Restitution and the Production of Legal Doctrine

I. IntroductionLegal doctrine, particularly of the common law or judge-made variety, has long been the source of critique and ridicule.1 In the eyes of many legal historians, doctrinal evolution is a process whereby the law's initial rationale becomes subverted by further refinement and where lawyers cannot help but get lost in the morass of self-inflicted wounds.2 More structural critiques focus on how judge-made doctrine subverts the popular will and on how, under the guise of legal interpretation, the caste of lawyers extracts large sums of money from other members of society.3 Defenders, by contrast, note that if cases are to be decided on the basis of legal principles rather than by judicial fiat, legal doctrine must be sufficiently nuanced to account for the complexity of human affairs.4Amid this longstanding debate regarding the nature of judge-made law, the common law of restitution presents an interesting case study. Viewed from the ground up, restitution is the law that governs transactions gone awry on account of payments made or services rendered in honest mistake, outright fraud, or somewhere in between. The recent history of restitution, however, reveals some rather stark differences in the way these cases are conceptualized in England and the United States. Whereas in American legal discourse restitution sits at the backwaters of the academic and judicial consciousness, in recent years, English and Commonwealth courts have expended considerable energy to articulate and develop this substantive area of law.5 Moreover, within the English bench, bar, and academy, the principles of restitution are debated with great care and sophistication and have (improbably) become the avant garde of private law theory.6 As a result, in English law, restitutionary principles have been employed to resolve such pressing questions as the availability of tax refunds from the government,7 the financial consequences of public contracts that overstep the government's constitutional authority,8 the fallout of large-scale commercial transactions gone awry,9 the recovery of funds from fraudsters and swindlers,10 and the dissolution of non-marital romantic relationships.11 Meanwhile, on American shores, restitution fails to generate much excitement. Instead, these factual scenarios are framed either as questions of statutory interpretation, judicial procedure, and jurisdictional competence or as questions of contract law and remedial relief.12To better illustrate the problem, consider the following fact pattern. A State government enacts a tax scheme that is more favorable to domestic than foreign businesses. Plaintiff, a foreign corporation, pays the tax. Later, a similarly situated taxpayer challenges the constitutionality of the tax on the basis of the disparate treatment between domestic and foreign corporations. The reviewing court finds the tax unconstitutional and holds for the taxpayer. Rather than specify the remedy, the court instructs the domestic courts to grant plaintiffs the same remedy that would be available for illegally collected taxes under domestic law. Plaintiff seeks return of the unconstitutional tax.In recent litigation, these facts generated a book-length symposium on the law of restitution in the English courts.13 Specifically, the courts pondered whether plaintiffs could circumvent the ordinary statute of limitations for recovery of improper tax assessments by bringing a restitution claim whose limitation period would not begin until the mistake was discovered, and thus a substantial portion of the argument turned on the particulars of restitution law.14 For example, does English law recognize a common law restitution claim for taxes paid under mistake of law? When a business pays a tax pursuant to a valid statute, in what way can it be said to be operating "under mistake of law?" And at what point is the business deemed to have discovered its mistake? Does notification of a lawsuit (brought by a third party) challenging the legality of the tax vitiate plaintiffs claim of mistake? …