Smith v. Rubel

Citation140 Or. 422,13 P.2d 1078
PartiesSMITH v. RUBEL.
Decision Date14 September 1932
CourtSupreme Court of Oregon

Department 2.

Appeal from Circuit Court Multnomah County; James P. Stapleton Judge.

Action by L. E. Smith against A. L. Rubel for money had and received, predicated upon allegations of the complaint which aver that the defendant received $993.81 belonging to the plaintiff's assignors which he, in equity and good conscience, cannot retain. The answer admits that the defendant received the said sum of money, but denies all imputations that the money was received under circumstances which render its retention inequitable. From a judgment in favor of the defendant, the plaintiff appealed.

Reversed and remanded, with directions.

Herbert L. Swett, of Portland (Dey, Hampson &amp Nelson, of Portland, on the brief), for appellant.

John W Kaste, of Portland, for respondent.

ROSSMAN J.

Preceding the trial, the parties agreed upon the facts constituting the foundation of the action, and thereupon signed a stipulation to which we shall now refer. August 5, 1930, the defendant owned 40 shares of the class B capital stock of the Time-O-Stat Controls Company of Elkhart, Ind. The class A stock of that corporation was listed on the Chicago Stock Exchange and sold at $25 per share. The class B stock was not listed upon any exchange, and its sale was effected in Chicago, Indianapolis, Minneapolis, Milwaukee, and Elkhart in a manner described in the stipulation as "over the counter market," at a price of $10 per share. August 5 1930, a representative of Tucker, Hunter, Dulin & Co., dealers in investment securities, which maintained offices in several Pacific Coast cities, but none in the cities just named, interested the defendant in the purchase of shares of the Shenandoah Company. Without committing himself to buy any of that stock, the defendant authorized Tucker, Hunter, Dulin & Co. to sell his 40 shares of Time-O-Stat Controls Company stock at $25 per share, expecting to invest the proceeds in Shenandoah stock. Next, he indorsed his certificate in blank, and delivered it to the brokers with authority to sell at a price of $25 per share, less the commission. The brokerage company was not a member of any stock exchange, and, as we have seen, had no offices in any of the cities where Time-O-Stat stock was sold. Upon receipt of the certificate, the brokers delivered it to the Portland office of E. A. Pierce & Co., plaintiff's assignors, which is a partnership maintaining a membership in the Chicago Stock Exchange, and instructed that firm to sell the stock. This employment was without the knowledge of the defendant. Pierce & Co.'s Portland office at once telegraphed to its Chicago office to sell 40 shares of class B Time-O-Stat stock at $25 per share. We now quote from the stipulation: "The Chicago office of E. A. Pierce & Company upon receiving said telegraphic instructions, inasmuch as the published quotations of stock sold on said Exchange referred simply to 'Time-O-Stat' without distinguishing between Class A and Class B stock thereof, erroneously assumed that said instructions referred to the stock listed on said Chicago Stock Exchange, to-wit: Class A stock, and thereupon sold on the Chicago Stock Exchange 40 shares of Time-O-Stat Controls Company Class A stock at $25.00 per share and immediately notified its Portland office that the said Portland order had been fulfilled."

Upon receipt of that information, the Portland office of pierce & Co., paid to Tucker, Hunter, Dulin & Co. $993.81, being the full sales price less the commission, and that company thereupon notified the defendant of what had occurred. The defendant then bought 85 shares of Shenandoah stock, paying for it with his credit of $993.81 and $15.87 cash. Upon receipt of the defendant's certificate of 25 shares of class B Time-O-Stat stock at the Chicago office of Pierce & Co., the mistake was discovered and explanations were made to all interested parties. The individual who had purchased the Time-O-Stat stock agreed to a cancellation of his purchase. Pierce & Co. were then advised that, after the receipt of the proceeds of the supposed sale, the defendant purchased the Shenandoah stock, and that since then his Shenandoah stock had declined in value. Pierce & Co. at once (August 28, 1931) offered to pay him an amount equal to the difference in the price of Shenandoah stock at the time of his purchase and its then market value, provided he would return to Pierce & Co. the aforementioned $993.81. It also offered that, if the defendant would return to them $993.81, they would accept his 85 shares of Shenandoah stock and pay him the full sum which he had paid for it. The defendant declined both offers. We quote again from the stipulation: "E. A. Pierce & Company has endeavored continuously since the date said mistake was discovered to sell said Time-O-Stat Controls stock at a price of $25.00 per share, but has not been able to effect any sale thereof, and said stock is still in its hands subject to defendant's order, no title to said stock being claimed by E. A. Pierce & Company or by plaintiff herein. The market price of said Class B stock at no time during the years 1930 and 1931 has been as high as $25.00 per share."

E. A. Pierce & Co. assigned their claim to the plaintiff.

Briefly stated, it appears from the above that the defendant is still the owner of his 40 shares of Time-O-Stat stock; that it was never worth more than $400; that he received $993.81 of E. A. Pierce & Co.'s money when that firm, through a mistake, believed that it had sold his stock; that, after the defendant had been apprized of this error, he refused to return the money which had been paid to him; and that the defendant possesses a sum exceeding in amount double the value of his stock and still owns his stock.

An action for money had and received, although an action at law is governed by equitable principles. Powder Valley State Bank v. Hudelson, 74 Or. 191, 144 P. 494; Kern v. Feller, 70 Or. 140, 140 P. 735; Edwards v. Mt. Hood Construction Co., 64 Or. 308, 130 P. 49; Hoxter v. Poppleton, 9 Or. 481. The action is liberal in form, and greatly favored by the courts. Maurice Allen v. M. Mendelsohn & Son, 207 Ala. 527, 93 So. 416, 31 A. L. R. 1063. 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. Powder Valley State Bank v. Hudelson, supra; Kern v. Feller, supra; Edwards v. Mt. Hood Construction Co., supra; Peterson v. Foss, 12 Or. 81, 6 P. 397; Hoxter v. Poppleton, supra. 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. Security Savings & Trust Co. v. King, 69 Or. 228, 138 P. 465; Scott v. Ford, 52 Or. 288, 97 P. 99; ...

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