- Cotnam v. Wisdom
- Callano v. Oakwood Parks Homes Corp.
- Pyeatte v. Pyeatte
pp. 103-113
Restitution is a form of recovery based on principle of unjust enrichment (opposed to a promise)
Claims to recover for benefits voluntarily conferred are regarded by the courts with suspicion (Restatement of Restitution § 112).
Ex: If you improve someone's land without them asking you to, you are not entitled to restitution.
Cotnam v. Wisdom
Supreme Court of Arkansas, 1907
Parties:
Π=Wisdom, doctor
Δ=Cotnam, administrator/executor of X's estate (there was no will)
X=Harrison, decedent
Facts:
-X was in terrible accident involving a streetcar
-Wisdom is called to the scene, tries to fix X but X dies without ever waking up
PH:
-Wisdom sues for services rendered
-Wins in trial court
-Δ appeals, disputing jury instructions given in trial court:
1. If you find from the evidence that Π rendered professional services as a physician and surgeons to X, in a sudden emergency following the X's accident, then you are instructed that Π is entitled to recover from X's estate a sum as you may find from the evidence is reasonable compensation for the services rendered
2. Factors you may consider in determining what is a reasonable charge for the services performed by Πs in the particular case may include: the character and importance of the operation; the responsibility resting upon the surgeon performing the operation; his experience and professional training; the ability of X to pay
Issues on Appeal:
-The correctness of the jury's instructions (#1: its implication that there existed an implied K between Π and X and #2: X's ability to pay was a proper element to consider when jury decided how much Π was entitled to recover)
Δ's argument on appeal issue #1:
X never came to. He did not and could not give consent to treatment. No matter how good Π's intentions were, new law would have to be established for Π to recover $.
Court's analysis:
-Δ is right that recovery must be rooted in law
-Δ is wrong that new law would have to be created. Implied Ks are as old as the English system of jurisprudence. Implied Ks are also known as quasi contracts or constructive contracts.
-Implied Ks are not really Ks but fill a practical societal need. They sustain recovery for physicians and nurses who render services to those who are incapable of contracting.
-Therefore, the lower court was right in this instruction.
-See "rules" section in shrubbery case below. Fits here as well.
Court distinguishes between Ks implied in fact and Ks implied in law.
Ks implied in fact: there's a factual question as to whether the parties actually made a K but there is evidence (in the form of a partially executed writing or oral testimony, etc.) from which it can be inferred that they did and on the basis of evidence, the K is enforced.
- Evidentiary questions as to what it is
Ks implied in law: There's no factual question as to whether there was an agreement (there wasn't an agreement) but the law simply acts and creates a fiction that a duty has arisen (even though no real K existed) to make sure that duty is honored.
Recovery amount in cases involving quasi Ks: - compensation for services rendered to be reasonable and fair …. R2C §371 gives 2 alternatives:
1. Reasonable value to the Δ of whatever he received in terms of what it would cost him to obtain it from another person in the claimant's position. (objective value)
2. The extent to which the Δ's property has increased in value or his other interests advanced
Issue #2:
Court's analysis:
"Ability to pay" was wrong instruction for jury because it should not matter. The services rendered by a surgeon are the same for a prince or a pauper and in either case, the surgeon is entitled to reasonable and fair compensation for his time, services and skill.
-Although some of the evidence would justify the amount the jury awarded, some of the evidence would show that the amount is higher than would be justified. Therefore, this was not a harmless error.
Conclusion:
-Judgment is reversed and the cause is remanded.
Notes 1 & 2:
1. Hypo: What if daughter called Wisdom and said: "Give my father the best care you can and I will pay you for it."… How much could Wisdom get then?
AnsweràCost of time, services and skill that surgeon put out to achieve his "best care" (This looks like an offer for a unilateral contract—a bargain. In that case, he is entitled to recover expectation damages, the "gold standard." Expectation is measured by custom and at that time a sliding scale for fees were fees were customary, so we could get closer to the sliding scale for fee collection, but it's still on dead-on.)
2. **If a person helps another in an emergency, they are usually NOT entitled to recovery because it's considered a gratuitous act. However, professionals who are in the business of helping people in emergency situations are entitled to recovery. Or if it is excessively expensive or burdensome to render the aide, a person may recover…
Callano v. Oakwood Park Homes Corp.
Superior Ct of NJ, 1966
Parties:
Π=Callanos, owner of landscaping business
Δ=Oakwood, builder/housing development company
X=Bruce Pendergast, decedent
Facts:
-Δ contracted with X to build a house
-X contracted with Π for delivery and planting of shrubs at new home
-X died before he moved into the house or paid Π for the shrubs and the work
-Δ and X's estate cancel their K
-Δ sells X's house to other couple, shrubs included in the sale
PH:
-Πs sue Δ for value of shrubs and work
-Lower ct holds for Π in amount of $475
-Δ appeals
Issue:
-Is Δ obligated to pay Πs for their shrubs on the theory of quasi-contractual liability?
Π's argument on appeal: Δ was unjustly enriched and therefore an agreement to pay for the shrubs is implied in law.
Δ's argument on appeal: Facts of the case do not support a recover on the theory of quasi-K.
Rules:
-In dealing with quasi Ks, the intention of the parties is entirely disregarded
-When the case shows that it's the duty of the Δ to pay, the law provides the promise to fulfill that obligation…
-Ks implied by law (aka "quasi" or "constructive") are a class of obligations which are imposed or created by law without regard to the assent of the party bound on the ground that they are dictated by reason and justice. (Equity) They rest solely on a legal fiction and are not really Ks b/c there is not agreement but they are clothed with semblance of K for the purposes of remedy. The obligation arises not from consent as in the case of true Ks but from the law or natural equity.
- Courts apply this theory with caution.
-Quasi-K-s are based on doctrine of unjust enrichment. To recover under unjust enrichment, two elements must be shown: a Π must prove that Δ was enriched (rec'd a benefit) and the retention of that benefit w/o payment for it would be unjust.
-Quasi-K cases involve a mistake by the person conferring the benefit or a direct relationship b/n the parties. (source of law on this one? Court doesn't specify)
Analysis:
-Both parties agree X's property was enhanced by the shrubs but Πs never had direct dealings with Δ. There was no mistake on the part of the Πs and no fraud. Therefore, Π can collect from X's estate but not from Δ.
-The unjust element was not met for unjust enrichment by the Π
-Quasi Ks were intended to provide a remedy where none existed. Here, a remedy exists—against X's estate, not against Δ
-Π may not use the theory of quasi-K to substitute one promisor for another
Conclusion:
-Δ was not unjustly enriched and is not liable for value of shrubbery. Reversed.
Hypo: What if X had been judgment-proof? Ans: There's no clear rule, but in a situation where the Π is not able to recover from the party who owed the obligation, there might be chance to recover from the third party who really benefited from the services.
Note 2 & 3:
Note 2. Paschall's Inc. v. Dozier:
Parties:
Π = contractor
Δ=couple
Facts:
Contractor enters contract with couple's live-in daughter to build a bathroom at couple's house, with the knowledge and consent of the couple. Contractor was unsuccessful in collecting from daughter, who was bankrupt. Contractor then sues couple on a theory of restitution.
PH:
-Trial court dismissed the complaint, sustaining Δ's demurrer (pleading does not state a cause of action)
-Π appeals
-Holding of appellate ct: Reversed and remanded "to the trier of facts to determine whether or not the Δ has been so unjustly enriched at the detriment of the complainant (Π) so as to require him to make restitution to Π.
Analysis:
In it's opinion, court says: Although the general rule is that the implied K cannot arise between the provider of the benefit and the benefactor when work was contracted by someone other than the benefactor, in this case, if the work was always meant to benefit the benefactor and the original K becomes invalid, the provider of the benefit may collect as long as he has exhausted the resources to collect remedies form the person with the whom he originally contracted and yet he is still not fully paid.
Note 3: How to measure the amount of recovery: R2C §371 gives 2 ways a court can go in determining the award in a case of unjust enrichment. It's at the court's discretion which one it uses:
1. Reasonable value to the Δ of whatever he received in terms of what it would cost him to obtain it from another person in the claimant's position. (objective value)
2. The extent to which the Δ's property has increased in value or his other interests advanced
If Δ had been held liable in a quasi K in this case, it would have to pay only the value of the shrubs, $47-.--
Pyaette v. Pyeatte
Az. App. 1982.
Parties:
Π is estranged wife
Δ is estranged husband
Facts:
-Couple was married and agreed that they would take turns pursuing graduate school while the other person worked. Husband went first.
-Wife lost job during husband's 3L year. They had to live off of savings for that time.
-Husband graduates, passes bar, gets job and wants a divorce
-Wife never got to go to school under their agreement
PH:
-Wife sues for breach of their agreement
-Trial court found the agreement to be valid and awarded her $23000 in expectation damaages
-Husband appeals
Issue on appeal:
Whether the promise was enforceable as a K or a quasi-K and therefore wife is entitled to restitution? (Restitution always follows quasi-Ks)
-Husband's argument on appeal: Agreement was too indefinite to be an enforceable K
-Wife's argument on appeal: Even if too indefinite to be enforceable, she's entitled to recover restitution.
Rules:
-No authority is cited to court in support that restitution, as a matter of law, is inappropriate in a dissolution.
Analysis:
-Agreement was too indefinite to be enforced as a K because we don't know where she's going to graduate school, cost, time, etc. but she may still be able to recover under unjust enrichment
-Unjust enrichment does not apply in cases where both spouses perform the usual and incidental activities of the marital relationship.
-Where facts are different (like in instant case), where one spouse provided an "extraordinary or unilateral effort" which gives benefit solely to the other, the remedy (restitution) is appropriate
Conclusion:
-Reversed and remanded for judgment amount of $23000 for proceedings in accordance with this opinion. (By this analysis, wife is not entitled to recover for period when she was out of work)
Were the elements of unjust enrichment met in this case? àYes for both (unjust and enriched)
Notes 1 & 2:
1. Calculate wife's restitution:
Option A: Value to what Charles received (law school tuition, living expenses, both?)
Option B: Increase in the value of his property (difference between pre-law school assets and his post-law school assets)
--The court will choose one or another at its discretion.
2. **Restitution claims between spouses have traditionally failed because they are presumed to be gratuitous. Same between family members.
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