Rosenblum v. First State Bank of Elgin, s. TC

Decision Date25 July 1978
Docket NumberNos. TC,L-24003,s. TC
Citation581 P.2d 515,283 Or. 123
PartiesA. Leon ROSENBLUM, Murray R. Rosenblum, Sheldon A. Rosenblum and Mendel Weinman, Respondents, v. FIRST STATE BANK OF ELGIN, Appellant, La Grande Air Service, Inc., and Wayne L. Mitchell, Defendants. ; SC 25611. *
CourtOregon Supreme Court

Carl G. Helm, of Helm, Petersen & Mukatis, La Grande, argued the cause and filed the brief for appellant.

R. T. Gooding, of Gooding & Susak, La Grande, argued the cause and filed the brief for respondents.


This is an action for money had and received. Plaintiffs are the owners of an airplane rented under contract to the United States Forest Service. Defendant bank had an assignment of the rental payments under the contract to secure its loan to a previous owner of the plane. The subject of this action is a mistaken payment of $10,190 made under that contract to the bank on behalf of the previous owner who, at that time, had no further right to rental payments under the contract.

The case was tried to the court, sitting without a jury. The court found that defendant was not entitled to retain the payment. Defendant appeals.

The questions raised by defendant's assignments of errors are mostly questions of fact. As to those questions, and because this is an action at law, we need only ascertain whether there is evidence to support the court's judgment. We have reviewed the record and have found ample supporting evidence. We also agree with the decision of the trial court on the remaining questions of law raised by defendant's assignments of error, as set forth in its opinion, which was as follows:


"* * * On May 3, 1974, La Grande Air Service, Inc. (hereafter referred to as 'Air Service') entered into a contract (number 004329S) with the United States Government, Department of Agriculture, Forest Service, (hereafter referred to as 'United States') which required that firm to furnish to the government one fully operational Beechcraft 99 airplane or equal.

"Air Service was to be compensated at the rate of $600.00 for each day the airplane was mandatorily available to United States and an additional $200.00 per hour that the airplane was used. Air Service was a corporation conducting a business concerned with aircraft, with its principal place of business at the La Grande Municipal airport in Union County, Oregon. Defendant Wayne L. Mitchell was the principal executive officer of Air Service.

"Air Service purchased a 1969 Beechcraft airplane, N991GP (hereafter referred to as 'airplane'). It subsequently negotiated a loan from First State Bank of Elgin in the amount of $275,000.00, and these funds were dispersed on August 28, 1974. The funds borrowed by Air Service from First State Bank of Elgin were used to purchase the 1969 Beechcraft airplane, N991GP. As security for the loan, Air Service gave the bank a lien on the airplane and assigned the proceeds from the contract with United States.

"By the terms of the assignment of the proceeds from Contract No. 004329S, Air Service agreed to notify United States of the assignment and to direct that all payments under the contract be sent to the bank until the bank notified United States otherwise. This notice was given by Air Service to United States. The assignment noted Air Service's indebtedness to the bank and the contract entered into by Air Service with United States. Also, the assignment provided that the bank was to notify United States to discontinue payments at the time the indebtedness was fully paid and at that time the assignment would be null and void.

"In September 1975, Air Service sold the airplane to Aerofin, Inc. On November 19, 1975, there was mailed to the bank a draft in the amount of $196,686.58 from Aerofin, Inc., as a full payoff of the bank's loan on the airplane. On November 24, 1975, the bank executed a release of its lien and security agreement on the airplane. Mr. Glenn W. Kirkeby, who was then executive vice-president and who is now president of the bank, handled this transaction on behalf of the First State Bank of Elgin.

"On December 15, 1975, plaintiffs purchased the airplane from Aerofin, Inc. Plaintiffs assigned the proceeds they understood they were to receive from United States for rental of the airplane to Crocker National Bank, and these payments were to be applied on plaintiffs' indebtedness incurred in connection with their purchase of the airplane. No notice was given United States, however, of the sale of the airplane by Air Service or its eventual purchase by plaintiffs.

"During March and April 1976, and while the airplane was owned by plaintiffs, the airplane was used by United States pursuant to Contract No. 004329S and the funds from the work and service were accumulating. On April 8, 1976, and April 15, 1976, plaintiff Murray R. Rosenblum talked on the telephone with Mr. Glenn W. Kirkeby, and Mr. Rosenblum informed Mr. Kirkeby of plaintiffs' ownership of the airplane and the right to the funds earned from the use of that airplane. Mr. Kirkeby declined to recognize plaintiffs' interest in the airplane rental receipts, claiming that he still had a valid assignment from Air Service that entitled the bank to the proceeds. On April 19, 1976, United States executed its check payable to the order of First State Bank of Elgin, as assignee of Air Service on Contract No. 004329S, in the amount of $10,190.80. The bank negotiated this check and applied $7,338.27 on other obligations of Air Service to the bank and deposited the balance, $2,852.53, to the accounts of Air Service in the First State Bank of Elgin. Plaintiffs seek recovery of the $10,190.80 paid to the bank by United States.

"Plaintiffs bring this action for money had and received. The leading case in Oregon on this type of action is Smith v. Rubel, 140 Or. 422 (13 P.2d 1078) (1932). In this case, the Court notes the applicable law to be as follows:

" 'An action for money had and received, although an action at law, is governed by equitable principles. (Citations omitted.) The action is liberal in form and greatly favored by the courts. (Citations omitted.) The generally accepted test which determines whether a recovery may be had is whether the defendant, in equity and good conscience, is entitled to retain the money to which the plaintiff asserts claim. (Citations omitted.) As a general rule, a payment made under a mistake of fact which induces the belief that the other party is entitled to receive the payment when, in fact, the sum is neither legally nor morally due to him, may be recovered, provided the payment has not caused such a change in the position of the payee that it would be unjust to require the refund. (Citations omitted.) The right to the refund is based upon a promise to return which the law implies, irrespective of any actual promise, and even against the refusal of the wrongful party to make it. (Citations omitted.) The payer's failure to exercise ordinary care to avoid mistakes will not defeat his right to recovery in the absence of a change of condition upon the part of the payee. It is sometimes said that neglect to bar recovery must consist of intentional failure to investigate. (Citations omitted.) An error of fact is established when it appears that some fact which the payer supposed existed really did not exist.

(Citations omitted.)' 140 Or. 426 and 427 (113 P.2d 1078).

"I find that the defendant First State Bank of Elgin, in equity and good conscience, is not entitled to retain the money to which the plaintiffs assert a claim. Thus the bank is not entitled to retain the sum of $10,190.80, which the bank received from United States by check dated April 19, 1976.

"The bank is claiming that it is entitled to retain the funds because at the time it had a valid assignment from Air Service to the bank of the proceeds due under Contract No. 004329S. However, at the time the bank received the check from United States, it was aware of the following: (1) that the check was...

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7 cases
  • Ahern v. Gaussoin
    • United States
    • U.S. District Court — District of Oregon
    • 10 Mayo 1985
    ...should have been paid to someone else and it would be `unjust enrichment' for him to retain the money. Rosenblum v. First State Bank of Elgin, 283 Or. 123, 581 P.2d 515, 519 n. 1 (1978). There are simply no facts demonstrating that defendant directors received or retained money under circum......
  • In re Conagra Foods, Inc.
    • United States
    • U.S. District Court — Central District of California
    • 23 Febrero 2015
    ...(2005)). To state a claim, plaintiff need not show that he or she was in privity with the defendant. See Rosenblum v. First State Bank of Elgin, 283 Or. 123, 128–29, 581 P.2d 515 (1978) (“[P]rivity of the contractual type need not exist between the parties,” citing Smith v. Rubel, 140 Or. 4......
  • Pape v. Knoll
    • United States
    • Oregon Court of Appeals
    • 23 Octubre 1984 has changed its position, that change does not mean that it would be unjust to require restitution. See Rosenblum v. First State Bank of Elgin, 283 Or. 123, 581 P.2d 515 (1978). If it did not have a valid claim against plaintiffs for the diverted funds, it could not have foreclosed its m......
  • Belmont Intern., Inc. v. American Intern. Shoe Co.
    • United States
    • Oregon Supreme Court
    • 23 Abril 1992 governed by equitable principles. Albino v. Albino, 279 Or. 537, 553, 568 P.2d 1344 (1977). Accord Rosenblum v. First State Bank of Elgin, 283 Or. 123, 131 n. 1, 581 P.2d 515 (1978); Golden v. Golden, 273 Or. 506, 511 n. 8, 541 P.2d 1397 (1975); Smith v. Rubel, 140 Or. 422, 426, 13 P.2d ......
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