UNIT 5 NATURE OF EQUITABLE RIGHTS I
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main content
3.1 Equitable Rights
3.2 Enforcement of judgements
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignments
7.0 References / Further Reading
1.0 INTRODUCTION
In the last unit, we considered the conflict between equity and the common law and the effect of the passage of the Judicature Act 1873-1875. The nature of equitable rights which evolved from the recognition of equity jurisdiction as a second force in the Nigerian legal system will be considered in this unit.
2.0 OBJECTIVES
By the end of this unit you should be able to:
(i) Define equitable rights;
(ii) Differentiate between rights in personam and rights in rem; and
(iii) Explain how judgements are enforced.
3.0 MAIN CONTENT
3.1 Equitable Rights: Rights in Personam or in Rem
The early development of equity jurisdiction owes much to the maxim ‘Equity acts in personam’. Of all the maxims, none has a more interesting history, none speaks more eloquently of the vor- tex of jealousy, antagonism and rivalry in which Chancery first formulated its doctrines, than
‘Equity acts in personam’. The influence of this maxim upon commentators on equity has been profound. It is the cornerstone of the theory which treats equitable interests as purely in per- sonam; naturally enough, Ames regarded it as the key to the mastery of equity. See Barbour, The Extra-Territorial Effect of the Equitable Decree (1918-19) 17 Mich. L. Rev. 527-528.
While it is too late to explain modern equity jurisdiction on the basis of the medieval maxims of equity because of the marked differences in the society that gave birth to these maxims and that of today, yet the nature of equitable rights and interests is buried in the interstices of the maxim
‘Equity acts in personam’, hence an attempt to discuss the nature of equitable rights and interests in the light of modern development may not be intelligible if adequate reference is not made to the maxim in so far as the maxim affects both the origin and the later development of Chancery jurisdiction.
The early Chancellors emphasised the theory of the maxim for two reasons.
(i) To prevent a real conflict between the Chancery and the common law courts.
(ii) To avoid a rivalry that might have otherwise resulted in the abolition of the Chancery jurisdiction which was then in its very early stage of development.
The chancellors employed the maxims in two ways both complementary to the development of Chancery jurisdiction, but at the expense of the already established common law jurisdiction. With regard to the equity jurisdiction being exercised by the Chancery, the Chancellors main- tained that unlike the common law jurisdiction which proceeded upon set and fixed principles, equity proceeded upon the conscience of litigants in the exercise of their common law rights. The aim of the Chancery’s equitable jurisdiction was not to override common law rights. On the contrary, it was to ensure that common law rights were not exercised in an unconscionable manner.
However, it must be noted that the Chancery would not hesitate to invoke this same maxim ‘Equity acts in personam’ (to ensure that common law rights were exercised in accordance with equitable principles) even if the ultimate result of such invocation would be to deprive common law rights of their material and legal effects. On the strength of this maxim, the chancery enforced rights created later under its exclusive jurisdiction as well as other equitable remedies classified as either concurrent or auxiliary jurisdiction in absolute defiance of corresponding remedies at law. Nevertheless, the emphasis on the theory of the maxim seems to have given much support and credence to the much contested proposition that equitable rights and interests are merely rights in personam.
It would serve no useful purpose to engage in this perennial controversy. It is now a matter of practical reality that equitable rights may either be in personam or in rem, depending on whether the emphasis is on the substance of the equitable rights in question or on the means or procedure by which these equitable rights are enforced. In the words of Barbour,
“The paradoxical contradiction between the substance of the rights equity enforces and the means of their vindication is misleading. When a judge sitting in equity today declares that a foreign decree ordering the conveyance of land creates no obligation but merely a duty owed by the defendant to the court, he is assuming that equity has made no progress since the time of Coke.” See Barbour, op.cit at 528.
Furthermore, the controversy is no longer of such significance because of the fusion of the ad- ministration of the rules of common law and rules of equity.
The Traditional View
There is an element of truth in the traditional view that because of the maxim, ‘Equity acts in personam’ which underlies the fabric of early equity jurisdiction, equitable rights are logically (not necessarily) rights in personam in the sense that they are enforceable only against the con- science of specified persons.
Long ago, Knightly, sergeant-at-law said- ‘A decree is not like a judgment in the King’s Bench or Common Bench, for such a judgment binds the right of the party; but a decree does not bind the right, but only the person to obedience, so that if the party will not obey, then the Chancellor may commit him to prison until he will obey, and this is all that the Chancellor can do.’ See Y.B. 27 Hen. VIII 15, p1. 6 (Ch. 1536).
In 1883, Lord Selbourne emphasised that the Courts of Equity in England are and always have been, Courts of conscience, operating in personam and not in rem. See Eving v. Orr Eving (1883) 9 App. Cas. 34 at 40. See also Hart v. Sansom (1884) 1 10 U.S. 151, 154. The import of these pronouncements is to circumscribe equitable jurisdiction and the nature of equitable rights and interests in terms of the means by which these rights and interests can be enforced. See J.R. v. M.P. (1459) Y.B. 37. In essence, since equitable rights and interests are in personam, equitable decree binds the person to obedience on pains of imprisonment, the decree does not operate on the subject matter in dispute.
3.2 Enforcement of judgements
At common law, whenever a judgement was given for damages for a tort or a breach of contract and the defendant refused to pay, one of the writs of execution could be issued against the prop- erty of the defendant. The effect was either to put the plaintiff into possession or to have the property sold and the proceeds paid to the plaintiff in satisfaction of his claims against the defen- dant. The title so obtained by the purchaser was good against the defendant. Thus, the procedure for the enforcement of a judgment of the common law courts was in rem.
In equity, if the defendant failed or refused to comply with an equitable decree, all that the Chan- cellor could do was to order the imprisonment of the defendant for contempt. The Chancery had no power to deprive the defendant of his property, because courts of equity have always operated on ‘conscience’ and not on subject-matter in dispute. In this manner, equitable decree of specific performance would operate only upon the person of the defendant and not upon the property that was the subject-matter in dispute.
For example, where in an equitable action for specific performance of contract for the sale of land, the defendant was ordered to convey the piece of land to the plaintiff, and he refused to comply with the order, the Chancery would proceed to imprison the defendant for contempt. The Chancery would not by itself execute the conveyance.
Jurisdiction Over Property Situated in a Foreign Country
The rule is well established that no court in Nigeria has jurisdiction to entertain an action in which the matter in dispute is to determine the title to, or ownership of land which is situated outside the court’s jurisdiction.
In Jadesola v. Akinola (1932) 11 NLR 108 at 109, Webber J. said: I can find no authority for the proposition that proceedings dealing with the ownership of land consequent upon execution, such land being outside this Court’s jurisdiction, can be dealt with by this court issuing the execution, nor in my opinion can any rule of court confer such jurisdiction.
The limitation on the jurisdiction of the court in this matter can be explained on the basis of prin- ciple of effectiveness. First, the physical control of the land is within the power of the country in which the land is situated. Secondly, it is the lex situs of the land which determines the title to or ownership of the land. See Hicks v. Powell (1869) 4 Ch. App. Cas. 741; Norton v. Florence (1877) 7 Ch.D 332. Re Hawthorne (1883) Ch.D. 743. B.SA Co. v. Conpanhia de Mocambique (1893) A.C. 602.
A court of Equity will, however, in certain cases, exercise its jurisdiction in respect of matters affecting foreign land or land situated outside its jurisdiction. The basis for the exercise of this jurisdiction is to be found in the maxim ‘Equity acts in personam’. See Penn v. Baltimore (1750)
27 ER 847. Specific performance was decreed in respect of articles executed in England concern- ing boundaries of two provinces in America, because ‘the conscience of the party was bound by this agreement; and being within the jurisdiction of the court, which acts in personam the court may properly decree it as an agreement’. The relevant equitable decree is enforceable against the person of the defendant who must be within the jurisdiction of the court.
In British Bata Shoe Co. v. Melikan (1956) 1 FSC 100, the proceedings concerned an appeal from an order of a Judge of the High Court of Lagos striking out the plaintiff’s action seeking specific performance of a contract for the assignment of the respondent’s leasehold property situ- ated at Aba in the former Eastern Region, on the ground that the High Court of Lagos had no ju- risdiction to try the case. This action was filed in the former Supreme Court in December 1954. At that time there was only one Supreme Court, constituting one jurisdiction for the whole of Nigeria.
The action came on for trial on the 9th of January, 1956. On the 1st of January, 1956, the Supreme Court of Nigeria had ceased to exist and was replaced by five independent High Courts, each ex- ercising jurisdiction within its own territorial limits. The two High Courts concerned were the High Court of Lagos exercising jurisdiction within the former Federal Territory of Lagos where the parties to this action were residing and the High Court of the former Eastern Region of Nige- ria where the property in dispute was situated. It was evident that each of the regions of the Fed- eration, with its separate High Courts, was like a foreign country to other regions.
The counsel for the appellant/plaintiff submitted that the action being one for specific perform- ance of a contract which calls upon the court to act in personam in equity against the respon- dent/defendant, the High Court of Lagos had jurisdiction as the parties were residing within its jurisdiction. Jibowu, Ag. FCJ, delivering the judgment of the court agreed that the claim for spe- cific performance of a contract is an action calling upon the court to exercise its equitable jurisdiction in personam over persons who are resident within its jurisdiction. He observed that the position of the High Court of Lagos must be likened to that of the English High Court of Justice with regard to land outside its territorial jurisdiction. Since the High Court of Lagos is empow- ered to administer law and equity, it has jurisdiction in cases of specific performance of contracts between persons resident within its jurisdiction. Although the land to which the contracts relate may be outside its territorial jurisdiction.
Similarly, the court will entertain jurisdiction to administer foreign assets, real or personal, of a testator who died domiciled in a foreign country, provided the executors or trustees are within the jurisdiction of the court. See Ewing v. Ewing (supra). The jurisdiction also covers the enforce- ment of a trust the subject matter of which is foreign land. See Rochefoucauld v. Boustead (1897) 1 Ch. 196.
In Ayinule v. Abimbola (1957) LLR 41, the High Court of Lagos in the exercise of its equitable jurisdiction restrained the defendant, who was within the jurisdiction from doing an act outside the jurisdiction. In that case, the plaintiff alleged that the defendant was making use of his (plain- tiff’s) Registered trade name in Ghana. He sought an injunction to restrain the defendant from repeating this alleged unlawful act. The question was whether the court had jurisdiction to re- strain a defendant who was within the jurisdiction from doing an act outside the jurisdiction.
It was evident that the defendant’s action clearly threatened legal injury to the plaintiff’s business interests, and that an injunction would issue in terms of the plaintiff’s application if the acts complained of were committed in this country. The court held that an order is injunction is di- rected to the person to be restrained and is an order in personam. In Ijaola v. Banjo (1958) LLR 58, Dickson J. said:
In my view the present action concerns land, and as we have already seen, the land is situ- ated in the Western Region. This being so, has this court jurisdiction to hear and deter-mine the claim? It is hardly necessary for me to say that the jurisdiction of the High Court of Lagos is confined only to the Federal Territory of Lagos. Equity acts in personsam over persons resident within its jurisdiction, and in certain cases the court would entertain an action respecting foreign land.
It therefore follows that if the person to be restrained is within the reach and amenable to the processes of the court, an injunction may be ordered regardless of the locality of the act to be re- strained.
The principle requiring the presence of the defendant within the jurisdiction has been further ex- plained in Tozier v. Hawkins (1885) 15 QBD 680, and in In re Liddell’s Settlement trusts (1936)
1 Ch. 365. Physical presence of the defendant within the jurisdiction may not be necessary where the defendant has been properly served in accordance with the relevant rules of court. Once this is done, so far as the jurisdiction of the court is concerned, the defendant, who need not be resi- dent within the jurisdiction, is precisely in the same position as a person who is physically present within the jurisdiction. See Romer LJ in In re Liddell’s Settlement Trusts (supra) at 374.
Generally, the exercise of this jurisdiction depends on the existence between the parties to the suit of some personal obligation. Such personal obligation may arise out of contract, (express or implied), fiduciary relationship or fraud, or other conduct which, in the view of a court of equity would be unconscionable. The question of jurisdiction in these matters does not depend on the lex situs, where immovable property is involved, or on the law of the place where the act, re- strained or commanded, is to be effected. See Dechamps v. Miller (1908) 1 Ch. 856 at 863.
Modern Development
The foregoing bears apparent testimony to the view that an equitable decree is directed against the person and that it only binds the person to obedience, it does not operate upon the subject matter in dispute. See J.R v. M.P. (1459) Y.B. 37 Hen. VI. fol. 13. pl.3. From this standpoint, eq- uitable rights are said to be rights in personam. This proposition may not be challenged in as much as the methods of enforcement of equitable decrees are not to be related to the principal or essential objects of the decrees.
An examination of the main or principal object of an equitable decree which compels or induces a person, on pains of imprisonment, to comply with the terms of the decree, reveals that equity in fact, operates upon the subject matter in dispute. Where a vendor complies with a decree of spe- cific performance of a contract for the sale of land, although the decree was directed against the person of the vendor, it has, in fact, operated upon the subject matter in dispute. The vendor has been compelled to convey the land, the subject matter of the contract, to the purchaser in accor- dance with the terms of the decree.
Furthermore, subsequent developments, judicial and statutory, affecting equity jurisdiction has enlarged the functional significance of the maxim ‘Equity acts in personam.’ As Timlin J., ob- served: ‘In the early stages of equity jurisprudence decreed were enforced only in personam… This rule has long since given way to the paramount rule that equity may in all cases frame its decrees as to make them effective to do equity, and now the forms of equitable relief are as vari- ous as the transactions investigated and regulated in equity. See McMillan v. Berber Asphalt Co. (1912) 151 Wis. 48.
Writs of Assistance
In order that equitable decrees should not be rendered illusory, the Chancery introduced various equitable writs, the principal object of which was to get at the specific res, that is, the subject matter in dispute. About the middle of the seventeenth century, the developed equity system in- troduced writs of assistance by which a court of equity empowered the sheriff to put the plaintiff into possession of the subject matter in dispute. See Vanlore v. Lidall (1624), Equity, Cases and Materials; Chafee and Re (1958, 4th Ed.) p.41.
If the decree were for land, and the party remained obstinate in prison, the court granted an injunction for yielding up possession to the party for whom the decree was made. If this were disobeyed, the court granted a commission to justices of the peace to put the party in possession; and in case of need, a writ of assistance was awarded, directed to the plaintiff, commanding him to be aiding and assisting the justices with the posse comitatus, to putting the party in possession, and to apprehend the contemners of the court; so that though the court could not bind the right it secured the possession, as the Praetors did un- der their extra-ordinary jurisdiction. See Spence, The Equitable Jurisdiction of the Courts of Chancery, (1846) Vol. 1, 392.
At that stage, equitable rights could not be said to be merely rights in personam for the real ob- ject of the writs of assistance was to deprive the defendant of the possession of a specific res, for the benefit of the plaintiff. See generally, Cook, The powers of Courts of Equity (1915) 15 Col. L. Rev. 37
Writs of Sequestration
There was also the Writ of sequestration which, in effect, was similar to the writ of assistance. Where a defendant, who had been committed to prison for his refusal to comply with an equita- ble decree continued to be recalcitrant, the Court of Chancery would issue a writ of sequestration whereby a sequestrator would be appointed to take possession of the defendant’s property pend- ing the time the defendant would comply with the terms of the decree. It is not certain whether the purchaser under the sale by the sequestrators got title.
In Shaw v. wright (1795) 3 Ves. 22, Loughborough L. C. said: ‘The difficulty is this: if the se- questrators sell, and the purchaser should be brought before this court to complete their contracts, I could not compel them to pay the money. I cannot make a man take a title, which he is to sup- port a bill for an injunction. You will not find any instance of any order to sell under a sequestra- tion a subject which passes by title and not by delivery.’ But see Cook, op. cit., at 113-114; Pegge v. Skynner and Richardeon (1784) Ch. 1 Cox Eq. Cas. 23.
However, where a writ of assistance of sequestration order began, equitable rights in respect of the property in dispute ceased to be mere rights in personam. In the words of a learned writer:
Originally the Chancellor could not act in rem in the sense of passing the legal title to property of any kind; but, in the development of our judicial system, he asserted successfully the power to do this in the case of chattels, by means of a sale under a writ of sequestration. Even if this is denied, it by no means follows that equity acts only in personam. If we recall that in personam means in reference to procedure, nothing but bringing pressure to bear upon the defendant’s physical person, it is clear that equity has done something which goes far beyond that. It has given the purchaser from the sequestrator: (1) full ‘equitable title’ to the chattels; (2) posses- sion of the chattels; (3) the right to use all the powers of the court of equity to pro- tect the possession and ‘equitable title’. As a consequence of the possession, the purchaser thus becomes, according to the common law, owner as against all the world except the defendant. On the other hand, the plaintiff having received money, has, and may of course transfer, an indefeasible title to it, and is a swell off as the judgment creditor in the legal action.’ See Cook, op. cit., at 114-115.
The inadequate or limited power of a court of equity to transfer property through its writs of as- sistance and sequestration, has been remedied by statutory provisions. See section 14 Judicature Act 1884; section 31 Trustee Act 1893. The extended powers are both vesting and appointive. Section 31 of the Trustee Act, 1893 empowered the court to make a vesting order in respect of the property in dispute. The effect of a vesting order is the transfer of the property from one party to the other. Where a vesting order could be made, the court may, if it is more convenient, ap- point a person to execute conveyance, contract or other instruments on behalf of the party who had refused to comply with the order.
SELF ASSESSMENT EXERCISE 1
What is the effect of a vesting order?
Foreclosure Order
Whenever it is proper and equitable, a court of equity will decree a strict foreclosure of a mort- gagor’s equity of redemption in favour of the mortgagee. See Maitland, Equity (Brunyate Ed.) 1949, p. 183. in Toller v. Carteret (1705) 2 Vern. 494; 23 ER 916, the Court of Chancery de- creed foreclosure of an equity of redemption to land situated outside jurisdiction on the ground
that equity acts in personam, and since the defendant was properly served within the jurisdiction, the court had jurisdiction to entertain the action. In view of the full effect of this decision, can it truly be said that equity acts in personam in decreeing a strict foreclosure of an equity of redemption?
In the words of the defence counsel in Paget v. Ede (1874) LR 18, Eq. Cas. 118, ‘We dissent from the proposition that a foreclosure decree is merely a personal decree. In as much as it de- prives the mortgagor of his estate, and operates to vest the estate, in the mortgagee, it is a direct proceeding in rem. It is a decree in personam in form only, the gist and essence being in the con- sequences, which are, that if the mortgagor do not pay, the estate will be taken out of him and transferred to the mortgagee, and his equity of redemption are wholly inconsistent with its being a mere personal right.’
Similarly, action for delivery up and cancellation of documents obtained by fraud falls in the same category in that the principal object of the action is the surrender of a specific res. So is the equitable decree for the appointment of a receiver whose function is to take charge of the prop- erty in dispute and preserve such property for the benefit of the person in whose favour the order was made. See Spence, Equitable Jurisdiction (1846) Vol. 1, p. 378.
4.0 CONCLUSION
On the strength of the maxim, ‘Equity acts in personam’, the chancery enforced rights created later under its exclusive jurisdiction as well as other equitable remedies classified as either con- current or auxiliary jurisdiction in absolute defiance of corresponding remedies at law.
5.0 SUMMARY
In this unit, we have considered the nature of equitable rights. You should now be able to define equitable rights; differentiate between rights in personam and rights in rem; and explain how judgements are enforced.
6.0 TUTOR-MARKED ASSIGNMENT
Discuss the procedure for the enforcement of a judgment of the common law courts.
7.0 REFERENCES / FURTHER READING
Hackney J., (1987) Understanding Equity and Trusts; London: Fontana press
Jegede M. I. (2007rep.) Principles of Equity; Ibadan: Unique Design/Prints