Court Opinion

ID: 9851648
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:16:45.58435+00
Date Added: 2024-06-11T09:22:09.689914
License: Public Domain

PETERSON, C. J.,
concurring in part and dissenting in part.
Only by indulging in the most liberal interpretation of the evidence can it be said that there was sufficient evidence from which a jury could find that a contract for lifetime employment existed between the plaintiff and the defendant. Because the plaintiff is entitled to a liberal interpretation of *370the evidence, I concur with the majority on this issue. I dissent from the majority’s conclusion that social security disability benefits should not be offset.
The issue is whether the plaintiffs award for breach of the employment contract should be reduced by sums that the plaintiff received in social security disability benefits. The plaintiff applied for disability payments in 1982 and was awarded benefits from and after January 1981.
The record shows that at the time of trial the plaintiff was receiving social security benefits for disability under 42 USC § 423(d)(1), which provides:
“The term ‘disability’ means—
“(A) inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months * * *.”
20 CFR § 404.1505(a) defines “disability” as follows:
“The law defines disability as the inability to do any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. To meet this definition, you must have a severe impairment, which makes you unable to do your previous work or any other substantial gainful activity which exists in the national economy. ” (Emphasis added.)
The evaluation of a disability claim is controlled by 20 CFR § 404.1520, which in part provides:
“(a) Steps in evaluating disability. We consider all material facts to determine whether you are disabled. If you are doing substantial gainful activity, we will determine that you are not disabled. * * *.
“(b) If you are working. If you are working and the work you are doing is substantial gainful activity, we will find that you are not disabled regardless of your medical condition or your age, education, and work experience.
a* * * * *
“(e) Your impairments) must prevent you from doing past relevant work. * * *.
*371“(f) Your impairments) must prevent you from doing any other work. * * (Emphasis added.)
At trial of the instant case, the social security issue arose in this manner. Near the end of the case, the plaintiffs attorney, in a chambers conference, volunteered that the plaintiff was receiving social security disability benefits. A discussion ensued concerning whether the evidence was admissible. The defendant’s attorney asserted that the evidence supported his defense that the plaintiff was unable to work and was admissible. The plaintiffs attorney argued that the evidence was inadmissible “as a collateral source.” The court ruled that the evidence would be admitted.
On the question of whether the disability benefits received could be used to reduce the plaintiffs damages, the court instructed the jury:
“Now, you have heard testimony in this case about the plaintiffs Social Security benefits and what he’s received therefrom, and what he may receive therefrom. However, now, if you find the plaintiff is entitled to recover, you should determine what his total damages were under the test or measure that I just gave you without any reduction for Social Security benefits received or to be received. The Court will adjust your award to allow for such benefits.”1
Following the return of the verdict for the plaintiff, the defendant moved the court for an order reducing the damages “by the amount of benefits plaintiff has received in the form of Social Security Disability payments and the amount he will receive in the future of such disability payments.” The motion was denied. This appeal followed.
As a general rule, recovery of damages for tortious injury is intended to restore the injured party to the position enjoyed before the injury or to compensate the injured party *372for the loss. See, e.g., United Engine Parts v. Reid, 283 Or 421, 584 P2d 275 (1978). Recovery for breach of contract is intended to put the plaintiff in the position he or she would have been had there been no breach. See, e.g., Timberline Equip v. St. Paul Fire and Mar. Ins., 281 Or 639, 646, 576 P2d 1244 (1978).
This action is for breach of an employment contract. Damages in such cases generally are measured by the accrued wages to the time of trial plus the present value of the total future lost wages for the unexpired term of the employment term, less amounts actually earned in other employment or amounts which could have been earned in other employment by the exercise of reasonable effort. Bramhall v. ICN Medical Laboratories, Inc., 284 Or 279, 286-87, 586 P2d 1113 (1978); 5 Corbin on Contracts 514-18, § 1095 (1964). Under this rule, had the plaintiff obtained other employment, the earnings from that employment would be deducted from the amounts otherwise payable under the contract.
The majority errs in holding that damages for breach of an employment agreement should not be reduced by the amount of social security disability benefits received by the plaintiff.
We start with the premise that in an action for breach of contract the plaintiff is entitled to be made whole; he is entitled to be put in as good a position as he would be had the contract been performed. Consistent with this rule, earnings from other employment are deductible from the amount promised to the plaintiff. Whether viewed as an avoidable consequence or as mitigation of damages, that is the rule.
In this case, if no deduction is made from the award, the plaintiff will be made whole and then some, the “then some” being the amount of the social security disability benefits.
I am persuaded that an offset should be made for social security disability benefits. If the disability payments are not deducted, the plaintiff will receive a double recovery and will be placed in a better position than had the contract been performed. See United Protective Workers v. Ford Motor Co., 223 F2d 49 (7th Cir 1955). The regulations quoted above make it clear that if the plaintiff had been working for the *373defendant, he would not have been entitled to the social security disability benefits.2 Had the plaintiff, after breach of the contract by the defendant, become disabled and unable to work, he would not have been entitled to receive payment from the defendant after the date of disability.3
Even allowing an offset, the plaintiff will be made whole. The plaintiff is put in the position he would have been had the contract been performed. The law’s interest in preventing double payment is met, and not unfairly. The law’s interest in full compensation is met, and not unfairly.
The collateral source rule, not referred to by name in the majority opinion, is an exception to the general principles that hold that the plaintiff is entitled to be compensated for his or her actual loss and no more. The reasoning is that the defendant, in acting tortiously and causing injury, is a “wrongdoer” and should not reap the benefits of or be credited with money or services received as a result of the injury from sources other than the wrongdoer. Reinan v. Pacific Motor Trucking Co., 270 Or 208, 213, 527 P2d 256 (1974); Cary v. Burns, 169 Or 24, 28-29, 127 P2d 126 (1942).
Heretofore this court has applied the collateral source rule only in the tort context. See e.g. Reinan v. Pacific Motor Trucking Co., 270 Or at 213; Peterson v. State Farm Ins. Co., 238 Or 106, 114-15, 393 P2d 651 (1964); Cary v. Burns, supra. That is because application in the context of contracts is inconsistent with the rationale for the rule. As stated above, in an action for breach of contract, the law aims to place the party injured by the breach in the position he or she would have been had the other party performed by means of a judgment for money. He or she is not entitled to receive more. *374Timberline Equip v. St. Paul Fire and Mar. Ins., supra, 281 Or at 646; Selman v. Shirley, 161 Or 582, 91 P2d 312 (1939).
Note the emphasized language: benefits “received as a result of an injury from sources other than the wrongdoer.” In tort cases, the defendant will not be credited for benefits received from other sources as a result of an injury from other sources. (This premise is carried into newly enacted ORS 18.580. It uses the phrase “when * * * the party awarded damages * * * received benefits for the injury * * * other than from the party who is to pay the damages * * *.”) The disability benefits were not received “as a result” of the defendant’s breach of contract. The collateral source rule isn’t a player in this case.
The majority states:
“We are not persuaded, however, that the effect of payments from a public benefit program on an employer’s liability for a wrongful discharge depends on whether the discharge is wrongful as a breach of contract or for some other reason.”
305 Or at 366 (1988). Wrongful conduct is the reason we have previously given for not allowing an offset for other benefits received. Why does the majority depart from that reasoning?
The majority goes on to say that whether the benefit “should reduce the cost to the employer of choosing to breach the employment contract is properly an interpretation of the statutory policy.” 305 Or at 367 (1988). If anything is clear from the social security legislation quoted above, it is that a worker should not, at the same time, receive compensation for working and compensation for social security disability benefits.
The majority also opines:
“Seen from the perspective of the employer, subtracting benefits paid to a discharged worker from the employer’s contractual liability to that extent reduces the employer’s incentive to perform its contract and to keep the worker employed rather than on public welfare or other benefits.”
305 Or at 368 (1988). The majority refers to the fact that “it may be economically more efficient to breach an employment contract and pay damages when the cost of such ‘efficient’ breaches falls on a social benefit program.” 305 Or at 368 *375(1988). Those maybe pertinent comments in another case, but they do not apply here.
This is not a case where the employer’s breach foisted anything onto the social security disability program. The benefits were not paid because of the breach. Indeed, the possibility of such benefits being paid was not contemplated by the employer.
This is a case in which the integrity of the judicial system should be considered. The plaintiff claimed damages from the defendant on the theory that he was “ready, willing and able to perform the contract.” It is clear from the social security regulations that the premise for his receipt of disability benefits is that he was “unable to do any substantial gainful activity.” Beyond question, there is an irreconcilable factual and legal inconsistency in these claims.
I suggest that the integrity of the judicial process requires an offset. By not allowing an offset, we are putting our imprimatur, our approval, on assertions that are more than arguably flatly inconsistent. In a very real sense, we are saying, “Plaintiff, you are entitled to social security benefits because you are unable to do any substantial activity; and you are nonetheless entitled to damages from the defendant, even though you could not have performed your contract with the defendant.”
One premise for the majority’s result in this case is that the breaching employer should not be able to foist onto social security or unemployment compensation the cost of its breach of contract. Whatever validity that premise has, it isn’t this case. The opinion encourages conduct that should be discouraged. I have no quarrel with rules of procedure that permit the assertion of inconsistent theories and the presentation of inconsistent facts. But no court should make or approve an award that is premised upon inconsistent facts or inconsistent theories of recovery.
The best result is this: We should make the plaintiff whole. Let the plaintiff keep his damage award (which is based upon the premise that he can work), but subtract from that the “damages” he has already received (based on the premise that he can’t work). This result is fair, and does no disservice to the policy arguments invoked by the majority.
*376From our opinions reaching back over twenty years, and most emphatically in the last two years, one must conclude that this court understands the inherent limitations of the judiciary to engage in social engineering. We have said that one should not be tempted to “explain the court’s understanding of the existing state of the law by the court’s views of desirable social policy.” Norwest Presbyterian Intercommunity Hosp., 293 Or 543, 553, 652 P2d 318 (1982). Accord Donaca v. Curry Co., 303 Or 30, 35-6, 36 n 5, 734 P2d 1339 (1987); Winn v. Gilroy, 296 Or 718, 728, 681 P2d 776 (1984); Wights v. Staff Jennings, 241 Or 301, 310, 405 P2d 624 (1965). That is what the majority does today.
This is not a case of tortious discharge from employment. Two parties disagree on whether there exists a contractual obligation on the part of the defendant to employ the plaintiff under a lifetime contract. The terms of the contract before this court, as stated by the majority, are these: “this job that’s available for Mr. Seibel, at this time, is a permanent job” “as long as we have production to run.” The plaintiff gave up no right by returning to work. He continued to assert to the Workers’ Compensation Board that he was totally disabled. The majority must agree that such terms could leave some doubt in the minds of all concerned that the plaintiff had a lifetime contract. To dispute the existence of such a contract is not some type of “bad faith.” I very much doubt that the legal significance of these terms was apparent to anyone (with the possible exception of the plaintiffs attorney) at the time of the workers’ compensation hearing.
If the defendant did in fact tortiously discharge the plaintiff or is otherwise guilty of deceit in offering the plaintiff a position that the plaintiff could not handle, then the plaintiff could have brought an action in tort. An attorney often must make decisions concerning the theory of liability to be asserted. Sometimes the tort measure of damages is more favorable than the contract measure. Oftentimes it is easier to prove one theory than another — for example, strict tort liability and negligence. Alternatively, the plaintiff could have argued that the employer acted in bad faith, that in this particular case the breaching party is in that sense a wrongdoer and is not entitled to an offset. These issues are not in the case. The majority should avoid the temptation to fashion a *377rule for all times and all purposes to avoid a perceived injustice in this case.
This is not the case to graft a tort measure of damages onto a cause of action for breach of contract. Nor does this case occasion us to examine the theory of efficient breach, the doctrine of bad faith breach, negligent breach or tortious breach, or to reexamine the collateral source rule in tort cases.4 It is a straightforward claim for breach of contract.
Jones and Gillette, JJ., join in this opinion.

 The better practice would be for the jury to decide all damage questions under appropriate instructions. As the trial court ruefully observed near the end of the case,
“See, you are putting me in a hell of a bind. You are throwing this at me right now. I’ve got to make a quick decision. I don’t like that.”
The record suggests that the source of the court’s instruction was a handwritten requested instruction by one of the attorneys. (The handwritten requested instruction is not in the trial court file.) In any event, the instruction was given, the procedure described was followed, no objection was made to the procedure and no exception was taken to the instruction.

 I emphasize that this case involves social security disability benefits. Whether the same result would apply to social security retirement benefits or unemployment compensation benefits is not involved in this case.

 The editors of Restatement (Second) Contracts give this example:
“On April 1, A and B make a personal service contract under which A is to employ B for six months beginning July 1 and B is to work for A during that period. On May 1, B repudiátes the contract. On August 1, B falls ill and is unable to perform the contract for the remainder of the period. A can only recover damages based on his loss during the month of July since his loss during subsequent months was not caused by B’s breach. * * *”
Id., § 347, illustration 15 at 117.

 See The Economics of Contract Law (A. Kronman & R. Posner eds 1979); Barton, The Economic Basis of Damages for Breach of Contract, 1 J Legal Stud 277 (1972); Shavell, Damage Measures for Breach of Contract, 11 Bell J Econ 466 (1980); Note, Tort Remedies for Breach of Contract: The Expansion of Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing Into the Commercial Realm, 86 Colum L Rev 377 (1986); Note, Damage Measurements for Bad Faith Breach of Contract: An Economic Analysis, 39 Stan L Rev 161 (1986).
On the collateral source rule in contract cases, see Fleming, The Collateral Source Rule and Contract Damages, 71 Cal L Rev 56 (1983).
On mitigation of damages by social welfare benefits, see Fleming, supra; Note, Mitigation of Damages by Social Welfare Benefits, 48 B U L Rev 271 (1968).