Kreutz v. Livingston

California Supreme Court Jul 1, 1860Published

Before: Cope

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Holding. The court held that an action for money had and received may be maintained against a defendant who holds money in equity and conscience belonging to the plaintiff, even in the absence of direct contractual privity.

Issues

Whether an action for money had and received requires direct contractual privity between the parties.
Whether a party intended to be secured by a mortgage, but not a party to it, can recover funds from the mortgagees who assigned the mortgage and retained the proceeds.

Disposition. reversed and remanded

Quotations verified verbatim against the opinion

“Whenever one man has in his hands the money of another, which he ought to pay over, he is liable to this action, although he has never seen or heard of the party who has the right.”

“The defendants occupied toward the plaintiff the position of trustees, and the money sued for was received in that character.”

Synopsis

An action for money had and received to the use of plaintiff lies whenever the defendant has in his hands money of plaintiff’s, which in equity and conscience he has no right to retain; and this, whether there be or not any contract or privity between the parties.

Defendants were the holders of a mortgage, executed by the Yreka Water Co. and B. to them, to secure advances made, and to be made, by themselves and others, to said company. Plaintiff had made advances to the company, and was - one of the persons intended to be secured by the mortgage, though not a party thereto. Defendants assign the mortgage, receive the consideration therefor, but refuse to pay any portion of the money to plaintiff, who sues for money had and received to his use. Held, that the action lies, that defendants are in possession of money which in equity and conscience they are bound to pay over.

Held, further, that defendants occupied toward plaintiff the position of trustees, and that the money sued for was received in that character; that it is of no consequence that the trust was created by a contract to which plaintiff was not a party, as he subsequently assented to it, and defendants cannot now repudiate it, and retain money which they would not otherwise have received.

Cope J. delivered the opinion of the Court Baldwin, J. and Field, C. J. concurring.

The demurrers to the complaint were improperly sustained. The action is for money had and received to the use of the plaintiff, and the facts stated in the complaint show clearly that the defendants are in possession of money which in equity and conscience they are bound to pay over. They were the holders of a mortgage, given to secure the payment of advances made, and to be made, by themselves, and others, to the mortgagors. The plaintiff had made certain advances, and was one of the persons intended to be secured, though not a party to the mortgage. The defendants assigned the mortgage, and received the consideration therefor, but refuse to pay any portion of the money to the plaintiff. We think that, upon proof of these facts, the plaintiff will be entitled to recover. The principal ground of objection is that there is no contract, and consequently no privity between the parties. But it seems to be settled that no privity is required in such a case, except that which results from one person having the money of another, which he has no right conscientiously to retain. In Hall v. Marston, (17 Mass. 574) one Bradford, being indebted to the plaintiff in the sum of four hundred dollars, and to the defendant in the sum of $1,300, remitted to the latter a bill of exchange for $1,000, with directions, when the amount should be received, to pay to the plaintiff the [347]sum of two hundred dollars. The defendant received the amount of the bill, but neglected to pay the plaintiff, and gave him no notice of the remittance. The action was for money had and received, and it was held that the plaintiff was entitled to recover. Parker, C. J., in delivering the opinion of the Court, said : “ The principal objection to the plaintiff’s right of action, is that the case does not show any privity between the plaintiff and the defendant, nor any promise to the defendant; so that, if any action can be maintained, it must be by Bradford against the defendant, for a violation of his implied undertaking to pay the two hundred dollars, according to his instructions. It seems to have been well settled heretofore, that if A promise B, for a valuable consideration, to pay to C, the latter may maintain assumpsit for the money. It is so laid down in many of the authorities cited by the plaintiff’s counsel; and it is stated, in Lord C. B. Comyn’s Digest, Assumpsit E, that if money be given to A to deliver to B, B may have the action; and Roll. Abr. and Hard. Rep. are cited in support of the position. The principle of this doctrine is reasonable, and consistent with the character of the action of assumpsit for money had and received. There are many cases in which that action is supported without any privity between the parties, other than what is created by law. Whenever one man has in his hands the money of another, which he ought to pay over, he is liable to this action, although he has never seen or heard of the party who has the right. When the fact is proved that he has the money, if he cannot show that he has legal and equitable ground for retaining it, the law creates the privity and the promise.” (See Eagle Bank of New Haven v. Smith, 5 Conn. 71; Dickson v. Cunningham, Mart. & Yerg. 221; Mason v. Waite, 17 Mass. 558; Arnold v. Lyman, 17 Id. 400.)

Kreutz v. Livingston

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