Jackson v. McKnight

On the 23d of March, 1875, the defendant was the assignee and owner of a bond and mortgage executed by the plaintiff, which had become payable several years before. The interest had been payable annually on the tenth of September, and it had in fact been paid up to September 10, 1874. On the day first mentioned, the defendant stated to the plaintiff that $230 of interest, payable September 10, 1874, were unpaid, and the plaintiff thereupon paid the defendant $230 for such interest, not remembering, at the time, that the interest had been- paid to that date. In January, 1876, the defendant assigned the bond and mortgage. After a lapse of two years the plaintiff sued to recover back this money as overpaid by mistake.

The difficulty is that, at the time when the plaintiff made this payment, he was owing the defendant a much larger amount, overdue and payable on the very obligation upon which this payment was made. Clearly, if the plaintiff had handed the defendant $230 to apply on the bond and mortgage, he could not have recovered that sum back. But in this present case he claims to recover, because it was intended as a payment of interest which *4had, in fact, been paid; and not as a payment of principal, which, had not. The payment, however, was really made on the debt. The plaintiff is, and'always will be, entitled to a credit for so much, paid thereon. The defendant and the defendant’s assignee can enforce the bond and mortgage only for what is payable, after crediting this and all other payments. In fact, over six months’ interest had accrued at the time when this money was paid, payment of which (it would seem) might have been demanded, the principal being overdue. And further, after this money was paid and before the suit was commenced, even before the defendant assigned the bond and mortgage, interest accrued on the bond and mortgage more than this amount. How any subsequent payments were made is not shown.

The action to recover money paid by mistake is sustained, because otherwise the party would suffer an unjust loss. It should not be extended to oases where the relief is not necessary. It is not necessary in the present case, because the plaintiff can protect himself whenever he is sued on the bond and mortgage. Perhaps, in such suit, the holder of the mortgage may voluntarily give the plaintiff the credit to which he is entitled for this payment. Any questions between the defendant and his assignee, as. to the defendant’s liability on the assignment, they must settle, among themselves.

The judgment should be reversed, a new trial granted, the reference discharged, costs to abide the event.

Judgment reversed, new trial granted, reference discharged,, costs to abide event.