Tuesday, February 28, 2006
One of the excellent presentations at the International Contracts Conference that just concluded was Jason Mehta's paper (co-written with Barak Richman and Jordi Weinstock of Duke) on the history of one of America's best-known cases on mitigation of damages. In A Bridge, a Tax Revolt, and the Struggle to Industrialize: The Story and Legacy of Rockingham County v. Luten Bridge Co., the authors dig deep into the real story behind a case best known for a doctrine that was never actually litigated in the dispute. (Left: The bridge at issue. Image: Duke Law School.) Here's the abstract:
Rockingham County v. The Luten Bridge Company is now a staple in most Contracts casebooks. The popular story goes as follows: Rockingham County entered into a contract with the Luten Bridge Company to build a bridge over the Dan River. Shortly after work commenced, the County repudiated the contract. Nonetheless, the Luten Bridge Company continued with its construction project and sued the County for the entire bill. Judge John J. Parker, the long-time chief judge of the Fourth Circuit, ruled in the famous 1929 opinion that the County was liable only for the costs up until the time of breach plus the anticipated profit, a sum of approximately $1,900, and not for the entire bill that was closer $18,000. The case is used to illustrate the "duty to mitigate," where a party to a contract against whom a breach has occurred is obligated to mitigate the damages resulting from that breach.
In this article, we revisit the history of this famous case. Examining original sources related to the case, the contemporary history, and the lives of those involved, we reveal that the case arose during, and sharply illustrates, Rockingham County's struggle to industrialize. The dispute emerged within a heated tax revolt that pitted the county's farmers against its mill owners and constituted a microcosm of the larger political conflict -- endemic throughout North Carolina and the south -- over investing in the public improvements necessary to promote industrialization. The Fourth Circuit opinion that transpired from the dispute offers many lessons and insights into the era's history, its legal issues challenges, and the development of the common law.
We do our best to bring the rich story to life and to understand its lessons. Section I of the paper documents the case's current importance in contract law, and Section II describes in detail the political and legal fights that culminated in Judge Parker's 1929 opinion. Section III then examines the true contemporary significance of the opinion. We reveal that Judge Parker's real objective was to enable North Carolina counties to enter into enforceable contracts to enable municipal development and facilitate industrialization, and that the ruling on mitigating damages was merely an afterthought. Section IV then examines the process through which the opinion, despite Judge Parker's intents, lost its original significance but later became immortalized to establish the mitigation principle.