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Restitution and Realism

Published online by Cambridge University Press:  20 July 2015

Dennis Klimchuk
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Extract

While the roots of the common law of restitution reach back hundreds of years, the idea that it constitutes a domain of private law was first clearly articulated in the American Law Institute’s Restatement of Restitution in 1932. The U.S. was at the forefront of development in the law of restitution but interest has declined. Recently John Langbein offered an explanation, first in terms of law and economics and then through legal realism. Realism, by Langbein’s estimation, has exacted “a terrible toll” on doctrinal study in the postwar period. One of the principal aims of The Law and Ethics of Restitution, Hanoch Dagan writes, is to disprove this claim. Realism, properly understood, is supportive of doctrine and, he argues, in this context, provides a better account of the law than the prevailing view. This book is a challenging and important work not only in the law of restitution but also in legal theory. My main interest in this Critical Notice is to ask whether the kind of justification for liability in restitution Dagan offers is compelling. While part of what separates Dagan from Langbein is their understanding of legal realism, I take Dagan to be right on this point, and ask whether he’s made the case in favour of a realist account of restitution. I do that by considering two examples of the doctrinal analyses that form the bulk of the book: first by outlining a pair of issues on which Dagan takes a position by setting up the question he aims to ask, and then by considering his rejection of the view to which The Law and Ethics of Restitution offers an alternative.

Type
Critical Notices
Information
Canadian Journal of Law & Jurisprudence , Volume 20 , Issue 1 , January 2007 , pp. 225 - 240
Copyright
Copyright © Canadian Journal of Law and Jurisprudence 2007

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References

* (Cambridge: Cambridge University Press, 2004) ISBN: 0521829046 pp. i-xxi, 1-374. References will be given in parentheses in the text.

1. Langbein, John H., “The Later History of Restitution” in Cornish, W.R. et al., eds., Restitution Past, Present and Future: Essays in Honour of Gareth Jones (Oxford: Hart, 1998) 57 at 62Google Scholar.

2. Ibid.

3. Seavey, Warren & Scott, Austin, “Restitution” (1938) 54 Law Q. Rev. 29 at 32Google Scholar.

4. This is an example of a case once collected under the law of quasi-contract. Another is a claim to recover a down payment made under a contract later frustrated. An example from equity is an award of a constructive trust to the owner of land transferred to another by mistake.

5. Seavey & Scott, supra note 3 at 29.

6. On Birks’s account the law of unjust enrichment is the law of claims materially identical to the paradigmatic case of the liability-mistaken payment. Birks, Peter, Unjust Enrichment, 2nd ed. (Oxford: Oxford University Press, 2005) at 3 CrossRefGoogle Scholar. The principle against unjust enrichment plays no role on this account.

7. See Peter Birks, “Misnomer” in Cornish et al., supra note 1 at 1.

8. Burrows, Andrew, “Quadrating Restitution and Unjust Enrichment: A Matter of Principle?” (2000) 8 Restitution L. Rev. 257 at 263Google Scholar.

9. See Fox, David, “The Transfer of Legal Title to Money” (1996) 4 Restitution L. Rev. 60 Google Scholar.

10. 96 S.W. 2d 1028 (Kentucky CA 1936).

11. See Smith, Lionel D., “The Province of the Law of Restitution” (1992) 71 Can. Bar Rev. 672 Google Scholar.

12. For Birks’ treatment of cases like Edwards see Unjust Enrichment, supra note 6 at ch. 4. I defend the view outlined in the last paragraph in more detail in “The Scope and Structure of Unjust Enrichment” in U.T.L.J. [forthcoming].

13. 97 Eng. Rep. 676 (K.B. 1760).

14. Ibid. at 681.

15. Digest 12.6.14 (Pomponius, Sabinus 21), ed. by Watson, Alan, trans. by Birks, Peter (1998)Google ScholarPubMed.

16. §1 cmt. b.

17. Ibid.

18. Ibid.

19. As I understand him, Dagan would agree to this. He objects to the idea that there is a fourth general element, namely that the defendant does not have a valid defence, on the grounds that it implies falsely that there is a set of defences available in principle to all claims in restitution. The point I want to make is independent of this issue.

20. Though in England and Canada there is growing judicial and academic support for the legal grounds approach.

21. Comparative work is flourishing. An excellent recent volume is Johnston, David & Zimmermann, Reinhard, eds., Unjustified Enrichment: Key Issues in Comparative Perspective (Cambridge: Cambridge University Press, 2002)CrossRefGoogle Scholar.

22. This claim is contrary to the view in the new Restatement. On Kull’s account, the common characteristic of transfers that lack an adequate legal basis “is that they are all in some sense non-consensual.” §1 cmt. d.

23. In others the unjust factors approach fares better. For example, it better explains why liability will not arise in many cases involving positive externalities. Suppose you live in the apartment above mine, and that the insulation in my ceiling and your floor is rather poor. In the winter you will realize savings on your heating bill that are in some sense at my expense. But I have no claim. It is difficult to say why on the legal grounds approach, because the benefit seems to be a pure windfall and to that extent without basis. The easier explanation is that I cannot point to an unjust factor in the transfer.

24. Mitchell McInnes suggested this argument to me.

25. As Smith, Stephen A. argues in “Justifying the Law of Unjust Enrichment” (2001) 79 Texas L. Rev. 2177 at 2194-95Google Scholar.

26. Contrary to Langbein’s characterization of realism (see supra text at note 2), Dagan is expressly uninterested in accounting for the motivations that may have led to particular outcomes in particular cases (4).

27. The other he notes is suits of governments against industries, for example tobacco, that caused harms the costs of which were borne in part by the state.

28. The most important simplification that introduces is that it allows us to avoid the question how to deal with the recipient’s subjective devaluation of the enrichment.

29. On these facts I would be entitled to raise that the common law defence of change of position, which defence allows defendants to retain that amount of the disputed enrichment that they can show was spent, in good faith, on an expenditure they would not otherwise have undertaken.

30. Though as Dagan argues persuasively, there is something unsatisfactory about holding that the recipient’s security interests are only engaged when she actually changes her material position (47).

31. Steam Saw Mills v. Baring Brothers, [1922] 1 Ch. 244.

32. Sonja Meier, “Unjust Factors and Legal Grounds” in Johnston & Zimmermann, eds., supra note 21 at 37. Peter Birks, supra note 6 at 139.

33. There is a bigger lesson here too, namely that one needn’t invoke that controversial example of ultra vires taxation to conclude that the rationale of recovery in unjust enrichment cannot simply be the protection of the claimant from the non-voluntary diminishment of her wealth. The point can be made by the core cases.

34. The locus classicus of the sort of view on which this claim relies is Aristotle’s Nicomachean Ethics 3.1.

35. See Fox, supra note 9.

36. See Sebok, Anthony J., “A Brief History of Mass Restitution Litigation in the United States” in Dyzenhaus, David & Moran, Mayo, eds., Calling Power to Account: Law, Reparations, and the Chinese Canadian Head Tax Case (Toronto, ON: University of Toronto Press, 2005) 341 Google Scholar.

37. Sebok, Anthony J., “Should Claims Based on African-American Slavery Be Litigated in the Courts? And if So, How?” (4 December 2000), online: FindLaw Legal News and Commentary http://writ.findlaw.com/sebok/20001204.html Google Scholar.

38. Developed earlier and in more detail in Dagan, Hanoch, Unjust Enrichment: A Study of Private Law and Public Values (Cambridge: Cambridge University Press, 1997)Google Scholar.

39. I develop this argument in the context of another reparations case in “Mack v. Attorney General for Canada and the Structure of the Action in Unjust Enrichment” in Dyzenhaus & Moran, eds., supra note 36 at 307.

40. There is a practical price, namely that a claim in unjust enrichment cannot reach profits, but only the value of labour. Or so one might argue. See supra text at notes 11-12.

41. Though not of Dagan’s account of restitution for wrongs. But that, I suggest, is because the wrongfulness does more justificatory work than Dagan allows.