equity.
Justice administered according to fairness as contrasted with the strictly
formulated rules of common law. It is based on a system of rules
and principles which originated in England as an alternative to the
harsh rules of common law and which were based on what was fair in a
particular situation. One sought relief under this system in courts
of equity rather than in courts of law. The term "equity" denotes
the spirit and habit of fairness, justness, and right dealing which
would regulate the intercourse of men with men. Gilles v. Department
of Human Resources Development, 11 Cal.3d 313, 113 Cal.Rptr. 374, 380,
521 P.2d 110. Equity is a body of jurisprudence, or field of jurisdiction,
differing in its origin, theory, and methods from the common law; though
procedurally, in the federal courts and most state courts, equitable
and legal rights and remedies are administered in the same court.
See Equity, courts of.
A system of jurisprudence collateral to, and in some respects independent
of, "law"; the object of which is to render the administration of justice
more complete, by affording relief where the courts of law are incompetent
to give it, or to give it with effect, or by exercising certain branches
of jurisdiction independently of them.
A stockholder's proportionate share (ownership interest) in a corporation's
capital stock and surplus. The extent of an ownership interest
in a venture. IN this context, equity refers not to a legal concept
but to the financial definition that an owner's equity in a business
is equal to the business's assets minus its liabilities.
[Black's Law Dictionary, Sixth Edition, p. 540]
126 S.Ct. 1869,
164
L.Ed.2d 612 (2006)
In
Barnes v. Alexander, 232 U.S. 117, 34 S.Ct. 276, 58 L.Ed. 530
(1914), for instance, attorneys Street and Alexander performed work
for Barnes, another attorney, who promised them “one-third of the contingent
fee” he expected in the case.
Id., at 119, 34 S.Ct. 276.
In upholding their equitable
claim to this portion of the fee, Justice Holmes recited “the familiar
rul[e] of equity that a contract to convey a specific object
even before it is acquired will make the contractor a trustee as soon
as he gets a title to the thing.”
Id., at 121, 34 S.Ct. 276.
On the basis of this rule, he concluded that Barnes' undertaking “create[d]
a lien” upon the portion of the monetary recovery due Barnes from the
client,
ibid., which Street
and Alexander could “follow ... into the hands of ... Barnes,” “as soon
as [the fund] was identified,”
id., at 123, 34 S.Ct. 276.
Much like Barnes' promise to Street and Alexander, the “Acts of Third
Parties” provision in the Sereboffs' plan specifically identified a
particular fund, distinct from the Sereboffs' general assets-“[a]ll
recoveries from a third party (whether by lawsuit, settlement, or otherwise)”-and
a particular share of that fund to which Mid Atlantic was entitled-“that
portion of the total recovery which is due [Mid Atlantic] for benefits
paid.” App. to Pet. for Cert. 38a. Like Street and Alexander in
Barnes, therefore,
Mid Atlantic could rely on a “familiar rul[e] of equity” to collect
for the medical bills it had paid on the Sereboffs' behalf.
Barnes, supra, at 121, 34 S.Ct. 276.
This rule allowed them to “follow” a portion of the recovery “into the
[Sereboffs'] hands” “as soon as [the settlement fund] was identified,”
and impose on that portion a constructive trust or equitable lien.
232 U.S., at 123, 34 S.Ct. 276.
The Sereboffs object that
Mid Atlantic's suit would not have satisfied the conditions for “equitable
restitution” at common law, particularly the “strict tracing
rules” that allegedly accompanied this form of relief. Reply Brief for
Petitioners 8. When an equitable lien was imposed as restitutionary
relief, it was often the case that an asset belonging to the plaintiff
had been improperly acquired by the defendant and exchanged by him for
other property. A central requirement of equitable relief in these circumstances,
the Sereboffs argue, was the plaintiff's ability to “ ‘trac[e]’ the
asset into its products or substitutes,” or “trace his money or property
to some particular funds or assets.” 1 D. Dobbs, Law of Remedies § 4.3(2),
pp. 591, n. 10, 592 (2d ed.1993).
[. . .]
But
as the Sereboffs themselves recognize, an equitable lien sought as a
matter of restitution, and an equitable lien “by agreement,” of the
sort at issue in
Barnes, were different species of relief. See Brief for Petitioners
24-25; Reply Brief for Petitioners 11; see also 1 Dobbs, supra,
§ 4.3(3), at 601; 1 G. Palmer, Law of Restitution § 1.5, p. 20 (1978).
Barnes confirms
that no tracing requirement of the sort asserted by the Sereboffs applies
to equitable liens by agreement or assignment: The plaintiffs
in
Barnes could not identify an asset they originally possessed,
which was improperly acquired and converted into property the defendant
held, yet that did not preclude them from securing an equitable lien.
To the extent Mid Atlantic's action is proper under
Barnes, therefore, its asserted inability to satisfy the
“strict tracing rules” for “equitable restitution” is of no consequence.
Reply Brief for Petitioners 8.
[. . .]
The Sereboffs finally fall
back on the argument that
Barnes announced
a special rule for attorneys claiming an equitable lien over funds promised
under a contingency fee arrangement.
Outside of this context,
they say, the “typical rules regarding equitable liens by assignment”
*1877 persisted and would have prevented recovery here. Reply Brief
for Petitioners 13.
But
Barnes did not attach
any particular significance to the identity of the parties seeking recovery.
See
232 U.S., at 119, 34 S.Ct. 276.
And as
Barnes itself makes
clear, other cases of this Court-not involving attorneys' contingency
fees-apply the same “familiar rul[e] of equity that a contract
to convey a specific object even before it is acquired will make the
contractor a trustee as soon as he gets a title to the thing.”
Id., at 121, 34 S.Ct. 276.
In
Walker v. Brown, 165 U.S. 654, 17 S.Ct. 453, 41 L.Ed. 865 (1897),
for instance, the Court approved an equitable lien over municipal bonds
transferred to a company to facilitate its business. When
a supplier of the company suspended shipments because of delinquent
debts, the individual who had transferred the bonds assured the supplier
that “ ‘any indebtedness that they may be owing you at any time, shall
be paid before the return to me of these bonds ... and that these bonds
... are at the risk of the business of [the company], so far as any
claim you may have against [it].’ ”
Id., at 663, 17 S.Ct. 453. The Court found that this undertaking
created an equitable lien on the bonds, which the supplier could enforce
against the individual after the bonds had been returned to him when
the company became insolvent.
Id., at 666, 17 S.Ct. 453. As in
Barnes, the Court resolved the case by applying general equitable
principles, stating that “[t]o dedicate property to a particular purpose,
to provide that a specified creditor and that creditor alone shall be
authorized to seek payment of his debt from the property or its value,
is unmistakably to create an equitable lien.”
165 U.S., at 666, 17 S.Ct. 453.
[Sereboff v. Mid Atlantic Medical Services,
Inc., 126 S.Ct. 1869, 164 L.Ed.2d 612 (2006)]