136 Minn. 72 | Minn. | 1917
The question in this case is which of two innocent parties, plaintiff or defendant, shall suffer for a wrong committed by a third person. The trial court decided in favor of defendant and plaintiff appeals from the judgment.
The facts are as follows: Plaintiff, a fraternal insurance corporation authorized and accustomed to loan its surplus funds on real estate security, in June, 1911, received a written application from the Hartman-O’Donnell Agency of Duluth, ostensibly on behalf of Emma M. Anschutz, for a loan of $5,000 for five years, secured on certain improved
Both the mortgage to defendant and that to plaintiff were forgeries, as were the notes. This was the work of O’Donnell. Mrs. Anschutz had made no mortgages on her property, and did not know of their existence until some two years after that to plaintiff was placed on record, at about which time O’Donnell absconded for parts unknown. O’Donnell paid the interest coupons on both mortgages as they became due, and neither plaintiff nor defendant had any knowledge or suspicion that the mortgages and notes held by them were not genuine until Mrs. Anschutz’ discovery of the forgeries and repudiation of the mortgages was reported to them. When this information reached plaintiff, its general counsel went to Duluth, acquainted defendant with the facts showing the invalidity of the mortgages, and demanded the return of the $2,500 paid by plaintiff to defendant supposedly in payment of this mortgage. This demand, as well as a later written demand, was refused by defendant. This action brought to recover the $2,500, was commenced December 11, 1914.
The theory of plaintiff, and the basis of its claim of a right to recover
Defendant insists that the action cannot be maintained because it was not plaintiff’s money that defendant received, but the money of O’Donnell, paid by plaintiff as his agent in the exercise of a right claimed by him through an agreement with defendant. It contends further that a recovery should be denied because plaintiff is unable to restore the status quo of defendant, that is, put him in the position he was before the payment was made.
The questions axe very interesting. The trial court was with defendant on both his contentions as stated above. As wé stated in the beginning, both plaintiff and defendant are absolutely innocent. Neither was in any way negligent. One of them must suffer a loss from O’Donnell’s dishonesty.
“An action for money had and received can be maintained whenever one man has received or obtained the possession of the money of another, which he ought in equity and good conscience to pay over. This proposition is elementary. There need be no privity between the parties, or any promise to pay, other than that which results or is implied from one man’s having another’s money, which he has no right conscientiously*77 to retain. In such case the equitable principle upon which the action is founded implies the contract and the promise. When the fact is proved that he has the money, if he cannot show a legal or equitable ground for retaining it, the law creates the privity and the promise.”
As expressed by Justice Mitchell in Sibley v. County of Pine, 31 Minn. 201, 17 N. W. 337, there is a “moral obligation, resting upon every person, natural or artificial, to make restitution where they have received without consideration the money of another which they have no right to retain.” Other cases which have announced and applied the rule are Borough of Henderson v. County of Sibley, 28 Minn. 515, 11 N. W. 91; Valentine v. City of St. Paul, 34 Minn. 446, 26 N. W. 457; Libby v. Johnson, 37 Minn. 220, 33 N. W. 783; Landin v. Moorhead Nat. Bank, 74 Minn. 222, 77 N. W. 35; Milton v. Johnson, 79 Minn. 170, 81 N. W. 842, 47 L.R.A. 529; Merriam v. Johnson, 86 Minn. 61, 90 N. W. 116; Quigley v. Welter, 95 Minn. 383, 104 N. W. 236; Stoakes v. Larson, 108 Minn. 234, 121 N. W. 1112; Todd v. Bettingen, 108 Minn. 493, 124 N. W. 443, in which Lord Mansfield’s theory of the action, quoted from Moses v. Macferlan, 2 Burr. 1005, is approved. The entire quotation is pertinent here, but we will repeat only these words: “It (the action) lies for money paid by mistake, or upon a consideration which happens to fail.”
Other decisions of this court having a bearing upon the question are: Houston v. Northern P. Ry. Co. 109 Minn. 273, 123 N. W. 922, 18 Ann. Cas. 325; Vetter v. Sandbo, 114 Minn. 144, 130 N. W. 450; Aetna Life Ins. Co. v. Flour City O. I. Works, 120 Minn. 463, 139 N. W. 955; Heywood v. Northern Assurance Co. of Detroit, 133 Minn. 360, 158 N. W. 632.
While no case in this state is just like this in its facts, and it would be surprising if this were not so, the principles aTe clearly stated and firmly settled, and we think are applicable to the facts here. Defendant, through mistake, obtained possession of plaintiff’s money. There was both a plain mutual mistake, and a want or failure of consideration. It is entirely immaterial that defendant honestly believed he was entitled to the money, or that he was guilty of no fraud or duress in obtaining possession of it. In several of the Minnesota cases cited, defendant’s possession of the money of plaintiff was just as innocent as it is here. The
It is unnecessary to cite or analyze the multitude of cases from other jurisdictions that announce the rule and apply it to particular facts. There are two cases that defendant relies on to support his contention that plaintiff should not recover because O’Donnnell, rather than plaintiff, should be considered as having paid the money to defendant. These cases are Walker v. Conant, 69 Mich. 321, 37 N. W. 292, 13 Am. St. 391, and Russell v. Richard, 6 Ala. App. 73, 60 South. 411; Ex parte Richard, 180 Ala. 580.
In the Michigan case the facts are much like those here. Edgar Van Riper, son of Henry Van Riper, forged the signatures of his father and mother to a mortgage for $1,000 on land of the father. The mortgagee, the defendant in the case, supposed the signatures to be genuine. While this mortgage was on record, and before it became due, Edgar forged the signatures of his father and mother to a mortgage for $3,000 on the same property. Plaintiff agreed to loan the money if defendant would release the first mortgage, plaintiff to pay the same out of the $3,000 to be loaned by him. Defendant agreed, and after receiving from Edgar the mortgage and notes apparently signed by Henry Van Riper and wife, and from defendant the satisfaction of the first mortgage, drew his check for the amount due on the first mortgage and, as defendant had requested, deposited this to his credit in a Detroit bank, paying the balance of the $3,000 to Edgar in cash. Edgar had told plaintiff to pay defendant’s mortgage out of the $3,000. After it was discovered that both mortgages were forgeries, plaintiff brought the action to recover from defendant
The facts in Russell v. Richard, supra, were as follows: Jim Gardner, a swindler, represented himself to be Taylor Parkman, the owner of a lot, and obtained from defendant a loan of $500 upon a forged note and mortgage. Shortly after the loan matured, Gardner, again impersonating Parkman, applied to plaintiffs for a loan of $850 on the lot. Plain-, tiffs, satisfied with the security, and believing that they were dealing with Parkman, agreed to make the loan. They gave to the swindler’s attorney their cheek for $850, with instructions to pay off defendant’s mortgage. The attorney cashed the check, paid $500 to defendant and received a satisfaction of the mortgage. Neither plaintiffs, defendant, nor the attorney had any knowledge that the mortgages were not genuine. Defendant did not know that the money he accepted in payment of his mortgage came from plaintiffs. The court said that if the money received by defendant was furnished by and paid in behalf of plaintiffs, and was, in legal contemplation and effect, the payment of plaintiffs, made under an honest mistake of a material fact, the right to recover' would be undoubted. But the court held that the money paid was that of the swindler, and was paid by him through his attorney. The Michigan case was cited as authority, though the court did not desire to be understood as approving that decision. The facts that plaintiff paid the money to the swindler, and that the latter, acting through his attorney, paid it to defendant, perhaps justified the decision that it was the swindler’s money, and distinguishes the case from the one at bar, from the Michigan case, and from Strauss v. Hensey (D. C.) 9 App. Cas. 541. It also explains the disapproval by the court of the Michigan case, and the failure of the supreme court of Alabama to reverse the ease when there on certiorari.
The case of Strauss v. Hensey, distinguished in the Alabama case, holds defendant liable as for money had and received under the following circumstances: Henderson, an impostor, impersonating an owner
We will not prolong the discussion of this question, or refer to further authorities. We hold that the money paid to defendant was plaintiff’s money, paid by it and received by defendant under a mutual mistake of a material fact, and without consideration, and that plaintiff may recover it back unless a recovery should be denied on grounds to be next considered.
“Where it appears that neither party was negligent, or that they were equally negligent, restitution has in a few cases been enforced; but there is reason to hope that these cases will not be followed, and they are already at least equalled in number by the cases which deny relief.”
We are disposed to agree that an irrevocable change of position by defendant, so that a recovery will result in a loss to him, that is, put him in a worse position than he would have occupied had the money never been paid him, is a good defense to a recovery where neither party was
The judgment appealed from is reversed, with directions to amend the conclusions of law in accordance with the views herein expressed, and to enter judgment in favor of plaintiff, with interest from the date the action was commenced.