Restitution and Abuse of Right

Question 1

Restitution

Answer 1

• both a remedy and a ground of liability (liability tied to unjust enrichment)
• often involves equitable-style of reasoning

Question 2

Core Elements of Restitution

Answer 2

(i) enrichment of the defendant
(ii) at the expense of the plaintiff
(iii) under circumstances that would make it unjust for the defendant to retain the benefit (tricky to evaluate - some people say too spongy)

Question 3

Restitution and Damages

Answer 3

• question of whether or not restitution for wrongs is just an alternative to damages in torts (egg-washing ex - what would def get from damages vs. restitution?)

Question 4

Olwell v. Nye & Nissen - Facts

Answer 4

• the egg-washing case
• P sells D an egg-packing business but not the egg-washing machine -> P arranges to store egg-washing machine in adjacent premises
• shortage of labor during WWII -> D takes egg machine out of storage and starts using it once per week until P discovers 3 yrs later
• upon discovery, P offers to sell to D for half of original price ($600), refuses D’s counteroffer of $50, and sues

Question 5

Olwell v. Nye & Nissen - Decision

Answer 5

• P sues for reasonable value of D’s use of the machine - asks for $25 per month, gets $10 per week (price of hiring a human egg-washer)
• on appeal, this gets bumped back down to the $25 (P can’t get more than asked for)

Question 6

Olwell v. Nye & Nissen - Principle

Answer 6

• court allows P to “waive the tort” - can sue for unjust enrichment in profits made by D through use of machine rather than in damages (tort would’ve been conversion - P would’ve gotten value of the machine, which wouldn’t have been much, given state of the machine)
• basically, gives P option of choosing whichever suit gets more $

Question 7

Olwell v. Nye & Nissen - Bad Faith

Answer 7

• Prof said might be bad faith influencing damage calculation - D could’ve been made to pay rental value of the machine, but instead has to pay much higher cost of hiring human egg-washers -> could be due to D’s showing of bad faith

Question 8

Two Criticisms of Restitution w/ Unjust Enrichment as Basis for Liability

Answer 8

• seems to rest solely on morality rather than mere solid foundation in law
• restitution does not embody any unitary principle but merely reflects miscellany of circumstances giving rise to right to restitution

Question 9

Mistaken Improver

Answer 9

• basically, someone who accidentally impacts property of another in a way that could be characterized as a benefit rather than a harm

Question 10

Producers Lumber & Supply v. Olney Building - Facts

Answer 10

• Orts mistakenly has a house built on land that his co (Olney) already sold to Producers -> Producers wanted to use it for a house for manager and his wife (they planted some trees on the lot, + O notices but doesn’t really think about it)
• house nearly complete when mistake discovered -> O tries to negotiate, but then breaks off negotiations after lowball offer and demolishes the house

Question 11

Producers Lumber & Supply v. Olney Building - Cost Assessments

Answer 11

• Monetary loss to Olney from the demolition (cost of tearing down the building $2768)
• Producers sue for damages though after he does this - he needs to pay extra beyond the cost of the demolition

Question 12

Producers v. Olney - Olney Mental State

Answer 12

• good faith mistake and subsequent good faith negotiations, but malicious in demolition

Question 13

Producers v. Olney - Trial Findings

Answer 13

Jury finds:

• Orts built house in good faith
• would cost $600 to restore the land to its pre-building condition
• Orts acted maliciously in removing the building
• Producers should receive $300 in exemplary damages

Question 14

Producers v. Olney - Argument on Appeal

Answer 14

• Trial court only awards the $600 for restoring the land -> Producers argues $5900 on appeal, includes value of building in addition to $300 punitive damages and the $600 for restoring land to condition

Question 15

Producers v. Olney - Decision and Reasoning

Answer 15

• court awards the full $5900 - they say house belonged to Producers at time of destruction (fixture) + there’d been no finding for Olney in favor of restitution (since he was a good faith mistaken improver) -> Olney’s destruction of house negates good faith (no equity b/c “unclean hands”)

Question 16

Producers v. Olney - Dissent

Answer 16

• not happy w/ the $5000 - says Olney had right to remove as a mistaken improver, + points out Producers wasn’t negotiating in good faith

Question 17

Remedies for Mistaken Improver

Answer 17

• removal
• unjust enrichment
• forced sale
• partition

Owner usually has choice of remedy - goal is to reduce burden of the mistaken improvement on the put-upon owner

Question 18

Mistaken Improver - Removal

Answer 18

• if improvement can be removed w/o undue damage to building or land, improver can remove

Question 19

Mistaken Improver - Unjust Enrichment

Answer 19

• if improvement cannot be removed, court will ascertain the difference in value between the property in its unimproved state + property w/ the improvement
• true owner will be given option of paying the difference in value to the improver (or option of having a lien put on the property in this amount - if sold, this value goes to improver)

Question 20

Mistaken Improver - Forced Sale

Answer 20

• if true owner cannot afford the price of the improvement, or elects not to pursue this remedy, improver will be allowed to acquire the land from true owner, by paying the price of the unimproved land

Question 21

Mistaken Improver - Partition

Answer 21

• if neither party willing to engage in forced transaction w/ the other, court will take control of the property, sell it to a third party, + divide the proceeds according to the parties’ respective interests

Question 22

Abuse of Right

Answer 22

• Prof said this has “somewhat tenuous status” - occasional theme, but courts don’t really like to push it too far
• general concept: court intervenes when extreme results would reflect unsavory behavior (might mean not enforcing transaction if disproportionate hardship on vulnerable party, or might deny injunction where party might be said to be invoking right inconsistently w/ its purpose)

Question 23

Edwards v. Allouez Mining Co. - Facts

Answer 23

• Allouez has stamp mill - its operations carry sand down a stream + deposit on banks below (impossible to profitably carry out mining ops unless this is permitted)
• Edwards purchases land downstream - majority infers speculation (trying to force def to buy it) -> sues for an injunction against further discharge of sand onto the land, + in support of the injunction, says the land is worth three to five times more than what it cost him (court thinks this shows speculation)

Question 24

Edwards v. Allouez Mining Co. - Decision

Answer 24

• court says damages but no injunction (injunctions are discretionary, + the court doesn’t like the manufactured situation- says damages sufficient in part because of his speculative purpose)
• damages vs. injunction makes a big difference here - shutting down def’s business vs. relatively low damages b/c the land not actually worth much

Question 25

Edwards v. Allouez Mining Co - Dissent

Answer 25

• basically says property rights are property rights regardless of an individual’s motives (“a very dangerous principle to hold that a civil wrong can be lessened by the motives of the party injured, so long as he has done no wrong himself”)
• argues def effectively seizing the pl’s land by depositing the sand