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.
If X is in some way liable to B, and places money in A's hands with which A is to pay B's debt, B may enforce such liability against A if A is not holding such money solely as X's agent.1 Thus, if X puts in A's hands money to pay A's debt to B for goods furnished, B may recover from A.2 An arrangement was made between A, B and X, by which it was agreed that A was to discount a certain note which X owned, and out of the proceeds was to pay to B one thousand dollars; in reliance upon which arrangement, B was to extend credit to X in the sum of one thousand dollars. B extended such credit, and A refused to perform the contract on his part, but discounted the note for his own benefit. A was held liable to B for money had and received.3 B held a mortgage on certain personal property belonging to X. X agreed to cause the proceeds of such property to be paid to B if B would refrain from foreclosure proceedings. X made an arrangement whereby the purchase price was paid to A under a contract whereby A was to pay X's debt to B out of such funds. It was held that B could recover from A.4 If A holds money as X's agent, under instructions to pay B, A is not liable to B as where he subsequently delivers such money to X on X's demand.5 Where an agent has made an unauthorized contract on behalf of his principal, the fact that the agent turns over personal property other than money to his principal, and reimburses him for any possible loss by reason of such contract, does not make the principal liable to the adversary contracting party in an action for money had and received. Thus, B held a bill of lading issued by X, an agent of A, a steam-ship company, without any authority, and before the goods were received. X subsequently transferred his property to A, to protect A against any loss on account of such bill of lading. B could not recover from A in an action for money had and received.6 If money is delivered to A by B for a specific purpose, and he refuses to perform the agreement under which it is received, but undertakes to apply the money to a liability owing to him by B, A is liable for such money in an action for money had and received to the person for whose benefit it was so deposited. Thus, where A received from C, the agent of B, money, to be applied upon the purchase price of stock bought by C for B, and such money was furnished by B, A cannot apply such money to a debt due to him from C, even if A does not know when the money is received that it is B's money.7 B, as sheriff, had incurred certain expenses in caring for a property seized by him in his official capacity, and such expenses were included in a bill of costs, and were collected as a part of the judgment. The entire amount of the judgment was paid to A, the attorney for C, the successful party. A credited the entire amount upon his account with C. It was held that B could maintain an action against A for such expenses, even if B could not prove that A had received this money under an express agreement to pay B out of such proceeds.8 If money belonging to B, or on which B has a lien, is paid by X to A, A cannot retain such money and apply it to the discharge of the debt due to him from X.9 Thus, where X owns certain cattle, upon which he had given a lien to a bank, B, of which John D. Myers was president, and X's agent, under an arrangement with B, was to sell the cattle and forward the money to a bank, A, of which John Q. Myers was president, the bank A could not retain the money and apply it to an indebtedness from that bank to X, but was liable over to B for such amount.10 B held certain receivership certificates which, by an arrangement between himpelf and A, were to have priority over those held by A. It was held that if A received payment of his certificates to the exclusion of B, B could maintain an action against A therefor.11 So where B, a beneficiary of a life insurance policy taken out by A, had agreed with A to pay a debt owing by A to X out of such policy, it has been held that B's executor may maintain an action against A for the amount of such debt.12
23 Stone v. Towne, 67 N. H. 113; 29 Atl. 637.
24 Wilkinson v. Baxter's Estate, 97 Mich. 536; 56 N. W. 931.
25Eliason v. Sidle, 61 Minn. 285; 63 N. W. 730.
26 Soderberg v. King County, 15
Wash. 194; 55 Am. St. Rep. 878; 33 L. R. A. 670; 45 Pac. 785.
27 Mitchell v. Weaver, 118 Ind. 55; 10 Am. St. Rep. 104; 20 N. E. 525.
28 Buckley v. Bank. 35 N. J. L. 400; 10 Am. Rep. 249; Shaffer v.
McKee, 19 O. S. 526; Farmer v. Bank, 100 Tenn. . 187; 47 S. W. 234.
1 Logan v. Talbott, 59 Cal. 652.
2Benner v. Weeks, 159 Pa. St. 504; 28 Atl. 355.
3Ehrman v. Rosenthal, 117 Cal. 491; 49 Pac. 460.
4Coppage v. Gregg, 127 Ind. 359; 26 N. E. 903.
5 Lewis v. Sawyer, 44 Me. 332.
6 Lazard v. Transportation Co., 78 Md. 1; 26 Atl. 897.
7 Bearce v. Fahrnow, 109 Mich. 315; 67 N. W. 318.
8 Knott v. Kirby, 10 S. D. 30; 71 N. W. 138.
9 Union Stock Yards Bank v. Gillespie, 137 U. S. 411; Central National Bank v. Ins. Co., 104 U. S. 54; Burtnett v. Bank, 38 Mich. €30; Alter v. Bank, 53 Neb. 223;
73 N. W. 667; Cady v. Bank, 46 Neb. 756; 65 N. W. 906; Bank v. King, 57 Pa. St. 202; 98 Am. Dec. 215; Rock Springs Nat. Bank v. Luman, 6 Wyom. 123, 167; 42 Pac. 874; 43 Pac. 514; reversing. 5 Wyom. 159; 38 Pac. 678.
10 People's National Bank v. Myers, 65 Kan. 122; 69 Pac. 164.