Summary
In Danielson a labor union that had promised a death benefit to survivors of its members paid twice after a member's death; the discharge for value rule would not have allowed the survivor to keep the second payment, and just about any rule of restitution lets the union recover the second payment, as the court in Danielson did.
Summary of this case from General Elec. Capital Corp. v. Central BankOpinion
April 2, 1964 —
April 28, 1964.
APPEAL from a judgment of the circuit court for Milwaukee county: ROBERT W. LANDRY, Circuit Judge. Reversed.
For the appellant there was a brief and oral argument by Jack A. Berland of Milwaukee.
For the respondent there was a brief by Quarles, Herriott Clemons, attorneys, and Laurence E. Gooding, Jr., of counsel, all of Milwaukee, and oral argument by Mr. Gooding.
Plaintiff local labor union brought an action for money had and received in the county court of Milwaukee county. Trial was to the court. The county court did not render a written or oral decision nor findings of fact nor conclusions of law. Judgment was entered May 2, 1962, in favor of the defendant, Mrs. Danielson. The union appealed to the circuit court.
Pursuant to a memorandum decision, judgment of the circuit court affirming the judgment of the county court was entered October 14, 1963. The union appealed.
The complaint alleged that defendant was indebted to plaintiff in the amount of $200, representing an overpayment by plaintiff of death benefits for defendant's father. By answer defendant admitted receiving the $200 payment, but alleged that the sum was used to pay claims against the father's estate. At the trial plaintiff entered a demurrer ore tenus to the answer on the ground that it failed to state a defense.
Defendant is the daughter of Frank E. Schulz, deceased. Prior to his death at the age of eighty-seven, the father had been a member of plaintiff union. The constitution of the international union provided for a funeral benefit of $300. The bylaws of the local provided for death benefit of $200.
Defendant's father left no estate; funeral expenses amounted to $924.90. Shortly after the funeral, defendant telephoned the union for the purpose of securing immediate payment of the funeral bills as she desired to take advantage of a discount offered by the undertaker. She was informed that the total death benefits payable amounted to $500; she testified that she argued with the union official as her father had told her he had $750 coming. The official stated that the union would deal directly with the undertaker and that they would make a partial payment on account. Defendant paid $424.90 to the undertaker.
The local paid $200 to the undertaker by check dated October 25, 1961. The international union sent its check for $300 to the local. The local sent the $300 check to the undertaker on November 9th and by mistake sent a second check of its own for $200. Thus the union had paid $200 more than was due, and the undertaker had received $200 more than the funeral expenses. The undertaker deposited the union checks and sent defendant his check for $200 on November 14, 1961. He testified that he paid the excess amount to defendant because defendant had made the funeral arrangements.
Defendant testified that at the time of receipt she believed the excess was an overpayment to the undertaker, but thought it was insurance money to which she was entitled. She deposited the check in a joint bank account she maintained with her husband.
Over plaintiff's objection defendant produced evidence of the payment by her husband of her father's medical and burial expenses. The payments, totaling $238.83 were made between October 9th and November 11th by checks drawn on an account denominated "J. J. Danielson, Agent." On December 24, 1961, defendant paid a hospital bill of $50 incurred by her father; payment was by check drawn on the joint account. The union demanded reimbursement of the overpayment on January 1 O, 1962.
It is undisputed that the defendant received $200 which the union paid under a mistake of fact. It seems evident that at the time the officers of the local union made the second $200 payment, they had forgotten having made the earlier payment. A party who has expended money by mistake of fact may ordinarily recover such sum in an action for money had and received. As stated in 40 Am. Jur. Payment, p. 849, sec. 197:
"The knowledge of the facts which precludes the recovery of money paid means a knowledge existing in the mind at the time of payment, and the general rule is that a payment made under a mistake of fact caused by forgetfulness may be recovered, where the person to whom the payment is made is not entitled thereto and cannot in good conscience retain it. Thus, a payment made through forgetfulness of the fact that the amount has already been paid is a payment under a mistake of fact, and may be recovered, for a person so paying has done an act he did not intend to do, and did not know or believe he was doing, and the error, no matter whether arising from forgetfulness or otherwise, destroys the whole basis of the agreement and the parties are restored to their original condition and right."
Although an action for money had and received is an action at law, it is governed by equitable principles. "[T]he defendant may rely upon any defense which shows that in equity and good conscience the plaintiff is not entitled to recover in whole or in part." As stated by the Restatement, Restitution, p. 284, sec. 69 (1):
Dairyman's State Bank v. Tessman (1962), 16 Wis.2d 314, 317, 318, 114 N.W.2d 460.
Marinette County v. Schmitt (1946), 248 Wis. 308, 311, 21 N.W.2d 717, 22 N.W.2d 151, quoting 19 Am. Jur. Equity, p. 168, sec. 195.
See also 40 Am. Jur., Payment, pp. 852, 853, sec. 201.
"The right of a person to restitution from another because of a benefit received because of mistake is terminated or diminished if, after the receipt of the benefit, circumstances have so changed that it would be inequitable to require the other to make full restitution."
"The rule that money paid under a mistake of fact may be recovered back does not apply where the payment has caused such a change in the position of the other party that it would be unjust to require him to refund. Thus, where the plaintiff alone is at fault, or his fault is greater than that of the defendant, then the cases seem to agree that alteration of position of the defendant is a defense to an action for recovery of the money by the plaintiff, and, as a general rule, in cases where the plaintiff and the defendant are equally to blame for the mistake under which the money was paid, or equally innocent in respect thereto, an alteration of position on the part of the payee is held to prevent liability in an action for recovery."
40 Am. Jur., Payment, p. 852, sec. 201.
If defendant paid her father's debts by reason of having received $200 which she believed she had a right to retain, such payment constituted a change of circumstances which would make it inequitable to require her to make restitution. The demurrer ore tenus was in effect an objection to the admission of evidence on the defense of change of circumstances. It was properly overruled.
See Note, 1947 Wisconsin Law Review, 426.
The absence of any indication of the grounds for the county court's decision creates a difficult situation on review.
See Oosterwyk v. Corrigan (1963), 19 Wis.2d 464, 473, 474, 120 N.W.2d 620; Oremus v. Wynhoff (1963), 20 Wis.2d 635, 643, 644, 123 N.W.2d 441.
The record is sufficient to sustain findings that defendant honestly believed, after receipt of the money, that she was entitled to keep it, and paid the $50 hospital bill on December 24, 1961, in reliance thereon. We shall assume the county court made such findings since they will, at least partially, support the judgment.
However, the other payments were made before she received the $200. Defendant cannot be said to have made those payments in reliance on her right to an additional sum from the union. Thus the union was entitled to judgment for $150 with costs.
By the Court. — Judgment reversed, and cause remanded for entry of judgment in favor of plaintiff for $150 together with costs.