The defendants in an execution paid to the agents of the
plaintiff the amount of the debt and gave a verbal notice that it
was their intention to sue out a writ of error to reverse the
judgment. This was afterwards done, and the judgment was reversed.
The agents of the plaintiff paid over to him forthwith the amount
received, and the defendants instituted a suit against the agents
to recover the sum paid to them.
Held that they could not
recover.
It is a settled rule of law that upon an erroneous judgment, if
there be a regular execution, the party may justify under it until
the judgment is reversed, for an erroneous judgment is the act of
the court.
On the reversal of an erroneous judgment, the law raises an
obligation in the party to the record who has received the benefit
of the judgment to make restitution to the other party for what he
has lost, and the mode of proceeding to effect this object, may be
regulated according to circumstances. Sometimes it is done by a
writ of restitution, without a
scire facias, when the
record shows the money has been paid, and there is a certainty as
to what has been lost. In other cases, a
scire facias may
be necessary to ascertain what is to be restored. But as it
respects third persons, whatever has been done under the judgment
whilst it remained in fall force is valid and binding.
Where money is wrongfully and illegally exacted, it is received
without any legal right or authority to receive it, and the law at
the very time of payment creates the obligation to refund it. A
notice to recover back the money does not even in such cases create
the right to recover it back; that results from the illegal
exaction of it, and the notice may serve to rebut the inference
that it was a voluntary payment or made through mistake.
The action was assumpsit in the circuit court, and was
instituted by the Bank of Washington against the Bank of the United
States for money had and received, to recover the sum of $881.18,
with interest. The case was submitted to that court on the
following case agreed.
In this case, Triplett & Neale recovered a judgment at
Alexandria court at April term, 1824, against the Bank of
Washington, which was afterwards taken to the Supreme Court by writ
of error and there reversed, as appears by the record of the same
in the Supreme Court, and the proceedings in that court in the
matter of the writ of error,
Bank of Washington
Page 31 U. S. 9
v. Triplett & Neale, decided at January term, 1828
of the Supreme Court.
26 U. S. 1 Pet.
25.
The Bank of Washington, on 2 June, 1824, had petitioned for the
allowance of a writ of error in the said case, and presented such
petition to one of the judges of the Supreme Court, by whom it was
refused, and afterwards the said petition was presented to the
Chief Justice of the United States, by whom the writ was allowed on
15 March, 1825, and the same was accordingly issued as by the
record; on 30 August, 1824, Triplett & Neale sued out execution
on said judgment, and immediately sent the same enclosed in a
letter to Richard Smith, cashier of the Office of Discount and
Deposit of the Bank of the United States at Washington, with an
endorsement thereon in writing, who wrote another endorsement
thereon, as appears from the said execution and the endorsement
thereon, in the words following:
"
Triplett & Neale v. Bank of Washington"
"Use and benefit of the Office of Discount and Deposit of the
United States, Washington City."
"CHARLES NEALE"
"Pay to Mr. Brooke Mackall Rd. SMITH, Cashier"
"Received $881.18."
"B. MACKALL"
Brooke Mackall, the runner in the said office, and the person
mentioned in the last of said endorsements, presented the said
execution, &c., to the Bank of Washington, and there, on 9
September, 1824, received the sum of $881.81, and signed the
receipt thereon. And at the time of signing the same, William A.
Bradley, then cashier of the Bank of Washington, verbally gave
notice to said Mackall that it was the intention of said Bank of
Washington to appeal to the Supreme Court, and that the said Office
of Discount and Deposit would be expected, in case of a reversal of
the judgment, to refund the amount. The said Mackall received the
said sum as the amount of principal and interest accrued on said
judgment, as appears by his receipts on the said execution, which
sum he delivered to said Smith, who entered it to the credit of C.
Neale, one of the firm of Triplett & Neale, on the proper books
of the said office. Before the delivery of the said execution to
the said Smith as aforesaid, C. Neale, one of the
Page 31 U. S. 10
said firm of Triplett & Neale, had promised said Smith to
appropriate the money, expected to be recovered from the Bank of
Washington in said suit, to reduce certain accommodation discounts
which he, the said Neale, had running in said bank, upon notes
drawn by him and endorsed by endorsers as sureties for the due
payment thereof, which discounts were still running upon such notes
at the time and times the said execution was so delivered, and when
the money was paid as aforesaid. The said Smith received the said
execution with the said Neale's said endorsement thereon, as he
understood and considered, for collection, and when collected, he
deposited the same in bank to said Neale's credit generally, and
would have sent the same to him at Alexandria, if he had requested
him to do so, or would have paid his check for the amount, and
immediately on the receipt of said money as aforesaid, said Smith
wrote a letter to the said Neale in the words following to-wit:
"
OFFICE OF THE BANK OF THE UNITED STATES"
"Washington, September 9, 1824"
"CHRISTOPHER NEALE, Esq."
"Dear Sir: I have received the sum of eight hundred and $881.18
from the Bank of Washington, in payment of your judgment against
it, and have placed the same to your credit. Be good enough to give
me specific directions of the way in which you wish it
applied."
"Rd. Smith, Cashier"
To which letter the said Neale returned the following
answer:
Dear Sir: In reply to your esteemed favor, I have to request
that you will apply the money received from the Bank of Washington
to the reduction of the notes endorsed by John H. Ladd & Co.
and John A. Stewart, equally, after paying Thomas Swann and Walter
Jones $100 between them, or $50 each, as their fees.
"C. Neale"
"10 September 1824"
The said Smith applied the said money pursuant to the directions
of the last mentioned letter. It was submitted to the court upon
the foregoing case agreed whether the plaintiffs were entitled to
recover of the defendants the money with interest so received and
applied by said Smith as aforesaid; if the court decide in the
affirmative, judgment to be entered for
Page 31 U. S. 11
the plaintiffs for the sum of $881.18, with interest from 9
September, 1824, till paid, and costs; otherwise for the defendants
with costs, &c. (any objections to the competence of the
evidence to be considered by the court).
The circuit court gave judgment for the plaintiffs, and the
defendants prosecuted this writ of error.
Page 31 U. S. 15
MR. JUSTICE THOMPSON delivered the opinion of the Court.
This case comes up on a writ of error to the Circuit Court of
the United States for the District of Columbia. The judgment in the
court below was given upon a statement of facts agreed upon between
the parties, substantially as follows.
Triplett & Neale, in April 1824, recovered a judgment
against the Bank of Washington for $881.18. A writ of error was
prosecuted by the Bank of Washington, and that judgment was
reversed by this Court at the January term, 1828. But whilst that
judgment was in full force and before the allowance of the writ of
error, Triplett & Neale, on 30 August, 1824, sued out an
execution against the Bank of Washington, and enclosed it to
Richard Smith, Cashier of the Office of Discount and Deposit of the
Bank of the United States at Washington, with the following
endorsement:
"
Triplett & Neale v. Bank of Washington"
"Use and benefit of the Office of Discount and Deposit U.
States, Washington City."
"Chr. Neale. Pay to Mr. Brooke Mackall. Rd. Smith, cashier.
Received 881.18."
"B. Mackall."
B. Mackall, who was the runner in the branch bank, presented the
execution to the Bank of Washington and received the amount due
thereon, on 9 September, 1824. At the time of receiving the same,
William A. Bradley, cashier of the Bank of Washington, verbally
gave notice to said Mackall, that it was the intention of the Bank
of Washington to appeal to the Supreme Court, and that the said
Office of Discount and Deposit would be expected, in case of
reversal of the judgment, to refund the amount. Mackall paid the
money over to Smith, who entered it to the credit of Neale, one of
the plaintiffs in the execution. Before the execution was sent to
Smith, Neale had promised him to appropriate the money, expected to
be recovered from the Bank of Washington, to reduce certain
accommodation discounts, which he had running in the Office of
Discount and Deposit. Smith, when he received the execution with
the endorsement thereon, understood and considered that it was for
collection, and the money when received by him was deposited to
Neale's credit generally, and he would have sent the money to him
at Alexandria if he had requested
Page 31 U. S. 16
him so to do, or would have paid his check for the amount.
Immediately on the receipt of the money, Smith wrote to Neale
informing him thereof, and asking him for specific directions how
to apply it, which letter Neale immediately answered, giving him
directions, and the money was applied according to such
directions.
Upon this statement of facts, the court below gave judgment for
the plaintiffs, to reverse which the present writ of error has been
brought.
That the Bank of Washington, on the reversal of the judgment of
Triplett & Neale, is entitled to restitution in some form or
manner is not denied. The question is whether recourse can be had
to the Bank of the United States under the circumstances stated in
the case agreed. When the money was paid by the Bank of Washington,
the judgment was in full force, and no writ of error allowed or any
measures whatever taken which could operate as a supersedeas or
stay of the execution. Whatever, therefore, was done under the
execution towards enforcing payment of the judgment was done under
authority of law. Had the marshal, instead of the runner of the
bank, gone with the execution and received the money or coerced
payment, he would have been fully justified by authority of the
execution, and no declaration or notice on the part of the Bank of
Washington of an intention to appeal to the Supreme Court would
have rendered his proceedings illegal or made him in any manner
responsible to the defendants in the execution. Suppose it had
become necessary for the marshal to sell some of the property of
the bank to satisfy the execution, the purchaser would have
acquired a good title under such sale, although the bank might have
forbade the sale, accompanied by a declaration of an intention to
bring a writ of error. This could not revoke the authority of the
officer, and while that continued, whatever was done under the
execution would be valid. It is a settled rule of law that upon an
erroneous judgment, if there be a regular execution, the party may
justify under it until the judgment is reversed, for an erroneous
judgment is the act of the court. 1 Stra. 509. 1 Ver. 195.
If the marshal might have sold the property of the bank and
given a good title to the purchaser, it is difficult to discover
any good reason why a payment made by the bank should not
Page 31 U. S. 17
be equally valid, as it respects the rights of third persons. In
neither case does the party against whom the erroneous judgment has
been enforced lose his remedy against the party to the judgment. On
the reversal of the judgment, the law raises an obligation in the
party to the record, who has received the benefit of the erroneous
judgment, to make restitution to the other party for what he has
lost. And the mode of proceeding to effect this object must be
regulated according to circumstances. Sometimes it is done by a
writ of restitution, without a
scire facias; when the
record shows the money has been paid, and there is a certainty as
to what has been lost. In other cases, a
scire facias may
be necessary to ascertain what is to be restored. 2 Salk. 587, 588.
Tidd's Prac. 936, 1137, 1138. And no doubt circumstances may exist
where an action may be sustained to recover back the money. 6 Cowen
297. But as it respects third persons, whatever has been done under
the judgment, whilst it remained in full force, is valid and
binding. A contrary doctrine would be extremely inconvenient, and
in a great measure tie up proceedings under a judgment, during the
whole time within which a writ of error may be brought. If the bare
notice or declaration of an intention to bring a writ of error will
invalidate what is afterwards done, should the judgment at any
future day be reversed, it would virtually, in many cases, amount
to a stay of proceedings on the execution. No such rule is
necessary for the protection of the rights of parties. The writ of
error may be so taken out as to operate as a supersedeas. Or, if a
proper case can be made for the interference of a court of
chancery, the execution may be stayed by injunction.
It has been argued, however, on the part of the defendants in
error that the Bank of the United States stands in the character of
assignees of the judgment, and is thereby subjected to the same
responsibility as the original parties, Triplett & Neale.
Without entering into the inquiry whether this would vary the
case, as to the responsibility of the plaintiff in error, the
evidence does not warrant the conclusion that the Bank of the
United States stands in the character of assignees of the judgment.
There is neither the form nor the substance of an assignment of the
judgment. No reference whatever, either
Page 31 U. S. 18
written or verbal, is made to it. The mere endorsement on the
execution "use and benefit of the Office of Discount and Deposit of
the United States, Washington City," cannot, in its utmost extent,
be considered anything more than an authority to receive the money,
and apply it to the use of the party receiving it. It is no more an
assignment of the judgment than if the authority had been given by
a power of attorney in any other manner, or by an order drawn on
the Bank of Washington. The whole course of proceeding by the
cashier of the Office of Discount and Deposit shows that he
understood the endorsement on the execution merely as an authority
to receive the money subject to the order of Neale with respect to
the disposition to be made of it. He did not deal with it as an
assignee, having full power and control over the money, but as an
agent, subject to the order of his principal. He passed it to his
credit on the proper books of the office, and wrote to him asking
specific directions how the money should be applied. He received
his directions, and applied it accordingly, and all this was done
six months before the allowance of the writ of error.
It is said, however, that although Mr. Smith might have
considered himself a mere agent to collect the money, the Bank of
Washington had no reason so to consider him. There is nothing in
the case showing that the Bank of Washington had any information on
the subject except what was derived from the endorsement on the
execution, and if that did not authorize such conclusion, the
plaintiff in error is not to be prejudiced by such misapprehension.
It was a construction given to a written instrument, and if that
construction has been mistaken by the defendant in error, it is not
the fault of the opposite party.
But again it is said the payment of the money was accompanied
with notice of an intention to appeal to the Supreme Court, and
that in case of reversal, it would be expected that the Office of
Discount and Deposit would refund the money.
If the plaintiff in error could be made responsible by any such
notice, given even in the most direct and explicit manner, that
which was given could not reasonably draw after it any such
consequence. It is vague in its terms, and does not assert that the
Office of Discount and Deposit would be held responsible to refund
the money, but only that it would be expected
Page 31 U. S. 19
that it would be done. This is not the language of one who was
asserting a legal right, or laying the foundation for a legal
remedy. And there is no evidence that even this was communicated to
the office.
But the answer to the argument is that no notice whatever could
change the rights of the parties, so as to make the Bank of the
United States responsible to refund the money. When the money was
paid, there was legal obligation on the part of the Bank of
Washington to pay it, and a legal right on the part of Triplett
& Neale to demand and receive it, or to enforce payment of it
under the execution. And whatever was done under that execution
whilst the judgment was in full force was valid and binding on the
Bank of Washington so far as the rights of strangers on third
persons are concerned. The reversal of the judgment cannot have a
retrospective operation and make void that which was lawful when
done. The reversal of the judgment gives a new right or cause of
action against the parties to the judgment and creates a legal
obligation on their part to restore what the other party has lost
by reason of the erroneous judgment, and as between the parties to
the judgment, there is all the privity necessary to sustain and
enforce such right; but as to strangers there is no such privity,
and if no legal right existed when the money was paid to recover it
back, no such right could be created by notice of an intention so
to do. Where money is wrongfully and illegally exacted, it is
received without any legal right or authority to receive it, and
the law, at the very time of payment, creates the obligation to
refund it. A notice of intention to recover back the money does
not, even in such cases, create the right to recover it back; that
results from the illegal exaction of it, and the notice may serve
to rebut the inference that it was a voluntary payment, or made
through mistake.
The judgment must accordingly be reversed, and judgment
entered for the defendant in the court below.
