Law and Equity is a connotation which differentiates “common law” (or just “law”) from “equity”. Before 1873, England had two parallel court systems: courts of “law” that could only award money damages and recognized only the legal owner of property, and courts of “equity” (courts of chancery) that could issue injunctive relief (that is, a court order to a party to do something, give something to someone, or stop doing something) and recognized trusts of property. This split propagated to many of the colonies, including the United States. For most purposes, most jurisdictions, including the U.S. federal system and most states, have merged the two courts. Additionally, even before the separate courts were merged together, most courts were permitted to apply both law and equity, though under potentially different procedural law. Nonetheless, the historical distinction between “law” and “equity” remains important today when the case involves issues such as the following:
• categorizing and prioritizing rights to property—for example, the same article of property often has a “legal title” and an “equitable title,” and these two groups of ownership rights may be held by different people.
• in the United States, determining whether the Seventh Amendment’s right to a jury trial applies (a determination of a fact necessary to resolution of a “common law” claim) or whether the issue will be decided by a judge (issues of what the law is, and all issues relating to equity).
• the standard of review and degree of deference given by an appellate tribunal to the decision of the lower tribunal under review (issues of law are reviewed de novo, that is, “as if new” from scratch by the appellate tribunal, while most issues of equity are reviewed for “abuse of discretion,” that is, with great deference to the tribunal below).
• the remedies available and rules of procedure to be applied.
The Constitution extends the judicial power of the United States to all cases, in law and equity, arising under the Constitution, the laws of the United States, and treaties made or which shall be made under their authority. However, the provisions of the Judicial Code granting original jurisdiction to the federal courts in civil actions wherein the matter in controversy arises under the Constitution, laws, or treaties of the United States do not extend to matters in admiralty arising under the general maritime law and not covered by specified federal legislation. The cases that come within the jurisdiction of admiralty do so by virtue of a distinct and specific grant of judicial power. They are not embraced in the “cases in law and equity” referred to in the Constitution. Also, the fact that it was the Constitution that established the maritime law as part of the law of the United States does not compel the conclusion that a civil action on a purely maritime claim is cognizable as one arising under the Constitution itself, by means of the “cases in law and equity” provision.