The Law and Ethics of Restitution.

• Author: Sherwin, Emily
• Position: Brief Article - Book Review

THE LAW AND ETHICS OF RESTITUTION. By Hanoch Dagan. Cambridge: Cambridge University Press. 2004. Pp. xxi, 374, $90.

In his new book The Law and Ethics of Restitution, Hanoch Dagan (1) undertakes to explain and justify the American law of restitution. He offers a broad theoretical account of this poorly understood subject, designed not only to fortify the substantive law of restitution but also to clarify the role and methodology of courts in developing the field. Dagan's book also provides lively discussion of the role of restitution in some of the most highly publicized legal developments of recent years. Those who think of restitution as an obscure branch of "legal remedies" may be surprised to read about the role restitution has played in tobacco litigation, slavery reparations, and rights following the breakup of unmarried cohabitants. Dagan describes himself as a Legal Realist in the style of Karl Llewellyn and Felix Cohen (pp. 3-4). Realism, for Dagan, entails "an ongoing (albeit properly cautious) process of identifying the human values underlying existing legal doctrines and trying to promote them in the best way possible." (2) Accordingly, he subjects established rules across the field of restitution to a "normative" analysis based on the values of autonomy, utility, and community (p. 4). Working within this framework, he sometimes defends existing rules, sometimes proposes refinements to rules, and sometimes argues for significant reforms.

Dagan's book is a major contribution. He approaches restitution with a combination of doctrinal expertise and theoretical sophistication that is rare in writing on private law. His arguments are careful, consistent, and, most often, persuasive. Despite the overall success of the project, however, there are ambiguities in Dagan's jurisprudence. In particular, he maintains throughout the book an ambivalent attitude toward legal rules and their role in common law decisionmaking. Dagan is an avowed Realist, yet he is attentive to and respectful of doctrine and often presents his own recommendations in the form of rules. This raises the question: is it possible to be a rule-oriented Realist?

1. REALISM AND RESTITUTION

   1. Autonomy, Utility, and Community

      As noted, Dagan analyses the law of restitution in terms of three values that are prevalent in liberal societies: autonomy, utility, and community. Autonomy, for Dagan, means the power of self-determination (not to be confused with negative liberty, which is only an instrument of autonomy) (p. 100). Utility means human welfare, typically elaborated through the proxy of economic analysis (p. 39). The value of community is somewhat more mysterious, although it plays an undeniable part in modern ethics. At times Dagan uses the term community to capture the ideals of cooperation, mutual support, and a limited form of altruism that accords value to the interests of others but does not require individuals to suppress all interests of their own (pp. 101-02). At other times, he uses the term to denote voluntary associations that contribute to the identity and welfare of individuals and can be facilitated by appropriate use of restitution (pp. 164-65).

      Dagan applies these values "contextually," that is, within the different classes of human situations in which restitution claims arise (pp. 8-9). He does not, however, recommend that judges simply balance the implications of autonomy, utility, and community in particular cases that come before them. Rather, he proposes that the rules of restitution should respond to the interplay of these three values in certain classes of cases. Later in this Review, I shall address the question what this means for judges.

   2. Unjust Enrichment

      The second chapter of Dagan's book, entitled Preventing Unjust Enrichment, does a major service to the law of restitution by demystifying the notion of unjust enrichment. In the 1937 Restatement of Restitution, Warren Seavey and Austin Scott assembled a variety of legal rules that appeared to exemplify a common principle, that no one should be unjustly enriched at another's expense. (3) Since that time, the unjust enrichment principle has dominated both scholarly discussion of restitution and judicial analysis of gain-based legal claims. (4) There are, however, significant differences of opinion about the role this principle plays or should play in judicial decisionmaking. Dagan, to his credit, prefers to minimize the role of unjust enrichment in legal reasoning and instead define restitution more simply as a field of law concerned with the recovery of gains. Unjust enrichment, in his view, is not "a legal argument" (p. 12).

      The principle forbidding unjust enrichment is susceptible to a variety of interpretations, with very different implications for how judges should resolve disputes. Most radically, it can be understood as a decisional principle authorizing judges to carry out "justice." (5) As an example of this approach, Dagan cites Lord Mansfield's famous conclusion in Moses v. Macferlan that the defendant was "obliged by the ties of natural justice and equity" to repay money. (6) Dagan argues cogently that, employed in this way, the unjust enrichment principle is incapable of constraining or even guiding judicial decisionmaking. It simply licenses "unprincipled adjudication," which Dagan rejects. (7)

      Dagan maintains that the values he invokes in his own analysis of restitution--autonomy, utility, and community--are "qualitatively different" from unjust enrichment. Dagan argues that, although vague, they have sufficient content to "serve as standards for principled adjudication" (p. 16). I have doubts about the capacity of these values, particularly the value of "community," to guide case-by-case adjudication in a useful way. Yet the line Dagan wishes to draw between Mansfield's version of unjust enrichment and the values he invokes seems unnecessary to me. Unjust enrichment, as applied by Mansfield, is a standard of decision: if it is "unjust" for the defendant to keep certain assets, then the judge should hold for the plaintiff. As I understand Dagan, he does not intend that autonomy, utility, and community should serve as "if, then" decisional standards for judges; rather, they are values judges and other lawmakers should consult in fashioning more determinate rules of decision.

      Another, somewhat narrower, understanding of unjust enrichment, which Dagan also rejects, instructs courts to reverse unjust enrichment-by-impoverishment, meaning enrichment that is linked to a corresponding loss suffered by the claimant. (8) Dagan finds this version of unjust enrichment less dangerous as a decisional principle, but normatively unattractive because the linkage between the claimant's loss and the defendant's gain evokes the sentiment of envy (p. 16). The relative positions of claimant and defendant, rather than the fact of enrichment, become the basis of the claim. A conception of injustice that plays on resentment of comparative outcomes is out of place in Dagan's project of shaping and defending restitution as a positive force in law. (9)

      Next, Dagan considers and discards an interpretation drawn from civil law, which equates "unjust enrichment" with "unjustified enrichment." (10) Unjustified enrichment is a transfer of wealth from one person to another that "lacks an adequate legal basis," or, more particularly, is not legally effective as a transfer of ownership. (11) This interpretation appeals to my own sympathies in favor of rule-oriented decisionmaking, because it relies on background rules of law to give content to unjust enrichment. Yet, Dagan's criticism poses some significant problems for the concept of unjustified enrichment. Dagan argues that to make sense of unjustified enrichment, one must refer either to a particular conception of "property," to the entire body of legal rules external to restitution, or to the doctrinal rules that currently comprise the law of restitution. Property, in Dagan's view, is too contestable an idea to define what transfers should count as effective (pp. 21-22). A formulation that refers to rules outside restitution to define what counts as an adequate legal basis for enrichment implies that restitution itself has nothing to say about entitlements, an implication that is belied by the rules authorizing recovery of mistaken payments (pp. 19, 22). This leaves the doctrine of restitution itself. Dagan's objection to this version of unjustified enrichment is that it may inhibit judicial development and refinement of the law. (12)

      Yet another understanding of unjust enrichment refuses to accord it any status as a decisional principle. Instead, unjust enrichment is a description of common features of restitution claims that may serve as an aid to analysis but does not authorize particular results. (13) Dagan is sympathetic to this interpretation, provided that the features suggested by the term unjust enrichment are not taken too literally as a blueprint for evaluating cases. (14) His own formulation treats unjust enrichment as a "loose framework," to be understood as a "placeholder for arranging and classifying legal rules that involve benefit-based liability" (p. 26). Accorded any greater authority than this, unjust enrichment will tend both to oversimplify a "complex and diverse" body of law and to result in decisions "by fiat, rather than by reason, obscuring the choices the law of restitution must make" (p. 25).

      Dagan's hard-headed treatment of unjust enrichment is refreshing and persuasive. Dagan does succumb to the temptation of unjust enrichment at one point when he suggests that the reference to justice can serve as an "invitation" to normative analysis (pp. 35-36). Yet he does not make the mistake of suggesting that restitution has properties that uniquely invite a Realist approach to law. For the most part, the role of unjust enrichment in Dagan's analysis is descriptive and organizational rather...