PART FOUR

UNIFIED CIVIL PROCEDURE

CHAPTER XVIII

PROCEDURAL MERGER OF LAW AND EQUITY

INTRODUCTORY.

THE movement for the procedural merger of law and equity had its chronological beginning in the United States with the activities of the New York Commissioners on Practice and Pleading. Their report of 1848 proposed that the distinction between law and equity be abolished, and this proposal was embodied in the Code of Procedure adopted by the legislature of New York in that year and widely copied in many other states within a relatively brief period.1 A little later, as a result of the investigations of two Royal Commissions, substantial legislative changes were made in the English practice which brought about some degree of fusion but of a less complete character. The English legislation, unlike that of New York and the states which copied the New York code, did not purport to combine law and equity, but did permit equitable defenses and some degree of equitable relief in actions at law and extended the jurisdiction of the Court of Chancery. to decide questions of law. Later English legislation (1858) gave the courts of law a limited jurisdiction to grant equitable relief in some cases. Legislation of somewhat similar character has been enacted in many of the noncode states. In 1875, England made effective a completely unified procedure. In 1915 Congress for the first time permitted equitable defenses in actions at law in the federal courts, and allowed the transfer of causes from law to equity or from equity to law. In the provision as to transfer of causes, Congress followed the lead of a number of non-code states. In recent years the movement for more complete unification of civil procedure has made considerable headway, the most noteworthy events being the adoption of a new system of prac

1 Within twenty-five years of its original enactment, the New York code of 1848 had been adopted in substance in twenty-four states and territories. 2 This legislation was the Chancery Amendment Act of 1852, 15 & 16 Vict. c. 86, and the Common Law Procedure Act of 1854, 17 & 18 Vict. c. 125. 3 By the Judicature Acts of 1873 and 1875, 36 & 37 Vict. c. 66 and 38 & 39 Vict. c. 77.

tice by the state of Illinois in 1933 and the promulgation by the Supreme Court of the United States in 1938 of unified rules of civil procedure for the federal district courts, pursuant to the statutory authorization of 1934.2

In studying the procedural merger of law and equity, four main types of legislation 3 come into consideration.

1. Equitable defenses and counterclaims at law. The English legislation of 1854, the federal legislation of 1915, and the statutes of most non-code states permit the defendant in an action at law to set up what are commonly denominated "equitable defenses." The main purpose of the earlier legislation of this character seems to have been to deal with cases where the defendant in an action at law could secure in equity a perpetual and unconditional injunction against the prosecution of the action, as for example where the plaintiff sued in covenant on a sealed instrument obtained by fraud in the inducement, in a jurisdiction where such fraud was not a legal defense. Later these statutes were extended in many jurisdictions to allow equitable counterclaims or sometimes equitable relief at law in some cases. Typical statutes of this general type follow:

COMMON LAW PROCEDURE ACT (1854).

17 & 18 Vict. c. 125.

LXXIX. In all Cases of Breach of Contract or other Injury, where the Party injured is entitled to maintain and has brought an Action, he may, in like Case and Manner as herein-before provided with respect to Mandamus, claim å Writ of Injunction against the Repetition or Continuance of such Breach of Contract, or other Injury, or the Committal of any Breach of Contract, or Injury of a like kind, arising out of the same Contract, or relating to the same Property or Right; and he may also in the same Action include a Claim for Damages or other Redress.5..

LXXXIII. It shall be lawful for the Defendant or Plaintiff in replevin in any Cause in any of the Superior Courts in which, if

1 Ill. Stat. Ann. (Smith-Hurd, 1935) c. 110, §§ 1-218. See Clark, “The New Illinois Civil Practice Act," 1 U. Chi. L. Rev. 209 (1933); Hinton, "Pleading under the Illinois Civil Practice Act," 1 U. Chi. L. Rev. 580 (1934) ; Millar, "Pleading under the Illinois Civil Practice Act," 28 Ill. L. Rev. 460 (1933).

2 See pp. 14-15, supra.

3 In most cases the change has been statutory, but in some instances, as in the case of the Federal Rules of Civil Procedure, it has been made by rules of court.

As to the appropriateness of this term, see Clark, Code Pleading (1928) 428-429.

5 Sections 80-82 relate to the procedure when such an injunction is sought.

Judgment were obtained, he would be entitled to Relief against such Judgment on equitable Grounds, to plead the Facts which entitle him to such Relief by way of Defence, and the said Courts are hereby empowered to receive such Defence by way of Plea; provided that such Plea shall begin with the words "For Defence on equitable Grounds," or Words to the like Effect.

LXXXIV. Any such Matter which, if it arose before or during the Time for pleading would be an Answer to the Action by way of Plea, may, if it arise after the Lapse of the Period during which it could be pleaded, be set up by way of Auditâ querela.

LXXXV. The Plaintiff may reply, in answer to any Plea of the Defendant, Facts which avoid such Plea upon equitable Grounds; provided that such Replication shall begin with the Words "For Replication on equitable Grounds," or Words to the like Effect.

LXXXVI. Provided always, That in case it shall appear to the Court, or any Judge thereof, that any such equitable Plea or equitable Replication cannot be dealt with by a Court of Law so as to do Justice between the Parties, it shall be lawful for such Court or Judge to order the same to be struck out on such Terms as to Costs and otherwise as to such Court or Judge may seem reasonable.

UNITED STATES JUDICIAL CODE.1

SEC. 274b. That in all actions at law equitable defenses may be interposed by answer, plea, or replication without the necessity of filing a bill on the equity side of the court. The defendant shall have the same rights in such case as if he had filed a bill embodying the defense of [sic] seeking the relief prayed for in such answer or plea. Equitable relief respecting the subject matter of the suit may thus be obtained by answer or plea. In case affirmative relief is prayed in such answer or plea, the plaintiff shall file a replication. Review of the judgment or decree entered in such case shall be regulated by rule of court. Whether such review be sought by writ of error or by appeal the appellate court shall have full power to render such judgment upon the records as law and justice shall require.

REVISED STATUTES OF MAINE (1944) c. 100.2

§ 18. Any defendant may plead, in defense to any action at law in the superior court, any matter which would be ground for relief in equity, and shall receive such relief as he would be entitled to receive

1 Added to the Judicial Code March 3, 1915, 38 Stat. 956. Now 28 U. S. C. § 398.

2 Originally enacted in substance by Me. Laws 1893, c. 217, §§ 4-6.

in equity, against the claims of the plaintiff; such matter of defense shall be pleaded in the form of a brief statement under the general issue. By counter brief statement, any plaintiff may plead any matter which would be ground for relief in equity against any defense set up by any defendant in an action at law in said court, and shall receive such relief as he would be entitled to receive in equity against such claim of the defendant.

§ 19. Whenever in any action at law any matter which would be ground for relief in equity is so pleaded by any party, the court may make such decrees and restraining orders as may be necessary to protect and preserve such equitable rights, and may issue injunctions according to the usual practice of courts of equity.

Under the code system of unified procedure it would appear that no special statutory authorization of equitable defenses or counterclaims was necessary, but doubts which arose under the pioneer New York Code of Procedure led to its amendment to include the following provision:1

"The defendant may set forth by answer, as many defences and counter-claims as he may have, whether they be such as have been heretofore denominated legal or equitable, or both."

Similar sections are contained in most of the codes of civil procedure in the states which have adopted code practice. We shall consider later in this chapter the difficulties which have arisen in some of those states in determining when an equitable defense rather than an equitable counterclaim is the proper mode of raising a defense to a complaint in an action formerly cognizable at law.

2. Expansion of the power of equity. Under the classical English practice, the powers of the Court of Chancery were limited by three self-imposed restrictions: (1) The Court was reluctant to decide questions of legal right or title in suits to enjoin torts; 2 (2) it was sometimes reluctant to decide questions of law and was in the habit of stating cases for the opinion of one of the courts of common law on such questions; 3 (3) it would not give damages in lieu of specific

1 N. Y. Laws 1852, c. 392, § 150. See Clark, Code Pleading (1928) 428429. The corresponding provision of the present New York Civil Practice Act is § 262, which provides in part as follows: "A defendant may set forth in his answer as many defenses or counterclaims, or both, as he has, whether they are such as were formerly denominated legal or equitable . . . Where defendant deems himself entitled to an affirmative judgment by reason of a counterclaim interposed by him he must demand the judgment in his answer".

2 Cf. Scott and Simpson, Cases on Judicial Remedies (1st ed. 1938) 873875.

3 See 9 Holdsworth, History of English Law (3d ed. 1944) 341.

performance or damages in cases where equitable relief turned out to be impracticable or was refused for some other reason not affecting the merits.1 The first two of these limitations were removed by statute in 1852, the third by statute in 1858.

CHANCERY AMENDMENT ACT (1852).

15 & 16 Vict. c. 86.

LXI. It shall not be lawful for the said Court of Chancery, in any Cause or Matter, to direct a Case to be stated for the Opinion of any Court of Common Law, but the said Court of Chancery shall have full Power to determine any Questions of Law, which in the Judgment of the said Court of Chancery shall be necessary to be decided previously to the Decision of the Equitable Question at issue between the Parties.

LXII. In Cases where, according to the present Practice of the Court of Chancery, such Court declines to grant equitable Relief until the legal Title or Right of the Party or Parties seeking such Relief shall have been established in a Proceeding at Law, the said Court may itself determine such Title or Right without requiring the Parties to proceed at Law to establish the same.2

LORD CAIRNS' ACT (1858).3

21 & 22 Vict. c. 27.

II. In all Cases in which the Court of Chancery has Jurisdiction to entertain an Application for an Injunction against a Breach of any Covenant, Contract, or Agreement, or against the Commission

1 See Todd v. Gee, 17 Ves. 273 (Ch. 1810). See also Jesus College v. Bloom, 1 Amb. 54 (Ch. 1745); Parrott v. Palmer, 3 Myl. & K. 632 (Ch. 1834). As to damages for past breaches incidental to a decree of specific performance, see 2 Story, Equity Jurisprudence (13th ed. 1886) §794. As to damages in equity for breach of trust by a trustee where there is no remedy at law at all, see 2 id. § 794a. Some American equity courts have gone further than the Court of Chancery was willing to go in giving damages in lieu of specific relief where the plaintiff would have been entitled to specific relief if the defendant had not disabled himself from affording such remedy, without statutory aid. See Milkman v. Ordway, 106 Mass. 232 (1870); McNulty v. Mt. Morris El. Light Co., 172 N. Y. 410 (1902). The cases are collected in 1 Chafee and Simpson, Cases on Equity (1st ed. 1934) 590-623; Chafee, Cases on Equitable Relief against Torts (1924) 246-280. As to damages in lieu of an injunction against a tort under unified procedure, see Cox v. City of New York, 265 N. Y. 411 (1934).

2 See also Sir John Rolt's Act, 25 & 26 Vict. c. 42 (1862).

3 This statute remains substantially in force in spite of 46 & 47 Vict. c. 49 (1883). See Leeds Industrial Co-op. Soc., Ltd. v. Slack, [1924] A. C. 851,. 863 (H. L.).