How Texas is Attempting to Capture Corporations Fleeing Delaware.
After 39 of the 55 delegates to the convention signed the final draft of the U.S. Constitution on September 17, 1787, it returned to the original 13 states for ratification. The ratification process sparked intense national debate: Federalists v. Anti-Federalists. But not quite as much in Delaware. Less than three months later, the Delaware state convention became the first to ratify – unanimously – the U.S. Constitution thereby also becoming the first state of the United States of America. Five years later, in 1792, Delaware adopted its state constitution, bucking the prevailing judicial trend at the time and carving out a separate court of equity–the Court of Chancery.
It would be hard to understate the legal significance of this court. Historically – and that is an England-level historically – judges sat either in law or in equity. Courts of law did the familiar work of judges. They developed bodies of common law and interpreted rules passed by legislatures. Yet courts at law worked slowly, sometimes to the detriment of fairness. And sometimes the procedural rigidity and strict application of the law ended in undesirable outcomes. Not to mention courts at law lacking any meaningful enforcement tools.
So courts of equity emerged as a supplement to courts of law, addressing specific cases where the application of common law might be unfair or overly delayed. This focus on fair outcomes and the provision of a remedy despite the lack of procedural issues was a key feature of courts of equity. Courts of equity were a royal initiative, existing as a means of exerting executive power to bring about just results.
Now try implementing that concept in the American colonies. You can imagine how that went. Colonists did not appreciate royal executives also wielding judicial power. And so a trend began in the 18th Century of states constructing their judiciaries wholly separate from executive power such that judges sat both at law and in equity with powers to interpret and apply common law, yet also able to structure remedies in the interest of fairness and justice. Separation of powers. Kind of a big deal.