Elgin v. Gross-Kelly & Co.

• Decision Date: 08 July 1915
• Docket Number: No. 1738.,1738.
• Citation: 20 N.M. 450,150 P. 922
• Court: New Mexico Supreme Court
• Parties: ELGINv.GROSS-KELLY & CO.

20 N.M. 450

150 P. 922

ELGIN

v.GROSS-KELLY & CO.

No. 1738.

Supreme Court of New Mexico.

July 8, 1915.

Syllabus by the Court.

Where money has been paid under mistake as to a material fact to one not entitled thereto, and who cannot in good conscience receive and retain it, the law raises an implied promise on his part to refund it, and an action will lie to recover it back.

The provision of the negotiable instruments statute that a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank is a declaration of the rule that, as against a drawee bank, a check is not an assignment of the fund. But, as against the drawer, the giving of a check for value on an ordinary bank deposit should be considered an assignment of the fund pro tanto.

To the extent that a bank check works an assignment pro tanto of a fund on deposit, the death of the depositor will not revoke the authority of the bank to pay the check, which has been given for a valuable consideration, and is therefore coupled with an interest.

In the absence of evidence to that effect, the Supreme Court cannot take judicial notice that a case before the court had connection with one formerly decided by it.

Appeal from District Court, Bernalillo County; H. F. Raynolds, Judge.

Action by Willie Elgin, as administrator de bonis non of the goods, chattels, and credits of M. B. Atkinson & Sons, against Gross-Kelly & Co., a corporation. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

Where money has been paid under mistake as to a material fact to one not entitled thereto and who cannot in good conscience receive and retain it, the law raises an implied promise on his part to refund it, and an action will lie to recover it back.

During the year 1910 M. B. Atkinson and his two sons, M. B. Atkinson and Jesse Atkinson, were copartners doing business under the firm name of M. B. Atkinson & Sons, and were engaged in the live stock business. While so engaged this firm contracted an indebtedness with the appellant, Gross-Kelly & Co., in a large sum, and on the 19th day of September, 1910, gave to said Gross-Kelly & Co. a firm check in the sum of $2,300 in partial settlement of their account with said firm. On the following day, however, M. B. Atkinson, a member of said firm, died before the aforesaid check was presented for payment. The check was subsequently, and on the 24th day of September, 1910, presented to the State National Bank, of Albuquerque, New Mexico, by the holder and payee named therein, and the State National Bank, having funds to meet the same, promptly paid the said check without notice of the death of said M. B. Atkinson, and it appears from the record that the said firm of Gross-Kelly & Co. was likewise without notice of the death of said Atkinson, or at least the record does not disclose that said firm had been notified of the death.

In May, 1911, the appellee, Milton Dow, was appointed administrator of the partnership of M. B. Atkinson & Sons, and subsequently made a demand upon Gross-Kelly & Co. for the return of said sum of $2,300 paid to that firm by the State National Bank upon the presentation of the check referred to. The ground for such demand by the administrator was that the said sum of $2,300 was the property of the said copartnership, and had been wrongfully received by the said Gross-Kelly & Co., because at the time of the payment of the check the death of M. B. Atkinson had terminated the partnership, and the bank was without authority to pay the check previously given.

The complaint in this cause set out two causes of action, the first seeking to recover the sum of $2,300 as represented by the check, with interest thereupon. The second cause of action, as set out in the complaint, is predicated upon the following state of facts, to wit: After the death of M. B. Atkinson the surviving partners, the sons of the deceased, made and executed to Gross-Kelly & Co. a certain chattel mortgage covering certain personal property of the firm of M. B. Atkinson & Sons, in order to secure the payment of the balance of the debt due from said firm of M. B. Atkinson & Sons to Gross-Kelly & Co., who subsequently foreclosed the chattel mortgage and applied the proceeds of said sale to the firm debt referred to. The plaintiff in the court below, Mr. Milton Dow, as administrator of the partnership estate, demanded of Gross-Kelly & Co. the possession of the property described in said chattel mortgage, who refused to deliver the same. Upon which state of facts the plaintiff in the court below, as administrator of the said partnership estate, for the second cause of action sues for the conversion of said personal property, the admitted value of which is $793.50.

The case below was tried by the court without a jury, and judgment rendered in favor of plaintiff, as administrator, and against the defendant, Gross-Kelly & Co., for the sum of $3,701.55, with interest on said amount at 6 per cent. from April 17, 1914. The amount of this judgment is made up, as shown by the findings of fact and conclusions of law of the trial court, of the sum of $793.50, with interest thereon from the 11th day of November, 1911, to the date of the judgment, in the sum of $115.86, or the total of $909.36, which is based upon the conversion of the personal property included within the chattel mortgage, and the further sum of $2,300, being the amount of the check given by the firm of M. B. Atkinson & Sons, with interest thereon at 6 per cent. from September 24, 1910, up to the date of the judgment of the trial court, making the aggregate amount $2,792.20.

Since this case was docketed in this court the appellee, Milton Dow, has died, and Willie Elgin, subsequently appointed as administrator de bonis non, has been substituted as appellee.

Reed Holloman, of Santa Fé, and Edward A. Mann, of Albuquerque, for appellant.

Marron & Wood, of Albuquerque, for appellee.

HANNA, J. (after stating the facts as above).

The first assignment of error presented by the brief and argument of appellant is that the court erred in its conclusions of law and its judgment in holding that the appellee was entitled to recover from Gross-Kelly & Co. the amount of the check which had been given by M. B. Atkinson & Sons, and paid by the bank upon which it was drawn without notice of the death of a member of said firm, after the check was given and before it was presented and paid. We are, therefore, concerned solely with the question of whether or not the death of M. B. Atkinson is to be considered a revocation of the authority of the bank to pay the check, and, such being the case, whether or not the administrator of the partnership estate of M. B. Atkinson & Sons can be permitted to recover from Gross-Kelly & Co. the amount paid them by the bank upon presentation of the check concerning which, as we understand the record, there is no contention as to a full and adequate consideration therefor. As pointed out by appellant, the action is in the nature of an action for money had and received, which is essentially an equitable action, the right to which exists whenever one has money in his hands belonging to another which in equity and good conscience he ought to pay over to that other.

[1] Generally speaking, it may be said that the right to recover in a case of this character depends upon the theory that money has been paid to the defendant or the person from whom recovery is sought, where either there was no obligation to pay the same or where the party to whom it was paid had no right either to receive or to retain it, and, while the form of the action is one essentially of contract, the reasons which permit of the recovery are purely equitable in their nature. This principle of law is briefly set out in volume 15, A. & E. Ency. of Law (2d Ed.) p. 1103, in the following language, which we approve and adopt, and which is supported by authorities from almost every state in the Union:

“Where money has been paid under a mistake as to a material fact, to one not entitled thereto, and who cannot in good conscience receive and retain it, the law raises an implied promise on his part to refund it, and an action will lie to recover it back.”

See, also, 27 Cyc. 849.

Applying this principle to the facts of the present case, it is contended by appellant that the action will not lie; there being no fraud or deceit in the transaction, and no contention that the amount was not due and owing to Gross-Kelly & Co. by the firm of M. B. Atkinson & Sons. It is the contention of appellee that the death of the drawer of the check revokes the check or authority of the bank to pay the same, and authorities are cited in support of this contention.

[2][3] Appellee contends that the greatest weight of authority is to the effect that a check does not operate as an assignment of the fund, but is a mere request to pay, and vests the payee with no interest in the deposit or right against the bank until the bank has accepted the check. Appellee refers us to section 189 of our Negotiable Instruments Act, in support of this contention, and as absolutely settling the question in this jurisdiction. Section 189 is as follows:

“A check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder, unless and until it accepts or certifies the check.” Section 189, c. 83, Laws of 1907.

They contend further in this respect that, except in those jurisdictions where the execution and delivery of a check operates as an assignment pro tanto of the deposit, it necessarily follows, as a matter of course, that upon the death of the depositor the bank is indebted to his estate to the amount of the deposit then on its books, and cannot, therefore, change its relation or its liability to the estate, with the exception that it will be protected where it pays a check...