Case Name: GENERAL MOTORS CORPORATION v. ENTERPRISE HEAT & POWER COMPANY
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1957-11-26
Citations: 350 Mich. 176
Docket Number: Docket No. 2, Calendar No. 47,052
Parties: GENERAL MOTORS CORPORATION v. ENTERPRISE HEAT & POWER COMPANY.
Judges: Dethmers, C. J., and Smith, Edwards, -Voelker, Kelly, Carr, and Black, JJ., concurred..
Reporter: Michigan Reports
Volume: 350
Pages: 176–183

Head Matter:
GENERAL MOTORS CORPORATION v. ENTERPRISE HEAT & POWER COMPANY.
1. Payment — Mistake of Pact — Change in Position of Payee.
Generally, a payment made under a mistake of fact which induces a belief that the other party is entitled to receive the payment when, in fact, the sum is neither legally nor morally due to him, may be recovered, provided the payment has not caused such a change in the position of the payee that it would be unjust to require the refund.
2. Same — Mistake of Pact — Refund—Implied Promise.
The right to a refund of money paid under a mistake of fact is based upon a promise to return which the law implies irrespective of any actual promise and even against the refusal of the wrongful party to make it.
3. Same — Mistake of Pact — Negligence.
The failure to exercise ordinary care to avoid mistakes by party who has made a payment under a mistake of fact will not bar his right to recovery in the absence of a change of condition upon the part of the payee unless his neglect is such as to constitute an intentional failure to investigate.
4. Same — Mistake of Pact.
An error of fact in the making of a payment of money is established when it appears that some material fact which the payer supposed to exist really did not exist.
5. Same — Mistake of Pact.
Payments made by reason of a mistake or ignorance of a material fact are regarded as involuntarily made.
6. Contracts — Modification of Original Agreement — Offer and Acceptance.
Contractor’s letter to owner, modifying quotation of prices originally agreed upon for work to be done, which constituted an offer that was accepted by the owners became a contract between the parties.
References for Points in I-Ieadnotes
40 Am Jur, Payment § 187.
40 Am Jur, Payment § 194.
40 Am Jur, Payment § 189.
40 Am Jur, Payment § 161 et seq.
7. Payment — Overpayment—Revised Contract — Mistake oe Pact —Consideration.
Plaintiff owner which had made a contract and a revised contract with defendant for the installation of an underground fuel network and made a payment under the revised contract instead of receiving a net credit to which it was entitled held, entitled to recover entire overpayment as having been made under a mutual mistake of fact as found by trial court, where there was no consideration for the overpayment.
Appeal from Wayne; Oulelian (Miles N.), J.
Submitted October 8, 1957.
(Docket No. 2, Calendar No. 47,052.)
Decided November 26, 1957.
Rehearing denied December 23, 1957. Reconsideration denied March 4, 1958.
Action by General Motors Corporation (Oldsmobile Division), a corporation, against Enterprise Heat .& Power Co., Inc., a corporation, to recover sums mistakenly overpaid on construction contract. Judgment for plaintiff. Defendant appeals.
Affirmed.
Henry M. Hogan (William J. Oldani and George W. Coombe, Jr., of counsel), for plaintiff.
Riseman, Lemlce & Piotrowslci, for defendant.

Opinion:
Sharpe, J.
This cause arises as the result of a claimed overpayment to defendant company of $9,-465 under a contract providing for the installation of an underground fuel network for plaintiff company. The essential facts are not in dispute.
In the fall of 1949, plaintiff company issued to contractors and materialmen requests for quotations for labor and materials to install underground network of storage tanks for gasoline and other fluids required in assembly plant operation. Defendant company made a bid for such work in the amount of $99,318. The bid was accepted by plaintiff and a purchase order was issued in September, 1949.
During the course of the work the parties entered into several alteration agreements whereby the original contract was modified. The revised contract price was $109,018.21. This amount was paid by plaintiff. The price should have been $99,553.21, which resulted in an overpayment of $9,465. Exhibit 13 furnished by defendant was an offer that was accepted by plaintiff for a revision of the contract'and reads in part as follows:
"November 5, 1949
"Oldsmobile Division General Motors Corporation Lansing 21, Michigan
"Attn : Mr. Fred A. Wiles
"Re: ' Bulletin No. 1 — Olds Job #0-49-238
"Gentlemen:
"In answer to your recent letter of November 4, 1949, we are pleased to submit the following revised quotation as requested in the subject bulletin:
"Item #1 — (Revise item #10 of original job #0-49-238.)
"As per original quotation (Item #10) . $1,126
"Less: Credit for 2 Neptune meters 529
Balance: $597
"Add: Additional labor and material cost for installing 2 propor-tioner meters . 287
Total: $884
"Item #2 — (Revise item #12 of original job #0-49-238.)
"As per original quotation (Item #12) . $2,531
"Less: Credit for proportioner meters . 1,315
Balance: $1,216
"(No additional labor and material charge on this item.)
"Page No. 2 November 5, 1949
"Item #3 — (Revise item #13 of original job #0-49-238.)
"As per original quotation (Item #13) . $3,098
"Less: Credit for 4 Neptune meters 1,058
Balance: ' $2,040
"Add: Additional labor and material cost for installing propor-tioner meters.................. 2,926
Total: $4,966
"Item #4 — -(Revise item #14 of original job #0-49-238.)
"As per original quotation (Item #14) . $1,391
"Less: Credit for 2 Neptune meters......................... 529-
B alance: $862
"Add: Additional labor and material cost for installing 2 plo-portioner meters . 264
Total: $1,126
"Item #5 — (Revise item #15 of original job #0-49-238.)
"As per original quotation (Item #15) . $1,319
"Less: Credit for Lincoln meters 657
Balance: $662
"(No additional labor and material charge on this item.)
"We wish to advise that the above quoted prices include the installation of (Proportioner meters furnished by Oldsmobile) sufficient meters to dispense the quantities required and specified in your original ¡request for quotation.
"Tours very truly
"Enterprise Heat and Power • Company, Inc.
"R. E. Johnson, Engr."
An analysis of this revised offer clearly shows a reduction from the original contract price in the amount of $611.
Exhibit 33 reads as follows:
"Analysis of Enterprise Heat & Power Quotation November 5, 1949, covering contract revisions specified in Bulletin No. 1 — Job No. 0-49-238
Item Contract Credit Number Amount to Olds Added Net Revised Charge Credit Contract to Olds to Olds Amount
1 (10) . $1,126 $529 $287 $242 $884
2 (12) . 2,531 1,315 None 1,315 1,218
3 (13) . 3,098 1,058 2,926 1,868 4,966
4 (14) . 1,391 529 264 265 1,126
5 (15) .•• 1,319 657 None 657 662
Totals . $9,465 $4,088 $3,477 $611 $8,854"
"(*Additional charge ' on original.)" Olds, appeared in red
This exhibit clearly shows that plaintiff company was entitled to a credit of $611 and that the revised contract amount was $8,854 instead of $9,465.
The cause came on for trial, and at its conclusion the court entered judgment in favor of plaintiff in the sum of $9,465 with interest.
Defendant appeals and urges that they submitted a bid to plaintiff for the installation of certain underground fuel network; that such bid was investigated by plaintiff's officers, and that it is now too late to claim a mutual mistake. Defendant also urges that when money has been paid with full knowledge of the facts, it cannot be recovered on the ground that the payment was made under a misapprehension of the legal rights of the person paying.
In coming to our conclusion in this cause we have in mind that there was no fraud involved and that both parties had ample opportunity to examine exhibit 13 prior to the making and acceptance of the overpayment. The general rule relative to the right to recover money paid through a mistake of fact is well stated in Smith v. Rubel, 140 Or 422, 426, 427 (13 P2d 1078, 87 ALR 644), where it was said:
"As a general rule, a payment made under a mistake of fact which induces the belief that the other party is entitled to receive the payment when, in fact, the sum is neither legally nor morally due to him, may be recovered, provided-the payment has not caused such a change in the position of the payee that it would be unjust to require the refund. Security Savings & Trust Co. v. King, 69 Or 228 (138 P 465); Scott v. Ford, 52 Or 288 (97 P 99); Thorsen v. Hooper, 50 Or 497 (93 P 361); Scott v. Ford, 45 Or 531 (78 P 742, 80 P 899, 68 LRA 469); 48 CJ, Payment, § 318, p 759. The right to the refund is based upon a promise to return which the law implies, irrespective of any actual promise, and even against the refusal of the wrongful party to make it. Hibbs v. First National Bank of Alexandria, 133 Va 94 (112 SE 669, 25 ALR 120). The payer's failure to exercise ordinary care to avoid mistakes will not defeat his right to recovery in the absence of a change of condition upon the part of the payee. It is sometimes said that neglect to bar recovery must consist of intentional failure to investigate. Security Savings & Trust Co. v. King, supra; Scott v. Ford, and 21 RCL, Payment, § 196, p 167. An error of fact is established when it appears that some fact which the payer supposed existed really did not exist. Scott v. Ford, supra."
Michigan has generally followed this rule. In Walker v. Conant, 65 Mich 194, 197, 198, we said:
"The rule is general that money paid under a mistake of material facts may be recovered back, although there was negligence on the part of the person making the payment; but this rule is subject to the qualification that the payment cannot be recalled when the situation of the party receiving the money has been changed in consequence of the payment,' and it would be inequitable to allow a recovery."
In Pingree v. Mutual Gas Co., 107 Mich 156, 159, 160, we said:
"Payments made by reason of a mistake or ignorance of a material fact are regarded as involuntarily made. Ignorance of a fact may be equivalent to a mistake of fact."
In State Savings Bank of Ann Arbor v. Buhl, 129 Mich 193, 197 (56 LRA 944), we said:
"While it may be difficult to find a case on all fours with this, it may be said the courts almost unanimously now bold that, although the mistake of facts is caused by the negligence of one party, that party is not precluded thereby from availing himself of the mistake if the other party can be relieved of any prejudice caused thereby."
See, also, Couper v. Metropolitan Life Insurance Co., 250 Mich 540.
In the case at bar exhibit 13 was a contract between the parties. An examination of this exhibit clearly shows that plaintiff was entitled to a refund of $611. Instead of receiving this amount plaintiff paid the sum of $8,854. A mutual mistake was made in paying and receiving this amount. No consideration was received by plaintiff in making the overpayment. Under such circumstances plaintiff is entitled to a judgment. We are in accord with the finding of the trial court in the following from the opinion' of the court:
"The court finds from the facts that there was a net overpayment of $9,465, and that the overpayment was a direct outcome of a mutual mistake. Both parties bad available to them the detailed price change analysis submitted by defendant pursuant to Bulletin No 1. Tbe totaling of tbe' figures tberieiri set forth and tbe application of said revised figures to tbe original contract price would bavé' reVealed tbe over-all net reduction to be tbe amount involved in tbis action. . Tbe fact tbat neither party arrived at an accurate price revision cannot detract .from tbe ultimate result of overpayment due to mutual mistake. Tbe mutual mistake was one of an existing fact and one which was material to the entire transaction. It went to tbe essence of' tbe object in view and was not merely incidental." • ; .
. Tbe judgment is affirmed, with costs.
Dethmers, C. J., and Smith, Edwards, -Voelker, Kelly, Carr, and Black, JJ., concurred..