Hartford Accident & Indem. Co. v. Benevento.

• Decision Date: 27 September 1945
• Docket Number: No. 16.,16.
• Citation: 133 N.J.L. 315,44 A.2d 97
• Parties: HARTFORD ACCIDENT & INDEMNITY CO. v. BENEVENTO.
• Court: New Jersey Supreme Court

133 N.J.L. 315

44 A.2d 97

HARTFORD ACCIDENT & INDEMNITY CO.

v.BENEVENTO.

No. 16.

Court of Errors and Appeals of New Jersey.

Sept. 27, 1945.

Appeal from Circuit Court, Bergen County.

Action by the Hartford Accident and Indemnity Company against John Benevento for money had and received. After defendant's motion to strike the complaint was denied, 40 A.2d 202, 23 N.J.Misc. 5, plaintiff obtained a verdict and judgment, and defendant appeals.

Affirmed.

Chandless, Weller & Kramer, of Hackensack (Ralph W. Chandless, of Hackensack, of counsel), for appellant.

George F. Losche, of Hackensack, for respondent.

HEHER, Justice.

Plaintiff sued for money had and received. The complaint is in two counts: The first alleges that ‘between November 17, 1943, and May 23, 1944,’ one Mabie, a paying teller of the Hackensack Trust Company, ‘took funds' of his employer ‘entrusted to his custody in the amount of $18,813.00 and delivered’ the same to defendant ‘as wagers or bets on the outcome of certain events of chance, to wit, the result of certain horse races,’ and that the Trust Company later assigned ‘its right of action’ to plaintiff; the second charges that defendant received the moneys ‘knowing the same had been stolen.’ A jury was impanelled to try the issues; and there was a verdict in favor of plaintiff on the first count for the full amount claimed, and of ‘no cause for action’ on the second count.

The basic point made by defendant is that plaintiff ‘has no cause of action.’ The question was raised, first, by a motion to strike out the complaint, and later by a motion for a nonsuit. He invokes the doctrince that when money obtained through the perpetration of a felony has been transferred to ‘an honest taker,’ the latter acquires a good title as against the one from whom the money was stolen, if he received it without knowledge of the felony and in in due course of business. It is said that plaintiff neither alleged nor proved ‘bad faith’ on defendant's part. But the principle thus cited has no application here.

Plaintiff produced evidence tending to show the following matters of fact: Defendant was a professional gambler. Mabie termed him ‘a bookmaker’-one who ‘took bets' on horse races. Mabie began placing bets with defendant in the Spring of 1942. For a time, he used only his own money in the making of the wagers. These bets never exceeded $20. When he had lost his entire cash resources, approximately $2100, he began drawing upon the bank's money for the purpose. This was in April, 1943. Thereafter, his bets with defendant ranged, almost daily, from $200 to $1050, all money abstracted from the bank's till. He turned the moneys over to defendant at the paying teller's window, when defendant called to cash checks. The money was contained in an envelope with notations of the desired wagers. All this was done at the suggestion of defendant. When Mabie protested that the modus operandi was ‘rather unusual,’ and that it would not be prudent ‘to make this conspicuous,’ defendant replied: ‘It can be covered up all right, George. I will bring in-I will have my checks cashed. At the same time you can pass out the envelope which contains your bets and money, and the transaction will end right there.’ Mabie's salary was $4,000 per annum; and he had been a faithful servant of the bank for some forty years.

All this testimony stands uncontradicted. Defendant adduced no evidence whatever. He did not take the witness stand; and there was no denial that he, himself, retained possession of the moneys at issue.

Title to the embezzled moneys did not pass to defendant. This is so at common law. The embezzler did not have title to the stolen funds; and he therefore could not vest title thereto in defendant. And, since such gaming is unlawful under R.S. 2:57-1 and 2:135-6, N.J.S.A., the transfer of title is not effected by the mere delivery of money upon a wager. The depositary holds the money ‘without any other right or duty respecting it than the duty of returning it on demand to its lawful owner, the depositor,’ enforceable by an action of indebitatus assumpsit for money had and received. Van Pelt v. Schauble, 68 N.J.L. 638, 54 A. 437, 438.

True, sec. 2:57-5 provides that the loser of a wager paid to the winner, or to any person to his use, or to a stakeholder, may sue for the recovery of the money from the winner, or the depositary, or the stakeholder, whether the same has been paid over by such stakeholder or not, provided the suit shall be instituted within six calendar months after payment or delivery of the money. But the limitation is not applicable to plaintiff or its assignor. The denial of a right of recovery to the losing participant in an unlawful wager is grounded upon the general rule that, when the unlawful wagering agreement has been executed, the depositor cannot recover the moneys deposited thereunder. This denial ‘does not rest upon any notion that the depositary has been able to transfer to his payee the legal title of the depositor. Evidently the act of the depositary in furtherance of the unlawful agreement can have no more effect upon the title than did the original act of the depositor. The denial rests solely on a rule of judicial procedure, In pari delicto, potior est defendentis conditio, which the courts will apply to a culpable plaintiff who has permitted the whole agreement to be executed, although they do not apply it to a plaintiff who repents and repudiates the transaction before it is consummated.’ Van Pelt v. Schauble, supra. Sec. 2:57-5, supra, modifies the general rule. This provision ‘does not create the right or chose in action on which the permitted suit is founded. Its legal effect is merely to remove the disability under which the judicial rule placed the plaintiff, so that the court would hear him as if he were free from blame. Thus exculpated, and his title to the money received by the defendants remaining unaffected by their act in paying it away, the plaintiff can enforce his claim on the same principle and in the same manner as if the unlawful agreement were still unexecuted.’ Van Pelt v. Schauble, supra. There, the plaintiff and five other persons, acting separately, deposited with a firm of which the defendants were members various sums of money for the purpose of winning or losing as the price of certain stocks should rise or fall; and the declaration set forth only the common money counts. At the trial it was shown that the defendants had paid the money to other parties, presumably on a fall in the price of the stocks, whereupon the defendants moved for a non-suit, because the transactions were unlawful under the statute; but that motion was overruled, and a judgment upon a verdict for the plaintiff was sustained by this court.

Thus it is that defendant, having acquired no title to the moneys so wagered, is liable for their return to the rightful owner in an action of indebitatus assumpsit for money had and received. In these circumstances, the law raised an implied promise on the part of the defendant to refund the money.

The action on the case for ‘money had and received’ is comprehensive in its scope, equitable in spirit, although legal in form, and is maintainable when the defendant has received money which in equity and good conscience belongs to the plaintiff. At common law, the plaintiff may declare generally that ‘the money was received to his use,’ and make out his case at the trial. Cory v. Board of Freeholders of Somerset, 47 N.J.L. 181; Township of Franklin v. Jones, 86 N.J.L. 224, 90 A. 1010, Capraro v. Propati, 127 N.J.Eq. 419, 424, 13 A.2d 318. See, also, Sergeant and Harris v. Stryker, 16 N.J.L. 464, 32 Am.Dec. 404. The common law action of assumpsit has its origin in the relief anciently afforded by chancery in respect of executory promises and implied obligations, due to the lack of a remedy at law. It is governed by equitable principles. The action has been extended-“conscience encroaching on the common law'-to almost every case where an obligation arises from natural reason, and the just construction of law, that is, quasi ex contractu.' 1 Spenc.Eq.Jur. 245. Lord Mansfield commented thus on the action for money had and received: ‘This kind of equitable action, to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged. It lies only for money which, ex aequo et bono, the defendant ought to refund: it does not lie for money paid by the plaintiff, which is claimed of him as payable in point of honour and honesty, although it could not have been recovered from him by any course of law; as in payment of a debt barred by the statute of limitations, or contracted during his infancy, or to the extent of principal and legal interest upon an usurious contract, or, for money fairly lost at play; because in all these cases...