Monday, August 26, 2013

Elements of Law 3.0 Notes of Readings: I-C (What is Law? Law Articulated by Legislatures: Statutory Law)

(Pix (c) Larry Catá Backer 2013)

I have been posting about the development of a new course I have been developing for our first year law school students, "Elements of Law."  (Elements of Law 3.0: On the Relevance of a First Year Law Course Designed to Frame the Law School Curriculum).  The SYLLABUS can be accessed HERE.

With this post I continue to share with the class and interested "others" summary study notes for the course readings.  For this post we consider:  I. What is Law? C. Law Articulated by Legislatures: Statutory Law.   Comments and discussion most welcome.

The Table of Contents for all of the Lecture Notes may be accessed HERE: Elements of Law 3.0: Table of Contents for Lecture and Reading Notes for An Introduction to U.S. Legal Theory and Practice.

I. What is Law? C. Law Articulated by Legislatures: Statutory Law. 
Reading notes for 
-->--Charles E. Clark, “The Union of Law and Equity,” 25 Columbia Law Review 1-10 (1925).
--  P.S. Atiyah, “Common Law and Statute Law,” Modern Law Review 48(1): (1985) 
Our last class introduced us to the Common Law and Equity in the United States.  The focus was on the origins of both.  That excursion into history was important as a fairly efficient means f exposing the fundamental premises of common law and equity, premises that continue to echo in the judicial culture in the United States today, even as the structures of law common law and equity have been increasingly subsumed within a legal culture more at home with statutes, regulations and other means of governance. These fundamental premises include a relationship between law and the state, the  semi-autonomous position of courts and judges with respect to the other agents of government, the passivity of courts (they receive but do not initiate actions), the use of precedent and stare decisis and juries as a means of keeping law grounded, stable and predictable (core premises of justice under the Institutes), and the importance of process as a means of legitimating the role of courts to apply law. The basics of that process at the heart of the common law system, in contemporary language, include notice, an opportunity to be heard, consistency, predictability and appeal to ensure accountability. Equity added a bit of an edge to common law.  It more directly interposed the state, in the form of the executive, into the management of law.  It provided a means of developing systems for the resolution of disputes and opened the possibilities of more flexible systems for such resolution.  But until it was regularized, that flexibility also produced a lack of accountability, certainty and predictability that detracted from its value.  More, in its early days it could also be seen as a means of subverting common law at the instance of the Crown.  Yet in modern form, it was tremendously liberating in its contributions both to dispute resolution process and to enlarging the scope of authority of the courts to hear private disputes and in its remedial palette which could be used increasingly not just against private but also public litigants.
Ultimately, by the 19th century, the slow, relatively stable and case based structures of common law/equity started to experience substantial stress in the face of the Enlightenment's emphasis on the science of management (of people and things) and the realities of the Industrial Revolution.  Common law and equity proved less able to provide satisfactory means of preserving social order as social order itself was undergoing rapid transformation.  And more important, science brought with it an increasing certainty that principles (immutable--recall the Institutes) of natural law based on reason (and for some powerful actors faith)  must be the basis for improving society, eliminating anti-social behavior and leading society to some sort of measurable end. That power to command is distinct from the traditional authority of the Crown to command individuals (an executive or police power).  Rather it is the power to substitute for traditional bases of behavior or social rules another set.  For that to occur, the state requires either sufficient force (and time) or another source of legitimacy.  Since the Institutes, in the Est, that additional source of legitimacy has been grounded in popular consent and in the devolution of power power (including the power of individuals to consent) to representatives.  In the medieval and early modern period that devolution could be vested in a single person--the Crown.  In modern societies, that devolution is usually vested in representative government, operating through popularly elected representatives of the people and enabled to exercised virtually all of their power. Limitations, now understood as constitutional and international law (the superior law of nations and civil law in Institute terms we leave for later. For this class we focus on the oldest and most common modern form of commanding behavior instrumentally--statutes. 
Statutes are of a fundamentally distinct character from common law and equity.  Whereas common law and equity are passive instruments applied by courts to resolve disputes among individuals litigants, and through these resolutions adding to the textures and body of law, statutes are "active" in the sense that they .  Likewise, while common law and equity are essentially malleable and change to reflect the customs of the people they bind (albeit in an attenuated, formal and sometimes quite imperfect way)  statutes freeze the moment of their enactment.  They remain unchanged until another legislature acts or the stature is otherwise voided by higher law.  Yet there are certain advantages to statutes--they cover a broad range of people, they do not have to wait to litigants to be developed, they are certain and their application predictable, they are accessible in ways that common law is not.  Common law must be cobbled together by a close reading of cases to extract the precise form and application of law to facts.  Statutes are quite definite in their provision (though they may be poorly written or ambiguous). Statutes can be used prospectively to solve problems, cure social ills or change behavior in quite conscious and targeted ways.  Common law and equity seeks to do right to injuries that are both individual and personal.  One can mold society in one's image through statute; society molds common law-equity which it is meant to reflect. 
In  civil law states, especially after the 18th century, custom and customary law and rights were viewed as primitive, antiquated, a relic of an old order usually overthrown at the cost of substantial violence.  For bourgeois and industrializing societies arising in the late eighteenth and nineteenth centuries, principles of scientific development, grounded in reason, could be used to reshape society and its operation in the most efficient ways possible.  The object was to eliminate social ills, but also to preserve structures of privilege which produced the social and economic stratification then equated with a "natural" order of things. When combined with the ideology of the Institutes, the result is clear: in civil law statutes all law must derive form the people.  And in most civil law states elaborate mechanisms were instituted to trace the devolution of popular power into representative government whether in the form of an imperial state (Germany), a kingly presidential republic (France) or a Parliamentary monarchy (U.K.). With the legitimacy of popular consent through the institutions of representative institutions and legitimate procedures for the enactment of law, the civil law constructed what became the modern rechtsstaat (the rights or rule of law state, very roughly). There were two significant consequences for law.  First, both natural law and the law of nations were subsumed under the primacy of the popular (representative) power of the state to enact a law system true to its peculiar national character (the modern version of this of course is the move today for a socialist legal order with Chinese characteristics). The immediate consequence was that the state, as popular representative and repository of popular power could structure law in any way it liked with virtually no constraints. Second, unless law was enacted legitimately by an approve state organ pursuant to the process prescribed for such enactment, there was no law.  Thus no statute no law (with the exception of administrative regulation, a subject to be taken up next). This remains a fundamental premise of civil law states and has been built into the fundamental principles of the European Union.  In its most traditional form (something that is changing rapidly in some civil law states as the convergence of civil and common law states proceeds under the logic of globalization) there was a consequence for the relationship between courts and law.  In its classic form, courts applied by did not make law; stare decisis was incomprehensible precisely because the sole referent in every case was the statute not the case; and the presumption was that courts logically applying the law under similar facts would invariably reach the same result. (Cf.  
-->John Henry Merrymen et al., The Civil Law Tradition: Europe, Latin America, and East Asia. Michie 1994. pp. 447-454; 476-485 )
In common law states, statutory systems never replaced the ancient system fo common law-equity.  As a consequence, the statutory state in the United State arose along side of rather than over the grave of common or customary law systems. Statutes were viewed as limiting or modifying those aspect of common law with which it "shared" regulatory space.  Beyond that it had no effect on the continued existence of common law-equity; statutes were enacted in "derogation" of common law. This approach was not unique to the United States--the pattern was well established in England at the time of independence (and indeed in some of the early statutes these were merged into the common law as it was received by the states).  The only exception--and it proved to be a very large one--was that statutes became the preferred means of extending law to new areas of governance unknown to the common law; and statutes were the principle means of regulating the relationships between the state and individuals.   Yet, in those states shaped by common law-equity, neither common law nor statute existed in vacuums. And the connection between statutorily and common law systems was made inseparable through the agency of courts.  Courts, steeped in the cultures of common law and equity, have been charged in the United States with the task of interpreting and applying statutes.  Statutes in this country, then, have the character of civil law pronouncements and their place in the hierarchy of law above common law, but because they are understood and applied by common law cultured courts, the way in which they operate in the United States is slightly, but significantly different. 
The first of the reading, Charles E. Clark, “The Union of Law and Equity,” 25 Columbia Law Review 1-10 (1925), is meant to serve as a bridge between two distinct Americas,  The first, substantially eroded by the early twentieth century was that of the common law and equity.  The second, arising between the World Wars and now dominant in contemporary United States, is one that is substantially the mirror image of the original. Professor Clark already sees the coming of the day when common law and equity would be merged (about a decade after the article was published at the federal level). The article is useful both as a review of the difficulties of the distinctions between common law and equity in practice, but more importantly for its discussion, now rarely considered by academics, of the cultures within which courts tended to operate.  The discussion suggests what I had hinted at earlier, a judicial culture that is quite conservative and strongly attached to traditional modes and patterns of action. It provides an excellent discussion of common law judicial thinking at the heart of the common law.  Most important, though, it suggests the way that courts understood and constructed the relationship between common law and statute. At the heart of the reading is a central issue of derogation of common law after statute: how do courts apply statutes that seek to change the procedure of civil cases.  Professor Clark suggests that courts, a century ago, might treat statutes the way they treated other elements of common law, one that could be understood only when naturalized within the web of case law into which it was inserted. This is about as far form a civil law sensibility as may be possible.  Professor Clark suggests that statutes ought to be treated with substantially more deference; that they ought to be applied without reference to or interpretation within the body of case law in to which it was inserted. Professor appeals to an interpretation that starts with the intention of the framers rather than the common law against which it was written (p. 3) and he appeals as well to common law sensibilities, suggesting earlier cases might have gotten the interpretation and application of the Code right (pp. 3-5). He further appeals to an interpretation of the statute based on its inherent logic and the policy it was meant to further when the Code is considered as a whole (pp. 6-7; 8-9), rather than relying on judicial interpretation.  This is a very distinctive approach to deriving law:  rather than focus on the aggregation of judicial opinion to construct an expression of the law (common law classic) Professor Clark would start with the code as a self referencing work, whose logic and meaning must be found within its language, specific language at issue, the meaning fo the provision in which it is written and the policies furthering the statute as a whole. Yet at the end, Professor Clark relies, as a good common law lawyer must, on argument deduced form the cases within which the statute and its logic must be found to fit.  Statute exists within the common law and perhaps in derogation thereof, but not apart. This approach will change substantially in the century that follows as statutes first are treated as independent and superior to common law and then statutes increasingly exist in aareas in which there is no common law to fall back on.  Still, the forms of reasoning for courts will not change much and the techniques once applied to cases will be applied to statutes as well. 
The second of our readings, P.S. Atiyah, “Common Law and Statute Law,” Modern Law Review 48(1): (1985), touches on the heart of the matter considered today--the relationship between statute and common law in Anglo-American systems. Atiyah askes:
The question concerns the relationship between the common law and statute law. Does our law constitute, in some sense, a single coherent, integral body of law, or does it consist of two separate entities, two streams running on parallel lines one of which occasionally feeds into the other, but which are destined for ever to retain their separate identities? (Ibid., 1).
This he believes is important in order to understand the way two distinct and developing bodies of law operate within a single legal system.  That is an issue as much for the United States as the United Kingdom. 

Professor Atiyah first reminds the student of the fundamental difference between statute in common law systems and those of civil law states--statutes are discrete legislative actions, even when they propose a fairly well integrated regulatory scheme (corporate regulation for example).  Statues in common law states are not integrated into a substantially self contained system, such as the Code Napoleon or the Germain Civil Code. Rather they are embedded into a system that includes and generates other statutes and further development of common law (in the form of rules, standards and applications of the statute itself).  In this they resemble case law but with a different character (p.2). Professor Atiyah then suggests three examples of the interwovenness of statuette and common law. The first are statutes that adopt a very broad textured type of language which requires courts to "fill in the gaps" through case law (p. 3).  The second are statutes that confer discretion on the courts  to resolve conflicts or disputes according to some specified formula, or more dangerously as is "just as equitable."  He uses the example of the English matrimonial property statutes. Students should consider why Professor Atiyeh view statutes of this kind with some concern.  (pp. 4-5).
The proliferation of these discretions appears to me to arise at least in part from the realisation that legislation, even when fleshed out by detailed subordinate legislation, simply cannot anticipate and provide for the great variety of cases which are likely to arise; and that Parliament therefore prefers to proceed in partnership with the judiciary. (Ibid., 5).
Much of the objection goes to rule fo law issues--judicial discretion unconstrained by common law or statutory boundaries can reduce the legitimacy of judicial action. The third, quite common in the United States, are statutes enacted in derogation of the common law.  Echomg Professor Clark's discussion of half a century earlier, Professor Atiyah explains: "When this happens, the Act may be interpreted and applied, often in parallel with analogous areas of the common law, and the legislation almost takes on the characteristics of a living graft which develops a life of its own." (Ibid., 5).  Cooperation generally takes one of two forms--either the courts work to operationalize the general principles by working out the details, or the courts seek to clean up disastrously bad legislation to make it workable within the general framework of the law into which the statute was was inserted. For much of this century U.S. courts were adept at cleaning up legislative messes.  Recently  new ideologies of judicial conservatism has tended to view such activities as too activist and judges have been more willing to allow legislatures to reap the consequences of badly worded legislation.

Part II of the article is used to suggest something Professor Atiyah suggests is a bit more controversial: can courts treat statutes like cases for the development of common law (p. 6).
Can they justify jettisoning obsolete cases, not because they have been actually reversed by some statutory provision, but because a statute suggests that they are based on outdated values? Could the courts legitimately draw some general principle from a limited statutory provision, and apply that principle as a matter of common law? (Ibid).
These were issues raised famously by the U.S. scholar Roscoe Pound in 1907 ("Common Law and Legislation” (1907) 21 Harvard Law Rev. 383).  Professor Atiyah's discussion of Pound's discussion of the distinct ways in which courts receive statutes remains important: (1) strict and narrow interpretation, no reasoning from statutes by analogy (2) broad interpretation, no reasoning from statutes by analogy, (3) statutes received fully into common law and treated like cases; (4) statutes treated as a higher source of law from which reasoning by analogy would be necessary. U.S. law of the early 1900s had just reached the first stage, as Professor Clarks' article illustrated nicely.  English law had reached the third stage (Ibid., 7). Professor Atiyah suggests that it is possible for courts to give statutes no effect as statute beyond their narrow confines but to apply statutes as a source of analogy or principle to justify changing common law.  He provides a number of arguments.  He then discusses a number of legal areas where he argues that English courts already develop the common law by analogy to statutes or from their principles.  Lastly, Professor Atiyah considers the way in which courts treat statutes that reverse or supplant common law.  (Ibid., 20-22).  He suggests a range of reaction--from treating the statutory derogation narrowly not affecting prior cases except to their holdings to those instances where a statute is deemed to require re-adjustment of the common law in the area touched on by the statute. We will consider this possibility under contemporary U.S. legal principles as the semester proceeds.  We will discover that, at leats in the area of corporate law, this is already a well established judicial methodology, especially in the area of fiduciary obligations.  Professor Atiyah suggests that certain U.S. statutes, including the Uniform Commercial Code already recommend the application of its provisions by analogy for decisions  (Ibid., 27). We will consider whether Professor Atiyah's assessment of the U.S. system applies in fact:
For one thing, our legislature is much more active than American legislatures, especially state legislatures. The need for judicial creativity is much greater there, and there is a corresponding need for methods by which the courts can jettison obsolete laws based on out-dated values. For another thing, American legislatures are accustomed to being told what they can and cannot do by the courts.(Ibid., 27).
We will consider this in more detail as we work through the core issues of the American constitutional system and its operation in the area of corporate governance.

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