This section is from the book "Popular Law Library Vol3 Contracts Agency", by Albert H. Putney. Also see: Popular Law-Dictionary.
In order for it to be possible to recover back money paid on an illegal claim, the payment must be involuntary and made under protest. "A payment will be recognized as involuntary only where the party making it does so to release his person or property from detention or to prevent a seizure of his person or property, by one having actual or apparent authority to make such seizure without first bringing suit."27
If money is paid under duress it can be recovered back.28 It is generally, however, held that it is necessary- that the plaintiff should have made a protest against the payment of the money.29
In general, money paid under a mistake of fact may be recovered back,30 while money paid under a mistake of law cannot.31 The Court in discussing these principles in Clarke vs. Dutcher,32 said: "But although this view of the case, if I am correct in it, is conclusive, it may be well briefly to consider that which, upon the argument, was treated as the main point in the cause. It is embraced in the exception, that payments made by the defendant in error were made voluntarily, with a full knowledge of all the facts in the case; and admitting that they exceeded the amount legally due, and that the statute of limitations was out of the question, the excess could not be recovered back, the mistake being in law and not in fact.
"Although there are a few dicta of eminent judges to the contrary, I consider the current and weight of authorities as clearly establishing the position, that where money is paid with a full knowledge of all the facts and circumstances upon which it is demanded, or with the means of such knowledge, it cannot be recovered back upon the ground that the party supposed he was bound in law to pay it, when in truth he was not. He shall not be permitted to allege his ignorance of law; and it shall be considered a voluntary payment.
27 Am. & Eng. Ency. of Law, Vol. XV, p. 1100; Phelan vs. San Francisco, 120 Cal., 5; Santa Rosa Bank vs. Chalfont, 52 Cal., 170; Chase vs. Dumal, 7 Me., 134; 20 Am. Dec, 352.
28 Arnold vs. Georgia R., etc. Co.,
50 Ga., 304; Chandler vs. Sanger, 114 Mass., 364.
29 Ligonier vs. Ackerman, 46 Ind.,
552; 15 Am. Rep., 323. 30 Devaux vs. Connolly, 8 C. B., 640; Espy vs. Cincinnati First National Bank, 18 Wall-, 603; Northrop vs. Graves, 19 Conn.,
548; 60 Am. Dec, 264; Newell vs. Smith, 53 Conn., 72.
31 United States Bank vs. Daniel. 12 Peters, 33; Richardson vs. Dever, 17 Colo., 398; Jefferson County vs. Hawkins, 23 Flail 223; Fowler vs. Black, 16,' I., 363; Mowatt vs. Wright, 1 Wend., 355; 19 Am. Dec, 508,
32 9 Cowen, 674. For a more thorough discussion of the subject of Mistake, see Equity Jurisprudence, Volume VII, Subject 20.
'This position was broadly stated by Buller, J., in Lowry vs. Bourdieu, Dough, 470 without any question, or the expression of any doubt or disapprobation by the rest of the judges. Although it is true 'that that case may have been, and probably was determined on the ground that the policy upon which the premium had been paid was a gaming policy, that the parties were in pari delicto, and that the law would not aid the plaintiff in recovering back what he had paid under such circumstances; still it is not to be supposed that Lord Mansfield and Mr. Justice Ashurst would have suffered the dictum to have passed without animadversion, if they had not assented to its correctness.
"In Knibbs vs. Hall, 1 Esp., 83, a tenant was not permitted to recover back from his landlord, or to be allowed by way of set-off, a sum of money which he had paid beyond the rent which was actually due from him. The landlord demanded 25 guineas, and threatened him with a distress if he did not pay it. The tenant insisted that he had taken the premises at 20 guineas, and offered to pay that sum; but under the supposition that he could not defend himself against the distress, paid the 25 guineas, and was not permitted to recover back or set-off the excess, it being held a voluntary payment. So, in Brown vs. Mc Kinnally, 1 Esp., 279, and Marriott vs. Hampton, 2 Esp., 546, the same principle was recognized.
"In Buller vs. Harrison, Cowp., 555, the money-was paid under a mistake in fact. The assurer, upon a representation that a loss had been sustained by one of the perils covered by the policy, paid the insurance to the agent of the assured. But soon learning that it was 'a foul loss', in the language of the case, he gave notice to the agent of the fact, and also not to pay over the money. The only question discussed in the case was, whether in judgment of law, the money had been paid over by the agent before he received the notice. The plaintiff's right to recover against the principal was not questioned.
"The case of Bilbie vs. Lumley and others, 2 East, 469, was also an action by an underwriter, to recover back from the assured, £100 which he had paid upon the policy. The ground on which the action was brought was, that the money had been paid under a mistake, the defendant not having disclosed to the plaintiff, at the time the insurance was effected, a letter relating to the time of the sailing of the ship insured, which it was admitted was material. But it appeared that before the loss was adjusted and the money paid on the policy, all the papers, including the letter in question, were submitted to the plaintiff. The counsel for the plaintiff put his case on the broad ground that it was sufficient to sustain the action that the money had been paid under a mistake of the law, the plaintiff not being apprised at the time of the payment, that the concealment of the particular circumstance disclosed in the latter was a defense to any action which might have been brought on the policy. When the case was stated at bar, Lord Ellenborough would not hear it argued. He said he had never heard of a case in which a party who had paid money to another voluntarily, with a full knowledge of all the facts of the case, had been permitted to recover it back, on account of his ignorance of the law, except in the case of Chatfield vs. Paxton (in a note to Bilbie vs. Lumley), in which Lord Kenyon, at nisi prius, had dropped an intimation of that sort. Now, upon examination, it will be found that in the case of Chat-field vs. Paxton, a majority of the judges put the case upon the ground that the payment had been made by the plaintiff, not with a full knowledge of the facts, but only under a blind suspicion of the case. Lord Ellenborough says that it is so doubtful on what point that case turned, that it was not ordered to be reported.
 
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