The money which formed the subject of the present controversy, was derived from a sale of the steamboat Alida, made under executions issued upon judgments recovered by the plaintiff against her owner. The purchaser at the sale, by the consent of the plaintiff, made and delivered his note to the sheriff for the amount of his bid. And when the money in dispute was paid, it was paid by the purchaser upon judgments recovered against the same defendant in favor of the Huguenot Bank. At that time it was supposed by that bank, and also by the plaintiff, that the sale had in fact been made under the executions issued upon the judgments of the Huguenot Bank, and that consequently that bank had the prior right to receive the money. Under that supposition the plaintiff consented that the money should be paid upon the judgments recovered by the Huguenot Bank, and that they should be canceled of record. This proved to be a mistake, for the executions of the Huguenot Bank had expired before the levy upon the *Page 402 steamboat was made. At the time when the money was paid, the judgments of the Huguenot Bank were liens upon real estate of sufficient value to pay and satisfy them. This was afterwards sold under other judgments recovered against the debtor, and the proceeds applied in payment of them. The question, therefore, arises, as one of the parties must be subjected to the loss of the money in controversy, upon whom should that loss in justice and equity, be imposed? No positive wrong can be attributed to either of them. For they each acted under the mistaken assumption of the existence of an important fact, concerning which each was equally bound to inquire. And the means of knowledge of its actual existence were equally accessible to them both.
The consequences of a recovery by the plaintiff, will be precisely the same to the defendant, as those arising out of the maintenance of the defendant's defence, will be to the plaintiff. If the plaintiff shall succeed, it will leave the defendant's judgments to that extent unpaid, but incapable of being restored as liens upon the debtor's property. While the success of the defendant will leave the plaintiff's judgments standing against the same debtors, divested of the means of payment which the levy and sale under them had supplied them with. For while the levy continued and when it was followed by the sale, the plaintiff's judgments were pro tanto paid, but the payment was not an absolute satisfaction or discharge. It was still subject to the contingency that the judgments would be revived against the debtors in case actual payment was prevented, without any fault of the creditor or of the sheriff who was acting in its behalf. In this case no such fault was attributable to either. For by the mistake of the parties the money which was realized from the sale of the property, was applied in payment of other debts which its owner was equally liable to pay. No complaint, therefore, can be made by him, for he has had the full benefit of the property sold, by the application of its proceeds in the payment of his debts. And under those circumstances he could not avail himself of the technical *Page 403 and temporary payment made by means of the levy and sale which was afterwards defeated by the mistaken action of his creditors, without in any manner increasing his liabilities, for the purpose of preventing the future collection of the plaintiff's judgments. (People v. Hodgson, 1 Denio, 574, 578; Peck v. Tiffany, 2 Com., 451, 456). The equities, therefore, were entirely equal between the parties to this action.
It was, however, insisted by the learned counsel for the plaintiff, that his client enjoyed the legal right, and that it should prevail for that reason. In this the counsel was in error, for until the money was actually paid over, the creditor had no legal title to it. The note which was taken by the sheriff upon the sale, was owned by him for the benefit, however, of the creditor who should prove to be legally entitled to receive its proceeds. But until it, or the proceeds derived from it, were delivered over to the creditor, the latter acquired no legal title to either. As neither was ever delivered to the plaintiff, but the proceeds were paid to the defendant with the plaintiffs' consent, the latter can, in no just or proper sense, be said to own the money in dispute. The most that can be affirmed in its favor is that it was entitled to become the owner, but relinquished its right to do so in favor of the defendant. And this united the legal title with the equities then created by the cancellation of the defendant's judgments in favor of the latter, which in equity would constitute a sufficient answer to the plaintiffs' action. For it is an established principle of that jurisprudence, that the legal title shall prevail in all transactions brought within its cognizance, where the equities prove to stand upon an equality.
The recoveries which were had in the cases relied upon by the plaintiffs' counsel were all sustained by that principle, for the evidence showed that the moneys which the defendants were required by the judgments to refund, were owned by the plaintiffs when they were received by the defendants. The legal title, as well as the equitable right, united in support *Page 404 of the demands made by the plaintiffs; and in addition to that, they stood precisely in the same relation to the persons who had respectively received the moneys from them, and for that reason could maintain similar, or other adequate actions or proceedings for their own reimbursement. (Canal Bank v. Bank of Albany, 1 Hill, 287, 294; Bank of Commerce v. Union Bank, 3 Com., 230, 237; Rheel v. Hicks, 25 N.Y., 289.) Neither of these elements exist in the plaintiffs' favor in the present case, and for that reason its action to recover the money received by the defendant in consequence of the mistake does not derive any support from their authority.
This action is founded upon the equitable consideration that the defendant has received the plaintiffs' money under circumstances rendering it unjust and inequitable for it to retain it. Wherever that is shown to be the case the action should be sustained; but where, as in the present case, the money received by the defendant was not the property of the plaintiff, and was not detained against equity and good conscience, neither justice nor precedent will sustain the action brought for its recovery. In cases of this description it has long been held, and justly so, too, that the defendant "may claim every equitable allowance; in short, he may defend himself by everything which shows that the plaintiff ex aequo et bono, is not entitled to the whole of his demand, or any part of it." (Eddy v. Smith, 13 Wend., 488, 490; Wright v. Butler, 6 id., 284, 290; Buel v. Boughton, 2 Denio, 91.)
And it has, therefore, been held that the action for the recovery of money paid by mistake should not be so far extended as to allow it to be maintained where it will deprive the defendant of a right. (Rathbone v. Stocking, 2 Barb., 135, 145; Moyer v. Shoemaker, 5 Barb., 319, 322; Barber v.Cary, 11 Barb., 549, 551-2.) And this qualification of the general rule clearly includes the present case.
In the case of McDonald v. Todd (1 Gant's Cases, 17), the action was brought to recover money received by the defendant *Page 405 upon a judgment recovered by him under circumstances quite similar to those presented by the present case; and it was maintained solely upon the ground that the defendants' attorney had fraudulently represented the lien of the judgment on which the payment was made, to be prior to that of the plaintiffs. GIBSON, J., who delivered the opinion of the court held that the defendant could have retained the money if it had not been for the fraud perpetrated by his attorney. (Id. 19.)
There is no legal ground upon which a recovery by the plaintiff could be properly or justly sustained; the judgment should, therefore, be affirmed.
All the judges, except DANIELS, J., concurring with HUNT, Ch. J., for reversal upon the grounds stated in his opinion.
Judgment reversed and new trial ordered.