NOTICE

Definition. Notice is of two kinds, actual and constructive. Actual notice is knowledge; constructive notice occurs where facts brought to a man's knowledge are such that a diligent, sagacious, and prudent man ought to make inquiry concerning them; a neglect to make such inquiry makes him liable for the consequences.

Examples. A general knowledge that property about to be bought by a man is in some way encumbered is constructive notice which requires inquiry on his part. Knowledge of unrecorded encumbrances has the same effect. An avoidance of inquiry may have, similarly, the effect of constructive notice, if clearly established by evidence. A general lack of caution, not connected with any specific matter, has not the same effect.

A person buying property under litigation has constructive notice, although he has no actual knowledge of such litigation; he buys subject to any decree against the party from whom he buys. In some States a formal statement of such litigation must be filed with the registry of deeds to constitute notice. A purchaser has constructive notice of the registration of instruments; not only of the fact of registration but of the contents of the instrument.

CONTRIBUTION, EXONERATION, SUBROGATION

Contribution. In the case of contract bonds or other debts where several parties, possibly sureties, are liable for a common debt and one pays the entire obligation, Equity will give to the one who pays, the right to recoup from the others their proportional share, under the name of "contribution."

Exoneration. In a similar way a surety who has paid a debt may look to his principal, perhaps the contractor, for reimbursement, probably including the costs of the suit, as "exoneration." It is likely to happen that the city or the railroad finds it more satisfactory to collect from the surety than from the contractor directly where both have signed the bond; the surety then needs a remedy against the contractor which the Common Law does not adequately provide.

Subrogation. Somewhat technically subrogation is the substitution of one creditor for another. In a broad sense, it is sometimes considered to be the means by which contribution and exoneration are effected. In a narrower sense, it is held to apply especially in the case where one surety, or the principal, has collateral security for the debt, in which case Equity will provide that the obligation be met by the one in possession of the securities.

RESCISSION, CANCELLATION

Rescission. There is necessity sometimes for setting aside some document or writing either because it was obtained by fraud or otherwise it ought not to stand. Such a case occurs when the legal title to lands has improperly passed by deed and where a money award will not set matters right. Resort must then be had to a court of Equity for "rescission" of the contract or deed. Any part performance by the plaintiff after discovering the fraud or wrongful act, seems to affirm the contract and is fatal to the suit. The maxim "He who seeks Equity must do Equity" finds application here. The plaintiff who asks rescission must tender everything he has received, so as to put the defendant in as good position as before, so far as possible. Where in the nature of things it is impossible to approximate to this, the court will refuse to interfere.

Cancellation. Somewhat similarly, a court of Equity will decree the cancellation" of an instrument obtained by fraud or otherwise invalid, in cases where, while a good defence exists at present, the evidence of its invalidity might later be unavailable. This remedy is an extraordinary one, to be secured only under expert advice. A suit to clear title to land where some cloud exists on the title is a remedy of a similar sort.

To Perpetuate Testimony. There are other cases where the assistance of Equity may be asked in order to perpetuate testimony which may later. become unavailable.

SPECIFIC PERFORMANCE OF CONTRACT

Specific Performance. Equity assumes jurisdiction in the case of contracts only when the Common Law remedy fails or is inadequate. In the case of a breach of contract the ordinary remedy is a suit at Common Law for damages, a favorable outcome resulting in a money award which in some cases is an inadequate remedy. A man secures from several owners contracts in writing to convey parcels of land to him; one of the owners refuses or otherwise fails to convey; all the parcels of land are necessary if the projected hotel, or business block, or church is to be built; it is impossible to secure a money award which will make the purchaser whole. In this case recourse is had to a court of Equity to secure specific performance of contract, a well recognized remedy of Equity. Specific performance of contract deals as a rule only with lands, real property rather than personal, although where the personal property is of a unique character it may apply even then. It applies also when the goods cannot be acquired in the open market if money damages are awarded. The remedy of specific performance is appropriate also in some cases where the damages cannot

be satisfactorily ascertained, and where part performance has already been done.

Within Discretion of the Court. The granting of a decree for specific performance is not regarded as a right in all cases, but often as resting within the sound discretion of the court; and although this follows in some sense from precedent, yet if the contract seems unconscionable or vague, or if otherwise the court thinks it ought not in equity and good conscience to grant a decree, it will refuse to interfere, leaving open such remedy as the Common Law affords. It is true, in general, that a court of Equity will not grant a decree which it is unable to enforce.

Money Awards. Cases may occur in which Equity jurisdiction is duly acquired, but specific performance is found impossible; in such case a court of Equity will not hesitate to award money damages, if this can be done with justice to the defendant. It is, in fact, not uncommon to award money damages as a part of the relief sought, in connection with other purely equitable relief which justifies a court of Equity in assuming jurisdiction.

UNCONSCIONABLE STIPULATIONS

Penalties or Forfeitures. Equity protects not only against fraud but also against the rapacity of a party toward another with whom he has a contract, when the latter has failed in performance of some unconscionable provision which subjects him to forfeiture or penalty. Equity will grant relief against the consequences of such provision as to penalty or forfeiture. Penalties are abhorrent in the eyes of the law, and the court of Equity will relieve against the penalty, and may either make a decree awarding the damages actually suffered, or leave the question to be settled at Common Law, depending upon the relief sought. The question of "liquidated damages" or of "penalty" is of special interest to engineers, but is discussed in a later chapter on additional contract forms.

RECEIVERS

Definition. A receiver is often a person appointed by the court upon application of an interested party to assume control of property in order to protect the interests of some party who does not otherwise have complete and certain title and control of the property. Sometimes two or more parties have interests not readily protected except when in the hands of some impartial party. Sometimes a receiver is appointed where interests are in doubt and pending their determination. The receiver appointed is an officer of the court, looks to it for instructions, and accounts to it for his doings with the property entrusted to him.

Railroad Receiverships. A common case of receivership is that of a railroad which has issued bonds as security for money borrowed to help in building; the stockholders also have contributed money and are in possession of the property and operate it. Whatever of net earnings is left after paying the interest on the bonds, is available for dividends to the stockholders who thus are alone interested in the measure of success of the business, so that normally the railroad operation is and should be conducted with a view to their advantage. If the earnings are for a time insufficient to pay interest on the bonds, the stockholders' prospect of dividends, temporarily at least, is wiped out.

Bondholders' Interest. The bondholders then become the real parties involved in the success of operation; when interest on the bonds is not paid, foreclosure becomes possible, although this is not to the advantage either of the bondholders or of the stockholders. A receivership is petitioned for by the bondholders, and the receiver appointed conducts operations primarily for the benefit of the bondholders who commonly hold a mortgage on the property, but also with due regard for the stockholders who still hold an equitable interest, which under skilful management may again become tangible and active.

Friendly Receiverships. Where such an outcome seems probable, the court of Equity has often appointed the president of the road, in what is called a friendly receivership; for if the business is conducted so as to ultimately restore the interests of the stockholders, the bondholders who have a prior security will clearly be protected, while the spirit of the law is fully complied with, with due regard for the rights of all.

INJUNCTION

Definition. An important remedy is "injunction," sometimes defined as a remedial writ commanding one to do, or refrain from the commission of, some specified act; thus it may be mandatory or prohibitory. More commonly, but not always, the form is prohibitory even when the result is substantially to dictate a positive action. When anyone enjoins or restrains another from retaining possession of certain goods from the owner, his neighbor, the action is negative; as a result he gives them up to his neighbor, a positive action. One may, however, directly and positively be compelled to restore water to its former channel, or to abate a nuisance. The remedy of injunction is directed towards preventing the beginning or the continuance of a wrongful and harmful action, while the Common Law remedy can at best only secure reparation. It is in this way one of the most valuable of the remedies of Law or Equity; in practice it is also the most prompt, effective, and complete. Injunctions in the first instance

are usually temporary, to be dismissed or made permanent after a later hearing on the merits. An apparently good prima facie case must be shown in order to secure even a temporary injunction.

Prevention of Torts. It may be used in many cases for the prevention of threatened or reasonably apprehended torts. After a tort has been committed, but not before, the Common Law awards damages. Where a tort has been repeated and will be further repeated, a court of Equity will often make an award to cover the whole case, past and future, in order to avoid multiplicity of suits. In order to prevent a tort, or a repetition of one already committed, an injunction may therefore be granted. This may be done especially in case of nuisance, but also for trespass, fraud, violation of water rights, violation of right of support, and some other forms of tort.

Enjoining Actions at Law. The remedy of injunction is so far reaching in its character that actions allowable at Common Law are sometimes enjoined, when such actions would result in injustice of a sort which a court of Equity can prevent. This is accomplished by enjoining litigants from pursuing such Common Law actions, but a court of Equity is slow to grant this remedy.

Engineers' Relations to Injunction. Engineers are peculiarly liable to attempt some action to which the law takes exception, and to be enjoined from such action. It may be the occupation of lands, public or private, for a railroad; it may be the infringement of some rights in connection with a water supply or a sewerage scheme; it may occur in some way with mills, or with mining plants. When an injunction has been issued, it must be obeyed; a failure to properly obey it constitutes contempt of court. The superintendent of a railroad in Massachusetts spent a year in prison for such a failure to obey the order of a court.

DISCOVERY

Definition. In Equity a right exists to compel a defendant to "discover" and disclose under oath the facts within his knowledge which are essential to the plaintiff's case, while under the Common Law the plaintiff must present evidence to make his case. He may, of course, put the defendant on the stand to give the evidence needed, but at much disadvantage.

Compelling Evidence. While in Equity the defendant cannot be forced to give "evidence tending to criminate himself," he may be compelled to uncover fraud on his part, and his lack of memory may not be excusable in a written answer where it might be in an oral examination in court. More time becomes available, also, for finding errors in the answer, or facts contradicting it.