Todd v. Bettingen

• Decision Date: 21 January 1910
• Docket Number: 16,120 - (5)
• Parties: JOHN A. TODD v. WILLIAM J. BETTINGEN
• Court: Minnesota Supreme Court

124 N.W. 443

109 Minn. 493

JOHN A. TODD v. WILLIAM J. BETTINGEN

Nos. 16,120 - (5)

Supreme Court of Minnesota

January 21, 1910

Action in the district court for Hennepin county to recover $20,500 as and for money had and received. Defendant demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. From an order Simpson, J., overruling the demurrer, plaintiff appealed. Reversed.

SYLLABUS

Action for Money Received -- Pleading -- Statute of Frauds.

The complaint for money had and received set forth: Pursuant to an oral agreement, plaintiff delivered to defendant shares of stock of the value of $31,500. Defendant delivered to plaintiff shares of stock in another company of the value of $11,000, but failed and refused to convey to plaintiff a tract of land he had agreed to transfer to him. The contract was void under the statute of frauds. Plaintiff prayed for judgment for $20,500. On demurrer it is held:

1. The action for money had and received may lie, although the parties sought to be charged had received, not money, but other form of property.

a. That action is in the nature of an equitable remedy to compel one unjustly enriched at the expense of another to disgorge.

b. Code pleading intends to administer practical justice, unhampered by the artificial restrictions and technicalities of mere form of action, or by the observance of strict demarcation between law and equity.

c Consistency, expediency, and authority concur in justifying its use under the present circumstances.

d. It is immaterial to plaintiff's right to recover that the contract was void. The law imposes on defendant the duty to return what he had received thereunder, or its value, as being held by him on a consideration which has failed.

2. An allegation of demand on defendant by plaintiff for the stock plaintiff had delivered was not necessary.

3. The complaint did not seek to recover damages in lieu of a sum definite and certain.

4. The party seeking to recover as for money had and received in the value of property other than money delivered by him to the party sought to be charged must allege the return or tender of specific property delivered to him by that party, or must allege excuse for his failure so to do.

a. A party to a contract void under the statute of frauds does not act fraudulently or illegally in asserting its bar, nor is he to be penalized for so doing. The inequitable conduct of this defendant consisted in an attempt to enrich himself at plaintiff's expense, and not in pleading that statute.

b. The law of quasi contracts proceeds upon the obligation of the party sought to be charged to make restitution. Its fundamental principle is that the party must be placed in statu quo so far as reasonably may be.

Harris Richardson and Harold C. Kerr, for appellant.

Plaintiff seeks to recover a part of the consideration for an entire contract. He does not allege that he ever notified appellant that the contract was rescinded or that he has restored or offered to restore the stock that he took under it. It was in large part performed. 1 Chitty, Pl. 355; Hunt v. Silk, 5 East, 449, and Beed v. Blandford, 2 Y. & J. 278, are strong cases; Miner v. Bradley, 22 Pick. 457; Cook v. Gilman, 34 N.H. 556; Smart v. Gale, 62 N.H. 62. Plaintiff is really seeking to retain all of the property to which he could get title and recover a proportionate part of the purchase money for the rest, although the transaction was entire. This he cannot do. Johnson v. Johnson, 3 B. & P. 162; Young v. Wakefield, 121 Mass. 91.

It was necessary for plaintiff to plead the Dakota statute of frauds relating to land transactions. Myers v. Chicago, St. P., M. & O. Ry. Co., 69 Minn. 476.

Wilson & Mercer, for respondent.

The demurrer admits the receipt of the stock, and $20,500 as the proceeds thereof, and its keeping without pay. This is enough according to the rules of this court. Bennett v. Phelps, 12 Minn. 219 (326); Johnson v. Krassin, 25 Minn. 117; Wyvell v. Jones, 37 Minn. 68; Pressnell v. Lundin, 44 Minn. 551; Payne v. Hackney, 84 Minn. 195; Proctor v. C.E. Stevens Land Co., 94 Minn. 181; Taylor v. Read, 19 Minn. 317 (372); Herrick v. Newell, 49 Minn. 198; Kicks v. State Bank, 12 N.D. 576; Parks v. Fogleman, 97 Minn. 157.

The contract being repudiated by respondent, and held by this court to be void under the statute of frauds, nothing was left to terminate. Todd v. Bettingen, 98 Minn. 170; Smith v. Lamb, 26 Ill. 397; Russell v. Gillmore, 54 Ill. 147; Richards v. Allen, 17 Me. 296; Bennett v. Phelps, supra; Taylor v. Read, supra; Reynolds v. Franklin, 41 Minn. 279.

The complaint which this demurrer admits gives credit to defendant for the full value of his stock, and demands judgment only for the excess consideration. Herrick v. Newell, supra. Under the rule of equitable offset here applied, actions were maintained before the praetor (equity judge) in Rome. This was done under the theory that "de obligationibus quasi ex contractu" applied. Sandar, Justinian, p. 465; Moses v. Macferlan, 2 Burr. 1011; Day v. New York, 51 N.Y. 583; Day v. New York, 89 N.Y. 616; Richards v. Allen, supra; Chapman v. Rich, 63 Me. 588; Hill v. Rewee, 11 Metc. (Mass.) 268; Mansfield v. Trigg, 113 Mass. 350, 354.

The ultimate fact of the statute of frauds of North Dakota was pleaded. It will be shown by evidence as any other fact, without pleading that evidence. Berney v. Drexel, 33 Hun, 34; 16 Cyc. 851; Graham v. Williams, 21 La. An. 594; U.S. v. Teschmaker, 22 How. 392; People v. Lon Yeck, 123 Cal. 246.

OPINION

JAGGARD, J.

This case has been before this court on other issues (98 Minn. 170, 107 N.W. 1049), in which the complaint was construed to set forth a cause of action for recovery of damages upon breach of a contract, void under the statute of frauds.

The complaint in this action was for money had and received. So far as here involved, it set forth: Pursuant to an oral agreement, plaintiff delivered to defendant shares of stock of the value of $31,500. The defendant delivered stock in another company of the value of $11,000, but failed and refused to convey a described tract of land which he had contracted to transfer. The contract was void under the statute of frauds. Plaintiff sought to recover the full value of his stock less the value of defendant's stock. He demanded judgment for the excess of consideration. Defendant demurred, on the ground that the complaint did not state facts sufficient to constitute a cause of action. This appeal was taken from the order overruling the demurrer.

1. The first controversy to be determined is whether, in any view, the action in its present form can be maintained. Because the defendant did not receive money from the plaintiff, can he recover for money had and received? It has frequently been said "it must in general appear that the defendant has received money, and not merely money's worth, as stock or goods," in order that he may recover for money had and received. 1 Chitty, Pl. 351. And it has, indeed, been held that the action will not lie where no money has been received. Nightingal v. Devisme, 5 Burr. 2589. And see Jones v. Brinley, 1 East, 1; Taylor v. Higgins, 3 East, 169; Morrison v. Berkey, 7 Serg. & R. 238; Beardsley v. Root, 11 Johns. 464, 6 Am. Dec. 386; Dean v. Mason, 4 Conn. 428, 10 Am. Dec. 162; Carlisle v. Dunn, 5 Blackf. 605; Updike v. Armstrong, 3 Scam. 564; Boyer v. Bullard, 102 Pa. St. 555, 558; Burnap v. Partridge, 3 Vt. 144; Moyer v. Shoemaker, 5 Barb. 319. There are other authorities to the same effect.

None the less we are of opinion that the action for money had and received lay, although the defendant did not receive money, but stock, from the plaintiff. The fundamental theory of this action is nowhere better stated than by Lord Mansfield. We quote his views at some length, because of the misapprehension of the nature of the action which has appeared from time to time in arguments before this court. In Moses v. Macferlan, 2 Burr. 1005, at page 1012, he says:

"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 honor 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 the defendant may retain it with a safe conscience, though by positive law he was barred from recovering. But it lies for money paid by mistake, or upon a consideration which happens to fail, or for money got through imposition (express or implied), or extortion, or oppression, or an undue advantage taken of the plaintiff's situation, contrary to laws made for the protection of persons under those circumstances. In one word: The gist of this kind of action is that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money. * * *"

Even at common law the remedy was considerably extended, and its further extension commended. In Longchamp v. Kenny, 1 Douglas, 137, Lord Mansfield said: "Great benefit arises from a liberal extension of the action for money had and received, because the charge and defense in this kind of action are both governed by the true equity and conscience of the case." The difficulty encountered at common law that a court of law may in this form of action go too far in...