10.2.2.2 Notes - Lumley v. Wagner | rauvinj | September 25, 2012

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10.2.2.2 Notes - Lumley v. Wagner

Original Creator: Kessler, Gilmore & Kronman Current Version: rauvinj
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NOTE

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1. For the subsequent history of the litigation, culminating in Lumley v. Gye, 2 E. & B. 216, 118 Eng. Rep. 749 (1853), see Z. Chafee & E. Re, Cases and Materials on Equity 233 (5th ed. 1967). For the development of the Lumley v. Gye doctrine which held a stranger to a contract liable in tort for "maliciously inducing" its breach, see Prosser on Torts 929 et seq. (4th ed. 1971). The monopolistic effects of the widespread use of rigid personal-service contracts in professional baseball are discussed in Topkis, Monopoly in Professional Sports, 58 Yale L.J. 691 (1949). See also Flood v. Kuhn, 407 U.S. 258 (1972) (upholding the exemption of baseball from the antitrust laws as an "established aberration").

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2. The Lord Chancellor evidently believed that, as a matter of morals, men should so far as possible, be bound "to a true and literal performance of their agreements" and should not be permitted "to depart from their contracts at their pleasure," leaving the other party "to the mere chance of any damages which a jury may give." In this respect, his view of the promisor's moral duties seems to have been close to that expressed by Justice Story, supra p. 1070. The opposite point of view, championed by Holmes, rests on the assumption that a man does no wrong by breaking his promise as long as he is prepared to compensate the other party for the damages he suffers. When a person makes a contract, should we think of him as promising in the alternative ("I promise either to perform or pay damages")? What moral significance should we assign to the fact that some of the harms caused by a breach may be noncompensable (for example, the disappointment and loss of trust a promisee experiences even if he is fully reimbursed for his pecuniary loss)? For a recent discussion of the morality of promise-keeping and its implications for contract law, see C. Fried, Contract as Promise (1981). Professor Fried argues vigorously for the idea that contractual obligation is rooted in the duty to keep one's promises but assumes, without argument, the propriety of requiring the breaching party in most cases to pay only money damages (even where the breach is willful).

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As to what the Lord Chancellor calls "the mere chance of damages," it should be noted that Lumley v. Wagner antedated by two years Baron Alderson's celebrated attempt to provide a rational basis for damage theory in Hadley v. Baxendale. See supra p. 106.

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3. Suppose the shoe in Lumley v. Wagner had been on the other foot. H Benjamin Lumley had refused to allow Mademoiselle Wagner to sing and had hired someone else to perform her parts instead, could she have obtained an injunction forbidding Lumley from staging the operas without her? It has often been said that a court will not compel specific performance of a promise to perform personal services, on the theory that to do so would be to impose a kind of involuntary servitude on the promisor. But where it is the performing party who seeks specific performance, does the same argument apply? Consider the case of Staklinski v. Pyramid Electric Co., 6 N.Y.2d 159, 160 N.E.2d 78 (1959). Mr. Staklinski had entered into an eleven-year contract with Pyramid Electric. The contract contained a provision stating that any dispute arising under it was to be settled by arbitration in accordance with the rules of the American Arbitration Association. Two years after the contract was concluded, the company made a determination (as it was permitted to do under another provision of the contract) that Mr. Staklinski was permanently disabled and that his services should be terminated. Mr. Staklinksi challenged the company's finding and the parties submitted their dispute to arbitration. The arbitrators held in Mr. Staklinski's favor and ordered his reinstatement. On appeal, the company sought to invalidate the arbitrators' award on the grounds "that it is against public policy to compel a corporation to continue the services of an officer whose services are unsatisfactory to the directors." Six members of the Court of Appeals construed the arbitrators' award as requiring the specific performance of a long-term contract under which the Pyramid Company had retained Staklinski's services "at a large salary plus a percentage of net profits." Of the six judges who so read the award, three voted to confirm it and three to overturn it. The seventh judge, Froessel, J., voted to confirm on the ground that he read the award as merely providing for damages in case Pyramid refused to reinstate Staklinski.

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February 15, 2015

10.2.2.2 Notes - Lumley v. Wagner

10.2.2.2 Notes - Lumley v. Wagner

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