Same - Money Paid Under A Mistake Of Law

The rule was established in England by Lord Ellenborough in the case of Bilbie v. Lumley.88 that money paid with a full knowledge of matters of fact, but under a mistake of law, may not be recovered, even though it be inequitable for the defendant to retain it; and this rule has been very generally recognized in this 'country.8* It has recently been severely criticised,85 however, and has been rejected by the courts in at least two jurisdictions,86 and has been modified by statute in others.87

79 Chambers v. Miller, 13 C. B. N. S. 125, 32 L. J. C. P. 30, 9 Jur. N. S. (126, 11 W. R. 236, 7 L. T. N. S. 856, 84 Rev. Rep. 479; Nat. Bank v. Berrall, 70 N. J. Law. 757, 58 Atl. 189, 66 L. R. A. 599, 103 Am. St. Rep. 821, 1 Ann. Cas. 630 (where payment had been stopped); Citizens' Bank v. Schwarzs-child, 109 Va. 539, 64 S. E. 954, 23 L. R. A. (N. S.) 1092 and note. See "Payment," Dec. Dig. (Key-No.) § 85; Cent. Dig. §§ 272-281.

80 See cases cited supra, note 79.

81 Woodward, Quasi Cont. 126. Mistake as to genuineness of drawer's signature. Price v. Neal, 3 Burr. 1354. "The Doctrine of Price v. Neal," by Prof. J. B. Ames, 4 Harv. Law Rev. 297. As to indorser's signature. La Fayette & Bro. v. Merchants' Bank, 73 Ark. 561, 84 S. W. 700, OS L. R. A. 231, 108 Am. St Rep. 71. As to body of instrument. Bank of Commence v. Union Bank, 3 N. Y. 230. See "Banks and Banking," Dec. Dig. (Key-No.) §§ US, 148; Cent. Dig. §§ 414, 438-446, 517; "Bills and Notes," Dec. Dig. (Key-No.) § 434; Cent. Dig. §§ 126S-1274; "Payment," Dec. Dig. (Key-No.) § 85; Cent. Dig. §§ 272-281.

82 Aiken v. Short, 1 Hurl. & Nor. 210; Harris v. Loyd, 5 Mees. & Wels. 432; Buffalo v. O'Malley, 61 Wis. 255, 20 N. W. 913, 50 Am. Rep. 137; Franklin Bank v. Raymond, 3 Wend. (N. Y.) 69. See "Payment," Dec. Dig. (Key-No.) § 85; Cent. Dig. §§ 272-281.

83 2 East, 409 (1802). See "Payment," Dec. Dig. (Key-No.) § 84; Cent. Dig. §§ 267-271.

84 Elliott v. Swartwout, 10 Pet. 137, 9 L. Ed. 373; Belloff v. Dime Savings Bank, 118 App. Div. 20, 103 N. Y. Sup. 273 [affirmed 191 N. Y. 551, S5 N. E. 1106]; Alton v. First Nat. Bank, 157 Mass. 341, 32 N. E. 228, 18 L. R. A. 1 44.

There is no presumption that a citizen of one state knows the laws of another state, and accordingly money paid by a citizen of one state under a mistake as to the laws of a foreign state may be recovered.88

Same - Want or Failure of Consideration - Failure of Other Party to Perform We may class with payments made under mistake payments which are allowed to be recovered because of want or failure of consideration, for in all cases where a recovery is allowed on this ground there has been a misapprehension. The party who has paid the money has not gotten what he supposed, or had a right to suppose, he was getting, or would get, in return for his money. Thus, where a person bought a bar of silver by weight, and, by an error in assaying it, paid for a greater weight than it contained, he was allowed to recover the excess from the seller as money received for his use.89 It needs no argument to show that this is a case of mistake. In like manner, if the purchaser of goods has paid the price, and the seller fails to deliver the goods, the purchaser may recover the money paid as money received for his use.90 And in any case where a person has paid money under an agreement which he is entitled to rescind, and does rescind, for want or failure of consideration, he may recover what he has paid.81 The action will lie, for instance, against a person who sells goods as his own, but which are not his own, where the real owner subsequently claims them from the purchaser; 92 or against a person who sells bills, notes, bonds, stock, or other securities, which turn out to be forgeries, or for some other reason to be worthless;93 or against a person who contracts to transfer the title to land, where because of his want of title, or for other reasons, no title passes.94

34 Am. St. Rep. 285; Vanderbeck v. City of Rochester, 122 N. Y. 285, 25 N. E. 408; Clarke v. Dutcher, 9 Cow. (N. Y.) 674; Wayne Co. v. Randall, 43 Mich. 137, 5 N. W. 75; Birkhauser v. Schmitt, 45 Wis. 316, 30 Am. Rep. 740; Carson v. Cochran, 52 Minn. 67, 53 N. W. 1130; Valley Ry. Co. v. Iron Co., 46 Ohio St. 44, 18 N. E. 486, 1 L. R. A. 412; Beard v. Beard. 25 W. Va. 486, 52 Am. Rep. 219; Porter v. Jefferies, 40 S. C. 92, 18 S. E. 229; Mutual Sav. Inst. v. Enslin, 46 Mo. 200; Trigg v. Read, 5 Humph. (Tenn.) 529, 42 Am. Dec. 447; Snelson v. State, 16 Ind. 29; Hubbard v. Martin, 8 Yerg. (Tenn.) 498; Real Estate Sav. Inst v. Linder, 74 Pa. 371; Townsend v. Cowles, 31 Ala. 428; Newell v. March, 30 N. C. 441; Christy v. Sullivan, 50 Cal. 337; Osburn v. Throckmorton, 90 Va. 311, 18 S. E. 285; ante, p. 256. A payment made under a mistake both of fact and of law has been denied Needles v. Burk, 81 Mo. 569, 51 Am. Rep. 251. See "Payment;' Dec. Dig. (Key-No.) § 81,; Cent. Dig. §§ 267-271.

85 Woodward, Quasi Cont 57.

86 Northrop's Ex'rs v. Graves, 19 Conn. 548, 50 Am. Dec. 264; McMurtry v. Kentucky Central R. Co., 84 Ky. 462, 1 S. W. 815. See "Payment," Dec. Dig. (Key-No.) § 84; Cent. Dig. §§ 267-271.

87 See Woodward, Quasi Cont. 62, where it is said to have been modified by statute in California, Georgia, Montana, North Dakota, South Dakota, and Oklahoma. See "Payment;' Dee. Dig. (Key-No.) § 81,; Cent. Dig. §§ 267-271.

88 Haven v. Foster, 9 Pick. (Mass.) 112, 19 Am. Dec. 353; Vinal v. Continental Const., etc., Co., 53 Hun, 247, 6 N. Y. Supp. 595. See "Payment," Dec. Dig. (Key-No.) § 81; Cent. Dig. §§ 267-271.

89 Cox v. Prentice. 3 Maule & S. 344. And see Devine v. Edwards, 101 I11. 138; Noyes v. Parker, 64 Vt. 379, 24 Atl. 12. .Sec "Payment," Dec. Dig. (Key-No.) § 85; Cent. Dig. §§ 272-281; "Sales," Dec. Dig. (Key-No.) § 391; Cent. Dig. §§ 1110-1127.

As a rule, the failure of consideration must be total in order to entitle a person to recover money paid under a contract. If he has in fact received a part of the consideration, so that the failure of consideration is only partial, his remedy, if he has any, is for breach of the contract under which the money was paid.95 This is in accord with the rule which we have heretofore stated - that money paid under a mistake cannot be recovered if an equivalent has been received. Where a specific article is sold with a warranty of its quality, and is not altogether worthless, a mere breach of the warranty does. not entitle the. purchaser to recover the price paid. His remedy is by action for damages for breach of warranty.96 Where the consideration

90 Giles v. Edwards, 7 Term R. 181; Devaux v. Conolly, 8 C. B. 640. See "Sales," Dec. Dig. (Key-No.) § 391; Cent. Dig. §§ 1110-1121.

91 Claflin v. Godfrey, 21 Pick. (Mass.) 1; Newsome v. Graham, 10 Barn. & C. 234; Giles v. Edwards, 7 Term R. 181; Johnson's Ex'x v. Jennings' Adm'r, 10 Grat. (Va.) 1, 60 Am. Dec. 323; Earle v. Bickford, 6 Allen (Mass.) 549, 83 Am. Dec. 651. See "Sales," Dec. Dig. (Key-No.) § 391; Gent. Dig. §§ 1110-1127.

92 Eicholz v. Bannister, 34 Law J. G. P. 105; ante, p. 586. See "Sales," Dec. Dig. (Key-No.) § 891; Cent. Dig. §§ 1110-1127.

93 Claflin v. Godfrey, 21 Pick. (Mass.) 1; Ripley v. Case, 86 Mich. 261, 49 N. W. 46; Westropp v. Solomon, 8 C. B. 345; Jones v. Ryde, 5 Taunt 488; Gurney v. Womersley, 4 El. & Bl. 133; Watson v. Cresap, 1 B. Mon. (Ky.) 195, 36 Am. Dec. 572; Young v. Cole, 3 Bing. N. C. 724; Burchfield v. Moore, 3 El. & Bl. 683; Moore v. Garwood, 4 Exch. 681; Wood v. Sheldon, 42 N. J. Law, 421, 36 Am. Rep. 523; ante, p. 586. See "Sales," Dec. Dig. (Key-No.) § S91; Cent. Dig. §§ 1110-1127.

94Cripps v. Reade, 6 Term R. 606; Schwinger v. Hickok, 53 N. Y. 280; Earle v. Bickford, 6 Allen (Mass.) 549, 83 Am. Dec. 651; Wright v. Dickinson, 67 Mich. 5S0, 35 N. W. 164, 11 Am. St. Rep. 602. And see McGoren v. Avery, 37 Mich. 120; Merryfield v. Willson, 14 Tex. 224, 65 Am. Dec. 117; ante, p. 588. See Keener, Quasi Cont. 125. See "Sales," Dec. Dig. (Key No.) § 391; Cent. Dig. §§ 1110-1127.

95 Hunt v. Silk, 5 East, 783; Rand v. Webber, 64 Me. 191; Blackburn v. Smith, 2 Exch. 783; Harnor v. Groves, 15 C. B. 667; Smart v. Gale, 62 N. H. 62. See "Money Received," Dec. Dig. (Key-No.) § 4,; Cent. Dig. §§ 9, 10.

96 Gompertz v. Denton, 1 Cromp. & M. 207. But in those jurisdictions In which a contract may be rescinded upon breach of warranty, money paid is severable, however, so that the money paid for a portion of it may be ascertained, a partial failure may entitle the plaintiff to recover the part of the money paid in respect of that part of the consideration which has failed.87

Clark Cont.(3d Ed.) - 41

A person can never recover money paid on the ground that the consideration has failed, if he has obtained the specific consideration which he bargained for, though it may turn out to be of no value;98 as, for instance, where he has bought land or goods, intending to take his chances as to the seller's title, or where he has bought stock, bonds, or other property, and taken the chance of their being of value." There must, as we have said, have been a misapprehension.

Where the failure of consideration was caused by the default of the plaintiff, he cannot recover the money paid for it.1