The Equitable Use
The courts of Chancery concerned itself with matters relating to ownership of land. It evolved a number of important remedies and doctrines including in particular the use and the trust, the equity of redemption and the remedies of an injunction and specific performance.
The user was the earlier version of the trust. An owner may transfer his land by conveyance to another who undertook to hold that property to the use of third person. The person to whom the transfer of the legal estate was made was the so-called feoffee to use. The institution facilitated holding of land more flexibly and the holding and transfer of land by institutions which were not entitled to hold and/or transfer land.
The foeffee (the precursor of the trustee held legal titles) However, where he acted relative to his beneficiary (the cestui que use) in a way that breached the underlying obligation or morality or the terms of the transfer, the course of equity would restrain this misuse. The cestui que use y use had beneficial or equitable ownership protected by the rules of equity. The feoffe had legal ownership protected by the common law rule.
The institution of the use allowed transfers of land by will. This facilitated the creation of settlement of land over generation.
One of the effects of the growth of the institution was an impact on feudal duties to the sovereign. Henry VIII who was unable to obtain income from parliament took steps to supress the institution of the use.
After a number of bills the Statute of Uses 1535 became law. The effect was that the use was executed, and the equitable estate became a legal estate. The feoffee was deprived of common law seisin and it became vested in the cestui, i.e., the beneficiary. A conveyance by A to B to the use of C simply vested the estate in C.
The Statute of Wills allowed a feudal tenant / (de facto owner) to grant all socage lands and up to two thirds of knights-service lands by will. This was a reaction to the statute which restricted the ability to o settle and grant wills land on debt.
Circumvented & Modern Trust
Soon the statute of uses was interpreted in a restrictive way. It did not apply where the feoffe have active management duties. It did not apply other than to freehold estate, so that leasehold estates and movables continued to be subject to the principle in equity. It was held not to apply to transfer to companies or corporations.
Ultimately in 1558 it was held that a double use was not executed and accordingly continued. It effectively created the institution of the trust. Accordingly a transfer by A unto into the use of the B in trust trustee for C was effective of trust. The trustee B obtained legal estate and the beneficiaries obtained the equitable estate.
The Statute of Fraud provided that a trust of land must be evidenced in writing. However, equity allowed exceptions where this would otherwise create a fraud.
The resulting trust evolved. Where a person took a conveyance in the name of another but provided the monies, it was presumed that the former held on trust for the latter.
Principles were evolved to protect the beneficiary by restricting the trustee in his conduct. A trustee could not receive remuneration unless expressly allowed. He could not take advantage of his position. He had fiduciary duties to the beneficiary.
Equity evolved the mortgage. The transfer of property, the real purpose of which was to secure a debt or other obligation was not treated as an absolute transfer Equity evolved to protect mortgagors who failed to redeem on the strict due date. Where the mortgagor failed to redeem, equity would protect his interest and allow him an equity of redemption.
Once the arrangement was mortgage in substance it was mortgage and protected as such. Time is presumed not to be of the essence and accordingly redemption late was permitted. The mortgage’s right as to the money and equity protected the mortgagor accordingly. The equity of redemption was recognised as an estate or interest in land.
If the mortgagee failed to redeem on the contractual date for redemption, his equitable right to redeem remained. The mortgagor was treated in equity as the owner of the property notwithstanding that the mortgagee was common law owner.
The mortgagee technically could take possession of property. However, equity declared that he was obliged to account strictly for the income of the land or any advantage over and above the interest due. The mortgagee was effectively discouraged from taking possession.
An injunction is an order of the courts of equity, usually directing a person to refrain from a particular course of action,. An injunction generally prohibits a wrongful act. A mandatory injunction is less common and requires performance of a positive act.
The practice of granting temporary introductory injunctions to reserve the status quo prior the trial evolved. In exceptional cases a qua timet injunction might be granted in respect of an apprehended future wrong.
The award of an injunction was at the discretion of the courts of equity. However, the discretion must be exercised in reference to the rights of the parties under circumstances.
Equivalents at Law
A form of injunction existed at common law. This is a writ of prohibition. However, by the 14th century the Chancellor granted injunctions personally against the defendant to restrain actions against conscience.
Equity could not grant damages. Ultimately in 1858, Lord Cairns’ Act permitted a grant of damages in lieu of or in addition to injunction.
A degree of specific performance is an order to perform a contract in accordance with its terms. It is a remedy of court of equity where the legal remedy is inadequate or insufficient.
A ancient equivalent action of covenant existed at common law in certain cases. However, generally the only remedy of common law was monetary damages. Monetary damages would frequently be inadequate particularly where there was a contract of purchase at unique piece of land.