Ordinarily, by restoring a benefit conferred in misreliance upon a right or duty, one merely places himself in the position where he would have been if the mistake had not been made. In other words restitution ordinarily entails no loss to the defendant. But what if the defendant, because of the receipt of the benefit and before learning of the plaintiff's mistake, gives up property, surrenders a right against a third person, or otherwise so acts - so "changes his position," as the courts usually put it - that restitution will not place him where he would have been if the mistake had not been made but will subject him to positive loss ? The answer to this question depends upon the responsibility for the plaintiff's mistake:
1. If the mistake is attributable solely or chiefly to some negligent act or omission of the defendant or his agent, it is but just that the defendant rather than the plaintiff should suffer a loss. Restitution, therefore, should be enforced.
Cases of this class are comparatively infrequent, but in all that have been found relief has been granted.1
2. If responsibility for the mistake cannot fairly be laid at the
1 Union Bank v. U. S. Bank, 1807, 3 Mass. 74; Koontz v. Central Nat. Bank, 1873, 51 Mo. 275, (Plaintiff paid draft under impression that defendant's door, or if his fault is no greater than the plaintiff's, the retention of the benefit by the defendant is not against conscience. To refuse to enforce restitution, it is true, is to subject the plaintiff to a loss; but justice would not be served by shifting the loss to the shoulders of a defendant who is either less at fault than the plaintiff, or at least no more blameful, and who, but for the plaintiff's mistake, would not have changed his position. Where it appears that the plaintiff alone was negligent, or that his fault was greater than the defendant's, this doctrine is accepted without question.1 Where it appears that neither she was the drawee. The draft was in reality against another person and was presented to the plaintiff by the mistake of defendant. Notwithstanding the fact that defendant had paid over the money to its principal and the further fact that the drawee had become insolvent, plaintiff was allowed to recover. The decision was not rested, however, upon the ground that the mistake was caused by defendant's negligence.); Phetteplace v. Bucklin, 1893, 18 R. I. 297; 27 Atl. 211, (Payment of lapsed legacy to personal representative of legatee who distributed the money according to the legatee's will. Matteson, C.J.: "When a person pays money in ignorance of circumstances with which the receiver is acquainted, and which if disclosed would have prevented the payment, the parties do not deal on equal terms and the money is held to be unfairly obtained and may be recovered. The testimony on the part of the defendant does not negative such a state of facts, and certainly, if such a state of facts existed, it would not be inequitable to permit the plaintiff to recover, even if the defendant had paid the money to others before demand for its repayment."); Met-calf v. Denson, 1874, 4 Baxt. (63 Tenn.) 565, (Plaintiff overpaid to defendants a judgment obtained against him in favor of defendants' client, the mistake being the result of the defendants' failure to inform plaintiff of a payment previously made upon the judgment by one who was indebted to plaintiff. Notwithstanding the fact that the defendants had remitted the money to their client, it was held that they must make restitution.). See Newall v. Tomlinson, 1871, L. R. 6 C. P. 405, (Plaintiffs overpaid defendants for cotton, the mistake being the result of an erroneous computation of weight by defendants' clerk. Defendants settled with their principals before the mistake was discovered, but a recovery was allowed. Bovill, C.J.: "The mistake originated with the defendants themselves, and they alone are responsible." The decision rests mainly, however, upon other grounds.); Clark v. Eckroyd, 1886, 12 Ont. App. Rep. 425. See also cases of payment of a forged bill to one who should have discovered the forgery, post, Sec. 92.
1 German Security Bank v. Columbia, etc., Trust Co., 1905, 27 Ky. Law Rep. 581; 85 S. W. 761, (Defendant lost right against indorsers by running of statute of limitations.); Pelletier v. State Nat. Bank, 1906, party was negligent, or that they were equally negligent, restitution has in a few cases been enforced;1 but there is reason to hope that these cases will not be followed,2 and they are
117 La. 335; 41 So. 640, (Wife paid debt of husband to prevent sale of seized property under mistaken impression that it belonged to her: as a result of payment, the defendant lost the benefit of the seizure and had its writ returned.); Wilson v. Barker, 1862, 50 Me. 447, (Defendant discharged a mortgage.); Walker v. Conant, 1887, 65 Mich. 194; 31 N. W. 786; 1888, 69 Mich. 321; 37 N. W. 292; 13 Am. St. Rep. 391, (Money paid on forged note and mortgage; defendant lost her note and mortgage and "therefore lost the power that the possession of these papers might have given her in the collection of her debt." But see dissenting opinion, 69 Mich. 329.); Continental Nat. Bank v. Tradesmen's Bank, 1903, 173 N. Y. 272; 65 N. E. 1108, (Plaintiff negligently certified and paid a raised draft; defendant paid money over to depositor.) ; Fegan v. Great Northern R. Co., 1899, 9 N. D. 30; 81 N. W. 39, (Plaintiff, a station agent, paid money to make good a defalcation mistakenly supposed to have occurred during his administration; as a result of payment, defendant lost right of indemnity on bond of his predecessor.); Atlantic Coast Line R. Co. v. Schirmer, 1910, 87 S. C. 309; 69 S. E. 439, (Plaintiff paid claim for loss of goods shipped by defendant, and later discovered that goods had been delivered to consignee. Consignee had quit business and disappeared, so defendant could not collect from him.); Richey v. Clark, 1895, 11 Utah 467; 40 Pac. 717, (Defendant lost rights against third person.). And see Deutsche Bank p. Beriro and Co., 1895, 73 L. T. R. 669; Maher v. Millers, 1878, 61 Ga. 556; 34 Am. Rep. 104; Guild v. Baldridge, 1852, 2 Swan (32 Tenn.) 294, 303.
1 Durrant v. Ecclesiastical Commrs., 1880, 6 Q. B. D. 234, (Plaintiff, by mistake, paid tithe rent in respect of land not in his occupation. The mistake was not discovered for two years and the defendants consequently lost their remedy against the lands actually chargeable.); Kingston Bank v. Eltinge, 1869, 40 N. Y. 391; 100 Am. Dec 516, (As a consequence of a payment under mistake the defendant had canceled a judgment and thereby lost a security.). See Koontz v. Central Nat. Bank, 1873, 51 Mo. 275, (Both parties appear to have been negligent, but the defendant perhaps in greater degree than the plaintiff.); Corn Exchange Bank v. Nassau Bank, 1883, 91 N. Y. 74; 43 Am. Rep. 655; Clark v. Eckroyd, 1886, 12 Ont. App. Rep. 425, (Defendants misdirected goods shipped to plaintiffs and they were sold by the carrier to pay charges. Plaintiffs, by mistake, paid for goods. The parties appear to have been about equally at fault, but the court intimates that the defendants' fault was the greater.); Bank of Toronto v. Hamilton, 1898, 28 Ont. 51; Phetteplace v. Bucklin, 1893, 18 R. I. 297; 27 Atl. 211.
2 Durrant v. Ecclesiastical Commrs., supra, has been criticized as inconsistent with earlier English cases. See Keener, " Quasi-Contracts," already at least equalled in number by the cases which deny relief.1