§ 528. In the next place as to mistakes of fact.-Where an act is done, or a contract made, under an injurious mistake or ignorance of a material fact, it is voidable;3 and this rule is not limited to cases where there has been a fraudulent concealment and suppression of facts, but extends also to cases of innocent misapprehension and mistake. The ground of this distinction, between mistake or ignorance of law and mistake or ignorance of fact, is stated by Mr. Justice Story to be, "That as every man is presumed to know the law, and to act upon the rights which it confers, when he knows the facts, it is culpable negligence in him to do an act or make a contract, and then set up his ignorance of law as a defence. But no person can be presumed to be acquainted with all matters of fact, nor is it possible by any degree of diligence to acquire that knowledge, and, therefore, an ignorance of facts does not import culpable negligence."1 Another reason would seem to be, that public policy and the necessities of the case do not demand the same arbitrary rule in respect to mistake of facts that is adopted in respect to mistakes of law,- since ignorance or mistake of fact is far more susceptible of proof and disproof by the rules of law than mistakes of law, - and also, since such mistakes of fact as avoid a contract are more inherent to it, and more necessarily productive of injury, than mistakes as to rules of law, which are extraneous to the contract. The law, therefore, wisely avoids establishing an arbitrary rule, where it is not absolutely necessary.

1 Hall v. Reed, 2 Barb. Ch. 501. The Chancellor in this case, commenting on the case of Many v. The Beekman Iron Co., 9 Paige, 188, distinguishes it from this case, and says: "The decision did not proceed upon the ground that it was competent for the Court of Chancery to make a contract for the parties which they had not intended to make for themselves. But the decision of this court, in that case, was based upon the fact that both parties had really agreed and intended to contract for the sale and purchase of the iron at the rate of 2240 pounds to the ton, and not for iron to be delivered and paid for as statute tons. And that in reducing their verbal understanding and agreement to writing, the parties by mistake neglected to insert, in the written contract, the proper words to effectuate their agreement and understanding. In that case also, the defendants, by demurring, admitted the alleged understanding and agreement of the parties, as stated in the bill, and the existence of the particular facts which were relied on by the complainant as evidence of the actual understanding and intention of the parties, which by mistake they had neglected to put in writing in the proper language to express that intention."

2 Haven v. Foster, 9 Pick. 112, 130; Norton v. Marden, 15 Me. 45; Raynham v. Canton, 3 Pick. 293; Story, Confl. Laws, § 638.

3 Haven v. Foster, 9 Pick. 129; Kelly v. Solari, 9 M. & W. 54; 1 Story, Eq. Jur. § 140; Watts v. Cummins, 59 Penn. St. 84 (1868).

§ 529. The doctrine formerly obtained that any mistake or ignorance of facts, which might, by an exercise of reasonable diligence, have been ascertained, would not be a sufficient ground to avoid a contract, for the reason that no person ought to be privileged to take advantage of his laches.2 Lex vigilantibus non dormientibus subvenit. But the later cases clearly affirm the doctrine that a plain and palpable mistake or ignorance of facts will entitle the mistaken or ignorant party to avoid the contract, and even to recover money paid under such circumstances.3 Money paid by mistake as to amount due, can be recovered back.4 But if the attention of the party making the mistake be not directed to the matter, it is of no consequence whether the fact was never known to him, or whether, having been once known, he have utterly forgotten it; in each case the act or contract, being founded in a mistake or ignorance of the fact, is voidable.1 Thus, where an action was brought by one of the directors of an insurance company, to recover money paid to the defendant on an insurance on the life of her deceased husband, and it appeared that the policy had lapsed just before the death of the party, in consequence of the non-payment of the last quarterly premium, and that a memorandum of such fact was, by direction of the actuary, noted on the policy, but some weeks afterwards the defendant, as executrix of her husband, applied to the office for the payment of the policy, and the directors drew a check for the amount, having entirely forgotten that the policy had lapsed, -it was held, that the money could be recovered, it having been clearly paid by mistake, although the mistake was occasioned by forgetfulness.2 Under this head it has been held,3 that if A.

1 1 Story, Eq. Jur. § 140.

2 Milnes v. Duncan, 6 B. & C. 671; Bilbie v. Lumley, 2 East, 469.

3 Bell v. Gardiner, 4 Man. & Grang. 11; Kelly v. Solari, 9 M. & W. 54; Lucas v. Worswick, 1 Mood. & R. 293; Waite v. Leggett, 8 Cow. 195; Wheadon v. Olds, 20 Wend. 174.

4 Mayor of N. Y. v. Erben, 38 N. Y. 305 (1868).

1 Kelly v. Solari, 9 M. & W. 54; Lucas v. Worswick, 1 Mood. & R. 293.

2 Kelly v. Solari, 9 M. & W. 54. In this case Lord Abinger was, at first, of opinion that the directors could only recover, on showing that they had no knowledge or means of knowledge of the fact. But a rule nisi having been obtained to set aside the nonsuit, after full argument, he said: "I think the defendant ought to have had the opportunity of taking the opinion of the jury on the question whether in reality the directors had a knowledge of the facts, and therefore that there should be a new trial, and not a verdict for the plaintiff; although I am now prepared to say that I laid down the rule too broadly at the trial, as to the effect of their having had means of knowledge. That is a very vague expression, and it is difficult to say with precision what it amounts to; for example, it may be that the party may have the means of knowledge on a particular subject, only by sending to and obtaining information from a correspondent abroad. In the case of Bilbie v. Lumley, the argument as to the party having means of knowledge was used by counsel, and adopted by some of the judges; but that was a peculiar case, and there can be no question that if the point had been left to the jury, they would have found that the plaintiff had actual knowledge. The safest rule, however, is, that if the party makes the payment with full knowledge of the facts, although under ignorance of the law, there being no fraud on the other side, he cannot recover it back again. There may also be gives B., in payment of a debt, the note of a third party, which both parties suppose valid and the party solvent, which is otherwise, it is a mistake of fact; and the party receiving it may still recover on his original claim. So, also, even if the party had the means of knowing the fact within his reach, he will not thereby be precluded from setting up his mistake of fact as a defence, unless when he did the act or made the contract, he intentionally waived all investigation with regard to the fact. Thus, where a bill of exchange, drawn by A. and indorsed by B., was subsequently altered by the holder, with the consent of A., and was finally paid by B. by his promissory note, he being ignorant that it had been altered, but having had ample means of ascertaining the fact, his ignorance was held to be a good defence to an action on the note.1 And it may be considered cases in which, although he might, by investigation, learn the state of facts more accurately, he declines to do so, and chooses to pay the money notwithstanding; in that case, there can be no doubt that he is equally bound. Then there is a third case, and the most difficult one,- where the party had once a full knowledge of the facts, but has since forgotten them. I certainly laid down the rule too widely to the jury, when I told them that if the directors once knew the facts, they must be taken still to know them, and could not recover by saying that they had since forgotten them. I think the knowledge of the facts which disentitles the party from recovering, must mean a knowledge existing in the mind at the time of payment. I have little doubt in this case that the directors had forgotten the fact, otherwise I do not believe that they would have brought the action; but as Mr. Piatt certainly has a right to have that question submitted to the jury, there must be a new trial."