CHAPTER 8 MAXIMS OF EQUITY \d the twelve terof Equity! can be grouped roun: jon —Thejubjes-mater of sui canb Court of Chancery che geo FONG NS om tun el exercised is jurisdiction. They are based upon an dec relation with the p i ee ‘the source: itable inci nts and obligations ve a judicial eta eat eee judicial principles constituting } eee events of society. These judicial principles const 'a¢ will be evident fro i ly known as “Maxims i ! ee dr arn Ns nis vy ct of aes as Salmond observes, are proverbs of he aosiend proves srefal Teans for the expression of leading doctrines o tea is brief and intelligible. Although as a matter of fact, pleas not go to the | root of equity inasmuch as some 7 Gena comparatively the fruil igin, yet as Hanbury says, they are the im et Guveloped equitable doctrines and the ideas embodied them are far olde their articulate expression. ds. © and not the indolent. 11. Where the Equities are equal, the first in time shall prevail. © 12, Where there is equal Equity, the law shall prevail. g Now we proceed to examine the field of an application of each maxim. oe EQUITY WILL NOT SUFFER A WRONG TO BE WITHOUT A REMEDY The maxim explained —This maxim is a A i] "When the law clothes a man with a right, means To Windicate and maintain it-and remedy if-he is injured and enjoyment of it; and indeed it is a vain, thing remedy, for want of right and want of remedy are he must have in the exercise to imagine a right without a reciprocal.” (52 ‘MAXIMS OF EQUITY 53 In fact, the very object of this maxim is to give effect to a right which is ws suit ible}for judicial enforcement but which were not enforced at common law on “account of some technical defect. Snell traces to this maxim the auxiliary jurisdiction of Equity. He further says that it must not be supposed that every moral wrong was redressed by Court of Chancery but remedy was provided only in those cases which were not taken up by the Common Law owing to some technical defects. Origin of equitable jurisdiction —The equitable jurisdiction in England grew up from the deficiencies-ofthe-law and inadequacy of remedies provided by the Common Law. This maxim covers equitable jurisdiction. This maxim is the source of the entire Equity jurisdiction,iexclusive, concurrent and auxiliary. The jurisdiction is ‘exclusive’ where the right to be enforced is wholly equitable; e.g. a trust; concurrent, where Equity contributes something to the legal doctrine, e.g., mistake or fraud; auxiliary, where Equity. lends its aid to the production of evidence which may be required in the action at law. rien Thus, this maxim led the Chancellor to/intervene in the administration of justice in order: 1. to give relief where the Common Law gave none; .2.to give an adequate relief where the one available in Common Law Courts was inadequate; .3> to help the litigants by offering facilities in evidence and procedure which the Common Law Courts did not secure. ‘he Court of Equity only vasion of legal or equitable rightiad EQUITY .d into the vast With these limitations the principle has been. aero range of equitable jurisdiction which provi Se inn exerci i jolation of # i) legal remedies for the violation o! i : adequate and complete manner than the law can giv the law has no (ii) equitable remedies for violation of legal rights which the power to give. It may be noted that although th doctrine of equity, its scope would cot becomes more and more comprehensive. Illustrations ne tui que trust was not recognized at law, but was const saa 8 be the owner of the property. Therefore eae ieee remedy to the cestui que trust in case of a breach of trust by the Lie a Another very important application of the maxim is to be found in the appointment of a receiver by way of equitable execution. If a successful plaintiff could not have legal execution against the property of the judgment-debtor, e.g., an Equity of redemption, the Court of Chancery interfered, and gave equitable relief in the nature of execution by the appointment of a receiver, supplemented, if necessary, by an injunction restraining the debtor from dealing with the property. In a recent judgment in Madan_Paul Singh v.State of U.P. Supreme Court has held in clear terms that whatever the situation, the Court cannot permit injustice to perpetuate. Rule embodied in Indian enactments. e maxim must continue to remain an active tinuously diminish as law develops and (b) n of instruments, d Trusts Act provides for trusts. Section 9 of th v i ractically In this way, this maxim is responsi : esate maxi, vay, | ponsible for the whole jurisd This maxim is the crux of all maxims of Court of Chancery, 2. EQUITY FOLLOWS THE LAW The maxim explained —This maxi ity is/not Of chaneene® acting contrary to law, but rather a surpie to) iota body of Sehancery)never claimed to override the C mon Taya tae correctly observes that “Every j ite When all this had been done, Fauity, would Tequire”. Sto that “where a rule either of me on olucidation of the abov. | ‘a rule either of 5 governs the case with all ae Common Law or the Statute Law, is pies This maxim is und 5 7. Equi erstood in the followi ~T Equity adopts and folloy wing two respects: 2EGuity flows the the rules of law in all 5 ws the analogies of Common Law, cases where applicable.MAXIMS OF EQUITY 55 1. Equity follows the rules of Law.—As Storey explains that where airule, either of the Common Law or of Statute Law, is direct and governs the case with all its circumstances, on a particular point, a Court of Equity is as much bound by it as a Court of Law. 2. Equity follows the analogies of law.—As regards equitable rights and interests, Equity although not strictly speaking, bound by the rules of law, acts in analogy thereto whenever an analogy exists. In the case of Hopkins v. Hopkins, ‘Lord Hardwicke had said: It is the maxim of the Court that trust estates which are the creatures of Equity, shall be governed by the same rules as legal estates, in order to preserve the uniform rules of property.” Equitable estates are thus guided by the same rules of descent and the rules of construction of words of limitation as legal estates. ‘ Application of maxim.—The maxim has two-fold application according to the subject-matter. The subject-matter may be— 1. legal estate, right or interest; or 2. an equitable estate, right or interest. As regards a legal estate, right or interest, Equity is strictly bound by the tules of law and the Court of Chancery never claimed to override the Courts of ‘ommon Law. Equity in these cases, obeyed the law even if the legal rules in questions were hard or unfair. Illustrations.—The rule of Common Law that where a man died intestate, leaving sons and daughters and possessed of a free simple estate, the eldest son was entitled to the whole of the land, was undoubtedly most unfair to the younger sons and the daughters, but Equity granted them no relief. But if the eldest son had persuaded his father not to make a will and had promised to share the property with his brothers and sisters, Equity would have compelled him to fulfil his promise. It would have been against conscience to allow him to keep the benefit of the legal estate which he only obtained by reason of his promise. So, while recognising the legal rule and giving full effect to it, Equity said that this did not conclude the matter, the circumstances of the son's promise must also be taken into consideration, and he must be a trustee of the land for himself and his brothers and sisters.”1 In Loffus_v. Maw,? X induced his niece to live with him on a verbal representation that~he had given her certain property by his Will. Subsequently, he revoked the Will. It was held that the Will was no doubt ineffective as a Will was revocable at common law, that the property was subject to the contract in favour of the niece, and equity would hold the heir as a trustee to the niece to the extent of her legacy. As regards equitable-estate, right and interest, Equity follows the law in the case of acting-gn analogy with legal rules in so far as an analogy clearly exists. For example) if B was the beneficiary under a trust, his interest in the trust property was merely equitablé and not recognized by the Common Law, but his interest in Equity has held to devolve according to the legal rule for the devolution of property. Similarly in case of Equitable claims which were 1. Stickland v. Aldridge, (1804) 9 Ves. 516 at p. 519. 2. (3 Giff. 502).EQUITY i f ‘time-bi d’ analogous to legal claims, Equity, as a rule, applied hee bcucnasy, a under the statutes of limitation. For cane the trustee to another beneficiary to receive trust money eee an eh aS ba inne nacurelona i ; 7 beneficiary under a common mistake of fac, was held 10 Dt 0 Ait Maul Common Law action for money paid and recei sacred period of limitation of six years was applied. This shows that Equity req proceedings to be brought within the period for legal proceedings of a similar kind. ° z The maxim, that Equity follows the law, has another meaning be 7 dealing with its own equitable estates and rights Equity has adop! the legal rules. Limitations,—The maxim applies in both the case equitable estate generally, but there are certain cases general application of the maxim, In exceptional cases, where an exact legal rule was neither directly applicable nor capable’of being extended on principles of analogy, Equity proceeded to administer. justice on principles and rules of its own. It may also be noted that this maxim is Subject to the previous maxim that ‘Equity will not suffer a wrong to be without'a remedy’ and where there was a wrong, Equity always extended its help to redress it and to enforce the right if it was capable of being judicially enforced. Application of maxim in India.—The distinction between legal and equitable interests does not exist in India. In all actions, whether it relates to legal rights and interests, or to what are known in England as equitable rights and interests, if there be any statutory provision relating to the subject-matter, that must apply and equitable consideration will not be allowed to override the provisions of the Statute. For example, in all actions, the Courts are required to apply the law of limitation as contained in Indian Limitation Act, 1963. The Courts cannot deviate from the provisions of the Limitation Act and enlarge on equitable grounds the time-allowed-by-the law, postpone its a pharation, or introduce exceptions not recognised by it. Besides, in the case of the aw of registrations the Privy Council has observed, "Nor can Equity override a Statute and confer upon a person a right which the statute enacts shall be conferred only by a registered instrument.” QE WHO SEEKS EQUITY MUST DO EQUITY ‘he maxim exp s—legal estate and exceptions to the impose terms on the pai its own cours. | our. pees t but the The rationale of this im Sturgis v. Champneys.3 “TheMAXIMS OF EQUITY 37 a refuses its aid to give to the plaintiff what the law would give him, if the curt of Common Law had jurisdiction to enforce it, without imposing upon fim conditions which the Court considers he ought to comply with, although the subject of the condition should be ome which ors Court would not enforce." a Equitable remedies are at the discretion of the Court and so the Court uid, before granting one, enquire whether the plaintiff himself woula te eee pared to act-as.a-man.of.conscience.towards-the defendants. Therefore, if it appeared to the Court that the defendant is entitl matter of the suit to an: Brant the equitable relief sought b: upon the condition of his giving the defendant his due. AC efore, not allow ‘ is 1 This maxim is a particular application of the. paramount maxim of equity, the Court must be governed by conscience The maxim, in its broadest sense, may be regarded as the foundation of all Equity, but as a practical principle guiding the Equity Courts in their administration of justice, the maxinv is only used in a much narrower and more special meaning. It is a principle of more extensive application no doubt, but it is only applied to certain particular cases, t A sued d Application-of the Maxim Wife's Equity to a settlement—When, before the passing of the various farried-Women’s.Property-Acts in England, a husband sought the aid of the Court of Chancery to obtain possession of property to which he was entitled in Tight of his wife, the Court refused to assist him except on the condition that he made a fair settlement of the part of the property on his wife and children, The rules as to infer equity to settlement have become nearly.obsolete due to the passing of the Married Woman's.Property Act, 1882, which enables the wife to hold her separate properties in her right Aogreat change in the legal Position of married women was introduced by the Law Reform (Married Women and Joint Tortfeasors) Act, 1935. Married women can now acquire, hold and dispose of any property and can sue and be sued in respect of. any contract or tort in all respects as if they were single. (2)"Unconscienable bargains.—In setting aside such bargains the Court would see that the money borrowed is repaid with fairNinterest. Where a58 Equity Person asks for the return of the mortgaged securities he is asking for 7 equitable relief and he must first pay back the money advanced Unless the Person concerned is ready to return the mortgaged securities, his claim for the advanced money cannot be upheld by the Court. (3) The doctrine of imutuality-in specific performance.—Equity will not Fee specific performance of a contract at the suit of one party, decrees specific performance at the suit of the other party as well. : (4) Election and mortgage.—The maxim is also illustrated generally in the doctrines of election and mortgages. Thus, Equity would allow the mortgagor to redeem the property even after expiry-of the contractual period, but only on conditions which are fair to the mortgagee. So far as the application of this maxim in the Yoctri f election] is concerned, this maxim applies and imposes a restriction “him’and the Court will-refuse to interfere on his behalf. to. acknowledge his right,and to:award him any relief. __ Appl —Dr. cited as illustrations of this maxim Court with a pre-conceived plan of Illustration. Hanbury says that “the cases most usually are those in which a suitor has come into fraud in his mind." Tf there is aby a use of different Couris withira snes of & i Courts withitra-sho; Fperiod. ae 0, filing multiple proceedinee's Panera it shall be held aes ings in ch partyMAXIMS OF EQUITY 6 is not possessed of clean hands therefore not entitled to an equitable relief. A principle to this effect was laid down by the Supreme Court in recent case. \Mahabir Prasad Jain v. Ganga Singh Even possession of immovable property by its owner cannot be taken without resorting to the due process of law. A person, taking possession, without legal process cannot be deemed to be with clean hands.” (ii) Specific Relief Act—The equitable relief of specific performance will be available if plaintiff's conduct in obtaining or acting under the contract is unconscientious and unfair. Section 22 of the Specific Relief Act says, “Jurisdiction to decree specific performance is discretionary and the Court is.not bound to grant such relief merely because it is lawful to do so." Similarly, Section 25 of the Act denies specific performance of a contract for the sale or letting of property to the vendor or lessor if he entered into the contract knowing that he had no title to the property. Besides, Section 28 of the Act lays down that Equity will refuse specific performance of a contract, which may be perfectly valid in law if the plaintiff has been guilty of undue advantage, circumvention, or unfair practices. He Gii) Injunction —On the same principlethe Court of Equity-will not grant .- anysinjunction to'a party in’ the continuance of-a: legal wrong even if the defendant is.also guilty of legal wrong. Equity will not grant injunction, for Equity will not adjust difference between wrong-doers. Fraud, illegality and breach of copyright in works are the instances of immoral or libellous acts for the continuance of which the Court will not grant injunction. (iv) Relief of rescission or cancellation.—These are equitable reliefs provided under Chapters IV and V of the/Specific Relief Act and the conditions being fulfilled, the Court would rescind a contract or cancél an instrument. But if there is anything unfair or inequitable on the part of the plaintiff, the relief will not be available to him. Limitation.=This- maxim -does-not“applyto’ very unconscientious: or ~~ s~inequitable:conduct on the part of the:plaintiffeltis'confined,to,the misconduct pin regard'to'the matter imJitigation. Exceptions.=The maxim does not apply:in the followingcases:- (1) Case*of: public. policy. —Where*a*transactionsis: agains! the:plaintiff need.not have clean hiands.:He.can:even then be release: from-obligation..1 S lief is notgiven for the sake-of the parties but for-the:sake of:the public __ i Repentance —I there is repentance on the part of the person who was intending to commit fraud, but did nothing to further the fraudulent design, the maxim as to clean hands, will\no} apply. Distinction between “do Equity” and “with clean hands.”—(1) It should oted:that'the*previous-maxim:doesnotassume'that the‘plai ae been.unconscioné 6 (1999) 8S.C.C. 274., 7. Ibid.62 EQUITY ; ; Jief tothe plaintiff ity. would-grant re i the. thas no with a condition, But the present maxim. applies where ee defen dependent claim of hhis own, but the plaintiff is guiltyrof suc Equity refuses him any. Telief.atall> ; A (2) The maxim, “He who comes to equity, must come with clean ands na wider than the maxim, “He who seeks Equity must do Equity. e latter i her party in future but the = — 3 i maxim requires the plaintiff to do Equity to the o! n fut first aon requires the plaintiff not only to be ready to do Equity in future but also to show that his past record in the transaction has been clear (or fair and equitable). Thus the maxim “clean hands, emphasises the past conduct of the plaintiff, while the maxim, “seeks Equity, do Equity”, refers to the future conduct of the plaintiff. {3) In case of the maxim, "seeks Equity, do Equity”, the plaintiff has option to get the equitable relief after fulfilling the condition that he will do Equity in future but in the case of the maxim, “clean hands", the plaintiff has no such option, i.e., if the past conduct of the plaintiff has been inequitable with regard to the transaction in question, he would not be entitled to any equitable relief. AAlief-as‘against-each-other;-and.so.E it_mé 5. DELAY DEFEATS EQUITY The maxim explained—The maxim has also been expressed in another form ie. “Equity_aids the vigilant and not the indolent”. This maxim means \ that while a legal claini is not barred by any lapse of time shorter than the on prescribed by.tbe Statute of Limitation, an equitable claim, on the other and, may in some cases be barred by the unreasonable delay on the part of the Plaintiff in seeking the relief. The Court of Equity discourages the laches i, unreasonable delay ofa suit in asserting or conforming the right, holding that Tee cae tunust to allow a claim to be asserted after an undue lapse of time. reli he ily dttespective of the Statute of Limitation refuses to give attempting eee, seeking relief has delayed for a long time without 10 explain coerce his right. The plaintiff seeking the equitable remedy has that 2 Court of boner period: of- delay. (Lord Camden in Smith v. Clay,® sai quity has always refused its aid to stale demands, rare y ie plaintiff i is unreasonable delay is technically cata "laches" 8. (1767) 3 Bro,. cc. 640, = : Knox v. Gye, (1872) LR. SHL. 656,MAXIMS OF EQUITY 63 thus, for an example, where a purchaser seeks to set aside or rescind a contract, he must apply for relief with reasonable diligence, and where owing to delay on his part, other parties have acquired rights or the property has deteriorated in value or changed in condition, the Court will refuse rescission. Delay fatal to claim—Three conditions.—Delay will be fatal to a claim r equitable relief only under the following nditions:— in the destruction or loss of evidence by which the -Telease of his right; or ‘ 3.-if the plaintiff has so acted as to i jefendant to alter his ion on sonable faith that | d or abandoned his s. But apart from such circumstance, delay will be immaterial. Strahan's observation—Strahan observes that “The doctrine of Laches in Court of Equity is not an arbitrary or technical doctrine where it would be Practically unjust to give a remedy either because the party has by his conduct done that which might fairly be regarded as equivalent to a waiver of it, or whereby his conduct or neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases lapse of time and delay are most material.” “Though the maxim is not applicable to cases covered by the Statutes of Limitation, expressly or by analogy in other cases, however, delay will be fatal to claim for equitable relief, if it may have resulted in the destruction or loss of evitience by which the claim might have been rebutted, or if it is evidence of an agreement whereby the plaintiff has so acted as to induce the defendant to alter his position on the reasonable faith that he has released or abandoned his claim."10 Laches and acquiescence should be distinguished, Laches denotes negligence or unreasonable delay. Acquiescence means assent to an infringement of one’s rights, which may either be expressed or implied from conduct. Exceptions.—This maxim will, however, fot apply to legal or equitable claims to which the Statutes of Limitation apply-expressly or by_anglogy. In such cases, delay so far as it is within the statutory period will not defeat a claim. Excuses of delay.—As there can be no abandonment of a right without full” knowledge, legal capacity, or free will, ignorance or disability or undue influence will be satisfactory excuse of delay. The plaintiff shall be heard after a reasonable lapse of time only when he gives a satisfactory reason of his delay and Court is satisfied with that account. Hanbury’s propositions.—Dr. Hanbury ‘resolves the attitude of Equity towards the Statute of Limitation into the following three simple propositions: In the case of purely equitable claims, Equity will grant or refuse equitable relief at its_discretion \without reference to any Statute of 10. (1874) LR. 5P.C. 221 at p. 239.j EQUITY Limitation unless an equitable claim has expressly been included in imitati such a statute. | , i itable claims which are closely al claims, or equitabl ‘ eee claims, Equity will, as a rule; apply the period prescribed by the Statute of Limitation. t_of the defendant, and the iii it if there has been fraud on the part u h si) plain did not discover the fraud, though no fault of his own, till after the statutory period has elapsed, the Equity will consider that the period has not begun to run until the date of the discovery of fraud. (ii) Application of the Maxim in India.—The Indian Limitation Act has made Provision for all conceivable cases, and cases not specially provided for in Act are governed by the residuary_Article 120. Indian Limitation Act provides under Section 113 three years as the period within which to file a suit for Specific performance of a contract. Hence, sufficient to defeat the Plaintiff's suit-for s} delay amounts to i Position of the d Not expressly apply to equitable claims, statute where the remedy in Equity corresponds with i s e the 's subject to a statutory limitation, 7 ees Equality as . Eau eines Of pemionate equality, The me® MAXIM dos of Jaw and Equity, y ray ution. of profi Ss paral liabilities of Re pet ee ate more effectually i ie "MPlified in Many me departmentsMAXIMS OF EQUITY 68 Application of the maxim. application. It may be illustrate doctrine : 1, Contribution, 2. Equity’'s dislike for a joint tenancy. 3. Rateable distribution of assets, 4. Marshalling, Q)"Contribution.—Where a {reditor has Persons, he has the option of realizing the debt from any one of them, and by the Common Law, the debtor who had thus been compelled to pay the debt in full, had no remedy against his cordebtors. But in Equity he could claim Contribution from the latter, so that the burden might fall equally on all. imi and .co-contractors. The decision ind makes the point in discussion —The maxim has a very wide and general d by means of the following examples of the a single claim against several with respect to co-sureties Biven in Reel v. Dixon, supports this view a more clear~ (i) A,B and C are under a joint Promise to pay D Rs. 3,000. C is unable to Pay anything and A is compelled to Pay the whole. A is entitled to Teceive Rs. 1,500 from B. : Q)-Bauity’s dislike for a Joint tenancy, Under Common Law, on death of joint tena the survivor and nothing was availaole to the representative of the deceased, Her® there is no_equality, except perhaps, ait equality of chance, Equity, therefore, held that the survivor is a trustee for the representative of the deceased in proportion to the sum advanced by him. Here the doctrine, ‘Equality is equity” is followed to de justice to the representatives of the deceased person, (3) Rateable distribution of a set were found insufficient-to-clear off the am creditors, the Common Law ‘allowed certai others and, therefore, others who did not come in preferential list, were left without a remedy against-the debtor F iquity in such cases‘insisted on a pro rata teProPortionate distribution of assets of the debtor by abolishing preferential treatment of certain creditors, All creditors were Placed on an equal footing and Were allowed to show the assets proportionately to the amount of their credit. ws, at law, though some of them were left without a remedy, in Equity there ‘uity leans against joint tenancy, int, the hole estate belonged to ‘Was no such injustice. (4) Marshalling.—Suppose, there are two creditors of the same debtor and sees aright to resort to two Of the debtor; other creditor has a Tight to only one of them. The Court, acting on this maxim, shall so “marshall” the funds that both the creditors are Paid as much and as far as possible. Here “Quality consists in fairness. Doctrine of Marshalling is meant for Providing66 EQUITY e. Its main aim is to see that any of the ‘fere equality of treatment lies among Je of the maxim, “equality is J justice to both the parties to the mortgag of satisfaction. Here ¢ s, It is an examp creditors is not deprived different shares of creditor: equity.” Application of Maxim Contribution.—In d it will be applied whenever its application. f confined within the statutory provisions, an: AS ity and good conscience call fo ‘Abatement of legacies.—In India, the rule for the abatement of legacies is contained in Section 330\of the Indian Succession Act. Rateable distribution of Assets—Section 43 of C.P.C. may be mentioned as an example of the application of this maxim. According to this section where assets are held by a Court and more persons than one have (before the receipt of such assets) made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realization will be rateably distributed among all such persons. (@rQuiry LOOKS TO THE INTENT RATHER TO THE FORM The maxim explained.—The maxim is stated in other form as “Equity regards substance rather than form”. The maxim means that Equity regards the spirit and not the Jetter of the law and that the actual words of the contract are not so very material as the actual intention of the parties entering into it. _This maxim is of great practical importance. It affects to a great degree the entire system of Equity. In fact, it is only by looking at the intent rather than form, that the Equity is able to treat that as done which in good conscience ought to be done. Equity always attempts to get the substance of things and to ascertain, uphold and enforce rights and duties which spring from real relations of parties. It will never allow the mere appearance and external form conceal the true purpose, objects and consequences of a transaction. | eet Sample, if there was a contract under_seal, the common law Rae Sypresaie ka Presence of consideration. Equity, however, always though it was eeig eae it a contract was void for want of consideration even pi Lord Chancellor Maccles Fic si ent a a expects or desires", Aciliauiie een i Bives the party all that he penalty is inserted ont word, url at “The rule is that where a yoyment of an object, the enjoyment of “The true ground of reliefMAXIMS OF EQUITY 6, that object is considered the principal intent of the deed and the penalty only as occasional.” f In both the above cases, the Court was dealing with penalties. But the Principle stated therein is of universal application that Equity always seeks for the real intent under the covers of whatever form of appearance may be and it gives effect to such intent unless prevented by some positive and mandatory Tules of the law. Attitude of the “Common Law” compared with “Equity””.—The ancient Common Law paid great defence to matters of pure form and to rigid observance of all stipulations of the agreements; performance to the very letter of every covenant or promise was, the inflexible rule. Extreme importance was attached by it to seal. The momentous and most arbitrary results which followed from these, made the early Common Law rigid and almost barbarous. The Equity Jurisprudence, on the other hand, differed widely in all these respects from the Common Law. From the very beginning, it was distinguished by an entire absence of these arbitrary transactions. Thus, if a contract was under seal, the Common Law conclusively presumed the presence of consideration. Equity, however, always allowed a party to show that a contract was void for want of consideration, even though it was under seal. Application of the maxim.—The most common applications of the maxim lie in the following : _-7 Relief against penalties and forfeitures. __2Precatory Trusts. 3. Mortgages. 4. Statute of Frauds. 5. Effects of the Seal. (1) Relief against penalties and forfeitures—The Common Law required, as stated above, a rigid performance of all stipulations to the very letter. When a contract provided for a penalty or forfeiture in case of a breach, the Common Law Courts imposed that penalty or forfeiture, regardless of the actual damage sustained by the party in default. Equity, however, deemed the performance of the act, or the enjoyment of the right, to be principal intent and the penalty or the forfeiture as merely accessory and therefore relieves the debtor from such penalty or forfeiture, wherever the actual damage sustained by the creditor may be adequately compensated. (2) Precatory Trusts.—Another example of the application of this maxim is to be found in what are known as precatory trusts. A precatory trust is one which is created not by express and unequivocal words but by such words as “I hope”, “I desire”, “I hope and doubt not”, “I recommend”, etc. Though such trusts are declared in an ambiguous language, zquity regarded it as a species of express trusts and not of implied trusts. (3) Mortgages.—Another remarkable application of this maxim lies in the equity_of redemption, i.., the equitable right and estate of the mortgagor in the mortgaged property after the legal title of the mortgagee had become absolute by a non-performance of the condition. Lord Nottingham\has observed, “In natural Justice and Equity, the principal right of the mortgagee is to therae 68 EQUITY security for the money.”!3 The be against conscience that the 0 the land is only as @ vit that which was intended jeclared it to his own bene! money and his right t Court of Equity, therefore, decle mortgagee should retain as owner for security. : Saas ‘rauds.—On the basis of this the princip! (4) Statute of Fi ee the Statute of Frauds on maxim, Equity evolved two Ie that Equity will not permit mit fraud. The exceptions are exceptions to * the Frauds to be made as engine ‘of fraud or to com al into writing but was not put into t was intended to be put 0 the fraud of.the defendant, ar to the action. f which the Court was accustomed to grant ail within the Statute of Frauds, part tiff would take it out of the (Jf the agreemen' he would not be allowed to writing owing t set up the statute as ab: (i) Whenever a contract © specific performance f h performance of the contract by the plain Statute. (5) Bfects of the seal.—In certain cases, Equity treated the presence of seal ac ew consequence and as producing no effect on the rights and duties of the parties. Application of Maxim in India : (1) Relief against penalties.—Section_74, of the Indian Contract Act relieves debtors against penalties. (2) Relief against ee and Section 114-A of the Transfer of Property Act| relieve the lessees of leases for non-payment of rent and certain other cases. ‘ (3) Relief against clogs on redemption.—Although it is open to the parties to enter into any reasonable agreement about redemption, a Court of Equity will not give-effect to an agreement which either directly or indirectly bars the ‘mortgagor's right to redeem forever, indefinitely or for an unreasonable period. she Tine isnotessence of contract in transaction regarding sale of land. In India, re ne regarding this point is contained in Section,55\of the Indian Contract a rae ich enacts, “When a party to a contract promises to do a certain thing at pees speed time, or certain things at or before specified times, and lo any such thing at or before the specified time, ‘ i , the contr: much of it as has not been performed, becomes voidable at the option cr tre promisee if the intention of the parties was that ti Sees the contract? meee of the ime should be the essence of Chee 9 a peParent Dhunjibhai, mpc | that “The above section di eeenielies from those which obtain oe tracts to sell land. Under that law, Equit ¥4 their Lordships of the Privy loes not lay down an: inci; Y principle r the Law of England as regards 'y, which governs the right of the . Thornborough v. Barker, (16 14, (1916) LR. 431A. 26; a} Seem 628,MAXIMS OF EQUITY Ce completion was to take place really and in such substance intended more than that it should take place within a reasonable time. The Court will indeed relieve against, and enforce, specific performance notwithstanding a failure to keep the dates assigned by the contract, if it can do justice between the Parties and if there is nothing in the express stipulation between the Parties, or the nature of the Property, or the surrounding circumstances, which would make it inequitable to grant the relief.” Their Lordships further observed: “The special jurisdiction of Equity to disregard the letter of the contract in ascertaining what the parties to contract are to be taken as having really and in substance intended as regards the time of its performance, may be excluded by any plainly expressed stipulation. But to have this effect, the language of the stipulation must show that the intention was to make the right of the parties depend on the observance of the time limits prescribed in a fashion which is unmistakable. The language will have this effect if it Plainly excludes the notion that these time-limits were of merely secondary importance in the bargain, and that to disregard them would be to disregard nothing that lay at its foundation. Prima facie, Equity treats the importance of such time limits as being subordinate to the main purpose of the parties and it will enjoin specific performance notwithstanding that from the point of view of a Court of Law the contract has not been literally performed by the plaintiff as regards the time limit specified. This is merely an illustration of the general principle of disregarding the letter for the substance which the Courts of Equity, when, for instance, they decree specific performance with compensation for a non-essential deficiency in subject-matter.” “But Equity will not assist where there has been undue delay on the Part of one party to the contract, and the other has given him reasonable notice that he must complete within a definite time. Nor will it exercise its jurisdiction when the character of the property or other circumstances would render such exercise likely to result in injustice. In such cases, the circumstances themselves, apart from any question of expressed intention exclude the jurisdiction. Equity will further infer an intention that time should be the essence of contract from what has passed between parties prior to the signing of the contract.” Tilley v. Thomas,15 where specific performance was refused, illustrates this class of transaction. But in such a case the intention must appear from what has passed prior to the contract, the construction of which cannot be affected in the contemplation of Equity by what takes place after it has once been entered into.” The period fixed for completion in the aforesaid case, was for two months. The purchaser failed to complete within that period, and subsequently he brought a suit for specific performance against the vendor. Their Lordships held, applying the above principles, that there was no intention that time should be the essence of the contract. Hence, they decreed specific performance 15. (1867) 3 Ch. 61.EQUITY . y High Court held in ersing the decision of the Bomba’ i jori ji Bhai case. K. Irani v. Burjori Dhunji Bl OT eacenn OKS ON THAT AS DONE WHICH OUGHT TO @ Seas HAVE BEEN DONE to the purchaser, rev This maxim must not be taken in the wide and literal sense oy as a code of conscience and makes a person do that which is ri Story’s and Snell's observation.—Sto1 of the maxim is that Equity will, treat the subject-matter. of a contract, as to collateral consequences, and incidents in the same manner as if the final acts collateral contemplated by the parties have been executed exactly as they ought to “have been done not as they might have been executed. The most frequent cases of the application of the rule are under agreements or contracts. This description is merely substituting one practical result and the principle in the place of the principle itself. m and Spi is considered in Application of maxim. following equitable doctrines : (4) Of conversion; (As to executory contracts; and The application of this maxim is found in the (1) Conversion —T j when/batalsa, hhe agreement is considered ag done not only at the: ti ‘\time_ a eqren! : ormed Man Which, according to the terre thereof, it ought forme. land, is treated as real ectat men’ COVenanted ‘i 7 estate j a nanted or devised! ji ; takes effect, and conversely. Equity from the moments ae ago in we saction 2) Executo: FY contracts,—wj land, a person whe ae Zebatd to ‘and, 10 is enters into possession of ja da OLY contract for lease of Sr an agreement { ‘or lease,MAXIMS OF EQUITY a Pecifically enforceable, is regarded as between himself and the ing i Position as the lease had been actually granted to him, Walsh v. Lonsdale! “greed in writing to grant a seven years’ lease ofa mill to W at a rent payable quarterly in arrear, but with a year's rent Payable in advance if demanded. W emer into possession without any lease having been granted and Paid his rent auarterly. Subsequently L. demanded a year’s rent in advance and on W refusing to pay put in a distress, W claimed an injunction and damages for illegal distress, on the ground that at law he was a Indian Law illustrate the Maxim as under: (1) Section 40 bf the Transfer of Property Act, 1882, provides an illustration which is as follows:— 16. (1882) 21 Ch. D. 9,| EQUITY ; transferee has taken or f which OM provided by the terms of rty o! any right in respect of the property Uacciy i is continued in possession, other than a "18 oe I affect the rights of a transferee ae oy Pe ee Borie contract or of the part-performance i i has no noti for consideration who thereof.” i ian Trusts Act, 1882, : ee eke are an pre-existing contract with regard to the si of ap ed to purchase, is ey ate constructive trustee|for the person who has a Pp rise clearly an-application of the equitable rule in question. a Limitation.—There are, however, two limitations on the operation which provides the purchase juitable ri ea m duty of such performance has C. :QUITY IMPUTES AN INTENTION TO FULFIL AN OBLIGATION The Maxim explained.—The Court of Equity was established to do right, and“it seems only natural, therefore, that it should impute to persons an intention to themselves to do what is right. The maxim means that when a person is under an obligation todo some-acts and he does oT ‘ich is not exactly of the kind agreed to be done, yet bears much resemblance to it or which isof such a that it may fairly be taken to have been his intention or design ‘0 satisfy his obligation by what he has the equity will a: had intention to fulfil his obligation. anes The reason of the rule is that it is ri r : is right to put the most favourable sonstruction ona mau''s acts and to presume that he intends to be just bef affects to be generous. a oe Application of the maxim. formance", “satisfaction”, « It is on this maxim that doctrines of execution o esti ‘ademption”, and “Reli Fi 0 power ofappointment” are busca «Relief against the d fectiveMAXIMS OF EQUITY 2 purchased land for 2,000 pounds and took a conveyance thereof to himself; he then died without bringing the land into settlement. The purchased land was in equity presumed to have been purchased by S in pursuance of his agreement and as being in fact his performance of that agreement. ; Satisfaction.—Satisfaction may be defined as the making of a donation with the intention that the donation should be taken to satisfy a prior claim or Tight of the donee himself. Where a father or any other person who stands in loco parentis covenants to make provisions for a child and afterwards gives the child a legacy, or makes some other provision during his lifetime then the Courts of Equity regard the provisions or the legacy as satisfaction of the Provision (called portion in Equity) covenanted to be made. \ For example, A is indebted to B for a sum of Rs. 5000/-. A executes a will es a provision therein for payment of Rs. 6000/- to B. The legacy will be presumed, unless the contrary intention is established, to have been intended and as such to operate as a satisfaction of the debt. Ademption.—Ademption may be defined as “the donation of a thing with the intention that it shall be taken as a substitution for a gift previously made by will in favour of the donee”. It means a transfer of property which whether the donee wishes it or not operated in law as a complete pro fanto substitution for _a gift previously made by the donor's will and unrevoked at his death. Here, the Equity presumes that the latter gift was intended to cut out the legacy either completely or in part. - Defective execution.—The doctrine of relief against defective execution of Power is also founded on the present maxim, The doctrine was thus stated in Tollet v. Tollet.1® “A defective execution will always be aided in Equity under the circumstances mentioned; it being the duty of every man to pay his debts and a husband or father to provide for his wife or child.” Doctrine of Advancement.—The doctrine of advancement also illustrates the application of this maxim. The doctrine connotes that if a father or anyone else in loco_parentis, makes any purchase or transfer of property without consideration, in the name of or to child, it gives rise to a presumption that it [acintended as an advancement in the interest of the child rebutting thereby the ordinary presumption of resulting trust in favour of the father or the person Chea the money or suffered the consideration. doctrine is based on the principle that a parent has a moral obligation towards his child to provide for his living and in case the father purchases any Property in the name of the son it is presumed that he did so in the discharge of his moral obligation. The transaction is prima facie treated as a gift to the child and not a resulting trust. It applies to cases of a parnt and child,!9 husband and wife.20 It also covers a case of a grandchild, father being dead,21 as well as a mother and a child.?? The rule has also been extended to the case of an illegitimate child.23 18. (1728) 2 P. Wms. 489. 19. Dyer v. Dyer, (1788) 2 Cox. 92. 20. Moate v. Moate, (1948) 2 All. E.R. 48 21. Ebrand y, Dancer, (1680) 2 Ch. Cas. 22 Sayre v. Hughes, (1868) LR. 8 Eq, 376, 23. Backford v, Backford, Loft’ Repgets 490.EQUITY 74 ouse in the name of B, B, would, in general, hold the Si s A, If, however, the relationship between A and Bi i Ato B. that of parent and child, it would be prima facie a gift of the house by a The doctrine of advancement, however, has no application in India. Atkin traces the genesis of the rule as follows: : ba “Tt has been established by the decision in 6 Coane ieee that owing to the widespread and persistent praceee Wert Te tives of India, whether Mohammedan or i . f Sapery make grants and transfers of it benami for no obvious reason or apparent purpose, without the slightest intention of vesting in the oe any beneficial interest in the p transferred, as S, roperty granted or the usages these natives have adopted and which have been protected by statute no exception he general law of India has ever been engrafted on t negativing the presumption of the resulting trust in favour of the person providing the purchase money suc! has has by the Courts of Chancery in the Exercise of their equitable jurisdiction, been engrafted on the corresponding law in England in these case: Thus if A purchases ah house only as a trustee for ; when the husband or father pays the money and the purchase is taken in the name of the wife or the child. In such a case, there is under the general law in India, no presumption of intended advancement as there is in England.” Application of the Maxim in India: Doctrine of performance.—Section 92 of the Indian Trusts Act gives effect to the principle of this maxim. It lays down that where a person contracts to buy a property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold that property for the i iciari c \ y for the intended b i discharge of his obligation for the same. eneficarieg. ana. in 10. EQUITY ACTS IN PERSONAM ‘The ma: t quitable maxims, This maxim is the Widest ‘a i : i y ind the most impo! because it comprises the whole jurisdiction of ee emai eden the peculiar procedure of enfor hiner ik had its origin in the principle that Equity ceable by a py f-contempt. While the judgment of the Court of o Taw was enforced by o y the writ : " Possession of the prope sof ex ‘cution)by which the plaintiff ae Maach 3 nt of the decreesMAXIMS OF EQUITY B ‘This is the widest of all the maxims. In a sense it comprises the whole sneplogous to trust.” Pl de endant is wi (ii) Administration of a foreign estate, if the executor or trustee is within its jurisdiction; (iii) more.24. this case, Penn ie objections taken by the defendan this objection was overruled by Lord Harwicke jurisdiction of Equity; It cannot be too often emphasized that on this maxim is based the whole theory of trusts and of their equitable interests \Redemptionjor foreclosure of land situated in its jurisdiction. it was to the jurisdiction of the Court, but on the ground that "the conscience of the party was bound by the agreement and being within the jurisdiction of the Court, which acts in personam, the court may properly decree it as eement.” The principle was—the land was not within the sdicti e ve ower to p iy It may be remembered that the court of equity never assumed to determine Questions of title in the land which was situated Thus, the equity courts had longer arms than that of the England or abroad. of the common law courts, Particularly in case of land situated in foreign country— (Ewing v. Orr. Ewing?®.—In this case a person domiciled in Scotland died leaving personal estate in Scotland. He made a will in Scotch form, and appointed Scotchman to be his executors and trustees. An infant legates, resident in England, brought an action for the administration of the estate | against the executors, trustees who entered appearance without protest. The Question was whether the English Courts had jurisdiction to order administration as to the whole estate. It was held that the English Court had Jurisdiction as to the whole estate. The Court of Equity exercised similar Jurisdiction in actions for redemption and foreclosure of a mortgage on land Outside England or for specific performance of an agreement to create a mortgage on such land or for an account of the rents and profits, or if necessary, for the Appointment of a receiver of such land. 24. (1750) 1 Ves. Sen. 444, 3. LR (1883)9 A.C. 34, 40,16 EQUITY While explaining the doctrine and delivering the judgment, Lord Selborne, LC, observed : “The courts of equity in England are, and always have been the coe conscience, operating in personam and not in rem and in the exercise | ae Personal jurisdiction, they have always been accustomed to compel : performance of the contracts and trusts as to subjects which were not either locally or ratione domicilli within their jurisdiction. They have done so as to land in Scotland in Ireland, in the colonies and in foreign countries. Hanbury says “the Court of equity will decree specific performance of a contract relating to land out of the jurisdiction if the defendant is within the jurisdiction and nothing more than his imprisonment is required to render the decree effective but it will never decide the title to the land, nor will it given specific performance of a contract relating to the land outside the jurisdiction; unless that land is in a country subject to the crown. It is notable that the assumption of jurisdiction has been generally Brith ard Esher, for example, observed in Companhia Maccambie British South Africa Co.26 that the decision in Penn v. Baltimore, which has been acted by other great judges in equit ty seems to be open to the strong objection that the court is doing indirectly what it does not do directly, lands, abroad have been diction “AS regards where a n to enforce an expre: acquired by 2 ses of Suit is filed against Tesiding within jurisdictio: i tess jutisdr ge j ict 'ss trust affecting land outside for. such should own act; or as Straha conscience”, It follows from case and the Cou, involves nothing e subjected to M puts it, this rule that there 3 - must be some toting more th westion of ttle to fons a. ae India, fee Sion * courts is governe ne principles as are applicable to English Ginn eae ascertained on the quit » except 26. (1892) 2 QB. 358, aMAXIMS OF EQUITY 7 they may be at variance with the legislative enactments.” In fact a number of enacted provisions incorporate this maxim in the Indian Law. Dr. Banerji while dealing with the appointments of receivers on the strength of Section 16 and Section 16-A (now Section 19) of Civil Procedure Code provides that, “The Courts in India have but limited powers of making a decree in personam. He further says that “apparently Equity may act in persona in India too.” The proviso to Section 16, has been stated by Mulla, “to be an application, though in a highly qualified form, of the maxim—Equity acts in personam. 11. WHERE THE EQUITIES ARE EQUAL THE FIRST IN TIME SHALL PREVAIL The Maxim explained.—The maxim means that when there is.no legal estate in the field and the question is as among the equitable estates only, the ‘ule is that the person whose Equity attached to the property first will be entitled to priority over the other. Thus, if A enters into a contract, for the sale of his house, with B and then with C, the interests of B and C both being equitable, B will have priority over C because his equity attached to the property first. The true meaning and effect of the maxim, have often been misunderstood. But the Court of Equity will not prefer the one to the other on the mere ground of priority of time, unless and until it finds upon an examination of their relative merits, that there is no other sufficient ground of preference between them or in other words that these equities are in all respects equal and that if the one has on other grounds a better Equity than the other. In applying the maxim, the courts must consider the nature and condition of their respective equitable claims, circumstances and manner of their acquisition and the whole conduct of each party with respect thereto, in éamining these points, the Court may. apply the test not of any technical rule but the same broad principles of right and justice which the Court of Equity applies universally in deciding upon contested rights. It follows from the explanation of this maxim that where several successive and conflicting claims upon the same subject-matter are wholly equitable and neither is accompanied by the legal claim which is held by a third person and neither possesses any special feature or incident which would according to the settled doctrines of Equity give it a precedence over the other irrespective of the order of time, the maxim applies and priority of claim is determined by priority of them. The test.—It is difficult to ascertain exactly the circumstances in which an earlier encumbrancer will be deprived of his priority over the latter encumbrancer. Vice-Chancellor Kinerdesly says,?® “As between persons having only equitable interests, if these interests are in all other respects equal, priority in time gives the better Equity.......In a contest between persons having only equitable interests, priority of time is the ground of preference last resorted to ie, a Court of Equity will not prefer the one to the other on the mere ground of 27. Kashinath v. Anant, (1900) 24 Bom. 353. 28. Rice v. Rice, (1853) 2 Drew. 73.7B ate und of preference priority of time until it finds that there is no sufficient grov P between them.” ities are equal. So, if : when equi! is The rule, however, is applicable ony a eof the person otherwise i ity on : i al in the sense that equity o ee sntiled to prionty is worse, ie. he is guilty of anything unco : F Je of unequal equity is furnished unfair, he will lose his priority. An apt examp! Ap preety ea ceas igence is sufficient for the Maitland expresses the a ee ae oe ement of a merely equitable interest r. - ES ae ‘on the other hand, maintains that so far as the decision goes an equitable mortgagee has only been postponed where he has been guilty of gross negligence. : Pomeroy, observes that “whether the same requirement of gross negligence applies to successive interests which are all purely equitable or whether mere negligence is sufficient to effect the priority, must be regarded as still unsettled by decisions.” Priorities.—Priority means the right to enforce a claim in preference to others. The question of priority arises when two or more Persons have interest in the same property. Suppose a person mortgages his Property to, A,B,C.D, and so on. In such a case, and in a similar Property resides in A and the equi uestion arises as to whose claim must first be satisfied. The general rule is that: ~1- A person in possession of the legal estate has having only equitable estate. This is so becau Law’ 30 Priority over a person se ‘Equity follows the “ffects the conscience of the be enforceable against a ice of the equitable without Notice are 29. (1853) 2 Drew, 73, 30. Maxim 2 31. Snell,MAXIMS OF EQUITY a unanswerable defence, and Court.” It may be noted that equitable titles have priority according to the Priority of notice. If the notices are received substantially, simultancously, the dealings rank in the order in which they were made, Application of the Maxim in India.—(1) Section 48 of the Transfer of Property Act is based on this maxi an unanswerable plea to the jurisdiction of the Property, and such rights cénnot all exist together, each later created right shall be subject to thé rights previously created. F nce, if Sree niet f0-8 and then to,C/B's interest having iave priority over C. ‘ions.—But it may, however, be noted that the rule applies only where equities are equal. If the normal claims of the plaintiff and defendant are not on an equality, the one who has the better claim will be preferred, although his interest arose after the others. (2) Section 78 of the Transfer of Property Act provides that where through the frauid, misrepresentation, gross neglect of a prior mortgagee, another person has been induced to advance money on the security of the mortgaged property, the prior mortgages shall be postponed to the subsequent mortgage. For instance, where the prior mortgagee allows the mortgagor to get hold of the title deeds some time after the mortgage, and the mortgagor, representing that the property was free from encumbrances, creates a second mortgage in favour of 2 Person who believes in such representation, the prior mortgage will be postponed. (3)|Section 79 of the Transfer of Property Act, provides another exception to the above rule. It enacts— “If a mortgage, made to securé future advances, the performance of an engagement or the balance of a running account, expressed the maximum to be secured thereby, a subsequent mortgage of the same property shall, if made with notice of the prior mortgage in respect of all advances or debts not exceeding the maximum made or allowed with notice of the subsequent mortgage”. 12. WHERE THERE IS EQUAL EQUITY, THE LAW SHALL PREVAIL The Maxim—A part of the principle —This and the previous maxim must be taken together to constitute a complete principle. The first applies to certain conditions of facts; the other supplements its operation by applying additional facts by which equitable rights and obligations might be affected, The two are in fact the counterparts of each other and taken together they form the source of the doctrine concerning priorities, notice and purchases for valuable Consideration and without notice. For example, A having title to land, gonttives by means of fraudulent concealment to get money from X, Y and Z on the security of the land and then disappears. The land is insufficient to pay all of them. X, Y and Z are now left to dispute among themselves as to the order in which they are to be paid.The maxim explained.—This maxim expresses ee equal equitable claims upon the same subject-matter ane Scere equally entitled to the protection and aid of the Cour : = Rea ae his equitable claim and one of them in addition to his equitable claim a e obtains the legal claim in the subject-matter, then he wi 0 Seren oe ; claim will prevail. The precedence of the legal claim mig ieee eon the Court of Equity refusing to interfere at all and thereby lea ing P i to conduct their controversy in a Court of Law where, of course, the legal claim alone should be recognised. ; This maxim means that the person in possession of the legal estate is entitled to priority over any person having merely an equitable estate in that Property. It is because that equity follows the law. In Thorndike v. Hunt,3? it was observed that “If the defendant has a claim to the passive protection of a Court equal to the claim which the plaintiff has to call for the active protection of the Court, he who has the legal estate will Prevail.” Thus the purchaser for value of the legal estate without notice of a prior equitable interest, is entitled to priority in Equity to Law. For “Equity follows the law." (2) Where the legal estate is subsequent to the e itable i i a peony i the legal owner takes the legal estate west feean fe ml fie purchaser ou" PUTTHSSE With notice maker the wee ot a (b) Where the Ie, will lose prio The law on the Northern Counties of Bal estate is Prior to the equi i g is pric quitable "ig aa a et or point has been clearly Jai down in th ‘gland Fire Insurance Co, y. Whipp, >> as followe: tT as follows: rior legal Mortgage to a the mortgagor hi f 0r his agent wi given for raising te th the fi - 32. (1859) 3De Gay sea, first estate; 33. Taylor v. London and SA LeNewe v. Lene MY Bake (1800) 2 Ch 299, 35. (1884) 24 Ch. Dag.MAXIMS OF EQUITY (iii) but the Court will not postpone the prior legal estate to the subsequent equitable estate on the ground of mere carelessness or want of prudence on the part of the legal owner.” In case where either maxims, namely “where the Equities are equal, the first in time shall prevail" and “where there is equal Equity, the law shall Prevail” does not apply because “equities are not equal” the guiding maxim is “where equities are unequal, he who has the best equity takes precedence.” It is, however, essential to note here that this maxim applies in case of a conflict between a legal and an equitable estate, whereas the previous maxim ie, “where Equities are equal, the first in time takes precedence”, is applicable in cases where there is no legal estate in the field and the question is among the equitable estates only. The law shall prevail.—We will discuss here the principal clause of this maxim viz., “the law shall prevail”. This part of the maxim means that the legal estate prevails over the equitable estate. In other words, the person in Possession of legal estate is entitled to priority over any person having merely an equitable estate in that property. This is so because of the maxim: ‘Equity follows the law.’ Where the equities are equal.—The part ‘where equities are equal’ qualifies the latter part of the maxim i. , ‘the law shall prevail.’ It means, therefore, that the rule as enunciated above holds good only when equities are equal. Application of the maxim.—One of the most frequent and important consequence and application of this principle is the doctrine that where a Purchaser of property for a valuable consideration and without notice of a prior equitable claim in the same subject-matter, obtains the legal claim in addition to his equitable claim, he becomes entitled to a property both in Equity and at law, for example, suppose that a trustee possessed of the legal rights in the Property conceals that trust and represents himself as the legal and beneficial owner of the property and on that footing sells and conveys it to a bona fide purchaser for value who has no notice whatever of the trust, this has an equal Equity with the defrauded beneficiary and by reason of Possession of the legal estate, it prevails over him. The doctrines of “ELECTION", “MARSHALLING” and “SET-OFF of Indian Law" are based on this maxim. 1, Election. —Election may be defined as the two inconsistent or contradictory bequests or benefits, one of which the donor has, strictly speaking, no power to bestow without the consent or co-operation Of the other. For example, where a person grants his own property X to A, and by the same instrument grants to B a property named Y belonging to A whether believing the latter Property to be his own or not, a case of election arises, and equity will not allow A to claim property X while retaining his own, property Y, and A would be “put to his election"— that is to say, he would be required to decide whether he will elect in favour of the instrument, or against the instrument. equitable accommodation of7 EQUITY inciple that he who accepts the The doctrine of election is based on the principe that re ho accepts the benefit under an instrument, must adopt the whole of i provisions and renouncing every right inconsistent with it. aeton an 2. Marshalling—Where there are two creditors of the same debtor, and one creditor has a right of resort to two funds af ae for payment o his debt, and the other creditor has a right to re 0 he Cour ‘ g e the funds that both the creditors are paid as far as eee eau eet aes creditor to be paid out of the fund against which the second creditor has no claim, so far as that fund will extend, 80 as to have as much as possible of the second fund for payment of the second creditor: and, if the first creditor has already paid himself out of the second, the Court will allow the second creditor to stand in his shoes and resort to the first fund to the extent to which the second has been exhausted by the first creditor. This doctrine comes into operation very frequently when the assets of a deceased person have to be administered. The doctrine has been stated by Lord Eldon in Aldrick v, Cooper36 thus: lf a creditor has two funds, the interest of debtor shall take to that ‘which paying him, will leave another fund for another creditor.” Set-off.—There can be set-off be Equity allows a set-off when the cred the second debt did so in reliance on it eh debts accruing in the same rights. itis mutual, ie, when the party incurring the former debt as a means of discharging Application of Maxim in India, The princi i i ' on of 1 ‘~The principle of this maxim has b ieemerated in Sections 40 and reach the Transfer of Property Act, racy tthe ing @ case of ‘prior’ equitable ancd ‘Subsequent’ legal estate, while the B latter i relevant poe ie Case of prior legal and subsequent equitable estate, The i —"Where a third person is n 40 runs as follows: tae Mlustration ntracts to sel] Sells Sultanpur to C ws Wt a"PUE to B, who hase the contract is sttl in force *Bainst to the same extent as against A Me contrat. 8 may enforce the contact Section 78 of the : Transfer of Pro : isrep eee Act, 1882, prey: a pestePresentation or gross nas Te duced to adv, Blect of a pri ere through mortgagee, teMAXIMS OF EQUITY 83 It may be noted that under both Sections 40 and 78 of the Transfer of Property Act, 1882, the maxim, "where the equities are equal, the law shall prevail” has been applied. While Section 40 is a case of prior equitable and subsequent legal estate, Section 78 is a case of prior legal and subsequent equitable estate. aay