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standing, and if the business understanding actually is satisfied by them, or reasonably so, it is probably more important to have the rule certain than to have it settled in any given way.

But there is no excuse for the departure from equitable principle where the actual understanding of the parties cannot be called in to justify it. The cases, therefore, where no express contract exists and no question of implied warranty or misrepresentation as to agency is involved, and yet the plaintiff is allowed to recover against an equally innocent defendant who has suffered an irrevocable change of position, must be condemned unqualifiedly. Fortunately the latter cases are few, and once they are discriminated from the cases where contracts express or implied in fact are asserted, it ought not to be hard to get them overruled, especially as they are squarely opposed by cases in other jurisdictions.3 Certainly the chances of a reversal, and of keeping new jurisdictions from following these erroneous cases, are greatly increased by showing that these cases form a class by themselves because there is in them no undertaking implied in fact to interfere with equitable principles.*

1 “ But even if the decisions had originated the difference without adequate ground, when once it exists its existence is a sufficient reason for continuing to decide in accordance with it.” Holmes, C. J., in Dedham Nat'l Bank v. Everett Nat'l Bank, 177 Mass. 392, 396.

2 They are Durrant v. Ecclesiastical Commissioners, 6 Q. B. D. 234; Kingston Bank v. Eltinge, 40 N. Y. 391 ; Bank of Toronto v. Hamilton, 28 Ont. 51; and see Phetteplace v. Bucklin, 18 R. I. 297 ; Koontz v. Central Nat'l Bank, 51 Mo. 275.

8 Crocker Woolworth Bank v. Nevada Bank, 139 Cal. 564; Behring v. Somerville, 63 N. J. L. 568; Boas v. Updegrove, 5 Pa. St. 516; Union Bank of Lower Canada v. Ontario Bank, 24 Lower Can. Jur. 309. See Pensacola, etc., Co. v. Braxton, 34 Fla. 471.

4 In England Durrant v. Commissioners, supra, which “is difficult to explain, unless by reason of the relative positions in life of the parties the defendant should be held responsible for the consequences of the mistake” (Professor Ames, 4 Harv. L. Rev. 310, n.), might easily be overruled, for the court was mistaken in supposing it to be sustained by Cocks v. Masterman, 9 B. & C. 902 (see Keener, Quasi-Contracts, 66, 67), and seemingly overlooked the earlier case of Watson v. Moore, 33 L. T. R. 121. See also Pooley v. Brown, 11 C. B. (N. s.) 566.

In New York, Kingston Bank v. Eltinge, 40 N. Y. 391, has been approved in dicta and has been supposed to be supported by Corn Exchange Bank v. Nassau Bank, 91 N. Y. 74, but the latter case was a case of forged indorsement and hence governed by different considerations. The later New York cases are not unfriendly to a change from Kingston Bank v. Eltinge. See Continental Nat'l Bank v. Tradesmen's Bank, 173 N. Y. 272, where the court recognized the equity of the defendant's change of position, and said that the plaintiff could not recover even if it did not owe any duty to the defendant in particular, but simply owed a general duty. See also Nat'l Park Bank v. Seaboard Bank, 114 N. Y. 28. The fact that in Kingston Bank v. Eltinge,

The doctrine of Durrant v. Commissioners 1 and its small following, that the irrevocable change of position of the defendant is immaterial where there is no "mutual relation between the parties creating a duty on the part of the plaintiff” to the defendant, misconceives the situation altogether. The defendant has the legal title to the money and can be deprived of it only where it is inequitable for him to keep it; but where the defendant's situation has changed in consequence of the mistake, so that repayment would leave him with a total loss, it is clearly not inequitable for him to keep it. The question is not whether the plaintiff owes a duty to the defendant, but whether the defendant has been excused from the obligation to repay.

This point is brought out clearly in the late case of Crocker Woolworth Bank v. Nevada Bank.2 It is almost never that a check case can present the equitable situation freed from questions of implied warranty and of agency, but this case seems to do it. For reasons not material and not defended here, the California court held that the plaintiff had paid the defendant a raised check on a so-called indorsement so restricted that the defendant was not liable on the indorsement; that the defendant incurred no implied liability from presenting the check for payment so indorsed; and that the defendant did not impliedly or otherwise represent to the plaintiff that the defendant was acting as a principal. That left the situation simply one of payment by an innocent mistake of the plaintiff, receipt by an innocent mistake of the defendant, and an innocent change of position by the defendant in the subsequent payment of most of the money over to its depositor. The California court thereupon properly held that the equities were equal, and that the plaintiff could not recover the money the defendant had paid over to its depositor.3

40 N. Y. 391, the court wrongly considered “that the plaintiff had the legal title although the money had been paid to the defendant by the plaintiff's consent" (4 HARV. L. REV. 310, n.), coupled with the fact that the decision did not even determine finally the rights of the parties to the action, — the defendant ultimately obtained a judgment on other grounds (Kingston Bank v. Eltinge, 66 N. Y. 625), - ought to make a reversal feasible.

Ontario would doubtless sooner or later follow England, if the latter should change, especially as one Canadian case announces the right rule. Union Bank v. Ont. Bank, 24 Lower Can. Jur. 309. 16 Q. B. D. 234.

139

Cal. 564. 3 As a decision on the subject of change of position, the California case is not seriously impaired by the general doctrine that where it appears from the indorsement that the collecting bank is acting merely as agent, it cannot be made to refund if it has

2

(d) The parties are equally negligent.

It seems clear that in a jurisdiction where no recovery is allowed if both parties are free from blame as to the mistake, no recovery will be allowed where they are equally to blame. The defendant has the legal title to the money and the equity of a change of position, while the plaintiff has no superior equity. Indeed, the plaintiff should no more recover here than where he alone is to blame, for “the fact being that but for the negligence of the plaintiff no loss would have been incurred, the law should leave the loss where it finds it."1 In a jurisdiction where recovery is allowed despite the fact that the defendant is not to blame and has innocently changed his position, recovery will be allowed where the parties are equally to blame. If the defendant has not changed his position, the plaintiff will, of course, recover.3

(e) The plaintiff has been guilty of negligence about notifying the defendant of the mistake.

Since there can be no recovery where the plaintiff alone was negligent and the defendant suffered a loss, it is just as true that there can be no recovery where money is paid by mistake and the plaintiff, even though careful at the time, is negligent about notifying

paid over the money to its principal before notice of the mistake. Nat'l Park Bank v. Seaboard Bank, 114 N. Y. 28. The reason why it is not so impaired is that the court does not hold that the indorsement — “pay only through the clearing-house ” — gave notice of agency, but simply said that in view of that indorsement the plaintiff could not say that the defendant represented anything more than the fact that the defendant was the holder of the check (139 Cal., at p. 582). To be sure, on the same page the court refers to the “ general practice” proven for banks not to buy, but to take for collection only, local checks such as the one paid by plaintiff, but even that general practice is not relied on to show that plaintiff knew that defendant was an agent;- it is simply referred to in order to negative the claim of the plaintiff that plaintiff had the right to infer that the defendant received payment as owner of the check or acted upon any such inference. No doubt if it had been necessary, the court would have held that the plaintiff knew that defendant was an agent, as it shows on pp. 582–583 that there was evidence that the plaintiff did know that fact, but the court preferred to rest its decision on the broad equitable principle announced in Holley v. Missionary Society, 180 U. S. 284. See 139 Cal., at pp. 570-573.

1 Keener, Quasi-Contracts, 72. See Pooley v. Brown, 11 C. B. (N. S.) 566, where the mistake was treated by the majority of the court as one of law, and both parties being at fault, the plaintiff was not allowed to recover against a defendant whose position was changed. The case of Behring v. Somerville, 63 N. J. L. 568, seems to be a case where neither party was actually negligent, but might be cited here.

? Koontz v. Central Nat'l Bank, 51 Mo. 275. In Union Bank v. Bank of U. S., 3 Mass. 74, the court seems to have regarded the defendants as more negligent than the plaintiff, they committing the first fault.” The same seems true of Clark v. Eck. royd, 12 Ont. App. 425.

3 Devine v. Edwards, 87 Ill. 177.

the defendant after the plaintiff discovers the mistake, and in consequence the defendant innocently changes his position."

CONCLUSION.

1

In closing it should be said that if this paper has made any clearer the problem before the court in the kind of cases here discussed, it has served its end. This particular field has been somewhat neg. lected, so that exposition rather than argument is needed. Our exposition has disclosed that except in a few jurisdictions change of position caused by a payment made under mistake of fact, for which mistake the defendant is not responsible, is a complete defense to an action to recover the money, unless by express contract or by a contract implied in fact the defendant has put it out of his power to make use of the defense.

V!!! VIVV UIT LIUI

It should be added that except in the few jurisdictions which allow a plaintiff to throw the loss upon an equally innocent defendant by taking from such defendant that title to the money which the plaintiff himself conferred upon the defendant, it is impossible to assert positively that the results reached by the courts are erro

It being conceded, as under our common law system it must be, that the general equitable doctrine that where the equities are equal the legal title must prevail has no application where by actual contract, that is, by express contract or by contract implied in fact, the parties agree that it shall not apply, the cases which find such an implied actual contract to exist rest upon an assumed general business understanding which is extremely difficult, if not impossible, to disprove. For that reason it is believed that they are now invulnerable to attack except through legislation. But vigorous protest may be effective, and therefore must still be raised, against those cases where equitable principle as such has been violated by the courts.

George P. Costigan, Jr. LINCOLN, NEBRASKA.

neous.

1 Skyring v. Greenwood, 4 B. & C. 281; Pooley v. Brown, 11 C. B. (N. s.) 566; Iron City Nat'l Bank v. Ft. Pitt Nat'l Bank, 159 Pa. St. 46; U. S. v. Clinton Nat'l Bank, 28 Fed. Rep. 357 ; Third Bank v. Merchant's Bank, 76 Hun (N. Y.) 475; Continental Nat'l Bank v. Metropolitan Nat'l Bank, 107 Ill. App. 455. And see London and River. plate Bank v. Bank of Liverpool, (1896) 1 Q. B. 7; Bank of St. Albans v. Farmers', etc., Bank, 10 Vt. 141.

The case of Iron City Nat'l Bank v. Ft. Pitt Nat'l Bank, supra, is in point on this question of change of position solely because a statute has changed the rule of Price v. Neal in Pennsylvania. See Corn Exchange Nat'l Bank v. Nat'l Bank of the Republic, 78 Pa. St. 233.

HARVARD LAW REVIEW.

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Editorial Board. Hugh SATTERLEE, President.

JOHN J. ROGERS, Treasurer. EDWIN H. ABBOT, JR.,

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JOSEPH H. IGLEHART, DONALD DEFREES,

PHILLIPS KETCHUM, RICHARD P. DIETZMAN,

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JAMES W. MUDGE, KARL T. FREDERICK,

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SIDNEY Sr. F. THAXTER, EDWARD H. GREEN,

WILLIAM D. TURNER, STUART GUTHRIE,

JOHN H. WATSON, JR.

THE PROPOSED RIGHT OF APPEAL BY THE GOVERNMENT IN CRIMINAL CASES. — In this country, by the overwhelming weight of authorities, including the United States Supreme Court, it is held that the common law gives the state no right of appeal in criminal cases. In the recent message to Congress, President Roosevelt called attention to the need of an enactment altering the present rule, and conferring upon the United States the right of appeal in criminal cases on questions of law. He points out incisely the power at present possessed by a single district judge to set at naught a congressional enactment believed by the vast majority of his colleagues to be valid ; the danger of frequent conflicts, real or apparent, in the decisions of the various district or circuit courts, and the unfortunate results thereof; and the impossibility of the government's obtaining final and uniform rulings by recourse to a higher court. At the last session of Congress the House of Representatives, recognizing these evils, passed a bill allowing the United States “the same right of review by writ of error that is given to the defendant, including the right to a bill of exceptions : provided that ... a verdict in favor of the defendant shall not be set aside."2 The bill, entirely transformed, was unanimously reported by the Senate committee on judiciary. As amended, it granted to the United States writs of error (and bills of exceptions) from decisions or judgments, “quashing or setting aside an indictment”; “sustaining a demurrer to an indictment or any count thereof”; “arresting a judgment of conviction for insufficiency of the indictment”; or “sustaining a special plea in bar when the defendant has not been put in jeopardy." Although little was said in opposition to this measure, it never reached a vote.

From a legal standpoint the proposed legislation seems likely to involve few seriously objectionable features. The enactment, however, should not

Rev. 354.

1 United States v. Sanges, 144 U. S. 310, and cases cited. See also 8 Harv. L. 2 See Congressional Record, ist Session 59th Congress, 5408. 3 See Congressional Record, ist Session 59th Congress, 7589, 8695.

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