Some of the courts have evinced their belief in the injustice and dishonesty of the rule of no recovery by refusing to extend it to cases of payments to trustees or other officers of the court.3 Said Lord Justice James in the prominent case of Ex parte James:4
"I think that the principle that money paid under a mistake of law cannot be recovered must not be pressed too far, and there are several cases in which the Court of Chancery has held itself not bound strictly by it. I am of the opinion that a trustee in bankruptcy is an officer of the Court. He has inquisitorial powers given him by the Court, and the Court regards him as its officer, and he is to hold money in his hands upon trust for its equitable distribution among the creditors. The County v. Hawkins, 1887, 23 Fla. 223; 2 So. 362, 365; People v. Foster, 1890, 133 111. 496; 23 N. E. 615 (cf. Moffett v. People, 1907, 134 111. App. 550); Painter v. Polk County, 1890, 81 la. 242; 47 N. W. 65; 25 Am. St. Rep. 489; Wayne County v. Randall, 1880, 43 Mich. 137 ; 5 N. W. 75; State v. Ewing, 1893, 116 Mo. 129; 22 S. W. 476; Territory v. Newhall, 1909, 15 N. M. 141; 103 Pac. 982. See also Morgan Park v. Knopf, 1902, 199 111. 444; 65 N. E. 322; Board of Highway Commrs. v. City of Bloomington, 1912, 253 III. 164; 97 N. E. 280.
1 Ellis v. Board of Auditors, 1895, 107 Mich. 528; 65 N. W. 577; United States v. Bartlett, 1839, 2 Ware (Dav. 9) 17; Fed. Cas. No. 14,532.
2 1897, 179 Pa. St., 639, 642; 36 Atl. 353.
3 Ex parte James, 1874, L. R. 9 Ch. 609; Ex parte Simmonds, 1885, 16 Q. B. D. 308; Carpenter v. Southworth, 1908, 165 Fed. 428; 91 C. C. A. 378; Moulton v. Bennett, 1836, 18 Wend. (N. Y.) 586; Gillig v. Grant, 1897, 23 App. Div. 596; 49 N. Y. Supp. 78; Comm. v. Lancaster County Ins. Co., 1891, 6 Pa. Dist. 371. See, contra, Wilde v. Baker, 1867, 14 Allen (Mass.) 349.
4 1874, L. R. 9 Ch. 609, 614.
Court, then, finding that he has in his hands money which in equity belongs to some one else, ought to set an example to the world by paying it to the person really entitled to it. In my opinion the Court of Bankruptcy ought to be as honest as other people."
This exception to the rule has been held in a few cases to extend to payments to attorneys at law, either by their clients or by others. For example, in the New York case of Moulton v. Bennett,1 where it appeared that the defendant in a litigation had paid to the plaintiff's attorney costs which were not legally chargeable, it was held that the money might be recovered.
Sec. 42. (III) What is the true principle ? - As was pointed out at the beginning of this chapter (ante, Sec. 35) the courts of equity, while generally refusing to enforce the repayment of money paid under mistake of law, have frequently granted relief from mistakes of law in other cases. But they are by no means agreed as to the jurisdictional test. It is now proposed to examine some of the theories that have been advanced, with a view to the selection of the true test - the test which ought in principle to be applied to cases of actions to recover money paid as well as to all other cases.
(1) That relief should be granted from mistake of one's "private rights," but not from mistake of general law.
In the prominent case of Cooper v. Phibbs,2 Lord Westbury, "one of the ablest judges that ever sat in the English court of chancery,"3 said:
"It is said, 'Ignorantia juris hand excusat'; but in that maxim the word 'jus' is used in the sense of denoting general law, the ordinary law of the country. But when the word 'jus' is used in the sense of denoting a private right, that maxim has no application. Private right of ownership is a matter of fact; it may be the result also of matter of law; but if the parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is, that that agreement is likely to be set aside as having proceeded upon a common mistake."
1 1836, 18 Wend. (N. Y.) 586. 2 1867, L. R. 2 H. L. 149, 170. 3 Pomeroy, "Equity Jurisprudence," Sec. 842, note.
There has been a considerable inclination in courts of equity, particularly in England, to follow this distinction. Just what mistakes Lord Westbury meant to exempt from the operation of the maxim, however, is not clear. The best interpretation of his doctrine, perhaps, is that offered by Mr. Justice Holmes, in Alton v. First National Bank:l
"Lord Westbury sometimes is supposed to have taken a distinction as to the effect of a mistake of law according to whether the mistaken principle is general or special. But in the often quoted passage of his judgment he only meant that certain words, such as ownership, marriage, settlement, etc., import both a conclusion of law and facts justifying it, so that, when asserted without explanation of what the facts relied on are, they assert the existence of facts sufficient to justify the conclusion, and a mistake induced by such an assertion is a mistake of fact. In the case before him the mistake was one concerning the ownership of a fishery, and was induced by a general statement of a certain person that he owned it."
Thus interpreted, the statement constitutes a very slight qualification of the general rule of no relief for mistakes of law, if indeed it can be said to qualify the rule at all.
(2) That relief should be granted for mistake of law common to all parties - that is to say, where they all act under the same misapprehension of law.
This modification of the rule of no relief, as has been seen (ante, Sec. 39), has the sanction of legislative enactment in several states. But it has been justly condemned.2 As a ground for the reformation of a contract, the necessity that the mistake shall be common to both parties is intelligible; but in other cases the reason for such a requirement is not apparent.
1 1892, 157 Mass. 341, 343; 32 N. E. 228; 18 L. R. A. 144; 34 Am. St. Rep. 285.