Lawrence v. . American National Bank , 54 N.Y. 432 ( 1873 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] On the 7th day of May, 1866, the plaintiffs made up a statement of their accounts with Post, which showed that there was a balance due to him of $10,643.20, and this sum they paid to the defendant as his assignee. When they made this statement, by mistake, they omitted to charge Post with $5,000, which they had loaned him, and hence they overpaid the defendant the amount of this sum, with interest. This mistake was unknown to them, and was manifestly unknown to the defendant. Both parties must have supposed that the amount paid by the plaintiffs was the amount due, and hence there was a mutual mistake. These facts furnish good ground of recovery by the plaintiffs unless certain other facts furnish the defendant with a defence. (The Kingston Bank v. Eltinge, 40 N.Y., 391; Union National Bank of Troy v.Sixth National Bank of N.Y., 43 N.Y., 452; Duncan v.Berlin, 46 N.Y., 685.)

It is claimed that it was plaintiffs' mistake, and that they had the means in their possession at the time of the payment for the discovery of the mistake, and that they were negligent in not discovering it. The authorities above cited show that negligence in making a mistake does not deprive a party of his remedy on account thereof. It is the fact that one by mistake unintentionally pays money to another to which the latter is not entitled from the former, which gives the right of action, and the fact that the mistake occurs through negligence does not give the payee any better or the payer any worse title to the money.

It is further claimed that the defendant settled with Wilson, Gibson Co., who were sureties for Post's liability to it, and that upon such settlement they were credited with the entire amount paid to it by the plaintiffs, and discharged, and hence, that it has been damnified by the mistake caused by the plaintiffs. The authorities above cited show that this is no answer to plaintiffs' claim. Unless the plaintiffs could recover of the defendant, they seem to have been without any remedy, as Post was insolvent. On the contrary, the defendant having discharged Wilson, Gibson Co. from their liability by mistake, can avoid the discharge and resort to them for so much as it is compelled to pay to the plaintiffs in this action. Hence it is not clear that the defendant will suffer any damage on account of plaintiffs' mistake. (Wheadon v. Olds, 20 Wend., 174;McDougall v. Cooper, 31 N.Y., 498.)

The doctrine of estoppel cannot be applied to this case. The plaintiffs, so far as appears, knew nothing about the relations between defendant and Wilson, Gibson Co.; they made no representation or statement to induce the defendant to act; they simply paid by mistake $5,000, and interest, more than they ought to have paid. The doctrine of estoppel in pais is founded upon equitable principles, and is applied to prevent fraud and injustice. It would be a very singular and extraordinary application of the doctrine to apply it for the purpose of preventing a party from alleging an innocent mistake. I cannot find that a party has ever been estopped by a mistake.

I am, therefore, of the opinion that the case was properly decided in the courts below, and that the judgment should be affirmed, with costs.

All concur.

Judgment affirmed.