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In his book, Debt: The First 5,000 Years, anthropologist David Graeber traces the history of debt and its relationship with and effect on human societies. Among other things, Graeber focuses on the development of how the idea of “debt” is used today in explaining moral relationships, which he claims is a historical anomaly. | | | The conditional bond was the primary method for securing the performance of contracts in the period prior to the landmark decision in Slade’s Case which marked the full development of the action of assumpsit (permitting aggrieved parties in contractual disputes to recover damages in a tort action falling out of trespass on the case, even when an action of debt was also a viable alternative).[1] | |
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< | At common law, the simple bond (which just stated who was to paid, what sum, when, and where) “was almost irresisitable.”[2] The only defenses available to a debtor were forgery or “a sealed acquittance to be shown in court acknowledging or releasing payment.”[3] Debtors were not permitted to attempt any other defenses, including “payment without taking of a sealed acquittance, payment at another time or place then specified in the bond, failure of consideration, impossibility of performance, or fraud in the underlying transaction.”[4] | >
> | At common law, the simple bond (which just stated who was to paid, what sum, when, and where) “was almost irresisitable.”[2] The only defenses available to a debtor were forgery or “a sealed acquittance to be shown in court acknowledging or releasing payment.”[3] Debtors were not permitted to attempt any other defenses, including “payment without taking of a sealed acquittance, payment at another time or place then specified in the bond, failure of consideration, impossibility of performance, or fraud in the underlying transaction.”[4] See, for example, Donne v. Cornwall, Y.B. Pas. 1 Hen VII, fo. 14v, pl. 2 (C.P.), reprinted in Baker and Milsom, Sources of English Legal History, p. 255, where the return of the bond at issue in the case from the obligee to the obligor (debtor) in return for payment was ruled to do nothing to cancel the debt because there was no sealed acquittance, although the judges disagreed on this point. The key distinction, it appears, was that the debt could only be discharged by an act of the law (the sealed acquittance), not an act of the parties (the return of the bond in return for payment). The judges seem to be much consoled (and therefore comfortable in their ruling) when it is finally decided at the Common Bench that "the party [defendant] suffers no mischief, for if the plaintiff recovers in this writ of debt, [the defendant] shall recover back the same amount in damages in a writ of trespass for the taking" (257). | | | | |
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< | Conditional bonds were somewhat easier to contest from the perspective of the obligor. Courts considered “performance of a valid condition” as a “valid defence to the bond, to be proved as a matter of fact without specialty, and at least from about 1500 jury trial (rather than wager of law) was contemplated as the mode of proof).”[5] | >
> | Conditional bonds were somewhat easier to contest from the perspective of the obligor. Courts considered “performance of a valid condition” as a “valid defence to the bond, to be proved as a matter of fact , without specialty, and at least from about 1500 jury trial (rather than wager of law) was contemplated as the mode of proof).”[5] | | | | |
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< | By the mid-sixteenth century, the common law began to recognize a range of limited circumstances “in which non-performance of the condition was excused or a variant performance was held a sufficient defense against the bond.”[6] For example, if the obligee refused to take payment on the appointed day (and the obligor had always been ready to pay the debt), a third party refused to accept payment, or the condition “was performed as specified except that it was done at a different place or before it was due, and the obligee accepted this performance,” then non-performance or variant performance by the obligor was excused.[7] It was said by Serjean Townsend that if a condition “became impossible by act of God such as a death, the obligor would be excused,” but “only one adjudged case under this rule was found.”[8] In that case (Abbot of Cerle’s Case[9]), the defendant was excused when he bound himself to an arbitration of three named persons on a particular day, and on that day one of the arbitrators was too ill to be present.[10] | >
> | By the mid-sixteenth century, the common law began to recognize a range of limited circumstances “in which non-performance of the condition was excused or a variant performance was held a sufficient defense against the bond.”[6] For example, if the obligee refused to take payment on the appointed day (and the obligor had always been ready to pay the debt), a third party refused to accept payment, or the condition “was performed as specified except that it was done at a different place or before it was due, and the obligee accepted this performance,” then non-performance or variant performance by the obligor was excused.[7] It was said by Serjeant Townsend that if a condition “became impossible by act of God such as a death, the obligor would be excused,” but, according to Henderson, “only one adjudged case under this rule was found.”[8] In that case (Abbot of Cerle’s Case[9]), the defendant was excused when he bound himself to an arbitration of three named persons on a particular day, and on that day one of the arbitrators was too ill to be present.[10] | | | | |
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< | Certain conditions were recognized as invalid, although these cut both against and to the benefit of the obligor. Conditions to hold the obligee harmless from “the consequences of his illegal act would render the entire bond void,” as would conditions which said that the obligor “should do an illegal act,” or even “simply if the condition was illegal.”[11] If, however, the condition to be performed was impossible, then the condition was void, but the bond was good (perhaps on the theory that it was the obligor who had himself drafted the impossible condition).[12] | >
> | Certain conditions were recognized as invalid at common law, although these cut both against and to the benefit of the obligor. Conditions to hold the obligee harmless from “the consequences of his illegal act would render the entire bond void,” as would conditions which said that the obligor “should do an illegal act,” or even “simply if the condition was illegal.”[11] If, however, the condition to be performed was impossible, then the condition was void, but the bond was good (perhaps on the theory that it was the obligor who had himself drafted the impossible condition).[12] | | | By the mid-sixteenth century, however, substantial performance was “never a defence against suit for the penal sum,” “unless the obligee had accepted it as sufficient.”[13] Part payment and late payment were similarly ineffective defenses.[14] Additionally, “conditions to be performed for the benefit of at third party,” had to “be strictly performed, without variation and regardless of the third party’s behavior.”[15] Rather more murkily, “a condition to save the obligee harmless against damages from all the world was void and the bond not defeasible by a showing that this condition had been performed.”[16]
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< | The Court of Chancery eventually began to pass upon the enforcement of penal bonds. Henderson points out that the complaints which are printed in the Calendar of Chancery Proceedings “all seem to involve elements of duress, unconscionable violence or the like in the making of a bond, rather than objections to the unfairness of enforcing it.”[17] | >
> | The common law eventually began to be made to compete with the Court of Chancery in this area, which eventually began to pass upon the enforcement of penal bonds. As Henderson points out, the complaints which are printed in the Calendar of Chancery Proceedings seem to conform to our expectations of equitable relief in that they “all seem to involve elements of duress, unconscionable violence or the like in the making of a bond, rather than objections to the unfairness of enforcing it.”[17] | | | | |
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< | Barrantyne v. Jeckett (1553/54) has been cited as the earliest example of the Court of Chancery giving relief from a penal bond.[18] By the middle of the sixteenth century, “Chancery was already intervening against penal bonds quite frequently” (34 cases being reported for study in the years 1544-68, with probably as many passed over as routine, and some falling through the cracks as not recognizable as penal bonds in the records).[19] “By 1582 Chancery’s intervention was even more frequent,” including some 16 bond cases under consideration in the Michaelmas term alone.[20] | >
> | Barrantyne v. Jeckett (1553/54) has been cited as the earliest example of the Court of Chancery giving relief from a penal bond,[18] but by the middle of the sixteenth century, “Chancery was already intervening against penal bonds quite frequently” (34 cases being reported for study in the years 1544-68, with probably as many passed over as routine, and some falling through the cracks as not recognizable as penal bonds in the records).[19] “By 1582 Chancery’s intervention was even more frequent,” including some 16 bond cases under consideration in the Michaelmas term alone.[20] | | | Although Chancery was more favorable to the debtor, it still maintained a relatively strict line in these cases: injunctions were not routinely granted “simply on the ground that the penal sum was outrageously disproportionate to the underlying debt.”[21] The 1557 case of Chamberlayn v. Iseham[22] illustrates this point. In that case, the debtor (now plaintiff in equity) had given a bond to pay a sum of £400, “defeasible if 20 marks (£13 s. 8d.) was paid by a certain date.”[23] Rather than grant an injunction barring the enforcement of the bond on the ground that the sum was grossly disproportionate to the underlying debt, Chancery “felt it necessary to mention special circumstances in the debtor’s favor,” namely, that “he was in the service of the king and queen on the day appointed for payment, and had since paid the twenty marks into Chancery to be held for the obligee.”[24] | | | Beyond these cases, Henderson argues that “by about 1562 Chancery was beginning to feel that the law of harsh penalties for small defaults was wrong in principle,” having held on a number of occasions that the defendant obligee could not recover more than his damages, regardless of the fact that he could have recovered at law the entire penal sum regardless of how much he had been harmed (“damnified” in the verbiage of the time).[32] This, Henderson argues, was the great shift permitting relief in exceptional cases to permitting relief “”routinely in a whole class of cases.”[33] | |
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< | An interesting outgrowth of Chancery’s willingness to intervene regularly in penal bonds (starting sometimes in the late 1580’s/90’s) was the shift from giving injunctions without regard to whether the law court had passed on the matter (which was the prior practice) to giving injunctions only during a set period of time.[34] Henderson deduces that such a shift was likely the result of a shift in the mindset regarding these cases – from the earlier thought that the Chancery court was only correcting “maverick cases in which the legal procedures have caused unjust results”[35] therefore justifying injunctions without regard to prior action to the thought that Chancery was regularly intervening because the law itself was unjust, the “time limit ought to be short and narrow” in doing so.[36] Whether or not “more research in the records of those years [1580’s/90’s]”[37] will produce clarity on whether that was the case, and I tend to think not, Henderson’s suggestion seems to be a plausible one. | >
> | An interesting outgrowth of Chancery’s willingness to intervene regularly in penal bonds (starting sometime in the late 1580’s/90’s) was the shift from giving injunctions without regard to whether the law court had passed on the matter (which was the prior practice) to giving injunctions only during a set period of time.[34] Henderson argues that this change was likely the result of a shift in the mindset regarding these cases – from the earlier thought that the Chancery court was only correcting “maverick cases in which the legal procedures have caused unjust results”[35] therefore justifying injunctions without regard to prior action, to the later thought that Chancery was regularly intervening because the law itself was unjust, and therefore the “time limit ought to be short and narrow” in doing so.[36] Whether or not “more research in the records of those years [1580’s/90’s]”[37] will produce clarity on whether that was the case, and I tend to think not, Henderson’s suggestion seems to be a plausible one. | | | | |
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< | By 1614, in fact, conflict between the Common Law courts and the Court of Chancery came to a head over whether the Chancery Court could properly issues injunctions in cases upon which the Common Law Courts had already passed judgment.[38] In the case of Courtney v. Glanville and Allen, which grew out of a particularly egregious example of fraud underlying a debt, Chief Justice Coke, judge and leading advocate of the Common Law, sought to challenge the authority of the Chancery Court to review decisions already made by the Common Law Courts. As the Common Law Courts had already given judgment for Glanville and Allen, Coke argued that the Chancery Court could not properly rule on the case so as to give an injunction which ran contrary to the action of the Common Law Court. Eventually, this particular dispute became wrapped in a wider rift between Common Law and Chancery in the Earl of Oxford’s Case, culminating in a stinging rebuke of the Common Law courts delivered by the King, re-affirming the Chancery Court’s right and duty to the people to review those decisions of the Common Law Courts which may have been manifestly unjust.[39] | >
> | Unsurprisingly, this caused friction between the Common Law courts and the Court of Chancery, which came to a head in 1614 over whether the Chancery Court could properly issues injunctions in cases upon which the Common Law Courts had already passed judgment.[38] In the case of Courtney v. Glanville and Allen, which grew out of a particularly egregious example of fraud underlying a debt, Chief Justice Coke, judge and leading advocate of the Common Law, sought to challenge the authority of the Chancery Court to review decisions already made by the Common Law Courts. As the Common Law Courts had already given judgment for Glanville and Allen, Coke argued that the Chancery Court could not properly rule on the case so as to give an injunction which ran contrary to the action of the Common Law Court. Eventually, this particular dispute became wrapped in a wider rift between Common Law and Chancery in the Earl of Oxford’s Case, culminating in a stinging rebuke of the Common Law courts delivered by the King, re-affirming the Chancery Court’s right and duty to the people to review those decisions of the Common Law Courts which may have been manifestly unjust.[39] | | | |
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