Holden v. Davis

Chalmers, J., delivered the opinion of the court. Sandy Turner drew two drafts in favor of G-. M. Davis on C. L. Holden, of the same date, amount and maturity, one of which was, and the other was not, accepted by Holden. Neither was intended as a duplicate of the other, but together they represented the amount intended to be paid by the drawer to the payee. On the day of maturity the unaccepted one was presented to Holden, and by him paid, under the mistaken belief, through carelessness and inattention, that it was the accepted one which he was paying. It is agreed that no fraud was prac-tised or intended by the payee, who must be held therefore to have presented the unaccepted draft with the bona fide purpose of seeing whether the drawee would not pay it despite the lack of previous acceptance. It is not shown whether it had been previously presented for acceptance or not. Suit is now brought on the draft which was accepted, and the acceptor pleads, by way of set-off, the amount paid by mistake upon the draft upon which he was not liable. There can be no doubt of the right to plead, as a set-off, any demand for which a suit can be sustained under the common counts, for money had and received or for money paid out and expended; and it is equally well settled that money paid under a mistake of fact, where the [771] party receiving it was not entitled to it, may be recovered even though the mistake originated in carelessness or forgetfulness, and the party making the payment had the means of information at hand. Kelly v. Solari, 9 M. & W. 54 ; Waite v. Leggett, 8 Cowen, 195; Rutherford v. McIvor, 21 Ala. 750. We think, nevertheless, that the court below rightly ruled that the facts pleaded constituted no defence. While it is true that money paid by mistake by one who is not liable for it may be recovered back, the principle will not apply where, in a case free from fraud, it is paid to one who is entitled to receive it from a third person, and who loses the right to pursue such third person by reason of the mistaken payment. The payee in this case lost the right to hold the drawer of the unaccepted draft liable by reason of his failure to protest it, and the failure to protest was caused by the payment made by Holden. This payment it is shown took place on the last day of grace, and it was several days afterwards before Holden discovered his mistake and notified the payee of it. The drawer was consequently released, and, as this result was caused by Holden’s mistake, the loss must fall upon him. Judgment affirmed.