Case Name: Daniel F. Payne, Appellant, v. Witherbee, Sherman and Company, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-05-05
Citations: 132 A.D. 579
Docket Number: 
Parties: Daniel F. Payne, Appellant, v. Witherbee, Sherman and Company, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 132
Pages: 579–584

Head Matter:
Daniel F. Payne, Appellant, v. Witherbee, Sherman and Company, Respondent.
Third Department,
May 5, 1909.
Sale of electric power — recovery of overpayments made by mistake — burden of proof — contract of sale construed.
A vendee of electric power, who through the mistake of his own agent in making computations on memoranda furnished by the vendor as to power consumed, has paid the vendor sums in excess , of those due under the contract of sale, can recover the overpayments where it could not be discovered that over-payments were made except by a somewhat involved process of mathematical computation, if the vendee’s agent had no authority to deviate from the written contract and there was- no ratification of his unauthorized acts, but on the contrary a repudiation thereof as soon as the real facts were ascertained.
Money paid under a mistake of fact may be recovered back, however negligent the party paying may have been in making the mistake, unless the payment has caused such a change in the position of the other party that it would be unjust to require him to refund.
The burden of showing that it would be inequitable to allow a recovery of moneys paid by mistake rests upon the party resisting repayment.
Contract for the sale of electric power construed.
Appeal, by the plaintiff, Daniel F. Payne, from a judgment of the Supreme Court in favor of the defendant, entered in the office ' of the clerk of the county of Essex on the 8th day of September, 1908, upon the decision of the court, rendered after a trial at the Essex Special Term, dismissing the complaint- upon the merits and awarding the defendant damages on its counterclaim.
Smith & Wicks [Francis A. Smith of counsel], for the appellant.
Stokes & Owen [Edward T. Stokes of counsel], for the respondent.

Opinion:
Cochrane, J.:
Plaintiff seeks to recover an alleged balance of $1,461.84 for electrical power furnished by him to the defendant during the first five months of the year 1907, under a written contract entered into March 22, 1905, between him as the party of the first part and the defendant as party of the second part. The defendant contends and the judgment determines that the defendant has fully paid, for the power so furnished and that by mistake of fact the defendant has overpaid the plaintiff for power furnished under said contract during the year 1906 to the extent of $3,646.23 besides interest, which amount is awarded by the judgment to the defendant under its counterclaim interposed herein against the plaintiff. Mo question exists as to the amount of power furnished at any time under the contract. The controversy arises concerning the price to be paid for such power.
The contract provides that the minimum amount of power shall be 350 horse power and the maximum amount 750 horse power; that delivery of said power shall begin January!, 1906, and continue for a period of ten years. The other portions of the contract relevant to the purpose of this action are as follows: " Such power to be furnished and delivered at least twelve hours per day and for twenty-four hours per day if required by party of the second part during each and every of the three hundred and sixty-five days in the year, except that during at least one day in each week party of the first part shall be required to furnish such power only for said minimum time of twelve hours. The said day in each week during which only said minimum time shall be required to be mutually agreed upon between the parties, and shall be during each and every Sunday during the period of this contract if the necessities of the party of the second part will piermit thereof, and
" Party of the second part covenants and agrees to and with the party of the first part as follows :
"First. To accept and receive said amount of minimum power during at least twelve hours per day for each and every day during the period of this agreement.
" Second. To pay the party of the first part the sum of twenty dollars per horse power per year of three hundred and sixty-five days of twelve hours each, and at the same rate for each and every hour per day in excess of said twelve hours. It is further understood and agreed that if the party of the second part shall not require said power during each and every of the twenty-four hours per day, the party of the first part will furnish said' power during the twelve hours of each day which shall be designated by the party of the second part." .
Prior to 1906 the plaintiff had furnished power to the defendant under another and similar contract so far as this question is concerned. During all that time and down to January 1, 1907, the power was measured by defendant's electrician Latnborn and the price to be paid was computed by him in conjunction with the plaintiff. Such computations were made at the rate of twenty dollars per horse power for 340 days of ten hours each instead of 365 days of twelve hours each as provided by the contract. Bills were made out monthly showing the total amount of power furnished and the aggregate price therefor but not showing the rate or method of computation, which bills were paid by the defendant in the usual course of its business. About January 1, 1907, Lamborn left defendant's employ and the person who succeeded him at once discovered that the prior computations had not been made in apcorcjapce with the pen- tract and reported Ms discovery to defendant. The latter through its general manager notified the plaintiff in writing of the fact and amount of the alleged overpayments and that the plaintiff must return the same. Defendant thereafter made payments according to its theory of computation.
The theory of the plaintiff is best stated by quoting from his brief as follows: " Lamborn, the defendant's accredited agent, and the plaintiff, when the first contract (Exhibit No. 2) took effect, settled the method of computing the plaintiff's compensation, and agreed that as the contract provided that during one-half day of twelve hours in each week the plaintiff should not be required to furnish power, that is to say, twenty-six days of twelve hours each out of the year — 340 days should be counted for a year. The plaintiff's contention is, that under both contracts, by their plain and unmistakable terms, the plaintiff was entitled to receive payment for twelve hours, if the defendant took the power for only ten hours. It is established that the defendant took.power only 10 hours out of 12, 20 hours out of 24, except that the plaintiff delivered an average of only 75 to 100 horse power during four hours out of 24, or 2 hours out of 12 when the defendant shut off all but the limited power furnished." ' . '
It seems that during certain portions of the day when defendant's employees were at their meals the minimum of 350 horse-power specified in the contract was not being received by defendant, and plaintiff's contention seems to be that because defendant was not receiving at least such minimum power during twelve consecutive hours but as he says only ten out of twelve or twenty out of twenty-four hours'and that because during one day in a week he was not obliged to furnish power for more than twelve hours, therefore, the rate of compensation should be computed based on ten hours a day and 340' days a year and as heretofore stated it is at that rate that payments , were computed and made during the year 1906 and for which plaintiff claims payment during the first five months of the year 1907. Defendant has received at least the minimum of 350 horse power twelve hours, or more in every day, but the contention of plaintiff is that such power has been intermittent and not continuous.
The contract as to the rate of payment is plain and unambiguous. Plaintiff is to be paid " the sum of twenty dollars per horse power per year of three hundred and sixty-five days of twelve hours each, and at the same rate for each and every hour per day in excess of said twelve hours." The method of computation pursued has clearly ignored this express provision in the contract and substituted therefor an arbitrary and artificial method which not only lacks support in the contract but is an entire departure from its express provisions. Plaintiff in his complaint stands, squarely on the contract and expressly alleges that " pursuant to the terms and provisions of said contract " he delivered the power. There being no question that defendant has not taken all the power it agreed to take nor as to the amount of power actually delivered it follows that the only question before us is the construction of this contract as to the price to be paid for the power so delivered and the plain provisions of the contract as to the rate of payment should prevail. Plaintiff, therefore, has been fully j>aid for the power furnished for the five months of 1907, and has been overpaid for the power furnished in 1906.
There is no reason in law or justice why defendant should not recover these overpayments. The court has found that they were made by mistake and the evidence clearly sustains the finding. The mistake consisted in ignorance of the fact that the computations were not being made according to the rule declared in the contract. It is true that Lamborn made the computations and that the bills paid by defendant contained data from which one familiar with the method of determining the price of the power could by a somewhat involved process of mathematical computation ascertain that a mistake was being made. But it was a matter requiring technical knowledge and the computation was somewhat complicated, and an ordinary observer would not be informed from a perusal of these bills and memoranda that an improper price was being charged. It is also true that Lamborn was authorized to measure the power and compute the price thereof, but he was not authorized to deviate from the written contract as to the basis of such computation. Defendant did not assent to or ratify this unauthorized act of its electrician, but, on the contrary, repudiated the same as soon as it ascertained the fact and called on plaintiff for repayment. If defendant, through oversight or inadvertence, has made overpay- meats according to ah unauthorized plan, pursued by Lamborn, that fact does not justify plaintiff in retaining what he has improperly received in the absence of proof that he has been prejudiced thereby. (Mayer v. Mayor, 63 N. Y. 455 ; Sharkey v. Mansfield, 90 id. 227; Hathaway v. County of Delaware, 185 id. 368 ; Kingston Bank v. Eltinge, 40 id. 391; Ransom v. Masten, 22 N. Y. St. Repr. 388.) The well-settled rule is stated, in Hathaway v. County of Delaware (supra) : " 6 Money paid under a mistake of fact may be recovered back, however negligent the party paying may have been in making the mistake, unless the payment has caused such a change in the position of the other party that it would be unj ust to require him to refund. ' (Nat. Bank of Commerce v. Nat. Mechanics' Banking Assn., 55 N. Y. 211), and if circumstances exist which make such recovery inequitable, the burden of proving that fact rests upon the party resisting the payment."
'The judgment should be affirmed, with costs.
Judgment unanimously affirmed, with, costs.