The consumption, sale, or other beneficial disposition by the defendant of that which he received, or, in the case of money received, its payment out for the benefit of the defendant, does not constitute such a change of position as justifies a refusal to make restitution in value.3 The distinction between payment over to a principal, which is a defense, and payment out for the benefit of the defendant, which is not, is well stated in an English case:

Continental Caoutchouc & Gutta Percha Company v. Kleinwort, Sons & Company, 1904, 20 Times L. R. 403; 90 L. T. R. 474: The defendant had advanced money to Kramrisch and Co., on the security of the shipping documents or bills of lading of certain parcels of rubber. Upon the sale of the rubber to the plaintiffs the defendants had released the bills of lading under an agreement that the price should be paid by the plaintiff to the defendants and applied by the defendants on the advances made by them. Plaintiff by mistake overpaid the defendants, and the defendants credited the amount received to Kramrisch and Co.'s account, and notified Kramrisch who acknowledged and approved what they had done. The court held that the plaintiff was entitled to recover, Collins, M.R., saying (p. 405): "It is clear law that prima facie the person to whom money has been paid under a mistake of fact is liable to refund it, even though he may have paid it away to third parties in ignorance of the mistake. He has had the benefit of the windfall and must restore it to the true owner. On the other hand, it is equally clear that an intermediary who has received money for the purpose of handing it on to a third party and has handed it on is no longer accountable to the sender. In such a case he is a mere conduit-pipe and has not had the benefit of the windfall. . . . Now, in this case it is quite clear that, as between Kleinwort, Sons, and Co. and Kramrisch, the former were the persons primarily entitled to receive the purchase-money of the goods in respect of which they had released the bills of lading. Had the sum due from the buyer been deposited with a third party and become the subject of an interpleader issue between Kramrisch and the defendants, it must, I think, have been awarded to the defendants. For these reasons I think that the defendants in respect of the sum claimed are in no better position than any other persons who have received for their own benefit money paid to them under a mistake of fact." 1

1 Grier v. Huston, 1822, 8 Serg. & R. (Pa.) 402; 11 Am. Dee. 627.

2 Phetteplace v. Bucklin, 1893, 18 R. I. 297; 27 Atl. 211.

3 In Standish v. Ross, 1849, 3 Exch. 527, the court said (p. 534): "It is in respect of the delay of the remedy only that the defendant could not be put in statu quo. We think these circumstances form no impediment to the right to recover, if money were paid over under an ordinary mistake of fact; it could not be any bar to the recovery of it, that the defendant had applied the money in the meantime to some purchase which he otherwise would not have made, and so could not be placed in statu quo." As to consumption of goods supposed by the recipient to be a gift, see post, Sec. 57.

In this connection the Texas case of Houston & Texas Central Railway Company v. Hughes2 is of interest. The action was brought to recover an alleged overpayment to a contractor for the construction of roadbed. The defense was that the contractor had distributed the overpayment to subcontractors on estimates of their work made by the plaintiff and that the whereabouts of such subcontractors was unknown. The court held that even if these facts were established the plaintiff was entitled to recover. In support of the decision it may be admitted that the contractor was not, like an agent, a mere conduit through which the money passed from the railroad company to the subcontractors. And if the overpayment received by the contractor had been expended in the payment of valid claims against him, or even if it had been expended, under a mistake of the contractor for which the railroad company was not primarily responsible, in the payment of invalid claims, the decision would not be open to criticism. But since the defense is that the sum sought to be recovered was distributed by the contractor by way of an overpayment to subcontractors to whom he did not owe it, and from whom he received nothing in return for it, and since the mistake which led to such distribution was directly attributable to the plaintiff's erroneous estimates of work done by the subcontractors, it cannot fairly be said, either that the contractor had the benefit of the windfall resulting from the plaintiff's mistake, or that, but for his own fault, he would have had the benefit of it. The enforcement of restitution under the circumstances, it is submitted, was unjust.

1 See also Moors v. Bird, 1906, 190 Mass. 400, 410; 77 N. E. 643. 21911, Tex. Civ. App. ; 133 S. W. 731.

Upon principle, there would seem to be room for the argument that proof by the defendant that money received by him from the plaintiff had been expended in purchases which he would not otherwise have made, or that goods received from the plaintiff and consumed by him were luxuries that he would not have purchased, should constitute a defense. For in such a case the defendant's position is so altered that the enforcement of restitution would be a distinct hardship. But, while in Brisbane v. Dacres l and Skyring v. Greenwood2 there are intimations to the effect that if, as a result of the receipt of the money sought to be recovered, the defendant "alters the habits of his life," restitution should not be enforced, the point has received very little consideration. It will be more fully discussed in a later section, dealing with the obligation to pay for goods supposed to be a gift (post, Sec. 57).

Sec. 30. (e) Is accidental loss or theft of money or goods a defense? - The suggestion has been made that the loss by accident or theft of the identical money or thing received by the defendant should be a defense.3 The case differs from that of a voluntary change of position in that whereas the latter is the direct result of the plaintiff's mistake, the former is so remotely connected with the mistake that it would hardly be called a consequence or result of it at all. Upon the basis of this difference it may be contended that a loss by accident or theft is the defendant's own calamity; that to deny the plaintiff relief is to shift the defendant's misfortune to the plaintiff's shoulders; and that such a result is as unjust in this case as in that of the accidental destruction of the defendant's building while in process of repair or improvement by the plaintiff (post, Sec. Sec. 116, 117), or that of the misuse by the defendant's agent of funds borrowed without authority and placed to the defendant's credit (post, Sec. 75). The argument is not without weight. It is submitted that where the mistake is one for which neither party may fairly be blamed, or one which is due at least as much to the defendant's negligence as to the plaintiff's, the plaintiff should be allowed to recover. But where, on the other hand, the plaintiff is solely or chiefly responsible for the mistake, it may be conceded that the remoteness of his connection with the defendant's loss is so offset by his blamefulness for the mistake as to justify a denial of relief.

1 1813, 5 Taunt. 143.

2 1825, 4 Barn. & Cr. 281.

3 Professor Costigan, ."Change of Position as a Defense," 20 Harv. Law Rev. 205, 212 n.