Delaware's Court of Chancery
Georgetown, Delaware is a pretty small town, but it's the county seat so it has a courthouse on the town square, with little roads running off in several directions. The courthouse is surprisingly large and imposing, even more surprising when you wander through cornfields for miles before you suddenly come upon it. The county seat of most counties has a few stores and amenities, but on one occasion I hunted for a barbershop and couldn't find one in Georgetown. This little town square is just about the last place you would expect to run into Sidney Pottier and all the top executives of Walt Disney. But they were there, all right, because this was where the Delaware Court of Chancery meets; the high and mighty of Hollywood's most exalted firm were having a public squabble.
Only a few states still have a court of Chancery, but little Delaware still has a lot of features resembling the original thirteen colonies in colonial times. The state abolished the whipping post only a few decades ago, but they still have a chancellor. The Chancellor is the state's highest legal officer, and four other judges now need to share his workload, which was almost completely within his sole discretion seventy-five years ago. In fact the Chancellor usually heard arguments in his own chambers, later writing out his decisions in longhand. The Court of Chancery does not use juries.
|Sir Francis Bacon|
Going back to Roman times, the Chancellor was the highest official under the Emperor, and in England the Lord Chancellor is still the head of the bar in a meaningful way. Sir Francis Bacon was the most distinguished British Chancellor, and gave the present shape to a great deal of the present legal system. A court of Chancery is concerned with the legal concept of equity, which is a sense of fairness concerning undeniable problems which do not exactly fit any particular law. The Chancellor is the "Keeper of the King's conscience" concerning obvious wrongs that have no readily obvious remedy. You better be pretty careful who gets appointed to a position like that, with no rules to follow, no supervisor, no jury, dealing with mysterious issues that have no acknowledged solution.
Delaware's Court of Chancery evolved in steps, with several changes of the state Constitution over a span of two hundred years. As you might guess, a few powerful chancellors shaped the evolution of the job. Going way back to 1792, Delaware changed its Supreme Court from the design of its Constitution, and George Read was the new Chief Justice. However, it was all a little embarrassing for William Killen, who had been the Chief Justice, getting a little old. Read refused to have Killen dumped, and in this he was joined by John Dickinson, who had been Killen's law clerk. So Killen was made Chancellor, and a court of Chancery was invented to keep him busy.
Under a new 1831 Constitution, the formation of corporations required individual enabling acts by the Legislature, and limited their existence to twenty years. However, the 1897 Constitution relaxed those requirements and permitted entities to incorporate under a general corporation law and allowed them to be perpetual. By this time, other states were distributing equity cases to the county level, but Delaware was too small to justify more than a single state-wide Court. That court was attractive to corporations because it could become specialized in corporate matters, but retained a pleasing number of equity cases among common citizens, thus retaining a folksy point of view. In unique situations, or those without significant history of public debate, it was thought especially desirable to strive for unchallenged acceptance of the court's decision.
But other states thought they could see what Delaware was up to. In 1899 the American Law Review contained the view that states were having a race to the bottom, and Delaware was "a little community of truck farmers and clam-diggers . . . determined to get her little, tiny, sweet, round baby hand into the grab-bag of sweet things before it is too late." However that may may be, corporations stampeded to incorporate in the State of Delaware, and the equity of their affairs was decided by the Chancellor of that state. In one seventeen year period of time, the U.S. Supreme Court reversed the decision of the Chancellor only once.
Chancery's jurisdiction was complementary to that of the courts of common law.
It sought to do justice in cases for which there was no adequate remedy at common law.
| A. H. Manchester|
Modern Legal History of England and Wales, 1750-1950
Some legal scholar will have to tell us if it is so, but the direction and moral tone of America's largest industries has apparently been shaped by a small fraternity or perhaps priesthood of tightly related legal families, grimly devoted to their lonely task in rural isolation. The great mover and shaker of the Chancery was Josiah O. Wolcott (1921-1938), the son and father of a three-generation family domination of the court. Most of the other members of the court have very familiar Delaware names, although that is admittedly a common situation in Delaware, especially south of the canal. The peninsula has always been fairly isolated; there are people still alive who can remember when the first highway was built, opening up the region to outsiders. Read the following Chancelleries quotation for a sense of the underlying attitude:
"The majority thus have the power in their hands to impose their will upon the minority in a matter of very vital concern to them. That the source of this power is found in a statute, supplies no reason for clothing it with a superior sanctity, or vesting it with the attributes of tyranny. When the power is sought to be used, therefore, it is competent for any one who conceives himself aggrieved thereby to invoke the processes of a court of equity for protection against its oppressive exercise. When examined by such a court, if it should appear that the power is used in such a way that it violates any of those fundamental principles which it is the special province of equity to assert and protect, its restraining processes will unhesitatingly issue."
That is a very reassuring viewpoint only when it issues from a person of totally unquestioned integrity, a member of a family that has lived and died in the service of the highest principles of equity and fairness. But to recent graduates of business administration courses in far-off urban centers of greed and striving, it surely sounds quaint and sappy. And many of that sort have found themselves pleading in Georgetown. Just let one of them bribe, muscle, or sneak into the Chancellor's chair some day, and the country is in peril.