
    HOUSTON & T. C. RY. CO. v. HUGHES et al.
    (Court of Civil Appeals of Texas.
    Jan. 5, 1911.
    Rehearing Denied Jan. 26, 1911.)
    1. Payment ⅛ 85) — Recovery oe Payments —Gbounds of Obligation — Mistake.
    Money paid under a mistake of fact which the payor was not legally bound to pay may be recovered back, unless he has derived a substantial benefit from the payment, or the payee has received it in good faith in satisfaction of an equitable claim, or it was due the payee in equity and good conscience, and, where money was paid to a contractor through mistake of fact, the mere fact that the contractor' paid it out to his subcontractors before he knew the money was paid to him by mistake would not prevent the payor from recovering such money.
    [Ed. Note. — For other cases, see Payment, Cent. Dig. § 281; Dec. Dig. § 85.]
    2. Payment (§ 85) — Recoveby of Payments —Mistake of Fact — Negligence of Payob.
    If money was paid through a mistake of facts, the fact that the payor was negligent in making the payment will not prevent its recovery by him unless the payee has been misled or prejudiced by the mistake.
    [Ed. Note. — For other cases, see Payment, Cent. Dig. § 272; Dec. Dig. § 85.]
    Appeal from Tarrant County Court; C. T. Prewett, Judge.
    Action by the Houston & Texas Central Railway Company against John P. Hughes and others. From a judgment for defendants, plaintiff appeals.
    Reversed and remanded for new trial.
    Baker, Botts, Parker & Garwood, Spoonts, Thompson & Barwise, and W. H. Francis, for appellant. B. P. Ayres and Slay, Simon & Wynn, for appellees.
    
      
      For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
   WILLSON, O. J.

John P. Hughes, deceased, under a contract with appellant constructed for it the roadbed for a line of railway between the town of Burnet and the town of Lampasas. By the terms of the contract appellant was to pay Hughes specified prices for the different kinds of work necessary in the construction of the roadbed, among which was $6 per cubic yard for box culvert masonry and $5 per cubic yard for paving grouted. By direction of appellant’s engineer the paving to be done in the culverts was changed from grouted, as specified in the contract, to rubble. One hundred and ninety-seven cubic yards of this kind of work was done by Hughes, and was classed by appellant’s engineer and carried into his estimates by which settlements between the parties were made as work it was to pay for at the rate specified in the contract for paving grouted; that is, at the rate of $5 per cubic yard. Hughes having objected to this classification, it was agreed that the rubble paving should be classed and paid for as box culvert masonry at $6 per cubic yard. Of box culvert masonry proper Hughes constructed 482 cubic yards, which, when added to the 197 cubic yards of rubble paving agreed to be classed as box culvert paving, made 679 cubic yards to be paid for as box culvert masonry at $6 per cubic yard. Appellant’s contention was that it paid Hughes for said 679 cubic yards at §6 per cubic yard, including said 197 cubic yards of rubble paving, and because of a mutual mistake also paid Hughes again for the 197 cubic yards of rubble paving at $5 per cubic yard. It sought to recover of Hughes by an action brought against him the sum of $985 as the amount so paid by mistake. Hughes died pending the suit. An administration with the will annexed having been closed, his widow, appellee Mrs. M. J. Hughes, as his sole devisee, having received all the property belonging to his estate, defended the suit. Among other matters set up by her as a reason why appellant should, not be permitted to recover back the money it claimed to have paid to Hughes by mistake was the fact, as she alleged, that Hughes had subcontracted the work, and in ignorance of the mistake, if there was one, had paid to the subcontractors on estimates of their work made by appellant and including the error the sum appellant claimed to have paid by mistake; and that “such subcontractors,” quoting from her answer, “were released, and are now gone, and their whereabouts unknown to said Hughes at the time said alleged error or double payment, if such was made, was discovered, and said subcontractors received the benefit of said error or double payment, and not the said Hughes or this defendant.” The verdict was in favor of Mrs. Hughes, and a judgment was rendered that appellant take nothing by its suit.

The first contention made by appellant, and the only one we think it necessary to consider, in view of the disposition to be made of the appeal, is that the trial court erred in instructing the jury as follows: “If you believe from the evidence in this case that the defendant J. P. Hughes received from the plaintiff, by mistake, double pay for 197 cubic yards of masonry, you will find for the plaintiff Houston & Texas Central Railway Company against the defendant Mrs. M. J. Hughes for the sum of $985, unless you further find that the defendant J. P. Hughes paid said double amount, if any, so received to subcontractors before defendant had any knowledge of said double payment, and, if you believe that the said defendant paid the said amount so received as a double payment to said subcontractors before he had any knowledge of said mistake and double payment, you will find for the defendant.”

The limitation in the instruction on the right of appellant to recover if it paid the money to Hughes by mistake we think was not authorized by principles controlling in such cases. The rule has been stated to be that “subject to the exception that money paid under a mistake of fact cannot be recovered where the payer has derived a substantial benefit from the payment, nor where the payee received it in good faith in satisfaction of an equitable claim, nor where it was due in honor and conscience, a payment made by mistake of fact, which the party is not bound by law to make, under ignorance of the facts or in misapprehension in regard thereto, may be recovered back.” 30 Cyc. 1316; 22 A. & E. Enc. Law, 621. The reason is that the payee ought not to be permitted to retain that which in conscience does not belong to him as against the person to whom in conscience it does belong. If, in addition to those stated, there is a further limitation on the rule than that a recovery cannot be had of an agent who in good faith has paid money received by him as such over to his principal, it must rest in the fact that, aside from the mistake, the payer has been guilty of conduct which has induced the payee, being himself without fault, to so act with reference to the money received by him as to cause him to suffer loss if the payer should be permitted to recover it back. City of Duluth v. McDonnell, 61 Minn. 288, 63 N. W. 727; Bank v. Eltinge, 40 N. Y. 391, 100 Am. Dec. 521; Phetteplace v. Bucklin, 18 R. I. 297, 27 Atl. 212; Moors v. Bird, 190 Mass. 400, 77 N. E. 645; Railway Co. v. Faunce,. 6 Gill (Md.) 68, 46 Am. Dec. 656; Bank v. Trust Co. (Ky.) 85 S. W. 763; Barth v. Jester, 3 Willson, Civ. Cas. Ct. App. § 223; Bank v. Behan, 91 Ky. 560, 16 S. W. 368, 13 Ky. Law Rep. 148; Bank v. Bank, 3 N. Y. 237. For it seems to be settled in this state that the mere fact that the mistake was due to negligence on the part of the payer will not preclude him from recovering of the payee. “Such negligence,” it was said, “does not give to the party receiving the payment the right to retain what was not his due, unless he has been misled or prejudiced by the mistake.” Bank v. Bank, 45 Tex. 218; Alston v. Richardson, 51 Tex. 6. Under the rules stated, we think it is clear, if appellant paid the money to Hughes by mistake, that the mere fact that the latter may have paid it to his subcontractors before he knew same had been paid to him by mistake was not a reason why appellant should be denied the right to recover it back, and that, in instructing the jury that it was, the court erred. The error was not, we think, as appel-lee suggests it was, one of omission merely. As an unwarranted limitation on appellant’s right to recover on the ground of mistake, we think the error was a positive and affirmative one.

Therefore the judgment will be reversed, and the cause will be remanded for a new trial.  