Kreutz v. Livingston

Cope J. delivered the opinion of the Court Baldwin, J. and Field, C. J. concurring. The demurrers to the complaint were improperly sustained. The action is for money had and received to the use of the plaintiff, and the facts stated in the complaint show clearly that the defendants are in possession of money which in equity and conscience they are bound to pay over. They were the holders of a mortgage, given to secure the payment of advances made, and to be made, by themselves, and others, to the mortgagors. The plaintiff had made certain advances, and was one of the persons intended to be secured, though not a party to the mortgage. The defendants assigned the mortgage, and received the consideration therefor, but refuse to pay any portion of the money to the plaintiff. We think that, upon proof of these facts, the plaintiff will be entitled to recover. The principal ground of objection is that there is no contract, and consequently no privity between the parties. But it seems to be settled that no privity is required in such a case, except that which results from one person having the money of another, which he has no right conscientiously to retain. In Hall v. Marston, (17 Mass. 574) one Bradford, being indebted to the plaintiff in the sum of four hundred dollars, and to the defendant in the sum of $1,300, remitted to the latter a bill of exchange for $1,000, with directions, when the amount should be received, to pay to the plaintiff the [347] sum of two hundred dollars. The defendant received the amount of the bill, but neglected to pay the plaintiff, and gave him no notice of the remittance. The action was for money had and received, and it was held that the plaintiff was entitled to recover. Parker, C. J., in delivering the opinion of the Court, said : “ The principal objection to the plaintiff’s right of action, is that the case does not show any privity between the plaintiff and the defendant, nor any promise to the defendant; so that, if any action can be maintained, it must be by Bradford against the defendant, for a violation of his implied undertaking to pay the two hundred dollars, according to his instructions. It seems to have been well settled heretofore, that if A promise B, for a valuable consideration, to pay to C, the latter may maintain assumpsit for the money. It is so laid down in many of the authorities cited by the plaintiff’s counsel; and it is stated, in Lord C. B. Comyn’s Digest, Assumpsit E, that if money be given to A to deliver to B, B may have the action; and Roll. Abr. and Hard. Rep. are cited in support of the position. The principle of this doctrine is reasonable, and consistent with the character of the action of assumpsit for money had and received. There are many cases in which that action is supported without any privity between the parties, other than what is created by law. Whenever one man has in his hands the money of another, which he ought to pay over, he is liable to this action, although he has never seen or heard of the party who has the right. When the fact is proved that he has the money, if he cannot show that he has legal and equitable ground for retaining it, the law creates the privity and the promise.” (See Eagle Bank of New Haven v. Smith, 5 Conn. 71; Dickson v. Cunningham, Mart. & Yerg. 221; Mason v. Waite, 17 Mass. 558; Arnold v. Lyman, 17 Id. 400.) The case at bar is much stronger than any of the cases cited. The defendants occupied toward the plaintiff the position of trustees, and the money sued for was received in that character. It is of no consequence that the trust was created by a contract tó which the plaintiff was not a party. He subsequently assented to it, and the defendants cannot now repudiate it, and retain money which they would not otherwise have received. The plaintiff is as much entitled to the benefit of the trust as if he had been a party to the contract. Judgment reversed, and cause remanded for* further proceedings.