Warning: This post will be of interest, if to anyone, only to those intrigued by the arcana of the intersection of the law of contract, tort, and unjust enrichment.
Back in February I blogged about a conference on the "rollout" of the new Restatement (Third) of Restitution and Unjust Enrichment. Not many cases have yet cited to the R3RUE but last week Richard Posner of the Seventh Circuit Court of Appeals based in Chicago gave it a passing mention. The plaintiff in the case, Wilder Corp. of Delaware v. Thompson Drainage & Levee District (slip opinion here) had sold some real estate to a nature conservancy organization. The contract warranted that there were no petroleum products on the land. It turned out there were. The buyer sued the seller for breach of warranty and won. The seller, Wilder Corp. of Delaware, then sued the entity that had leaked the petroleum on the land, the local drainage district (a political entity in Illinois).
The basis of Wilder's suit was the common law tort of nuisance. After shooting down all the theories Wilder advanced for why the drainage district should be liable for its breach of contract, Judge Posner raised the doctrine of equitable subrogation, which is set out in the R3RUE, only to reject it. But he gave two, inconsistent reasons.
First, the court seems to say that equitable subrogation is inappropriate when the buyer and seller could have expressly provided for subrogation by contract. This contradicts R3RUE sec. 26. (Of course, no court is bound by any Restatement of the law. But it would be nice for a court that rejects a rule in the Restatement to spell out its reasons in some detail.)
The second, and much more persuasive reason for cutting off this line of attack on the drainage district, is that Wilder Corp.'s attorneys never raised it.
There is rarely a good reason for a court to reject an argument not raised by the parties and none appears here. Of course, Judge Posner rarely resists an opportunity to address the arguments he thinks the parties should have raised. The court's discussion of R3RUE sec. 26 is thus dicta and shouldn't dissuade other courts from considering it in a similar situation.
Back in February I blogged about a conference on the "rollout" of the new Restatement (Third) of Restitution and Unjust Enrichment. Not many cases have yet cited to the R3RUE but last week Richard Posner of the Seventh Circuit Court of Appeals based in Chicago gave it a passing mention. The plaintiff in the case, Wilder Corp. of Delaware v. Thompson Drainage & Levee District (slip opinion here) had sold some real estate to a nature conservancy organization. The contract warranted that there were no petroleum products on the land. It turned out there were. The buyer sued the seller for breach of warranty and won. The seller, Wilder Corp. of Delaware, then sued the entity that had leaked the petroleum on the land, the local drainage district (a political entity in Illinois).
The basis of Wilder's suit was the common law tort of nuisance. After shooting down all the theories Wilder advanced for why the drainage district should be liable for its breach of contract, Judge Posner raised the doctrine of equitable subrogation, which is set out in the R3RUE, only to reject it. But he gave two, inconsistent reasons.
First, the court seems to say that equitable subrogation is inappropriate when the buyer and seller could have expressly provided for subrogation by contract. This contradicts R3RUE sec. 26. (Of course, no court is bound by any Restatement of the law. But it would be nice for a court that rejects a rule in the Restatement to spell out its reasons in some detail.)
The second, and much more persuasive reason for cutting off this line of attack on the drainage district, is that Wilder Corp.'s attorneys never raised it.
There is rarely a good reason for a court to reject an argument not raised by the parties and none appears here. Of course, Judge Posner rarely resists an opportunity to address the arguments he thinks the parties should have raised. The court's discussion of R3RUE sec. 26 is thus dicta and shouldn't dissuade other courts from considering it in a similar situation.
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