Stotsenburg, Admr., v. Fordice et al., 142 Ind. 490

Hackney, J. In November, 1866, one Maginnis executed to the appellant’s predecessor three promissory notes, each for $1,627.27, “with interest at the rate of six per cent., payable semi-annually and specifically in gold coin.” To secure said notes he executed his mortgage on certain real estate. In November, 1871, Maginnis conveyed the real estate to the appellee Fordice, and one Devol, who assumed the payment of said mortgage. In November, 1877, what was supposed to be one-half of said debt was paid.

In May, 1892, by order of the Floyd Circuit Court, in partition, said real estate, as the property of said Fordice and Devol, was sold to the appellee John B. Lloyd who assumed said mortgage. This suit was by the appellant for a personal judgment against said Fordice and Lloyd and the foreclosure of said mortgage against them and the appellee Etta B. Lloyd.

The fourth paragraph of the separate answers each of Fordice and of Lloyd and wife, was as follows: “And the defendants * * by way of amended fourth paragraph of answer herein says that by mistake of the agents of said Fordice as to the rate of interest upon said notes, the said defendant, Fordice, by his agents, paid to the predecessors of the plaintiff in his said trust, interest on the notes mentioned in the complaint at the rate of eight per cent, instead of six per cent.

That such mistake was made in each payment of interest on said notes from the 13 th day of November, 1867, until the 11th day of February, 1892, said payments being made annually from said first named date until the date last mentioned; that by reason of the excess of interest so paid by mistake, the defendant is entitled to an annual credit upon the principal of the notes sued on, of thirty-two dollars and fifty-five cents ($32.55), and to a total credit upon the principal of the notes sued on of eight hundred and seventeen dollars and fifty cents ($817.50).

Wherefore he prays judgments, etc.” Upon the overruling of the appellant’s demurrers to said answers, for the want of sufficient facts, the appellant filed replies, and the court, upon final hearing, rendered a special finding and gave the appellant judgment and decree for the principal and interest sued for, less the amount found to have been overpaid on account of interest and by reason of said alleged mistake. The appellant’s complaint in this court is of the overruling of said demurrers and in denying him a new trial.

The first proposition advanced is that the answer in question was but a partial answer while pleaded in bar of the entire cause of action. A well known rule of practice is that which holds that a partial defense pleaded in bar of an entire cause of action is unavailing. However, it is now well settled that where the plea is not, strictly speaking, a defense to the cause of action, but sets up a cross-demand, such as set-off or counterclaim, it is not bad in failing to respond to so much of the claim sued upon as may be in excess of the set-off or counterclaim, though it be directed to the entire cause of action.

Curran v. Curran, Admr., 40 Ind. 473; Dodge v. Dunham, 41 Ind. 186; Mullendore v. Scott, 45 Ind. 113; Law v. Vierling, 45 Ind. 25. The appellant assails this answer further because (1) no deceit or concealment was practiced on Eordice; (2) mistake to operate as a defense must be mutual, or it must be shown that surprise or imposition existed; (3) the payments were not shown to have been compulsory or involuntary;

(4) Eordice and Eloyd were strangers to the original transaction, and could not take advantage of the payment of usurious interest; (5) that demand for repayment should have been alleged. In Brown v. College Corner, etc., Co., 56 Ind. 110, a complaint to recover money paid by mistake of the payor, was held sufficient without allegations of fraud, concealment, mutuality of mistake, or compulsory payment.

An objection there expressly made was that no fraud or concealment was alleged, and that if the payor did not know the facts, and the state of the accounts with the payee, it was his neglect, and, therefore, no remedy existed. It was said in that case: ‘ ‘ It is well settled that money paid under a mistake, on the part of the payor, of a material fact, can be recovered back. 2 Chitty Oont., 11 Am. ed., 928, and authorities there cited.

On the subject of laches on the part of the party paying the money, and seeking to recover it back, we quote the following passages from the volume above cited, at page 930. ‘And, in the above case, Bayley, J., said-.

If a party pay money under a mistake of the real facts, and no laches is imputable to him, in respect of his omitting to avail himself of the means of knowledge within his power, he may recover back such money.” But the rule on this subject has ceased to be thus limited; it being now held, that the possession of the means of knowledge by the party who paid the money, can be regarded only as affording a strong observation to the jury, to induce them to believe that he had actual knowledge of the circumstances ; but that there is no conclusive rule of law, that because a party has the means of knowledge, he has the knowledge itself. ’ ” A similar case is that of Lewellen v.

Garrett, 58 Ind. 442. There the rule of recovery was quoted from Guild v. Baldridge, 6 Swan (Tenn.) 295, as follows: “ ‘The right of recovery proceeds upon the ground that the plaintiff has paid money, which he was under no obligation to pay, and which the party to whom it was paid had no right either to receive or to retain, and which, had the true state of facts been present in his mind, at the time, he would not have paid. ” In Worley v. Moore, 97 Ind. 15, the rule recognized was that where the facts showed that the payee could not in good conscience retain the money, it could be recovered.

It is true that the opinion stated that in that instance the mistake was mutual, but it was not held that recovery depended upon the mutuality of the mistake, nor was fraud or concealment held to be essential. In City of Indianapolis v. McAvoy, 86 Ind. 587, it was held that the failure to employ the means of knowledge which would disclose the mistake does not preclude recovery. In Ingalls v.

Miller, 121 Ind. 188 (190), is the following statement of the rule: ‘ ‘ Where money is paid upon the supposition that a specific fact, which it was supposed would entitle the other to maintain an action, is true, which fact is not true, an action will lie to recover the money back, ‘upon the ground that the plaintiff has paid money which he was under no obligation to pay, and which the party to whom it was paid had no right either to'receive or retain, and which, had the true state of facts been present in his mind, at the time, he would nothavepaid.’ Guild v. Baldridge, 32 Tenn. 293; Lewellen v.

Garrett, 58 Ind. 442; Brown v. College Corner, etc., G. R. Co., 56 Ind. 110; Cross v. Herr, 96 Ind. 96.” See also Grimes v. Blake, 16 Ind. 160; 15 Am. and Eng. Ency. of Law, p. 677; Baltimore, etc., R. R. Co. v. Faunce, 46 Am. Dec. 655. In the last case it was held that money paid in consequence of a mistaken view of the facts, cannot be a voluntary payment. To the same effect is the rule as stated in Bishop on Contracts, sections 632, 633.

It is clear that in the reformation of contracts which are alleged to misstate the intention, it must appear that the mistake is that of all of the parties, otherwise a new contract would be made, and the terms of the first would be varied to meet the mind of but one of the parties, and not to conform to the conditions upon which the minds of both parties met in the original transaction. But we do not see any good reason for applying the rule of mutuality where recovery is sought for moneys paid under a mistake of fact to one not entitled to receive it.

Suppose the mistake is as to the identity of the creditor, and money owing tp A is paid to, and received by B, the fact that B does not participate in the mistake, but submits his willing hands to the receipt of the money should not, in good conscience, permit B to retain the money when the debtor discovers his mistake. Nor do we observe a better reason for enforcing the rule of mutuality where the mistake consists in paying to the proper creditor, by mistake, more than he was entitled to receive. But, even where written agreements are sought to be reformed, the rule as to mutuality of mistake is not unbending.

In Roszell v. Roszell, 109 Ind. 354, (p. 856), it is said: “If it appears that the mistake was known to one of the parties, who, with knowledge of the ignorance of the other, nevertheless kept silent when he should have spoken, the party having knowledge will be estopped to defeat a reformation by alleging that he knew that the instrument was different from the agreement.” This proposition, it seems to us, should .receive added force when applied to the case of one who has received, by the mistake of another, that to which he was not entitled, but which he may have accepted with knowledge of the mistake.

In Kerr on Fraud and Mistake, p. 415, the rule is stated more strongly than is necessary to support our conclusion. “Money paid voluntarily, under mistake of fact, is recoverable both' at law and in equity, unless it be clear that the party making the payment intended to waive all inquiry into the facts. It is not enough that he may have had the means of learning the truth if he had chosen to make inquiry.

The only limitation is that he must not waive all inquiry. ” The issue tendered by the answer requires no inquiry as to the collection or recoupment of usurious interest paid nor as to the privilege of Fordice and Lloyd to take advantage of any such payments. The contract rate was not usurious and the excess was alleged to have been paid by mistake as to the contract rate and not pursuant to contract.

It was not essential to the maintenance of the appellees’ claim, as pleaded in the answer in review, that a demand should have been made, before answerixxg, for the repayment of the sums paid by mistake or for credit therefor upon the notes. The suit of the appellant excused the demand, if one was necessary. Harshman v. Mitchell, 117 Ind. 312; Stix v. Sadler, 109 Ind. 254; McClanahan v. Williams, 136 Ind. 30. We are of opinion that the fourth answer of Fordice was not bad for axxy of the reasons urged against it.

The foux-th answer of Lloyd is attacked for all of the reasons pressed against the answer of Fordice and upon the additional objection that Lloyd was not a party to the mistake of Fordice and would not be injured thereby, but that he had notice, by the proceedings in partition, that he was assuming the principal of the debt. The partition proceedings were not before the lower court by the allegations of the answer and could form no basis for an objection to the answer.

The answer responded to the complaint which, in theory, charged both Lloyd and Fordice as privies to the transaction with the original debtor and the answer was not objectionable ixx pleadixig facts which showed that the assumption was of a debt diminished by payments and by the existence of claims which should be deemed a compensation, in part, 'of the claim sued upon. The questioxx is suggested that the judgment was not sustained by the evidence.

The well known rule that this court will not weigh the evidence and pass upon the question of its weight and preponderance renders it necessary only that we should ascertain that there was evidence supporting the judgment. The evidence without conflict shows that the notes provided but six per centum as interest and that the payments made were at the rate of eight per centum.

It also appears that for one or two years, of the payments by Fordice, he paid eight per centum in cun-ency as the equivalent of six per centum in gold, gold then bearing a premium, and that subsequently his payments were gauged by the amount he had first paid, though gold did not then bear a premium, and were made by his agents who were governed by the former payments and did not know the contract rate. This it seems is sufficient to bring the case within the rules suggested with reference to the sufficiency of the answer of Eordice. Filed September 17, 1895.

Finding no error in the record, the judgment is affirmed.