Case Title: Wood v. Board of Supervisors

Citation: 

Docket Number: 962082

State: virginia

Court: Virginia Supreme Court

Date: 1997-10-31T00:00:00Z

Document:
Present: Carrico, C.J., Compton, Lacy, Hassell, Keenan, and 
Kinser, JJ., and Whiting, Senior Justice 
 
DAISY WOOD 
 
v. Record No. 962082 
OPINION BY JUSTICE CYNTHIA D. KINSER 
                                      OCTOBER 31, 1997 
BOARD OF COUNTY SUPERVISORS 
OF PRINCE WILLIAM COUNTY, ET AL. 
 
 
FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY 
 
LeRoy F. Millette, Jr., Judge 
 
 
This appeal concerns an erroneous payment of real 
estate taxes on a parcel of land located in Prince William 
County.  Because we find that an inadvertent payment is a 
mistake of fact which may be corrected even if the mistake 
was unilateral, we will affirm the lower court's judgment 
that the Board of County Supervisors of Prince William 
County (the County) can correct the mistake by refunding the 
erroneous payment to the payor or by crediting the payor's 
other tax accounts. 
 
I. 
 
In April 1994, GH Associates L.P. (GH) acquired two 
tracts of land, Parcel 26 and Parcel 27, by a deed in lieu 
of foreclosure.  At the time of GH’s acquisition, Daisy Y. 
Wood (Wood) held a note secured by a first deed of trust on 
Parcel 27.  In addition, Parcel 27 was encumbered by 
delinquent real estate taxes.
1
 
Parcels 26 and 27 were part of a large development in 
Prince William County known as the Greenhill Farm Project, 
                     
     
1 Parcel 26 was likewise encumbered by delinquent real 
estate taxes in addition to a deed of trust held by Samuel 
M. Jones (Jones). 
which was a joint venture involving various related 
entities.  One such entity, Greenhill Farm, L.P. 
(Greenhill), owned eight parcels of land in the Greenhill 
Farm Project.  Two other entities, Peterson Development 
Corporation (Peterson) and H/P Companies L.C. (H/P), played 
a central role in the management of the project.  Peterson 
acted as a banker by maintaining a central bank account for 
the entities associated with the Greenhill Farm Project and 
by providing a line of credit when it advanced funds to 
them.  H/P was a service company and performed accounting 
functions, including paying the bills of the different 
entities.  In making these payments, H/P used funds in 
Peterson’s central bank account.  H/P then recorded these 
payments on separate ledgers that it kept for each entity. 
 
In July 1994, H/P issued a check request form which in 
turn generated a check drawn on Peterson's account.  The 
check, payable to the County, was for real estate taxes owed 
on 10 separate tax accounts.  Individual tax tickets 
designating the real estate upon which the taxes were being 
paid accompanied the check.  Eight of the tax tickets were 
for property owned by Greenhill.  The remaining two tickets 
were for Parcels 26 and 27, GH’s property.  The amount of 
the check was $204,002.45, and of that amount, $78,637.12 
was for taxes owed on Greenhill's property, and $125,365.33 
was for taxes owed on Parcels 26 and 27.
2  In making this 
                     
     
2 Out of the $125,365.33 paid on GH's accounts, 
$83,114.39 was for Parcel 26 and $42,250.94 was for Parcel 
27. 
payment, however, H/P erroneously and without Greenhill's 
permission used Greenhill's funds to pay the taxes on GH's 
property, Parcels 26 and 27.  GH had no intention of paying 
the taxes and did not authorize or agree to the payment.  
 
Upon realizing the mistake in August l994, H/P 
contacted the County and requested that the real estate 
taxes paid on Parcels 26 and 27 be reversed and credited to 
other tax accounts for real estate owned by Greenhill.  The 
County refused to grant H/P’s request.  However, following 
further communications, the County did agree to hold the 
money in escrow until the real estate taxes for Parcels 26 
and 27 were paid in full, at which time the County would use 
the funds in escrow to credit other accounts as directed by 
H/P.  
 
When Wood learned of the reversal of the payment, she 
demanded that the County re-credit the tax payment to Parcel 
27.  Wood was concerned that if the real estate taxes were 
still outstanding, her lien would be impaired and she would 
have difficulty foreclosing on the property.  Wood also 
questioned whether the County has statutory authority to 
reverse delinquent tax payments to the detriment of the 
first lienholder.  
 
Faced with conflicting demands, the County filed a 
declaratory judgment action in the court below in March 
1995.  In its petition, the County alleged that it can 
correct legitimate mistakes in the application of tax 
payments and that it does so routinely.  However, because of 
the controversy, the County requested the court to determine 
the proper application of the erroneous tax payments on 
Parcels 26 and 27.  
 
At a hearing on June 18, 1996, the trial court 
determined that H/P paid the taxes by mistake without any 
authorization from Greenhill and that the "proper mechanism" 
to correct this mistake was to have the money "either 
refunded or applied to accounts that [Greenhill] owes money 
on."  Accordingly, the court, by an order dated July 22, 
1996, ruled as follows: (1) that the County has the 
authority to correct factual mistakes made in the payment of 
real estate taxes and can do so by refunding the payment or 
crediting other accounts; (2) that the party who mistakenly 
paid the taxes has the right to have the payment corrected; 
(3) that H/P's payment of GH’s taxes with Greenhill's funds 
was an inadvertent factual mistake, and H/P has the right to 
direct that the payment be credited to other tax accounts; 
and (4) that the County has the authority to enter into the 
escrow agreement.  Wood appeals.
3
 
II. 
 
The only issue raised in Wood's assignment of error is 
whether a mistake of fact requires mutuality.
4  Wood 
                     
     
3 We also awarded Jones an appeal regarding the 
County's statutory authority to refund or credit erroneous 
tax payments.  However, following a settlement of his case, 
Jones withdrew his appeal, and that issue is no longer 
before us. 
     
4 In her petition for appeal, Wood assigned the 
following error: 
 
contends that mutuality is a necessary element to relieve a 
party from a mistake of fact and that mutuality is absent in 
this case.  She argues that H/P’s mistake was unilateral 
because neither she nor the County was a party to the 
mistake. 
 
"The principle upon which a right of recovery is based, 
in the case of money paid by mistake of fact, is well 
settled."  W.B. Hibbs & Co. v. First Nat'l Bank of 
Alexandria, 133 Va. 94, 105-06, 112 S.E. 669, 673 (1922).  
In Hughes v. Foley, 203 Va. 904, 128 S.E.2d 261 (1962), we 
stated that "the right of recovery is based upon the promise 
to return the money which the law implies, irrespective of 
any actual promise, and even against the refusal to make it, 
whenever the circumstances are such that in equity and good 
conscience the money should be paid back."  Id. at 906, 128 
S.E.2d at 262. 
                                                             
 
The trial court erred in granting a refund of 
taxes to the management corporation which paid 
taxes on behalf of a client from an account 
utilized by numerous separate clients when neither 
the taxing county or secured noteholder 
participated in or contributed to the mistake. 
 
Nevertheless, Wood made the following arguments on brief and 
orally: GH, H/P, and Greenhill are not separate entities; no 
mistake of fact occurred; if there was a mistake, it 
resulted from negligence; and the County has no statutory 
authority to refund the payment.  The Court will not address 
these issues since Wood did not include them in her 
assignment of error.  See Hamilton Dev. Co. v. Broad Rock 
Club, Inc., 248 Va. 40, 44, 445 S.E.2d 140, 143 (1994) (“The 
language of an assignment of error may not be changed.”).  
Furthermore, we stated in an order dated July 30, l997, that 
the case would be limited to the error assigned by Wood in 
her petition for appeal. 
 
In Virginia Ins. Rating Bureau v. Commonwealth of 
Virginia, 186 Va. 270, 42 S.E.2d 419 (1947), we addressed a 
mistake of fact in the context of whether an insurer was 
entitled to a refund of an assessment that it had paid to 
the Virginia Insurance Rating Bureau, also known as the Fire 
Bureau.  The insurer had insisted for several years that it 
was not required to make payments on the basis of its 
automobile collision insurance premium income, but, in 1943, 
it inadvertently included its collision premium income in a 
report to the Rating Bureau.  This Court held that "[a] 
payment mistakenly made as the result of forgetfulness or 
inadvertence is a mistake of fact and is recoverable" when 
the person receiving the payment is not entitled to it and 
therefore, cannot retain it.  Id. at 283, 42 S.E.2d at 425. 
 The fact that the insurer's mistake was unilateral did not 
affect our decision that it was entitled to a refund.   
 
Wood attempts to distinguish Virginia Insurance by 
arguing that the Rating Bureau had no legitimate claim to 
the insurer's money whereas Prince William County was, in 
fact, owed the taxes on Parcel 27.  However, the issue here 
is not whether the County is entitled to a tax payment but 
whether a mistake of fact in making a payment may only be 
corrected upon a finding of mutual mistake.  If the County, 
through its own mistake, had erroneously applied Greenhill’s 
payment to Parcel 27, the County would be obliged to rectify 
the mistake and apply the payment to the correct tax ticket, 
despite the fact that the County was owed the money.  
Accordingly, the result should be no different just because 
H/P made the mistake when it tendered the payment. 
 
Finally, we perceive no inequity in the trial court's 
decision.  Wood is in no worse position than she would have 
been if H/P had never erroneously paid the delinquent taxes 
on Parcel 27.  Moreover, she did not change her position as 
a result of the payment.  See Hibbs, 133 Va. at 106, 112 
S.E. at 673 ("[M]oney paid under a mistake of fact cannot be 
recovered back where the payment has caused such a change in 
the position of the payee that it would be unjust to require 
him to refund."). 
 
Accordingly, for the reasons stated above, we will 
affirm the judgment of the trial court. 
 
Affirmed.