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Case:
BGHZ 30, 29
VI. Civil Senate
(VI ZR 90/58)
Date:
24 March 1959
Note:
Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz
Translated by:
Mrs Irene Snook
Copyright:
Professor B.S. Markesinis

The defendant, a wife who since 1949 had lived with her husband, the co-defendant, under the matrimonial property regime of community of property, on 1 April 1956 intentionally set ablaze the agricultural property of her adjoining neighbours. For this crime she has been bindingly sentenced. The fire caused extensive property damage to buildings and movables.

The parties now only dispute the amount of compensation payable for the buildings partially destroyed and partially damaged in the blaze. The Bavarian Chamber of Insurance has calculated the costs of repair of the buildings at DM 27, 120 and fixed the compensation according to the current value at DM 21, 463. The claimant demands from the defendant payment of the difference amounting to DM 5, 5657.

The Landgericht has awarded the claimants only DM 25o for the damage to the buildings and otherwise rejected the claim, reasoning that through the compensation the claimants, i.e. the victims, should not financially be placed in a better position than they were in before the damaging event occurred; they must therefore allow a deduction under the heading "new for old", since the reconstructed buildings are more valuable than at the time of the damage. Applying para. 287 ZPO (Code of Civil Procedure), the Landgericht has assessed this deduction to be as high as the Bavarian Chamber of Insurance's calculation of the amount of compensation due. The claimant's appeal failed as did the further appeal, admitted by the court of appeal.

Reasons

1. The appeal court correctly assumes that a deduction is basically to be made for the difference between old and new in cases when compensation is to be calculated for the damage or destruction of goods whose original value has fallen through use and lapse of time or which had even already been damaged, and that this method is to be applied in the case under consideration.

a) According to para. 249, first sentence BGB, a person liable to pay damages must restore the situation as it would be if the circumstance making him liable had not occurred. Where damages are to be paid for the injury to a person or, as here, for damage to property, instead of repair the claimant can demand under para. 249, sentence 2 BGB payment of funds needed for such repair. Here, the claimants chose to make such claim. In fact, the claim for monetary compensation is a claim for restoration, although not directly through the debtor's performance but rather by providing satisfaction for the creditor through the debtor's payments (RGZ 71, 212, 214).

It applies to both alternatives set out in para. 249 BGB that the restoration of the previous state of affairs means that the victim whose property has been damaged must be placed in the same position economically as he was in before the event took place which led to the liability for damages (RGZ 91, 104, 106; 126, 401, 403). The law is not guided by the restoration of exactly the same conditions as had existed before the damaging events took place but rather by the victim's economic situation as it would have been without the damaging event (see RGZ 131, 158, 178; 143, 267, 274). The therefore necessary comparison of the economic situations mirrors the basic principle of the law of damages, i.e. to ensure that compensation does not render the victim richer or poorer. Although the further appeal is justified in claiming that the Civil Code does not contain provisions on how to make allowances for the difference between old and new when calculating compensation, it is none the less incorrect, as the further appeal alleges, to assume that the Civil Code did not intend to have this difference taken into account. Rather, the legislator did not find it necessary to make legal provisions in this respect since, as is expressed in the motivations for the draft of a Civil Code (Amtliche Ausgabe, vol. II 1888 to s. 218, p. 18 et seq.). This practice had already found satisfactory solutions to this question and is expected also to do so in future. The relevant passage runs:

The solution to the question whether and to what extent in cases of claims for damages the advantage which the victim has obtained from the damaging event must be deducted from the compensation (compensatio lucri et damni) must be left to jurisprudence and practice.....It goes without saying, ... that where from one and the same action or a complex of actions for which the same person is liable, damaging and profitable consequences arise, these cannot be separated and the result as a whole must be looked at. Even an attempt to solve this question by express legal provisions would be dubious, particularly in the case of tort. Its solution is intrinsically linked to the determination of the term of "damage", which in any event cannot be done by law for all cases and for all their possible and perhaps dubious differences..... Unimpeded by legal provisions, legal practice will continue to find solutions for each particular case.

At that time the decision of the Reichsoberhandelsgericht (ROHG XXIII, No. 116) was already available - and cited in the motives to the BGB (op. cit. p. 19, note 1) which principally favours a consideration of the difference between old and new where damages are claimed. Where it thus transpires that such offsetting of advantages was already envisaged by the legislator of the Civil Code and is an inherent part of civil law (RGZ 54, 137, 14o et seq.; OLG Hamburg MDR [1952] 224 and further references from literature), it can be left undecided whether or not the rules on the consideration of a loss in value resulting from the differences between old and new, as set out in paras 710 (3), 872 HGB (Commercial Code); paras 86, 141 (2) VVG (Act on Insurance Contracts); para. 85 BSchG (Act on Shipping on Inland Waterways), contain a general basic principle ( as held by Fischer in respect of paras 710, 872 HGB in his Der Schaden nach dem Bürgerlichen Gesetzbuch, Jena 1903, p. 203 ) or whether these sections are special provisions restrictively dealing with their specific matter which cannot elsewhere be applied analogously.

b) The further appeal is wrong where it holds that in this case an equalisation of advantages in the form of a deduction "old for new" cannot apply because it was not the same event which lead to the claimants' advantage and disadvantage, since the loss resulted from the arson and the advantage from the reconstruction of the buildings. The adjustment of advantages is a component in the calculation of the damage (see RGZ 103, 406,408). In this respect it is unnecessary that the damaging action has also directly brought about the advantage; rather, it suffices that damage and advantage stem from several events, which are separate as to their outward appearance as long as, according to the natural flow of affairs, the damaging event was generally capable of bringing about such advantages and that the connection is not too tenuous, in which case and according to a reasonable person's understanding, it no longer merits further consideration (BGHZ 8, 325, 329; RGZ 133, 221, 223; 146, 275, 278; see also Cantzler, AcP [156] 42, who talks of a causal connection between the conditions). Seen in this light, there are no objections against holding that the advantage which the claimant accrued from the reconstruction of the buildings damaged or destroyed in the fire as a result of the change from old to new, was created by and is adequately causally linked to the damaging action, i.e. the arson.

c) In its decisions BGHZ 8, 325 and 10, 107 this Senate has already pointed out that the legislator, as stated in detail above under 1 a), has left it to the case law to decide which advantage to take into account. In these two decisions it was furthermore stated that it must be considered in each case whether or not an allowance is consummate with the meaning and aim of the liability for damages. But this does not mean that this is a question as to the facts of the case, as the claimants allege when they - erroneously - question the appeal court's admission of the further appeal. The point is rather that when deciding the legal question as to whether or not an advantage can be taken into account, an overall view must be taken of the various interests as they exist between the victim and the tortfeasor as a result of the damaging event. This is because the principle that an advantage, which is adequately causally created by the damaging action, must always be taken into account, cannot be applied in all cases. The limits as to what is reasonable must be observed. On the one hand, damages should in principle not result in a financial improvement of the victim, but on the other hand the tortfeasor should not unjustly be favoured (BGHZ 10, 107, 108; Ennecerus/Lehmann, Recht der Schuldverhältnisse 15. ed., 1958, para. 17 II 1 a (p. 85); see also SchlH OLG MDR [1952] 747). Contrary to the opinion expressed in the further appeal, making an allowance for the advantage resulting from the change from old into new is not already unacceptable in cases where the victim is forced to incur expenditures which he would otherwise not have had, because the repair or reconstruction of the damaged goods can only be done by increasing their value compared to the situation at the time of the damage. The contribution to the costs which the claimant must make in respect of the reconstruction of the buildings damaged by fire is mirrored by the added value of the buildings, their increased life expectancy and the deferment of future necessary repairs to them. There are here no special circumstances and the further appeal has not raised any which could be decisive for the question of reasonability, s for instance that the claimant is financially unable to meet the necessary extra costs.

2. There is apparently no reason why the question as to the taking into account of advantages gained from the change from old to new should be decided upon differently for durable economic goods and short-lived goods. Firstly, such distinction of economic goods according to their life span has not found entry in the system of civil law but is rather the result of an economic, though in this context important, point of view and has found its way into tax law. As the appeal court rightly stated, for considerations under civil law the difference is one of degree and not of principle. Insofar as the further appeal alleges that in respect of durable economic goods the owner is more concerned with the value in use than the trade value and thereby perhaps wishes to indicate that in the case of short-lived economic goods the trade value is decisive, it must be counter-argued that even in the case of these goods it is not merely the retail value of the (old) goods as it stood before the damage occurred, from which to proceed but rather their special value to the victim. An exchange of old goods by new ones has an effect both in the case of goods with long or short life spans, i.e. in the form of added property value, an enrichment of the victim, where an allowance is not made under the auspices of "new for old". Increased costs for material and labour must, however, be attributed to the tortfeasor when the amount of damages is calculated under para. 249 (2) BGB (RGZ 98, 55; 102, 143); but this does not alter the fact that the victim's enrichment which is expressed in the increased economic value of the reconstructed buildings, which are now new instead of old, must be equalised, since otherwise the victim has received a compensation exceeding the damage (differently Oertmann, LZ [1916] 1512, changing his previous opinion).

Whether and to what extent disadvantages arising from the need for the victim to contribute part of the costs for reconstructing the buildings, such as interests for loans taken up, losses in interests for accumulated capital, tax disadvantages and other items are separately to be taken into account when calculating a discount under the principle "new for old" need not be decided in this case, since no substantiated claims were made in this respect.

3. One can think of circumstances in which the repair of a building after the damage does not result in an increased value and thus not in a financial gain made by the victim. Such a case was admitted by the Oberlandesgericht Oldenburg in its decision published in VersR [1954] 182, on which case the further appeal bases its reasoning. In this context the further appeal criticises the claimant's specific submission that the restoration of the buildings to the condition in which they were before the damage occurred would have cost DM 27, 120, i.e. the same amount as that which the Bavarian Chamber of Insurance calculated as being necessary for the repair of the buildings and that the appeal court had not dealt with this submission.

However, the Landgericht had already held this submission to be inconclusive, as a restoration to the old state, i.e. with all the wear and tear from use over the course of years is quite impossible. The appeal court has - as set out in the reasons to its decision - upheld the opinion of the Landgericht and stated that in the case of destruction of or damage to old goods or goods worn from use and thus devalued, the recreation of the same condition as before is impossible. The claimants' submission in respect of possible ways and means of reconstructing or, respectively of constructing the fire-damaged buildings, for which the further appeal has not requested any further evidence, can be appraised by the judge dealing with the facts of the case, since such appraisal is within the limits of free evaluation of evidence pertaining to the case (para. 286 ZPO) and cannot be opposed for legal reasons.