Dear Nick and Dear Nora,
The time has come for the exposition on the true meaning of the word “fair,” which should also be known as the “f-word.”
Back to my English friends, Jonathan and Lynn Gaunt. Recall that Jonathan received the classical English education, which served to produce rulers and managers of the Empire “on which the sun never set.” One of the exports to the subject-states (colonies) was the “English notion of fair play.” With his classical education, Jonathan would have either been one of the elite who implanted the idea all over the world, or he would have managed the project from a ministry at Whitehall.
I asked him, “If I describe a competitive situation involving two people, could you tell me if either or both complied with the notion of ‘fair play’?” He said he could.
But Lynn immediately disagreed, with some fervor. After saying, “You certainly cannot,” she continued. “You know what your public school friends think is ‘fair play,’ which is handy since a good part of the judiciary have a similar background, but you don’t know what regular people think is ‘fair.’”
After some thought, Jonathan replied, “She is right, but it goes further. At public schools, and especially at the boarding school, athletics — what we call ‘games’ — are an essential part of the curriculum, you know. Wellington’s ‘playing fields of Eton.’ In fact, each school can be categorized by the types of games they play. Most schools play with various kinds of ‘balls.’ Other schools play games requiring a racket, and a few schools are equestrian. Balls are less expensive than rackets, which are much less expensive than horses. I’ve noticed that men who have gone to a ‘racket school’ have a somewhat different sense of rectitude than those who went to an ‘equestrian school’ and both would, occasionally, disagree with what I, and my friends from ‘ball schools,’ perceive as ‘fair’ or ‘fair play.’”
The application of the notion of “fair play” depends on where you went to school. So when the Supreme Court speaks of “traditional notions of fair play,” we can’t know what they mean.
. . .
Now to the situation I described previously where Art used $20,000 he had before marriage to make the down payment on a $100,000 house. Title was taken by Art and Barbara as husband and wife.
Twenty years later, the house is sold as a part of their divorce. The net proceeds of sale are $1 million. How does Art get compensated, if at all, for using his separate property to buy the house in the first place?
» No. 1: He could get the entire amount, since only his separate property was used to acquire the property. Whatever the couple paid by way of mortgage interest and principal was the equivalent of paying rent.
» No. 2: But what about joint title? Doesn’t that mean anything? It does. Art can’t sell the property without Barbara’s signature, so what is joint title worth? He could have insisted on excluding Barbara from taking title, but he didn’t. One reasonable answer would be that if they took title jointly, there is joint ownership that is equal unless the deed says something else. So Barbara gets half and Art gets nothing extra for his $20,000.
» No. 3: Or the $20,000 could be seen as an investment on which there should be a return. Of the original cost, 20 percent came from Art’s separate property. After 20 years, the appreciation was $900,000, so give Art 20 percent of that ($180,000) plus his original investment ($20,000) and divide the balance ($800,000) equally. Barbara gets $400,000 instead of $500,000. Does that seem unfair?
» No. 4: Give Art his $20,000 back and divide the balance, so Barbara would get $490,000 and Art would get $510,000.
Unless you selected No. 1, you are right. And you are wrong. Since 1974, different California three-judge appellate courts have reached the determination that No. 2, No. 3 or No. 4 is “fair.” The state Supreme Court has seven justices, and they went for No. 2, unless there was an “agreement or understanding to the contrary.” There is nothing in the opinion about the necessity of a written “agreement of understanding.” From a lawyer’s perspective, this is the worst of the four possible rules, not because it is “unfair,” but because the requirements for proof are missing.
I’ve written to you about the artificial reality we create in court by use of only “admissible evidence.” Some agreements must be in writing or they don’t have a legal existence. This isn’t because the agreement can’t exist without a writing; it’s because it is too easy or too tempting to present false testimony — and that problem is eliminated by a writing. If a writing had been required, the case is easy — end of case.
In our case, Barbara agrees that she frequently acknowledged Art’s contribution and thanked him for it. Is that an agreement or understanding contrary to 50/50 ownership? Probably not, but under the third rule, he would get an extra $200,000 if a judge decides that it is an “understanding.”
. . .
I used to teach a class at the local law school and always had my students do the “fairness” exercise. I assigned each student to a “triad” and gave the triads 20 minutes to come up with a definition of “fair” that they could all sign off on. In 10 years, no triad was able to complete the assignment.
. . .
If you continue to be hung-up on the idea of some sort of “absolute fairness,” there is a possibility that you may be able to deduce or induce your way to a conclusion on the basis of pure thought, as John Rawls did in his book A Theory of Justice. Or you could try to create the equivalent of Euclidian geometry by working from at least one “first principle” revealed by Capuchin monkeys at the Emory University primatology lab.