Submitted June 30, 1882
Decided October 17, 1882
N.H. Clement for appellant. Tracy, Catlin Hudson for respondent.
This is not a case of money paid under a mutual mistake, where the action of each party was equally innocent. The mistake was that of the party who paid, and not at all that of the one who received the amount in dispute. The plaintiff was employed by the defendant to build a stone pier in the Gowanus canal. The precise terms of the contract, and the amount due for construction were sharply litigated on the trial; but the verdict of the jury establishes that there was an over-payment mistakenly made by the defendant. His right to recover back is resisted, mainly upon the ground that notice was not given and demand made of the over-payment, before setting up the counter-claim. Without stopping to consider whether the same rule applies to a defendant pleading an over-payment by way of counter-claim, as that which governs a plaintiff suing for the same cause, and assuming the law to be identical in both cases, we are still of opinion that a demand was not a condition precedent to the defendant's right of action. Two cases in this court are relied upon by the appellant. ( The Mayor v. Erben, 3 Abb. Ct. of App. Dec. 255; Southwick v. The First National Bank of Memphis, 84 N.Y. 420.) In the first of these cases no mistake was established, and that fact decided the case. The court added, "where money is paid under mutual mistake," demand, or at least notice of the error, must precede a right of recovery. In the later case the mistake was mutual, and stress was laid upon the fact that the defendant "lawfully and innocently received the draft and the money thereon." The ground of these decisions is quite obvious. Where the mistake is mutual, both parties are innocent, and neither is in the wrong. The party honestly receiving the money through a common mistake owes no duty to return it until at least informed of the error. It is just that he should have an opportunity to correct the mistake, innocently committed on both sides, before being subjected to the risks and expenses of a litigation. It was said in Abbott v. Draper (4 Denio, 53) that "when a man has paid money as due upon contract to another, and there is no mistake, and no fraud or other wrong on the part of the receiver, there is no principle upon which it can be recovered back until after demand has been made." While this language is not accurate as to a mistake on the part of the receiver, if that was the meaning intended, the doctrine is clearly recognized that where the receiver is guilty of fraud or other wrong in taking the money, he is not entitled to notice. The necessity of a demand does not, therefore, exist in a case where the party receiving the money, instead of acting innocently and under an honest mistake, knows the whole truth and consciously receives what does not belong to him, taking advantage of the mistake or oversight of the other party, and claiming to hold the money thus obtained as his own. In such case he cannot assume the attitude of bailee or trustee, for he holds the money as his own, and his duty to return it arises at the instant of the wrongful receipt of the over-payment. He is already in the wrong and it needs no request to put him in that position. ( The Utica Bank v. Van Gieson, 18 Johns. 485; Andrews v. Artisans' Bank, 26 N.Y. 299; Dill v. Wareham, 7 Metc. 447; Southwick v. First National Bank of Memphis, 84 N.Y. 430.)
This case is of that character. The receiver was not innocent. If he did not perpetrate a fraud, at least he committed a wrong. He knew all the facts and must be assumed to have known the law. He went to trial not admitting a mistake, but insisting that there was none. He charged a price beyond that to which he was entitled, or for quantities which were exaggerated, and obtained the money through the inadvertence and mistake of his debtor, who had not measured the work. He did not come rightfully by the excess. He took it as his own money, conscious of all the facts, and not only claimed to hold it as such, but sued to recover more. The case is not one in which he owed no duty until apprised of his mistake, for he made none. He took what was not his, knowing all the facts, and at the moment of its receipt it was his duty to return it. The action for money had and received could be at once maintained.
The appellant further relies upon the facts of the presentation of his bill and a payment thereafter, made by the defendant, and also upon the lapse of time during which the bill remained unchallenged. These circumstances he insists amounted to an admission of the correctness of the bill. They tended to that result, but were not conclusive. They were met by the defendant's evidence of mistake and his explanation consistently therewith. The facts relied on and the explanation given were submitted to the jury and they have determined the question. We discover no just ground for reversing the recovery.
The judgment should be affirmed, with costs.
All concur, except TRACY, J., taking no part.