Hathaway v. Delaware Cnty.

• Decision Date: 12 June 1906
• Citation: 185 N.Y. 368,78 N.E. 153
• Parties: HATHAWAY et al. v. DELAWARE COUNTY.
• Court: New York Court of Appeals Court of Appeals

185 N.Y. 368

78 N.E. 153

HATHAWAY et al.

v.DELAWARE COUNTY.

Court of Appeals of New York.

June 12, 1906.

Appeal from Supreme Court, Appellate Division, Third Department.

Action by Charles Hathaway and others against the county of Delaware. From a judgment of the Appellate Division (93 N. Y. Supp. 436,103 App. Div. 179), affirming a judgment dismissing the complaint as to the first cause of action, but reversing a judgment for plaintiff on the second cause of action, plaintiffs appeal. Judgment as to the first cause of action affirmed, and as to the second cuse of action reversed and remanded.

A. B. Cruikshank, for appellants.

Chas. L. Andrus and Edwin D. Wagner, for respondent.

CULLEN, C. J.

As to the first cause of action we content ourselves with stating our concurrence in the view of the Appellate Division and of the Trial Term, that the plaintiffs failed to establish that the money which they sought to recover was appropriated to the discharge of valid obligations of the defendant, and that, therefore, as to this cause of action the judgment below should be affirmed. For the facts relating to this claim see report of the case in 103 App. Div. 179,93 N. Y. Supp. 436.

As to the second cause of action we think that the decision of the Trial Term was correct and the action of the Appellate Division in reversing the judgment awarded by the Trial Term was erroneous. The facts on which this claim was founded are as follows: Prior to January 1, 1900, one Woodruff was the county treasurer of Delaware county-the respondent in this action-and was a defaulter in his trust. On that day he was succeeded as county treasurer by Hugh Adair. About May 1, 1900, Adair discovered that Woodruff was indebted to the county, and demanded payment of the debt. Thereupon Woodruff presented to the plaintiffs what purported to be a note of the county of Delaware and to be executed by Hugh Adair, its treasurer, under authority of the board of supervisors, for the sum of $5,000 and interest, payable February 1, 1901. The signature of Adair to this note was forged by Woodruff. Woodruff had dealt with the plaintiffs during his incumbency of the office of county treasurer, and had borrowed for the county, on what either were or were assumed to be its obligations, several sums of money. On the presentation of the forged note referred to Woodruff represented that he was obtaining the loan for the county. The plaintiffs thereupon drew their check to the ‘order of Hugh Adair, county treasurer of Delaware County,’ and delivered it to Woodruff for transmission to the county treasurer. Woodruff turned the check over to Adair on account of his personal indebtedness and it was received by Adair as a payment on that account, he being ignorant of the means by which Woodruff had obtained it. The money was collected and went into the treasury of Delaware county. The plaintiffs on discovering the forgery demanded the return of the money, which, being refused, they instituted this action. On the trial neither party asked for the submission of any question to the jury, and if the evidence presented any question of fact that question must be considered as decided by the court in favor of the plaintiff, a finding which it was not within the power of the Appellate Division to disturb, for the appeal to that court was solely from the judgment. Alden v. Knights of Maccabees, 178 N. Y. 535, 71 N. E. 104.

Plaintiffs sought to recover this money as paid under a mistake of fact. The rule as to such payments is thoroughly settled in this state. ‘Money paid under a mistake of fact may be recovered back, however negligent the party paying may have been in making the mistake, unless the payment has caused such a change in the position of the other party that it would be unjust to require him to refund’ (Nat. Bank of Commerce v. Nat. Mechanics' Banking Ass'n, 55 N. Y. 211, 14 Am. Rep. 232) and if circumstances exist which make such recovery inequitable, the burden of proving that fact rests upon the party resisting the payment. (Mayer v. Mayor, etc., of N. Y., 63 N. Y. 455;Phetteplace v. Bucklin, 18 R. I. 297, 27 Atl. 211). That the plaintiffs paid their money under a mistake of fact, to wit, that they had received a genuine obligation of the defendant, is unquestioned. It does not appear that the defendant's claim against Woodruff of his sureties has been in any manner jeopardized or impaired. On final analysis the transaction is simply this: The plaintiffs paid money to the defendant as a loan. The defendant received it as a payment on the debt of Woodruff. Though the fault or misfortune which led to this mistake was the plaintiffs,' in failing to discover the forgery, that no more than negligence can bar their right to recover, unless by that payment the situation of the defendant has been altered to its detriment. Generally in actions of this kind the mistake under which money is paid is a mutual one as to the existence or nonexistence of a fact which justifies or requires the payment. It is not essential, however, that the mistake should be of that character. The case at bar is on all fours with that of Mayer v. Mayor, etc., of N. Y., supra. In that case the plaintiff paid the city of New York an assessment for a local improvement upon an adjoining lot instead of the assessment on his own. The fault or negligence by which the payment was made on the wrong lot was the plaintiff's, yet it was held that he was entitled to recover back the money so paid, it not appearing that by the payment the city had lost its lien upon the lot, the assessment of which had been paid. Judge Andrews said: ‘The city received the money upon a lawful demand, but from a person who was not legally liable to pay it, and we do not find that the circumstance that money paid by mistake is received upon a valid claim in favor of the recipient against a third person prevents a recovery back, provided the claim against the party who ought to pay it is not thereby extinguished or its collection prevented.’ The case is decisive of the one before us, unless under the facts some other rule conflicting with or modifying the general rule is applicable to this case.

The learned judge who wrote for the Appellate Division recognized the principle that money paid under a mistake of fact may be recovered back, and would have upheld the judgment for the plaintiffs had he not deemed the case controlledby the decision of this court in Goshen Nat. Bank v. State, 141 N Y. 379, 36 N. E. 316. That case and the earlier decisions on which it is founded (Justh v. Nat. Bank of Commonwealth, 56 N. Y. 478;Stephens v. Bd. of Education of Brooklyn, 79 N. Y. 183, 35 Am. Rep. 511;Southwick v. First Nat. Bank, 84 N. Y. 420) proceed on the primary proposition that ‘money has no earmarks' and that the possession of money vests the title in the holder as to third persons dealing with him and receiving it in good faith in the due course of business, and upon the secondary principle that where money is transferred by checks the same rule obtains as where payment is made in coin or bills. In the Justh Case a person had obtained a loan from the...