This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In order to recover in an action for money had and received the person from whom recovery is sought must be placed in statu quo, unless he is a wrongdoer. A common illustration of this rule exists when money paid to an agent to be paid over to his principal and by him so paid over is sought to be recovered from the agent. If B pays money to A as agent for X, and A pays that money over to X, B cannot recover such money from A if A's agency was disclosed when the payment was made, and A himself has committed no wrongful act in inducing or compelling B to pay him the money.1 Thus, where a purchase price of a ward's land was paid to the guardian, and the guardian remitted the money to his ward, the guardian is not liable in an action for money had and received, to a broker suing for commissions for the sale of such property.2 So, selectmen of a town, who in good faith determine the value of a pauper's support furnished him by the town, which amount under the law he must refund to the town before he is put on the voting list, are not liable to him for money had and received, where in good faith they fix an excessive amount which he pays them and they pay into the town treasury.3 Where property is sold for a sidewalk assessment, and the proceeds of such sale are by law to be paid over to the contractor entitled thereto, a purchaser at such sale cannot recover from the city to which the money is paid, and he pays it over to the contractor though the assessment proves to be illegal, and the purchaser takes nothing by reason of his purchase.4 If, however, the fact of agency is not disclosed to the person making the payment, at the time of such payment, the person making the payment may recover from the agent of whom he pays the money, if the facts are such that he could have recovered from the principal had the payment been made direct to the principal. Thus, where A, an investment company, made a loan for its principal, C, to B, and B supposed that she was dealing with A alone, and B makes over-payments to A, by way of usury, which B is permitted to recover, B may recover from A, though A has forwarded such payments to C.5 If payment is made under protest, this is sufficient notice to the person receiving it to make him liable therefor if, under the circumstances, he would have been liable to refund a payment for his own benefit, even if he has paid over to his principal the money thus received.6
8Richey v. Clark, 11 Utah 467; 40 Pac. 717.
9 See Sec. 256, 799 et seq.
10 McKee v. Preston, 66 Cal. 522; 6 Pac. 379.
11 Goddard v. Seymour, 30 Conn.
394; Wiesmann v. Brighton, 83 Wis. 550; 53 N. W. 911.
12 Newcomb v. Davenport, 86 la. 291; 53 N. W. 232; Hopkins v. Butte, 16 Mont. 103; 40 Pac. 171.
1 Elliott v. Swartwout, 10 Pet. (U. S.) 137; Wilson v. Wold, 21 Wash. 398; 75 Am. St. Rep. 846; 58 Pac. 223.
2 Hudson v. Scott. 125 Ala. 172; 28 So. 91.
3 Brown v. Marden, 61 N. H. 15; distinguishing, Ford v. Holden, 39
4 Richardson v. Denver, 17 Colo. 398; 30 Pac. 333.