THE BANK OF THE UNITED STATES, PLAINTIFFS IN ERROR
v.
THE BANK OF WASHINGTON, DEFENDANTS IN ERROR.
Supreme Court of United States.
*11 The cause was argued for the plaintiffs in error by Mr Lear and Mr Sergeant, and for the defendants by Mr Dunlap and Mr Key.
Mr Dunlap and Mr Key for the defendants in error.
*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 and Neale, in April 1824, recovered a judgment against the Bank of Washington for eight hundred and eighty-one dollars and eighteen cents. 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 and Neale, on the 30th of August 1824, sued out an execution against the Bank of Washington, and inclosed it to Richard Smith, cashier of the office of discount and deposit of the Bank of the United States at Washington, with the following indorsement:
Triplett and Neale v. The 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 eight hundred and eighty-one dollars and eighteen cents." 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 the 9th of 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 indorsement 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 *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 and 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 forbid 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 *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 and 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 or the substance of an assignment of the judgment. No reference whatever, either *18 written or verbal, is made to it. The mere indorsement 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 any thing 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 indorsement 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 indorsement on the execution; and if that did not authorise 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 *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 a legal obligation on the part of the Bank of Washington to pay it; and a legal right on the part of Triplett and 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 or 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.