Revaluing restitution: from the Talmud to postsocialism.

• Date: 01 May 1999
• Author: Heller, Michael A.

UNJUST ENRICHMENT: A STUDY OF PRIVATE LAW AND PUBLIC VALUES. By Hanoch Dagan. Cambridge, Eng.: Cambridge University Press. 1998. Pp. 185. $59.95.

1. INTRODUCTION

   Whatever happened to the study of restitution? Once a core private law subject along with property, torts, and contracts, restitution has receded from American legal scholarship.(1) Few law professors teach the material, fewer still write in the area, and no one even agrees what the field comprises anymore.(2) Hanoch Dagan's Unjust Enrichment: A Study of Private Law and Public Values(3) threatens to reverse the tide and make restitution interesting again. The book takes commonplace words such as "value" and "gain" and shows how they embody a society's underlying normative principles. Variations across cultures in the law of unjust enrichment reflect differences in national understandings of sharing, property, and even personhood. As Dagan puts it, he seeks "the reflection of core social values in the technicalities of the law" (p. 1).

   The law at issue can be briefly summarized (and its more tedious complexities elided). Imagine, for example, someone chops trees from your land. Tort and contract law focus on remedying your loss. The law of unjust enrichment, however, is primarily concerned with restoring to you the trespasser's gain from using the lumber. Dagan's book reveals a complex inquiry hiding behind this simple distinction. Measuring restitution by the defendant's gain is a prologue to the further analysis of how a society understands value. Within the American legal system, the tree-chopper's gain may be defined as the lumber's fair market value, or can be calculated in terms of the chopper's net profits, the full proceeds from sale, or by a range of increasingly abstract methods. Within a single legal system, these various measures may all be available, each linked to restitution of a particular type of resource, each animated by different normative concerns. Dagan argues that restitutionary choices within a culture track attitudes towards property and personhood; overarching patterns across cultures reflect divergent national ethoses. Restitution is a window into a larger project of social understanding.

   In this review we put Dagan's jurisprudential approach to a practical test.(4) Restitution is going global; today, the postcommunist rebuilding of market economies, social developments in South Africa and Cuba, and even Native American and African-American claims are at the cutting edge of restitution.(5) We focus on Eastern Europe, where the Czechs are putting elderly people back into their childhood apartments, while the Hungarians offer compensation coupons for use in privatization auctions.(6) Governments are valuing the unjust gains of -- and more often the losses inflicted by -- the communists in radically different ways as they attempt to reconnect with a precommunist past. Yet little theoretical work explains the rise of and variations among these massive programs of property reallocation.(7)

   If Dagan's theory makes sense, and we think it does, then his book can provide some order for the hodgepodge of national mythmaking, political accident, and cultural posturing that surrounds the restitution frenzy in newly emerging market economies.(8) His framework helps explain postcommunist restitutionary programs and points to some surprising results: more aggressive restitution may prove less protective of private property rights. In turn, the Eastern European experience challenges Dagan's portrayal of the feel-good ethos of sharing by suggesting a richer and more troubling take on the meaning of community. By distilling doctrinal complexity through a sensitive jurisprudential filter, Dagan offers a new way to study private law.

2. ROADMAP TO RESTITUTION

   1. The Argument in Brief

      Dagan's book is an easy read. Without too many bows to past masters, the book is cleanly written and tightly argued. The Prologue encapsulates the story, while the following chapters are a disciplined march through his theory concluding with concrete applications to and comparisons among American, Talmudic, and international law.

      From a large range of available restitution paradigms, Dagan focuses solely on the example of a defendant who is unjustly enriched by using a plaintiff's resource.(9) Dagan avoids difficulties defining the scope of unjust enrichment in either the American or comparative setting because his goal is to "abstract[] from the contextual contingencies of any specific set of restitutionary rules, and to extricate the essence -- the common denominator -- of the ways various societies implement the general principle against unjust enrichment" (p. 3). Across cultures and spanning a breadth of resources, social values are reflected in methods of valuation. This is more than a clever semantic point; by linking available measures of recovery with specific social values, Dagan provides a "translation scheme" for interpreting the meaning of valuation, summarized usefully in a simple table (p. 22).

      Dagan has two distinct projects in uneasy relation to each other. The first project is to explain variations in restitutionary remedies within a single culture. He relates those variations to the divergent rationales a society may seek to vindicate across a range of socially important resources. For example, Chapter Four sets out a detailed intracultural analysis of Americans' relationship with various resources. The more the specific property implicates its owner's "personhood" -- like her body, her land, or maybe her car -- the more likely the legal system will be to protect her control over the property rather than merely to restore her ex ante well-being.

      The second project is more ambitious yet: to look across national legal systems and show how distinct national ethoses animate broader restitutionary patterns. Chapters Five and Six make this comparison as they explore Talmudic civil law and international law respectively. While Dagan's first project strikes us as more compelling than the second, both parts of his effort contribute to revaluing restitution as a field for theoretical work.

   2. The Translation Scheme

      1. Definitions

         Measures of restitutionary recovery range from the harm suffered by a plaintiff to several types of gain secured by a defendant. Gain, in turn, can mean quite different things, depending on the doctrinal niche in which the term is invoked. Gain can mean the fair market value of the appropriated resource or the defendant's net profits. It can refer to a defendant's gross proceeds from using an appropriated resource, in which case the defendant will be made worse-off than before she was unjustly enriched (assuming nonzero expenses in using the resource). Or gain can be measured as the greater or lesser of any combination of these values. Dagan points out that the ex post method of valuation will affect how vigorously people's resources are protected ex ante from appropriation and will signal a society's tolerance for appropriating another's property (p. 15). With the lowest measure of gain, defendants may readily appropriate resources they believe they can put to better use than the plaintiff; with the highest measure of gain, defendants may hesitate to take resources despite being confident their uses are more highly valued.

         The question raised by the wide variety of restitutionary remedies is why, for any given resource, a legal system would choose one remedy over another. Dagan suggests that the specific measures of recovery noted above express various rationales that a society may be trying to vindicate, specifically well-being, control, sharing, and condemnation (pp. 15-16, 22). The argument concentrates primarily on well-being and control, which are defined by reference to the familiar distinction between "liability" and "property" rules.(10) Well-being mirrors a liability rule in which "ex post pecuniary recovery is intended as a surrogate for ex ante consent" (p. 15). This rationale maintains an individual's initial level of wealth. Control, by contrast, mirrors a property rule by requiring the resource holder's ex ante consent before the resource may be taken. While restitution operates in a sphere in which a forced transfer has already occurred, certain rules for recovery can actually vindicate ex ante control over resources by deterring invasions.

         Dagan's "translation scheme" demonstrates how different measures of restitutionary recovery relate to control, well-being, or both. Assuming that the plaintiff was harmed less than the defendant was enriched -- a presupposition Dagan makes in his paradigmatic case (p. 13) -- measuring recovery as the plaintiff's harm encourages a savvy defendant to appropriate resources from plaintiffs who value them less than either the defendant or the market. In such a case, measuring restitution by the plaintiff's harm promotes sharing of resources by encouraging more efficient users to take without permission. Restoring the resource's fair market value protects the plaintiff's well-being by restoring her to her ex ante level of wealth, including her ability to sell the resource at market value. A recovery of net profits vindicates the plaintiff's control by removing a potential appropriator's economic incentive to take the plaintiff's resources, regardless of the defendant's higher valued use of those resources. Finally, a recovery of gross proceeds (not offset by the appropriator's expenses in using the resource) may be reserved for cases where a society wants not only to protect the plaintiff's control, but also to express its condemnation of the defendant's action.(11)

         These four rationales motivate different levels of recovery and comprise the heart of Dagan's theory of valuation.(12) "Choosing amongst these possibilities is not a purely theoretical enterprise; rather, it dictates and shapes the available remedies" (p. 15). The pattern of restitution that a national legal...