
    James J. Belden and another, Survivors, etc., App’lts, v. State of New York, Resp’t.
    
    
      (Court of Appeals,
    
    
      Filed October 5, 1886.)
    
    1. Judgment—When a bah to an action—Money paid under mistake. Although a party failed to sustain an action for obtaining money by fraud, the judgment is not a bar to an action to recover the same money as having been paid under a mistake of facts.
    2. Same—Evidence—Collateral issues. Facts offered in evidence at a trial to establish an.issue are not themselves, in issue and the judgment is no evidence in regard to them.
    3. ' Payment, presumption of—Equitable set off—Statute of limitations.
    Money received by a creditor from his debtor in over-payment on a con- . tract, must be deemed to be money in his hands for the use of the debtor, the debtor is entitled to its application, and the creditor must be presumed to have applied it in payment on a subsequent indebtedness between the parties the moment it accrued. The existence of means of payment in the hands of the creditor and the lapse of time are conclusive evidence of an actual discharge of the accruing debt, or are of themselves facts which require a court of equity to adjudge such application to have been made. The creditor cannot plead the Statute of Limitations as to such money when sueing for the subsequent debt.
    Appeal from order and judgment of the supreme court, general term, Fourth department, affirming a.decision of the board of audit.
    
      E. Nottingham and Martin A. Knapp, for app’lt; D. O’Brien, Attorney General, for resp’t.
    
      
       Affirming 31 Hun, 409.
    
   Danforth, J.,

On the second of December, 1881, the appellants presented to the board of audit a claim for $125,--406.90, with interest on $91,044,60, part thereof, from December 1, 1881, and on the second of May, 1882, a further claim, by way of amendment to the original claim of $28,-410.58, with interest from May 1, 1882, making the total amount claimed $153,817.48 ; and for this sum, with interest, asked an award in their favor, and against the state. The claim is for money alleged to have been earned under three contracts for canal work dated September 9, 1869, and referred to respectively as “A,” “B,” and “0.” It seems apparent that upon contract “B ” there was unpaid $7,605, with interest, and on contract “0,” $9,750, with interest. But the board of audit found that for work done under contract “A” the claimants were entitled only to $341,960.70, and had in fact been paid $417,570, leaving due the state for overpayment the sum of $102,610.30. They therefore-held (1) that contract “A” had been fully performeduby the state; and (2) that so much of the overpayment, under color of that contract, as might be necessary, should be applied to extinguish the amounts otherwise due on contracts “B” and r‘G that for the balance, viz., $85,368.40, the claimants were indebted to the state, and accordingly dismissed their claim. There is evidence in the case to support the conclusion of overpayment, and the question upon this appeal is whether it is available to the.state.

The appellant contends that the decision by this court in People v. Dennison (80 N. Y., 656), is conclusive against the state as to the payments in excess of the sums rightfully due under contract “A.” In that case the state sued to recover back the whole sum of $417,571, upon the sole ground that it had been obtained from its officers by false pretences and false certificates. The defendants answered, and, among other defenses, set up a certain claim for $73,-674.05 as yet due upon that contract; being, as is now stated, the same moneys claimed before the board of audit under contract “A.” The state succeeded upon the trial, but upon appeal both the supreme court at general term and this court held that the action was in tort, and not on contract, and reversed the judgment rendered by the trial court on the ground that the plaintiff, having failed to establish the fraud alleged, had not made out its case. The supreme court had granted a new trial, but the plaintiff stipulated so as to perfect an appeal, and this court, in pursuance of the stipulation, gave judgment absolute against it. Such a judgment presents no obstacle to the recovery of money paid by the state officers in ignorance that the amount of work and materials in the estimates on which they acted was incorrectly stated, and in excess of that really done or furnished, and under a mistake as to those facts. That question was neither litigated nor decided in the former action, nor could it have been. It was not involved in- the pleadings, nor presented for determination. Moreover, evidence, however ample to warrant a recovery for money paid under a mistake of fact, would be wholly insufficient to show that its payment was procured by fraud. The cause of action is not the same. The judgment relieved the contractor from the imputation and the consequences of obtaining the money fraudulently, but it did not establish the fact of indebtedness, nor confirm a title to the money if it was otherwise defective. The plaintiff failed because its action was misconceived, and for a cause not warranted by the facts proved. The judgment is no bar to a claim, therefore, for a sufficient cause, or where the evidence to sustain the second would not have entitled the plaintiff to recover in the first, where, in other words, there is no identity of the question with that before decided.

It is entirely consistent with the record in that action that money paid under a mistake of fact may be recovered back, although the state there failed in its assertion that the money was obtained from its officers by fraud and false pretenses. That question was settled, but not the right of the defendant to retain it. Nor does that judgment establish the sum due to the appellant under contract. That question was not in issue. It may have come collaterally in question, and, as incident to the general charge of fraud, been the subject of evidence and controversy; but it was not in issue within the meaning of the rule which gives effect to the adjudication. That applies to that matter only upon which the plaintiff proceeded by its action, and which the defendant answered by their pleading. Facts offered in evidence to establish the issue so presented are not themselves in issue, and the judgment is no evidence in regard to them. Jackson v. Wood, 3 Wend., 27; Lawrence v. Hunt, 10 id., 81; Remington Paper Co. v. O’Dougherty, 81 N. Y., 474.

The appellants contend that the statute of limitations barred the right to recover the overpayments. Whether time had elapsed sufficient, in any view, for that purpose, I do not think it needful to inquire. No judgment has gone in favor of the state against the appefiants. The money in their hands was in excess of that due from the state when they presented their claims; and a tribunal having the powers of a court not only of law but equity, and expressly charged to allow only such sums as it considered should equitably be paid by the state to the claimants (Laws 1876, chap. 444, § 2), have adjudged that while retaining it, they have no claim which can be allowed. That conclusion has been approved by a court authorized upon appeal to consider both the law and the evidence, “ and determine the same between the claimant and the state, as shall be equitable and just.” Laws 1881, chap. 211. A different decision would be a reproach to either jurisdiction. The claimants could ask only for so much as was due to them; and before a court having power to take an account, and strike a just balance between the parties, it would be a surprising assertion for one to say: “1 obtained the money of my adversary under circumstances which imposed on me an obligation to repay, but in the meantime he became justly indebted to me; and, as by lapse of time no action can be brought by him, I now demand that my title to the money, so obtained, shall not be questioned, but be deemed absolute, and he be required to pay the debt which has accrued.” It might well be answered: “You .shall be deemed to have done your duty, and at the moment of the accruing of the claim, to have applied upon it the money which you have already received from your -debtor.” So here the money received by the claimants in overpayment on one contract must be deemed to have been money in their hands for the use of the state, the state entitled to its application, and the claimants be presumed to have applied it in payment of the other obligation the moment it accrued. The existence of means of payment in the hands of the creditor, and the lapse of time, are conclusive evidence ■ of the pre-existing fact of an actual discharge of the accruing debt, or are of themselves facts which require a court of equity to adjudge such application to have been made. Equity requires that one demand should extinguish the other, by deducting the less from the greater.

Other propositions are advanced in behalf of the appellant. They are insufficient to disturb the judgment; nor do they answer the opinion of the general term. As we agree, therefore, with that court and the board of audit in the conclusion reached by them, the judgment appealed from should be affirmed.

All concur, except Andrews, J., dissenting,, and Ruger, Ch. J., not sitting. _•  