The Contribution Of Equity

contribution-of-equity

As with the criminal law and the law of contract and tort, the basis of the law of real property is common law, but it is in the sphere of property law that equity' has made its most important contribution notably, but not exclusively, in its enforcement of the trust (formerly known as the use). The common law provided no remedy for breach of trust, so that if S. the fee simple owner of Smith, conveyed it to T in fee simple, directing him to hold it upon trust for B in fee simple, T at common law was at liberty to disregard the claims of B and to use the property for his own benefit. The Court of Chancery, however, at the suit of B (the beneficiary) would enforce the trust against T (the trustee) and compel T to utilise the property for the benefit of B.

It should be noticed that the Court of Chancery did not deny T's legal, i.e. common law, title to the land, but merely required T to utilise his ownership of the land for the benefit of B on the ground that, having undertaken the trust, he was bound in conscience to do so.

It was not long, however, before it was realised that the effect of compelling T to account to B for all the fruits of ownership was to make B for many purposes the real owner of the property. We are now in a position to understand the meaning of some important terms.

The fact that the common law recognises T as the owner of the land is often expressed by saying that T is the legal owner of the land, or that T has the legal estate in the land. The fact that B has the benefits of ownership is often expressed by saying that B is the equitable (or beneficial) owner, or that B has the equitable estate in the land.

Originally the Court of Chancery would enforce the trust only against the trustee himself, and not against any other person into whose hands the land might come, but in the course of time equity so enlarged the classes of persons that for one reason or another it regarded as bound by the trust that in the end the trust became enforceable, not only against the trustee himself, but against any other person who might acquire the land except a bona fide purchaser for value of the legal estate without notice, actual or constructive, of the trust (or any person claiming through such a bona fide pur�chaser).

At first, trusts were of a simple character, e.g. a man going on the crusades might convey his land to trustees for the benefit of his family during his absence, but in the course of time it became possible to create a succession of estates under the trust, just as such a succession of estates could be created at common law without a trust. For example, as we have seen, 5, the fee simple owner of Smith, might convey Smith to A for life with remainder to B in fee simple, and A would then have a legal life estate and B a legal fee simple in remainder.

Alternatively, it now became possible for S to convey the land to one or more trustees in fee simple directing them to hold the land upon trust for A for life with remainder to B in fee simple. A would then have an equitable life estate and B an equitable fee simple in remainder. The trustee or trustees had the legal fee simple; the beneficiaries had equitable estates. In developing the equitable (or beneficial) interest under the trust in this way, equity borrowed the common law system of estates. In other words equity allowed the settler to create as equitable estates those estates, and only those estates, that could be created as legal estates at common law without the employment of a trust.

Moreover, to these equitable estates equity applied nearly all the common law rules governing the particular estates. For example, on the death of the owner of an equitable fee simple, or fee tail, the equitable estate would devolve in the same way as if it had been a legal estate: it would devolve upon the heir, ascertained by applying the old common law canons of descent. Only in a few instances did equity decline to "follow the law" in this way.


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