Opinion ID: 1744061
Heading Depth: 2
Heading Rank: 3

Heading: Duress and Mistake of Fact

Text: The Stones argue that the voluntary-payment defense is inapplicable in this case because, they say, the payment was made not voluntarily but under duress and under a mistake of fact. Mt. Airy Ins. Co., 668 So.2d at 538. Although evidence of duress or mistake can limit the application of the voluntary-payment doctrine, we find no such evidence in this case. First, Lawhorn, acting as the Stones' agent, requested the faxed information over a month before the closing. For all that appears, the Stones had a reasonable alternative; they could have gotten the payoff statement by mail, free of charge. But, even if the urgency of the situation had required the use of facsimile transmission rather than the regular mail service and the record does not suggest it did the Stones' failure to challenge the payment until nearly three years after the duress had been lifted, destroys any reasonable factual basis for a finding of duress. A contract made under duress will be deemed ratified if the aggrieved party fails to repudiate the agreement within a reasonable time after the duress has dissipated. Keshishian v. CMC Radiologists, 142 N.H. 168, 173, 698 A.2d 1228, 1232 (1997). A nearly three-year delay, under these facts, falls well beyond the outer limit of a reasonable time, as a matter of law. The Stones argue that the payment was not voluntary, because, they say, it was made under a mistake of fact. The mistake, they say, is that they thought payment of the fax fee was necessary for a release of the mortgage. The Stones argue that because they, ostensibly through knowledge of their agent, Lawhorn, believed that payment of the fax fee was necessary for a release of the mortgage, the payment was made under a mistake of fact; that mistake of fact, they argue, precludes application of the voluntary-payment doctrine. See Mt. Airy Ins. Co., 668 So.2d at 538. Mellon's fax fee is separately listed on the payoff statement, distinct from the loan principal and the accrued interest. See Colangelo v. Norwest Mortgage, Inc., 598 N.W.2d 14 (Minn.App.1999). The fact that Lawhorn, as the Stones' agent, may have read more into the phrasing of the statement than that phrasing logically and fairly suggestsand we cannot know that Lawhorn did thatwould not provide a factual basis for a finding that the fee was paid because of a mistake of fact. Likewise, the testimony of Mellon's representative as to what Mellon would have done if the Stones had inquired whether the fax fee was a condition for release of the mortgage, does not create a genuine issue of material fact. At most, Lawhorn made a mistake of law, a mistake that would be imputed to the Stones. If a party with full knowledge of the facts wrongly interprets them, so that he misperceives their legal significance, that wrong interpretation does not constitute a mistake of fact. The Stones' misperception of the legal significance or effect of Mellon's including the fax fee in the total shown on the payoff statement constitutes a mistake of law rather than a mistake of fact, and a mistake of law does not preclude the application of the voluntary-payment doctrine. It is well settled that money voluntarily paid under a mistake of fact may be recovered, see, e. g., Citizens' Bank of Fayette v.[J.] Blach & Sons, Inc., 228 Ala. 246, 153 So. 404 (1934); Jones v. Watkins, 1 Stew. 81 (Ala.1827), even where the party paying had means of ascertaining the real facts, Hinds v. Wiles, 12 Ala.App. 596, 68 So. 556 [(1915)]. However, it is equally well settled that money voluntarily paid with full knowledge of the facts but by reason of mistake of law cannot be recovered. See Rice v. Tuscaloosa County, 242 Ala. 62, 4 So.2d 497 (1941).... Sherrill v. Frank Morris Pontiac-Buick-GMC, Inc., 366 So.2d 251, 257 (Ala.1978) (Torbert, C.J., concurring specially); see, also, Hinson v. Byrd, 259 Ala. 459, 66 So.2d 736 (1953) (where three people participating in transaction had full knowledge of the facts and of their existing legal rights, but were operating under a misconception of the legal meaning and effect of an instrument they had executed, the mistake was one of law). The rule by which the law denies one a recovery for a voluntary payment is subject to an exception where the payment has been procured by a fraud. Mt. Airy Ins. Co., 668 So.2d at 537. However, in their complaint the Stones did not allege a misrepresentation by Mellon, and in their brief on appeal they make no argument that would support a finding of fraud on the part of Mellon. We are unwilling to characterize Mellon's conduct as fraud and thereby save the Stones from the effect of their voluntary payment made under a possible mistake of law. Because the Stones did not object to the fax fee once their loan transaction had closed and their alleged duress had been lifted, and because they have shown no mistake of fact, the voluntary-payment doctrine defeats their claims based on theories of unjust enrichment and money had and received.