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.
Where payment is made by one who is under no legal liability, under mistake of fact as to the existence of such liability, the weight of authority is that such payment may be recovered, even if the party making it could have discovered his mistake if he had used proper diligence.1 The mere fact that the party making the payment had the means of knowing the facts does not prevent him from recovering.2 It is not the means of knowledge possessed by the party making the payment, but his actual knowledge or ignorance of material facts that determines his right to recover.3 So, where A paid money for
9 Marriott v. Hampton, 7 T. R. 269.
10Lathrope v. McBride, 31 Neb. 289; 47 N. W. 922. Nor is such payment under duress.
1 Union National Bank v. McKey, 102 Fed. 662; Brown v. Tillinghast, 84 Fed. 71; Merrill v. Brantley, 133 Ala. 537; 31 So. 847; Rutherford v. Mclvor, 21 Ala. 750; Indianapolis v. McAvoy, 86 Ind. 587; Metropolitan Life Ins. Co. v. Bowser. 20 Ind. App. 557; 50 N. E. 86; Douglas County v. Keller, 43 Neb. 635; 62 N. W. 60; Mayer v. New York, 63 N. Y. 455; Houser v. McGinnas. 108 N. C. 631; 13 S. E. 139; McKibben v.
Doyle, 173 Pa. St. 579; 51 Am. St. Rep. 785; 34 Atl. 455; Hummel v.
Flores (Tex. Civ. App.), 39 S. W. 309; City National Bank v. Peed
(Va.), 32 S. E. 34.
2 Indianapolis v. McAvoy, 86 Ind. 587; McKibben v. Doyle. 173 Pa. St. 579; 51 Am. St. Rep. 785; 34 Atl. 455.
3"The possession of the means of knowledge by the party who paid the money can be regarded as affording a strong observation to the jury to induce them to believe that he had an actual knowledge of the circumstances; but . . . there is no conclusive rule of law that because a party has the means of a party-wall, relying on B's claim of ownership, A may recover, though A had the means of learning of B's want of title.4 So A, a mortgagee of a cotton crop, whose mortgage secures a debt greater than the value of the crop, who knows that B holds a second mortgage on the same crop, and who buys from B such crop and pays for it, may recover from B the money thus paid where he did not know that it was the same crop, even if he could have learned such fact by due diligence.5 Thus where a sheriff made a levy upon property which had been taken on a prior attachment, and hearing nothing from such prior attaching officer or creditor, sold such property and paid the proceeds over to the party whose execution the sheriff was serving, and the latter was afterwards obliged to pay over the amount for which the prior attachment was issued, it was held that he might recover the amount of such payment from the execution creditor to whom he had paid the entire amount.6 Accordingly one who has known a fact but has forgotten it, and under such forgetfulness makes a payment, may recover such payment.7 Thus where A, acting as clerk for B, an express messenger, delivered a package of money to C and forgot to make a note or take a receipt of it, and C, after A had forgotten the facts, claimed that he had not received the money, and thereupon A and B contributed to make up the amount and paid the express company, which paid C, A was allowed on learning of his mistake to recover the amount from C.8