Equity: Part II
Immanuel Kant
Aristotle and Aquinas Recap
In my first post on the philosophical notion of equity, I discussed the Aristotelian and Thomistic theory of equity. To summarize, both Aristotle and Thomas Aquinas defined equity as the choice to not apply the law in those situations where applying the law would create more harm than good. This could mean something like the rich forgiving the debts of the poor, even though the law would require the payments of debts (which is an example Aristotle gives). Or it could mean that you refuse to return a debt when you know your lender plans to use the returned debt to start an insurrection (which is one of Aquinas's examples). Both Aristotle and Aquinas believe that justice requires equity because it is impossible for a law-giver to account for every single contingency in the creation of the law. There will always be outlying cases where an application of the letter of the law will violate the spirit of the law. This is true even with good laws. In these cases, the law needs to be dispensed with.
Since writing that post, I have found discussions of equity in the writings of both Thomas Hobbes and Immanuel Kant. Chronologically, I should be discussing Hobbes first, but I am going to discuss Kant first for two reasons. For one, Kant's understanding of equity is closely aligned with Aristotle and Aquinas, while Hobbes' theory is going to belong to a slightly different tradition. Secondly, Kant's writing on equity is shorter and requires less reading. Huzzah!
Immanuel Kant's Equity, Introduction
As I have noted, Kant adheres fairly closely to the Aristotelian definition of equity. However, he does not not seem to fully endorse this idea, but rather exposes problems with it, at least in legal application.
In my review of Kant, I was only able to come across a short passage on the topic of equity in Kant's book The Metaphysics of Morals in the "Appendix to the Introduction to the Doctrine of Right." He may have written more on the topic elsewhere, but I would not know where to look. In The Metaphysics of Morals, Kant discusses the idea of equity very quickly, and only for the purposes of dismissing it. His discussion comes in the first half of the book, which is dedicated to the Doctrine of Right, that is, to legal applications. The second half of the book is dedicated to virtue, which is the aspect of morality without legal applications.
The word Kant uses for equity is the German word Billigkeit. However, he ensures to include in parentheses that by Billigkeit he means the German equivalent to the Latin word aequitas, thus ensuring his readers know he is referring to the same concept previous established in Latin literature. On a side note, Billigkeit is a fun little German word for intermediate Germanophiles like myself, since its literal translation is "cheapness." It is, however, the established word for equity in philosophical literature.
Kant's Statement of Equity
Kant believes that equity is a matter of right, that is, when somebody makes a claim to equity, they are not merely asking another person to be virtuous. The rich man forgiving the poor man's debts out of the goodness of his heart is not equity, according to Kant. If somebody demands forgiveness of debts on the basis of equity, they are appealing to human rights, not to human sympathy. Kant states, "Equity is in no way a basis for merely calling upon another to fulfill an ethical duty (to be benevolent and kind). One who demands something on [equity] stands instead upon his right, . . ."
This observation fits in nicely with Aristotle. Even though Aristotle's example of equity might look like mere virtue (the rich forgiving the debts of the poor), Aristotle's theory is that equity is a matter of law. He believes that by equity we mean what the law-givers would themselves have chosen to craft as law had only they been aware of the particular circumstances in a particular case. For all the philosophers we have looked at, none of them view equity as a private virtue. It concerns the law.
Instead of offering a definition for equity, Kant offers a very neat little motto for equity. He states, "the motto of equity is, the strictest right is the greatest wrong." Equity is a remedy for the overly strict application of the law. This is exactly what Aristotle and Aquinas believed. No law can possibly be crafted that takes into account the countless contingencies of individual situations. To apply the law with strict exactitude, without regard to its purpose, is to commit oneself to permitting injustice so long as it fits the letter of the law. The strictest right is the greatest wrong, because a commitment to strict right is a commitment to indifference towards situational justice.
Kant's Problem with Equity
While it sounds nice to be able to relax the law a little bit to account for contingencies the law-givers never considered, there's a problem with equity that Kant observes, and it forces him to ultimately eschew equity from his doctrine of right. If equity is the suspension of the law, then by definition, there is no legal mechanism of enforcing it. Or, as Kant puts it, one who appeals to equity "does not have the conditions that a judge needs in order to determine by how much or in what way his claim could be satisfied." You cannot demand legal satisfaction when what you really need is satisfactory legal dispensation. You cannot pull off a legal Thanos maneuver.
Examples of Equity
In the first example, a group of partners form a company, and they agree to split the profits equally. When the company is running, one partner dedicates himself more to the company than any of the other partners, pouring in more time and energy. Supposing the company fails, the partner who put in more energy has lost a substantial amount in opportunity costs, while the other partners were probably out finding new opportunities and neglecting their original investment. Sure, they lose money when the company goes under, but the partner who actually was committed to working for the company lost the most, both because his other partners neglected him and because of lost opportunities elsewhere.
When the company closes, the partners divide the remaining assets amongst themselves, but the partner who did more work for the company claims a greater share of the remaining assets. He appeals to equitable distribution to account for the fact that he suffered more losses than the others. Equally dividing the remaining assets would not be right, so he claims. They need to divide the assets equitably, not equally.
In the second example, a servant is hired for the year, given food and lodging, and told that after the year they will be paid a certain sum of money in a given currency. By the time the year is over, however, the currency the servant agreed to has dramatically depreciated in value, and most people are now trading in a second currency. The servant goes back and demands, on grounds of equity, that since the value of the currency was greater at the start of the contract, it is the value that they should be paid, not the amount. The servant wants the same purchasing power they thought they were going to earn when they signed the contract. This would require ignoring the letter of the contract to go with the intent of the contract, which is a form of equity.
Kant's Rejection of Equity
Does either the business partner or the servant have legal means of achieving an equitable outcome in these situations? Kant's answer is no. His reason is that there are no agreed upon terms in the contract or information in the facts that will ever reach a conclusion as to what constitutes equity in the given situations. Both of these examples include contracts, which by definition require the consent of both parties. But you cannot go backwards in time to rewrite the contract to account for the contingencies in the facts. "A judge cannot pronounce in accordance with indefinite conditions," states Kant. The judge's job is to enforce the contract, but in these cases, the judge "would have no definite particulars (data) to enable him to decide how much is due by the contract."
Discussion
Kant (although he has not explicitly said this) has focused on contract law. Both of his examples are based on contracts. Interestingly enough, Kant implies that the sovereign may be able to apply equity in situations where the sovereign is one of the parties in the contract. He mentions that equity may be granted "when the crown itself bears the damages," although even here Kant does not think the petitioners have a leg to stand on.
To compare back to Aristotle and Aquinas, both of these two previous philosophers we looked at have said that equity is what the law-giver would have said had he crafted the law with the particular case in mind. But contracts do not depend on the hypothetical intention of a government body or law-giver. Contracts depend upon mutual agreement between two parties, and neither's intention prevails over the other. As such, there is no singular hypothetical intention we can point to in the case of contracts. In contracts, the terms of the law are in the agreement, not in the intentionality of the law-giver. And precisely where the agreement makes no contingencies in anticipation of events, there are no terms of agreement to which equity can appeal.
If I understand Kant correctly, then when he says that judges lack the conditions necessary to adjudicate claims of equity, what he means to say is roughly that there is no law-giver whose hypothetical intentions we can appeal to. Since the presence of a law-giver is a necessary prerequisite of equity, the lack of such a law-giver makes equity mute.
At this point, I will ask the question (with no intention of providing an answer), has Kant properly analyzed equity? I can envision two opposing arguments here. On the one hand, contract-theorists might propose that all law is based on contract, and therefore if it can be demonstrated that equity cannot apply to contracts, it cannot apply to any law whatsoever. On the other hand, supposing that there is natural law that supersedes human contracts, as Thomas Aquinas believed, then contracts themselves would be subject to natural law, and an appeal to equity in the cases of contracts might not depend upon the intentions of the individuals involved but upon the intentions of the natural law-giver, which in this case might be God or whatever one supposes imbues nature with such laws.
I must admit, coming from a perspective so engrossed in Aristotle and Aquinas, and having been raised in the American (that is to say, English) legal world, it is difficult for me to get into the mindset of a German tradition based on continental European civil law. As we will see when I discuss Hobbes, the English legal tradition embraces equity. In fact, the English tradition developed two court systems, one for common law and one for equity. My being from this English tradition, Kant's arguments have little appeal to me.
When I hear of a servant being paid in a devalued currency, I immediately want to know if the employer had anticipated this devaluation. Did the employer have a practice of hiring help in an inferior currency while only accepting a superior currency in their own business? Was the employer engaged in insider trading? Or maybe the situation was the opposite and the employer's assets were all lost since he was heavily invested in the depreciated currency as well. It seems to me that there are plenty of relevant contingencies I would want to investigate before reaching the absolute conclusion, "No equity for you!" It is, after all, these contingencies that make equity necessary. So say Aristotle and Aquinas.