginning stages of her education.

Id. at 567 (¶15) (internal citations and quotation marks omitted).

¶20. In the present case, Melanie argues that the parties’ two minor children need the same stability given to the minor child in Daniel. She asserts that the parties’ children should reside with her in Warren County, where they currently attend daycare. In light of the Court’s decision in Daniel, and to provide the parties’ children with the stability that is crucial at the beginning stages of education, Melanie asks that the case be remanded with instructions for the chancellor to determine which parent should be the primary physical custodian.

¶21. As previously discussed, the decision to award the parties joint legal and physical custody was within the chancellor’s discretion since the parties agreed to submit this issue to her for determination. Bearing in mind our limited scope of review on appeal, we find that the chancellor did not commit manifest error in awarding joint custody. Therefore, this issue also lacks merit.

Bravo to Melanie’s appellate counsel for making the maxim argument. I thought it was apropos. Don’t let the fact that the COA didn’t buy the argument in this case discourage you from asserting claims based on the maxims in other cases. I’ve stressed here before that the maxims underly all actions in and relief granted by chancery courts, so they are always a legitimate basis for advocating for your client’s position.

The Lost Maxims of Equity

November 22, 2013 § Leave a comment

Several lawyers (thank you all) sent me links to the Volokh Conspiracy‘s blog post setting out the Lost Maxims of Equity. For those of you who have not seen them, here they are:

Lost Maxims of Equity
By on November 8, 2013 2:20 pm

From 52 J. Legal Ed. 619 (2003):

He who seeks equity must do so with full pockets.

Equity is not for the squeamish.

Equity, schmequity.

Equity can be grumpy before its first cup of coffee.

Equity is crunchy on the outside, soft and chewy on the inside.

Equity is a mean drunk.

Equity, like all of us, prefers the rich and good-looking.

These clever, tongue-in-cheek aphorisms are takeoffs on the great Maxims of Equity that I expounded about here previously in a series of posts. My fave from above is “Equity is crunchy …”

Over the years I have seen several versions of these humorous stabs at the maxims. I googled trying to find some other versions for you, but I misfired in the time allotted.

Again, thanks to those who sent me the link. And if any of you see something you think is worth posting, send it on. I don’t guarantee that I will post it, but you’re encouraged to send it anyway.

Maxims: What Use Are They Today?

October 23, 2013 § 3 Comments

As we’ve seen over the past several weeks, the jurisprudence of equity developed radically apart from the law. It looked past forms to substance, beyond rigid concepts to a more fluid approach to affording relief. It sought to make whole those who were wronged. 

Mississippi long adhered to the principle that the lines of demarcation between law and equity jurisdiction should be preserved. See, e.g., Cotton States Life Ins. Co. v. Cunningham, 141 Miss. 474, 482, 106 So. 766 (1926).

Those lines were kept clear and distinct from the earliest days of statehood through two, separate sets of procedures, one for chancery court and another for circuit court. Each set of procedures addressed the unique needs and approaches of the different courts.

Since the MRCP, however, our procedures have become more alike. In fact, except notice of R81 matters, practice is procedurally the same in both courts.

With the advent of the MRCP, in my opinion, the line of demarcation between the courts has become increasingly blurred. It seems that the concept that equity follows the law has been elevated to a principle that somehow equity is inferior to the law, or that it should be constrained by the same strict forms and conventions that limit the law courts.

That’s unfortunate because there is a need for flexibility and ability to do substantial justice in our court system, as equity has been doing for many centuries.

So the point I’m getting at is this: when you are pressing a point in chancery, don’t overlook using the maxims themselves as persuasive authority. They are a part of our law of equity just as is every MSSC and COA ruling arising from chancery appeals. They are good law.

Maybe if more lawyers would throw the maxims into their trial arguments and appellate briefs, it would reawaken an awareness of the great equity principles in our jurisprudence. And by doing so, perhaps we will return to the core idea of the great difference in approach between the two courts, and the validity of preserving the difference. 

As Judge Griffith said:

… there is not to be forgotten the obligation of equity judges to firmly retain the jurisdiction which the court of chancery definitely possesses, not only because a vast experience has justified the propriety and better efficiency of it, but because of a reason already elsewhere touched upon; that two courts, one more largely of the people and the other solely of a judge, existing and in operation side by side, each within its own sphere, tend to keep the course of justice directed the more upon an even keel and better along a middle, a deeper and a truer channel. Griffith, § 26, p. 28. 

What is the future of equity and chancery courts as we plunge deeper into the 21st century and move toward the second 100-years of our statehood? That’s a matter we’ll explore at a later date.

Maxims: To Protect Property Rights

October 8, 2013 § Leave a comment

From the earliest days of equity, property disputes were matters for chancery. The concept of property, however, is much broader than the dirt upon which we stand and live.

Judge Griffith explains:

Property and property rights only are within the domain of equitable interference, there being included however not only all those interests in real and personal property which are, or can be, the subject of individual ownership, but also those other interests of quasi-ownership which are the equitable equivalents of property in some form, such, for instance, as the right to labor and engage in a lawful business, the right to health and reputation, the right to the physical senses of sight, hearing and the like, which will make labor, business or property profitable or enjoyable; the right to free speech, free movement and thr right to all the civil privileges which make all those other rights real and preserve them unimpaired — all these are not only in a party’s own right but in behalf as well of all those of his family who are legally dependent upon him. Griffith, § 44, pp. 47-48.

He distinguishes the mentioned matters from “Questions of partisan politics, religious or fraternal controversies, crimes and the like, except when property is directly involved …” as issues that are reserved for jury courts.

The common thread running through the list of equitable matters is that to effect a remedy in each the court must take coercive measures or look past the parties’ current situation and legal forms, and put the parties in a proper relationship to one another. Money damages alone will not cure the problems arising in those matters.

Maxims: If You Seek Equity, You Must Do Equity

October 7, 2013 § 1 Comment

“He who seeks equity must do equity.”

Judge Griffith characterizes this maxim as “one of the oldest of equity principles.” He says (paragraphing added):

… the court in extending its aid will require as a condition thereof that the complaining party shall accord and render to the adversary party all the equitable rights to which the latter is entitled in respect directly to the subject matter of that suit, and this is true even as to many of those things which the defendant could not compel by an independent suit.  

It is through the peration of this maxim that tender or the equitable equivalent thereof is required; the restoring of benefits received and the placing of the opposite party in statu quo, and the like; and that without the necessity of cross demand [note: counterclaim in modern parlance], the decree [read judgment] may often be so drawn and rendered that each party may be given, in respect to the identical transaction, what in equity and in good conscience he ought to have and in the approximate manner in which he ought to have it — settling the whole matter by making any decree at all in complainant’s [read plaintiff’s] behalf conditional upon the allowance of the cognate rights of the defendant: provided, these latter rights are so intimately connected with the transaction as to be equitably inseparable therefrom, and provided that no express principle of the law stands in the way. Griffith, §43, pp. 45-46.

When a litigant invokes jurisdiction of the chancery court, that litigant is thereby bound by all equitable principles. Hooks v. Burns, 168 Miss. 723, 152 So. 469 (1934). It applies only to one seeking affirmative relief. Burton v. Mutual Life Ins. Co., 171 Miss. 596, 625, 158 So. 474 (1935). It protects the substantive rights of a defendant, and may not be extended to impose moral duties. Gaston v. King, 63 Miss. 326, 332 (1885).

I used to tell clients that we wanted to be the ones “wearing the white hats” in court. In part that was a nod to the wisdom behind this maxim. And, it was a recognition of the fact that the judge is always ready to aid the one in the right, and to set right the one in the wrong.

Maxims: Clean Hands

October 2, 2013 § Leave a comment

“He who comes into equity must come with clean hands.”

This maxim is the source of the so-called “Clean Hands” doctrine that every chancery practitioner has encountered at one time or another.

Judge Griffith’s description is apt today. Here’s what the judge said (paragraphs added):

” … [N]o person as a complaining party can have the aid of a court of equity when his conduct with respect to the transaction in question has been characterized by wilful inequity, or illegality.

“It does not exclude a party because in some other matter his conduct may have been reprehensible; it refers only to the subject matter of the particular suit in hand.

“The wrongful conduct which will bar the complainant need not be so gross as to be a crime punishable as such, nor so positive as within itself to form the basis of a legal action. It may be described as such wilful misconduct, inequity or fraud  with respect to the immediate transaction as would be condemned and pronounced wrongful by homest and fair-minded men.” Griffith § 42, p. 44.

As Judge Griffith goes on to say, the doctrine of clean hands is purely defensive in nature, and can not be used by a party to acquire rights to which he or she would otherwise not be entitled. It is not required that it be pled, and the court may apply it, even on its own motion, at any time that it becomes evident in the course of litigation that it has come into play.

The doctrine acts as a form of estoppel. A former wife was estopped from obtaining a judgemnt of contempt against her ex-husband when it was established that she had failed to comply with the judgment herself. Brennan v. Brennan, 605 So.2d 749, 752 (Miss. 1992). See also, Banks v. Banks, 648 So.2d 1116, 1126 (Miss. 1994).

Maxims: Aiding the Vigilant

September 30, 2013 § Leave a comment

“Equity aids the vigilant and not those who slumber on their rights.”

Judge Griffith puts this about as well as it can be said (I’ve broken it down into separate paragraphs):

“Those diligent find equity always ready to extend just aid, but the slothful are not favored.

“There is no principle of equity sounder or more conservative of peace and of fair play than this, which requires a party who has a claim to prefer or a right to assert to do so with a conscientious promptness while the witnesses to the transaction are yet available and before the facts have faded from their memories.

“It is a fact of universal experience that men will generally use diligence to get what rightfully belongs to them, and will unreasonably delay only as to false or ineuqitable claims, — thus in the hope that fortuitous circumstances may improve their otherwise doubtful chances.   

“If therefore a party delay the bringing of a suit, or delay the taking of some particular step therein, to such an unreasonable time that to allow him so late to proceed would work an injustice and injury upon the opposite party, it will require a much stronger case to move the court to action than if the matter had been seasonably presented; and if on account of the delay a serious injustice would result to the opposite party the court may decline to proceed at all.

“The maxim does not apply however to those under disability such as infants, nor can it be invoked by one who has lulled his adversary into repose by deceit, false promises, concealment and the like.” Griffith, § 41, p. 43.

Equity, then, treats rights that are not asserted within a reasonable time as having been abandoned, or as surrendered to the other party. Magee v. Catching, 4 George 672, 1857 WL 2672, (Miss. Err. App. 1857). [Note: Magee  is still good law, despite its antiquity, and despite the fact that it involved a mortgage secured by slaves.]

Equity is all about fairness. Equity looks askance at a complaining party who delays taking action to gain an advantage because of the inherent unfairness of the situation.

This maxim is the basis for the doctrine of laches, which we will address tomorrow.

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.

Maxims: Substance over Form

September 23, 2013 § 7 Comments

“Equity looks to the intent, and will regard substance rather than form.”

I’ll let Judge Griffith do the talking here:

“Under this maxim, throughout the whole of the substantive law, equity deals with a matter according to its actual substance, and regards mere form as a secondary consideration. It pierces through the shell of a thing to what is within: it does not suffer itself to be circumvented by formal devices. And so, in procedure, it will not permit a mere technicality to conceal the real position of the parties, nor any mere form to divert the action of the court away from the actual merits of the cause. Mere appearances and external form will be put aside and the real relations of the parties will be ascertained and examined: no form will avail if the substance is wanting, and the form will be disregarded if the substance exists. This is not to be taken, however, as any declaration that essential rules of procedure may be disregarded. It means only that rules, when they do not go to the substantial rights of one of the parties, in a given situation, are not to be allowed to subvert, to mere technical form, the actual right of another.” Griffith, § 39, p. 42.

This approach is antithetical to what I call “Gotcha!” law in which the lawyers play procedural games in an attempt to catch the other in some overlooked dotting of i’s or crossing of t’s to justify sanctions or dismissal of pleadings or worse.  

It’s also directly opposed to discovery gamesmanship in which the parties try to hide assets, or create sham entities or transactions, or try to sidestep direct inquiries with misleading answers and a fog of insubstantial objections.

Proceedings in chancery should be more akin to a search for the truth rather than pharisaical quibbling over jots and tittles. “There is this general principle: A court of equity in the exercise of a broad discretion should see to it that wrong and oppression are not inflicted under the guise of legal procedure, but that justice be done as the very right of each case may demand.” Herring v. Sutton, 86 Miss. 285, 38 So. 235 (1905); Griffith, § 39, p. 42, fn. 32.

As caught up as we get in the procedural aspect of our procedural rules, we must never lose sight of the fact that they exist primarily to safeguard and protect substantive rights. Procedures are never an end in themselves. The rules point that out: “All pleadings shall be so construed as to do substantial justice,” (MRCP 8(f)); and “These rules shall be construed to secure the just, speedy, and inexpensive determination of every action,” (MRCP 1); and “These rules shall be construed to secure fairness in administration … to the end that truth may be ascertained and proceedings justly determined” (MRE 102).

 

 

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