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.
The term "mistake of fact" has been held in cases involving the right to recover payments to include mistakes as to the title to realty,1 the existence of a lien thereon,2 the solvency of an estate,3 as where such insolvency is producd by the subsequent presentation and allowance of claims whose existence was not known to the executor when he overpaid the legatee from whom he is now seeking to recover the excess ;4 the amount of the assets of a firm,5 the release of an indorser by omission of the holder of a check to present it for payment,6 and the validity of sales of furniture on which commissions were paid under the belief that such sales were valid.7 Payment of illegal street assessments made in ignorance of the facts making them illegal may be recovered.8 If A pays money to B, in performance of a contract between them, under the mistaken belief on A's part that B has performed such contract fully, A may recover such payment.9 Thus, where B had agreed to plaster a house for A, and A paid him, believing that such work had been done, he may recover the money thus paid, where the contract is of such inferior quality as to be valueless.10 A agreed to sell fish for B, at ten per cent commission, and to guarantee the purchase price on sales made by him. Before making such contract with A, B had sold some of the fish to X. Memoranda of the amounts delivered to the different vendees were turned in to A, and A paid to B the amount due thereon, less his ten per cent commission. In this way A paid B for the fish which B had sold to X. On X's refusal to pay A, A sued B for such amount. It was held that A could recover.11 X's will provided that A should have control of X's estate until B reached the age of eighteen, when A was to pay B a certain part of the estate; and if B died before reaching such age, the entire estate was to fall to A. A voluntarily paid B B's share before B reached the age of eighteen. Subsequently B died before reaching such age of eighteen. A was allowed to recover on the ground that the payment was made under a mistake of fact, in that B did not know that A would die before the age of eighteen.12 Where a city engineer by mistake estimated the are? paved at about three thousand square yards more than it really was, and in reliance upon such estimate, the city paid the con tractor for the entire amount of the engineer's estimate, at the rate of one dollar a square yard, it was held that the city could recover from the contractor on learning of the mistake.13 So if A pays a note to B under the mistaken belief that A has executed such note, A may recover.14
61 Wis. 255; 50 Am. Rep. 137; 20 N. W. 913. "Where money is paid upon the supposition that a specific fact, which it . is supposed would entitle the other to maintain an action, is true, which fact is not true, an action will lie to recover the money back, ' upon the ground that the plaintiff has paid money which he was under no obligation to pay, and which the party to whom it was paid had no right either to receive or retain, and which, had the true state of facts been present in his mind, at the time, he would not have paid.' " Ingalls v. Miller; 121 Ind. 188, 190; 22 N. E. 995; quoted in Stotsenburg v. Fordice, 142 Ind. 490, 494; 41 N. E. 313, 810.
2 See Sec. 798.
3 Kelly v. Solari, 9 Mees. & W. 54; United States v. Barlow, 132 U. S. 271.
4Spe Sec. 796.
1 Adams v. Henderson, 1G8 U. S.
573; Shaw v. Mussey. 48 Me. 247.
2Hardigree v. Mitchum, 51 Ala. 151, Rhodes v. Lambert (Ky.). 68 S. W. 608.
3 Mansfield v. Lynch, 59 Conn. 320; 12 L. R. A. 285; 22 Atl. 313; Wolf v. Beaird.. 123 111. 585; 5 Am. St. Rep. 565; 15 N. E. 161: Blue v. Smith, 46 111. App. 166; Tarplee v. Capp, 25 Ind. App. 56; 56 X. E. 270; Bliss v. Lee, 17 Pick. (Mass.) 83; Rogers v. Weaver. 5 Ohio 536. But such payment cannot be recovered until after a judicial determination that the estate is insolvent. Union, etc.. Bank v. Jefferson, 101 Wis. 452; 77 N. W. 889.
4 Wolf v. Beaird, 123 111. 585; 5 Am. St. Rep. 565; 15 N. E: 161.
5 Stokes v. Goodykoontz, 126 Ind 535; 26 N. E. 391.
6Martin v. Bank, 160 N. Y. 190; 54 N. E. 717.
7 Cleveland, etc., Co. v. Hotchkiss, 89 Tex. 117; 33 S. W. 855.
8Mutual Life Ins. Co. v. New York, 144 N. Y. 494; 39 N. E. 386; Tripler v. New York, 139 N. Y. 1; 34 N. E. 729; same case, 125 N. Y. 617; 26 N. E. 721; Redmond v. New York, 125 N. Y. 632; 26 N. E. 727.
9 Nollman v. Evenson, 5 N. D. 344; 65 N. W. 686.
10 Nollman v. Evenson, 5 N. D. 344; 65 N. W. 686.
11 Blanchard v. Low, 164 Mass. 118; 41 N. E. 118.
12 Semmig v. Merrihew, 67 Vt. 38; 30 Atl. 691.