[HOUSE OF LORDS]

AND

Administration - Distribution under invalid charitable bequest - Mistake of law - Right of next of kin to recover in equity from charities wrongly paid - Equitable claim in personam and common law action for money had and received - Statute of Limitations - Applicability - Limitation Act, 1939 (2 & 3 Geo. 6, c. 21), s. 20.

Acting under a mistake of law the personal representatives of a testator, whose residuary disposition was invalid, distributed his residuary estate, on the footing that it was valid, among divers charitable institutions which received the payments in good faith.

Held, that, subject to the qualification that they must have first exhausted their remedy against the personal representatives, the next of kin had a direct claim in equity against those to whom the residuary estate had been wrongly distributed.

Held, further, that the action by the next of kin was "in respect of any claim to the personal estate of a deceased person" within the meaning of s. 20 of the Limitation Act, 1939, and accordingly the period of limitation was twelve years, so that the action, being brought within that period, was not barred.

Decision of the Court of Appeal (sub nom. In re Diplock, Diplock v. Wintle) [1948] Ch. 465, affirmed.

APPEAL from the Court of Appeal (Lord Greene, M.R., Wrottesley and Evershed, L.JJ.).

The facts, stated by Lord Simonds, were as follows: On March 23, 1936, Caleb Diplock died intestate as to his residuary estate, which amounted to over 250,000l. He had by his will dated November 3, 1919, purported to dispose of it by directing his executors to apply it "for such charitable institution or institutions or other charitable or benevolent object or objects in England" as his acting executors or executor might in their or his absolute discretion select. The invalidity of this disposition was finally established by the House of Lords in the year 1944: Chichester Diocesan Fund and Board of Finance Incorporated v. Simpson (1). The proceedings in which this decision was given had been commenced on June 10, 1940, by the testator's executors by way of originating summons issued in the Chancery

(1) [1944] A. C. 341.

Division of the High Court of Justice, but in the meantime, on January 3, 1940, an action had been commenced in the same Division by the first three respondents to the present appeal, together with another person, claiming to be four of the next of kin of the testator, against the executors or their personal representatives, certain selected charitable institutions, which had received donations from the executors, and the Attorney-General, claiming administration of the testator's estate. In this action an order was made on April 5, 1944, by which the court approved a compromise of the claims of the plaintiffs against the executor and directed that such compromise should be binding on all persons beneficially entitled to the property of the testator. Under this order (inter alia) a sum of 15,000l. was to be paid by the executors to the fourth respondent to this appeal, who had been appointed judicial trustee of the testator's estate. This order was relevant to the present appeal because its admitted effect was that by it the first three respondents and all other next of kin must be deemed to have exhausted whatever remedy they had against the executors in respect of the wrongful distribution of the estate.

On July 28, 1945, the respondents issued the writ in the action in which this appeal arose. The original defendants were the President, Vice-Presidents, Treasurer and Governors of Westminster Hospital, a corporation incorporated by private Act of Parliament. This corporation was dissolved under the provisions of the National Health Service Act, 1946, and replaced by a new corporation created under that Act. It was, however, common ground between the parties that the appellant, the Ministry of Health, which was added as a defendant to the action by an order of the Court of Appeal, was under s. 6, sub-s. 1, of the same Act liable to pay any sum due in respect of the respondents' claim. By their action the respondents claimed a declaration of the liability of the defendants to refund to the estate of the testator the sum of 4,000l. which they had received out of that estate from the executors with interest thereon and an order for payment accordingly.

The relevant facts were not in dispute. On June 4, 1936, the Deputy Chairman of the Hospital applied to the executors for a contribution towards the fund for the erection of new buildings for the hospital. On March 20, 1937, a cheque for 4,000l. was sent to one of the treasurers of the hospital by or on behalf of the executors under cover of a letter which, as was now admitted, did not affect the recipient with notice of the invalidity or possible invalidity of the residuary bequest in the will. On March 23, 1937, the cheque was paid into the "Westminster Hospital Rebuilding Fund Current Account" at a branch of Barclays Bank Ld., which at the close of business on that day

showed a credit balance of 15,268l. 1s. 10d. It was not until October 18, 1939, that the defendants had notice of the claim of the next of kin and already by that date all moneys to the credit of the account in question had been applied in payments relating to the erection of the new hospital buildings and the account showed a debit balance of 9,508l. 3s. 9d. In these circumstances it was not contended that, the respondents could assert any right at law or in equity to follow or trace the sum of 4,000l. into assets held by the appellant. The single question to be determined in this appeal was whether the original defendants were, and the appellant now was, under a personal liability to refund to the estate of the testator the money wrongfully paid to them.

This question was answered in the negative by Wynn-Parry, J., and in the affirmative by the Court of Appeal (Lord Greene, M.R., and Evershed and Wrottesley, L.JJ.). The appellant appealed to the House of Lords.

Upjohn, K.C., Denys Buckley and Dunbar for the appellant. The executors, in the innocent but mistaken belief that they had the power to do so, made payments to several charities. It is admitted that the mistake was one of the general law and not a mistake of fact or as to the construction of the will. Neither at law nor in equity can the next of kin recover the money so paid in a direct action against the charities. Where money which belongs to A (here the next of kin) is in the hands of B (here the executors) and is wrongly paid to C (here the charities) the general law is that A cannot sue C direct in personam. There is no action at law or in equity founded on considerations of ex aequo et bono or justice between man and man to recover the money in personam merely because it would be the right and fair thing: see Sinclair v. Brougham (2). There are certain exceptions: thus if B has a right to recover from C, then A, using the machinery of equity, may make a claim directly against C. For example, if C has been guilty of fraud or if there has been a mistake of fact or a total failure of consideration the money can be recovered directly. But this exception does not apply here because B paid the money under a mistake of law, and public policy discourages actions based on ignorance of law.

Again, even where B is himself barred, A may yet be entitled to recover from C in a limited number of exceptional and special cases. There is the case where C is a trustee or occupies some fiduciary capacity to A. But it is conceded that C did not become a trustee in this case. Even if A and C are claiming under the same document (e.g., a will) and C has been wrongly paid, that does not constitute him a trustee for A. But C in

(2) [1914] A. C. 398, 456.

this case was not in the position of a claimant under the will at all. Instead, C was a stranger to the estate and never a legatee. Even had the bequest been valid the charities would not have been in the position of legatees; none of them had any right to have the estate administered in the Chancery Division.

The only other case where A can make a direct claim against C is where the common law, or equity acting by analogy to the common law, allows money to be recovered on a count of money had and received to the use of A. This may only be where the money sought to be recovered was paid under a mistake of fact. The authorities on this aspect of the case discussed in the Court of Appeal all fall within this classification.

Where unpaid creditors of the testator appear after the legatees have been paid they can compel the legatees to repay, for everyone who takes under a will knows that he takes subject to creditors' claims. Again, where payment is made to the wrong person, in the mistaken belief that he is the next of kin, and a nearer of kin is subsequently discovered, the nearer of kin can recover the estate. That is a case of pure mistake of fact. There is no case in the authorities of a mistake as to which of two known persons is next of kin; that would be a mistake of law and accordingly there could be no repayment. As between legatees one legatee can claim repayment in a case where another legatee has been overpaid because the assets were deficient at the time of payment and the executor can no longer make repayment owing to his own insolvency. It is otherwise where the deficiency of assets has arisen after payment.

The principle of equity between legatees was wrongly extended to this case by the Court of Appeal, for that principle is applicable only (i) where there has been a mistake of fact, and (ii) where there is a question of adjustment between legatees, whereas the charities here are not legatees and, even after the executors had expressed an intention of making them a gift, the gift was still imperfect. The early position with regard to the relevant principles is illustrated by Nelthrop v. Hill (3); Grove v. Banson (4); Chamberlain v. Chamberlain (5); Noel v. Robinson (6); Anonymous (7); Hodges v. Waddington (8); Newman v. Barton ( 9); Anonymous (10); and Anonymous (11).

In ordering the repayment of money paid in the course of administration the remedy which the Court of Chancery could give was circumscribed in the same way as that given by the Spiritual Court which required a legatee who was paid his legacy

(3) (1669) 1 Ch. Cas. 135.

(4) (1669) 1 Ch. Cas. 148.

(5) (1675) 1 Ch. Cas. 256.

(6) (1682) 1 Vern. 90.

(7) (1683) 1 Vern. 162.

(8) (1683) 2 Ventris 360.

(9) (1690) 2 Vern. 205.

(10) (1718) 1 P. Wms. 495.

(11) (1738) 1 Atk. 491.

to give security only in a limited class of cases (a) to meet the contingency of further creditors appearing and (b) to meet the case of a deficiency of assets to pay all legacies of equal rank pari passu. The only two precedents of bonds discovered cover no other contingencies: see The Scrivener's Guide by Covert (4th ed., 1724), Vol. I, p. 334, and Burn on Ecclesiastical Law (9th ed., 1842), Vol. IV, p. 517. These bonds indicate the extent of the equity, since equity in these matters acted in imitation of the Spiritual Court and its action was coterminous with the action of that court where the bond was treated as proper protection. If the Court of Chancery have thought that something further was needed it would have insisted on more. As to the competition between the Court of Chancery and the ecclesiastical courts, see Holdsworth's History of English Law, Vol. VI, p. 652. In the present case the only appropriate form of bond would have been a bond against creditors.

The development of the law is further illustrated by Orr v. Kaines (12); Atkins v. Hill (13); Walcott v. Hill (14); 1vHiggins v. Higgins (15); Gillespie v. Alexander (16); and Greig v. Somerville (17), which support the conclusion that a remedy is only available where there is a mistake of fact. As for David v. Frowd (18), there was nothing to justify the Court of Appeal in fixing on the final words of the judgment to conclude that the mere receipt of money coupled with notice is sufficient to fasten on the conscience of a recipient in the position of the charities in the present case. If that were true in the administration of estates the principle must apply to every other case. The administration of assets is on the same footing as the administration of trusts. There is no logical difference. Wrongful payment by an executor under a mistake of law is no different from the case of a trustee who pays money under a mistake of law to someone who is a stranger to the trust. In order to give rise to an equity in such a case as the present there must be something positive in the conduct of the parties. Mere passive receipt is not enough. See also Sawyer v. Birchmore (19); Davies v. Nicolson (20); Thomas v. Griffith (21); Fenwick v. Clarke (22); Peterson v. Peterson (23); Prowse v. Spurgin (24); Hilliard v. Fulford (25); Mohan v. Broughton (26); Harrison v. Kirk (27);

(12) (1751) 2 Ves. Sen. 194.

(13) (1775) 1 Cowp. 284, 287.

(14) (1788) 2 Bro. C. C. 304-5.

(15) (1832) 4 Hagg. Ecc. 242.

(16) (1826) 3 Russ. 130.

(17) (1830) 1 Russ. & M. 338.

(18) (1833) 1 My. & K. 200.

(19) (1836) 1 Keen 391, 401; (1837) 2 My & C. 611.

(20) (1858) 2 De G. & J. 693.

(21) (1860) 2 Giff. 504.

(22) (1862) 4 De G., F. & J. 240.

(23) (1866) L. R. 3 Eq. 111.

(24) (1868) L. R. 5 Eq. 99, 101.

(25) (1876) 4 Ch. D. 389.

(26) [1900] P. 56,

(27) [1904] A. C. 1.

In re Hatch (28); In re Rivers (29); In re Mason (30) v; In re Blake (31); Swinburne on Wills (7th ed., 1803), p. 376; Maxims of Equity by Robert Francis (1728), p. 12; Bize v. Dickason (32); Bilbie v. Lumley (33); Brisbane v. Dacres (34); Wilson and M'Lellan v. Sinclair (35); Dixon v. Monkland Canal Co. (36); Baylis v. Bishop of London (37); and Sinclair v. Brougham (38).

The case of the charities is particularly assisted by Rogers v. Ingham (39) and In re Robinson (40).

For the next of kin to succeed it is not enough for them to establish that it is right and fair that they should recover the money. The executors have no right to claim against the charities and therefore, in order to succeed, the next of kin must establish an independent right not available to the executors. The charities are not constructive trustees for the next of kin, who must establish an equity entitling them to relief. To be available that equity must cover the case where an executor has innocently paid money to a third party who had no right to it under the will. No authority can be found which expressly states so wide a proposition. The next of kin found their alleged equity on the words used in Noel v. Robinson (41) that common justice will compel the legatee to refund, and the question arises whether the. House of Lords is to take words used in the seventeenth century and apply them now, although meanwhile equity and the authorities have taken a different course.

The phrase originated at a time when reporting was only starting in Chancery, and in those reports one must not take a phrase just as it stands. That was a case of legatees and a remedy available to one beneficiary against another is not available against, a stranger to the estate: see Chamberlain v. Chamberlain (42). The application of this equity rests on the clear principle that creditors take before legatees and therefore a legatee, if paid, may have to refund if a creditor subsequently appears. Similarly next of kin take under a defeasible title subject to better information disclosing nearer kin. But a recipient in the position of the charities does not take with notice of any danger that the whole will may be invalid and accordingly is not in the same position as a legatee. The phrase in Noel v. Robinson (43) has never been applied outside the case of an

(28) [1919] 1 Ch. 351.

(29) [1920] 1 Ch. 320.

(30) [1928] Ch. 385; [1929] 1 Ch. 1.

(31) [1932] 1 Ch. 54.

(32) (1786) 1 Term Rep. 285.

(33) (1802) 2 East 469.

(34) (1813) 5 Taunt. 143, 152.

(35) (1830) 4 W. & S. 398.

(36) (1831) 5 W. & S. 445.

(37) [1913] 1 Ch. 127.

(38) [1914] A. C. 398, 451.

(39) (1876) 3 Ch. D. 351, 355, 356.

(40) [1911] 1 Ch. 502.

(41) 1 Vern. 90, 93.

(42) 1 Ch. Cas. 256, 257.

(43) 1 Vern. 90, 93.

overpaid beneficiary (one who is really a beneficiary) and a next of kin, where other next of kin came in: see Roper on Legacies (4th ed., 1847), Vol. I, c. VII, s. III, pp. 456-460. Further, the equitable remedy where it exists was only available to an unpaid creditor or legatee if the estate had been administered by the court.

As to limitation, the claim of the next of kin, if any, is barred under s. 2, sub-s. 1 (a), of the Limitation Act, 1939, and s. 20 does not apply, nor does the case fall within the ambit of s. 26. Accordingly the limitation period is six years. The period of limitation prescribed in s. 20 can only apply to the case of an action against an executor. The words "from the date when the right to receive the share or interest accrued" are inappropriate to any other case. The section is not concerned with innocent third parties. Its opening words throw some light on its true ambit. The scope of s. 19, sub-s. 1 (b), is confined to an action against the trustee of trust property and does not cover the case of a claim such as the present against an innocent payee. (See the definition of "trust" in s. 68 of the Trustee Act, 1925.)

The law was clear down to 1939; where an action was against innocent payees the Limitation Act, 1623, applied. If the law laid down in In re Blake (44) and In re Mason (45) had been altered it would have been done in plain language. The applicability of the Act of 1623 is preserved by s. 2, sub-s. 7, of the Act of 1939. When the legislature introduces into the Act of 1939 a section dealing with mistake, s. 26, it is dealing with mistake in cases where fraud or mistake would be pleaded. But this is a case of money wrongly paid and there is no question of mistake and it does not fall within the ambit of the section at all. The charities were not bound to exercise reasonable diligence to discover the mistake of the executors.

Costs in this case should follow the event. As to the course that has been taken of three of the next of kin, who are very numerous, claiming that their share should be paid to the judicial trustee to be dealt with in due course of administration, the appellant charity offers no objection but without prejudice to the position of other charitable institutions against which actions are pending.

Denys Buckley following. There is nothing in the authorities to support the existence of an equity as wide as that which the Court of Appeal held governed this case, though they declined to define it or to state its nature specifically. The personal representative of a deceased person has to administer the assets in due order of priority. He must find out by inquiry and pay the

(44) [1932] 1 Ch. 54.

(45) [1928] Ch. 385; [1929] 1 Ch. 1.

debts, but he can never be positively certain that he has found all the debts. In an intestacy the administrator must discover the nearest of kin but in cases where there is difficulty in ascertaining it he can never be positive that there is no nearer of kin. In the same way, when pressed by the legatees for distribution before the final estate is known, the personal representative cannot be certain that there will not be a deficiency of assets, or that all the claims of creditors are known. It would prejudice the estate if, before acting, the personal representative or the administrator had to wait until he had attained virtual certainty Therefore whoever takes must be taken to have done so with notice of the risks enumerated. The element of uncertainty informs the recipient's mind and is analogous to notice of an existing trust so as to make him a qualified constructive trustee whose conscience is contingently affected. It would be inequitable if the personal representative or administrator continued to carry those risks without any right of indemnity.

But in other cases where the person accepting a benefit has no reason to believe that his title is assailable he is entitled to assume that the executor has properly performed his duties, and he cannot be taken to assume that the executor may have made a mistake in law. He is not put on inquiry as to the contents of the will and the question of knowledge or ignorance of the law does not come into play. If there were an equity compelling a person who had innocently received money in the circumstances of this case to refund it, that would go beyond the administration of assets and such a principle would apply equally to the execution of trusts. But no such principle has been applied, and this points to the limitation of the equity to cases of mistake of fact in the administration of assets. The conscience of the payee is unaffected by his subsequently learning of the rights of other persons if he has then parted with the assets, since he did not take with notice of potential adverse claims: (see Rogers v. Ingham (46).)

Pascoe Hayward, K.C., and J. L. Arnold for the respondents. At all material times the sum of 4,000l. belonged in equity to the testator's next of kin and should have been paid to them in due course of administration and not to the Westminster Hospital. The equity to be applied is this: Where, in the course of administering the estate of a deceased person, a personal representative either underpays or leaves altogether unpaid a creditor or beneficiary, that creditor or beneficiary has a right to recover. by an action in equity from one who has received as a beneficiary or supposed beneficiary from the personal representative out of the estate payment of something in excess of that,

(46) 3 Ch. D. 351, 355-6.

to which he is entitled, the amount left unpaid or (as the case may be), the amount underpaid or so much of the said amount as is represented by the said excess. Provided that no such right of recovery can be exercised unless (a) the payment to the recipient of the excess was a devastavit and; (b) the unpaid or underpaid creditor or beneficiary has fully exhausted his remedy (if any) against the personal representative in respect of such devastavit, and provided further that the underpaid creditor or beneficiary shall in exercising his right of recovery give credit to the recipient for anything obtained in the course of exhausting his remedy against the personal representative.

The remedy is strictly confined to cases of administration. It is purely equitable in the sense that it could never have been enforced in the courts of common law before the Judicature Act. The remedy is available at the suit of an unpaid or underpaid creditor and is available against all persons who have received any part of the estate as beneficiaries or supposed beneficiaries. There is no fundamental distinction between the case of a creditor and a beneficiary, and where a creditor and a beneficiary are plaintiffs no fundamental distinction has ever been drawn between their rights. If one cannot recover, the other cannot either. The right is entirely independent of any right which the personal representative may enjoy at common law against those overpaid or wrongly paid. Generally speaking, the executor has no right at common law: see Hodges v. Waddington (47).

The existence of the remedy is quite independent of the circumstances in which the payment to the defendant was made. It may have been made by a mistake of fact or of law, or deliberately, as where the personal representative is actuated by malice towards the rightful beneficiary. The remedy rests on a positive and coherent rule of equity. It is not a case in which equity has admitted a few exceptions to an overriding negative proposition that there is in general no relief. In David v. Frowd (48), where the rule was first applied to the case of next of kin, it was suggested that this was a new type of case but the judge said that it rested on well established principles and he applied the rule as a general principle. It does not appear whether a mistake of fact or of law was involved in that case. but had the distinction been vital the report would have shown whether it was the one or the other. Like Sawyer v. Birchmore (49), it was a case where no form of bond, as set out by the appellant, would have been any protection.

There is no historical justification for the attempted distinction between mistake of fact and mistake of law. The equitable

(47) 2 Vent. 360.

(48) 1 My & K. 200.

(49) 1 Keen 391; 2 My & C. 611.

relief for which the respondents contend was developed in its final form before the middle of the eighteenth century: see Nelthrop v. Hill (52); Grove v. Banson (53); Newman v. Barton (54); Orr v. Kaines (55). The distinction between mistake of fact and mistake of law had not then grown up and so the early Chancery judges cannot have had any conception of it: see Farmer v. Arundel (56); Bize v. Dickason (57); Bilbie v. Lumley (58); Brisbane v. Dacres (59); Wilson and M'Lellan v. Sinclair (61); Dixon v. Monkland Canal Co. (62). Moreover, even at common law mistake of law is not fatal to an action for money had and received where (as here) the mistake was made by a third party and not by the plaintiff. This was decided in Blackburn & District Benefit Building Society v. Cunliffe Brookes & Co. (65), which was disapproved by Viscount Haldane, L.C., in Sinclair v. Brougham (66), but he rested on other grounds.

The suggested qualification on the equitable relief has no logical foundation and would lead to the most capricious and surprising results. The only logical ground for limiting the equitable relief would be to bring it into harmony with the common law, but this is not wholly possible. For the equitable relief must apply above all in the case of a deliberate payment, Yet this is just the case where no relief will be grunted at common law.

As an example of the capricious results of the appellant's contention, take the example of one of two brothers who marries, begets children, makes a will bequeathing his estate to his "children", is divorced, goes abroad, marries again, begets another child and dies; and a brother in England proves his will. Three alternative situations may be taken: (a) The executor never having heard of the child abroad, distributes the estate among the children in England. (b) The executor, although he has heard of the child abroad, construes the will as only referring to the children in England and distributes the estate accordingly. (c) The executor, although he has heard of the child abroad, deliberately excludes him from the distribution, perhaps for personal reasons, perhaps from a religious objection to divorce. (In all three cases the children in England are innocent parties.) The result of the appellant's contention would be that the excluded child could recover the money in the first case but not in the second, and the third case would be uncertain. The

(52) 1 Ch. Cas. 135.

(53) 1 Ch. Cas. 148.

(54) 2 Vern. 205.

(55) 2 Ves. Sen. 194.

(56) (1772) 2 W. Bl. 824.

(57) (1786) 1 Term Rep. 285.

(58) (1802) 2 East 469.

(59) (1813) 5 Taunt. 143, 155.

(61) 1830 4 W. & S. 398, 409.

(62) 1831 5 W. & S. 445, 450-1.

(65) (1885) 29 Ch. D. 902.

(66) [1914] A. C. 398, 426.

House should reject the distinction resting on the difference between a mistake of fact and one of law. This would bring the law of England into harmony with that of the United States: see the American Restatement of the Law (Restitution), c. 2, sec. 45, comment (c), at pp. 186-7, and Topic 3, at p. 179.

The appellants' further distinction between a payee who has a title and one who has no title is ill founded. It is suggested that the equitable relief is confined to cases where the plaintiff and defendant are linked by a common relationship of title, and is not available where the defendant never had any title at all. But first there is nothing in any of the authorities to suggest that the equitable remedy is so limited. Secondly, the proposition can be accepted only by overruling David v. Frowd (67). Thirdly, the distinction would be highly artificial. For example, take the case of a will bequeathing the testator's residuary estate to the children of his brother; at the time of his will there are two and at his death three. If on the true construction of the will the estate ought to be divided among all three, whereas in fact it is divided between the two elder children, the third could recover from the overpaid legatees. But, on the appellants' argument, in the case of a division to a stranger there could be no recovery from him, because all three are linked by a common relationship of title. But suppose on the true construction of the will the estate ought to be divided between the two elder children and it is in fact divided between all three. The two elder children could recover nothing from the youngest because ex hypothesi he never had a title to any part of the estate.

As to the suggestion that the equity is narrowed to the form of the bond used in the Consistory Court, the limitation is without foundation. David v. Frowd (68) and Sawyer v. Birchmore (69) are cases in which, so far as the bond was concerned, no protection would have been afforded to the claimants.

Further, it is impossible to base this equity on the state of the recipient's conscience at the date of the receipt of the money. That could not be reconciled with the admitted qualification on the claimant's right that he must first exhaust his remedy against the executor. The appellants, in seeking to base the equity on conscience, relied on the element of uncertainty in a normal administration, but in In re Rivers (70), Eve, J., assumed the absence of uncertainty. See also Walcott v. Hill (71). The court will order repayment in cases where there can be no element of uncertainty in the recipient's mind. In the majority of cases the next of kin must be well known in an intestate's

(67) 1 My. & K. 200.

(68) 1 My. & K. 200.

(69) 1 Keen 391.

(70) [1920] 1 Ch. 320, 325.

(71) 2 Bro. C. C. 304.

family and in such cases it is fanciful to suggest an element of uncertainty.

The appellants relied on Rogers v. Ingham (72), but properly understood that case is slightly in the respondents' favour: see per James, L.J.(73). The proper reading of the judgment is that if the lady had not herself been implicated in the payment (as the next of kin here were not) the decision might have been the other way. In In re Robinson (74), the judge was not seeking to lay down whether or not any particular action would or would not succeed; he was only saying that the action was of a kind to which the Statute of Limitations would apply by analogy. He was not deciding whether or not the plaintiff had a good claim legal or equitable. So too in In re Mason (75), the question was not whether the claim was good but whether the Statute of Limitations applied. So too in In re Blake (76), the judge was dealing only with the Statute of Limitations, 1623, and was not examining the nature of the equitable action. Hilliard v. Fulford (77) was concerned really with the question how the costs of the administration suit were to be borne and does not assist the appellant. In re Hatch (78) has nothing to do with this case and contains nothing to negative the existence of the equity asserted by the next of kin. Fitzpatrick v. M'Glone (79) is not directly on this point. See also Sinclair v. Brougham (80), and Harris v. Harris (No. 2) (81).

The effect of the cases is thai the equitable remedy on which the next of kin rely exists. The limitations on it sought to be imposed by the appellant should be rejected. There is no evidence of them in the decided cases and they would lead to illogical results. The equity does not depend on the conscience of the recipient at the time of the receipt of the money. The purpose of the equitable remedy is to protects the equitable interest of the plaintiff - an existing equitable interest which the plaintiff enjoys. The court has always insisted on the plaintiff first exhausting his right against the executor. If it were a question of conscience the court would allow the plaintiff to go straight to the recipient. That being the nature of the equity, it should be applied in all cases where the plaintiff's equitable interest needs protection.

As to the period of limitation, this is an action "in respect of any claim to the personal estate of a deceased person" within s. 20 of the Limitation Act, 1939, and it was brought within the twelve years mentioned in the section. The words

(72) 3 Ch. D. 351.

(73) Ibid. 354.

(74) [1911] 1 Ch. 502, 508, 511.

(75) [1928] Ch. 385, 390-1, 394-5.

(76) [1932] 1 Ch. 54.

(77) 4 Ch. D. 389.

(78) [1919] 1 Ch. 351.

(79) [1897] 2 I. R. 542.

(80) [1914] A. C. 398, 454.

(81) (1861) 29 Beav. 110.

of the section reflect s. 30, sub-s. 2, of the Administration of Estates Act, 1925, and s. 3 of the Intestates Estates Act, 1884 (cf. s. 2 of that Act, where the word "recovery" is used in the case of a direct action against the person to whom administration has been granted as a nominee of the Crown). If this is an action "for relief from the consequences of a mistake" within s. 26 (c) of the Act of 1939, time does not begin to run till the plaintiffs discovered or could, with reasonable diligence, have discovered, the mistake. See also the Limitation Act, 1623, s. 3.

J. L. Arnold following. For the appellants it is contended that the test which should be applied to determine whether the recipients are susceptible to the operation of this equitable remedy is to see whether they realized, or should have realized, that they were receiving something which the next of kin should have had. In general it cannot be said that all equitable jurisdictions are founded on the tender conscience of the defendant. This is particularly evident when the court is supervising the administration of property. In bankruptcy it is concerned to see that every creditor has his proper share of the assets. In the winding-up of partnerships it is basically concerned not with conscience but to see that everyone receives his true due. So, too, in the execution of trusts and in the administration of assets. From the earliest times in which this equity has been considered and applied the executor has not been allowed to undo his assent and recover against the improperly paid recipient: see Noel v. Robinson (82), Hodges v. Waddington (83), and Orr v. Kaines (84).

As to the period of limitation, time does not begin to run until the remedy against the executors is exhausted. If, however, the claimant was guilty of delay in taking action against the executors he would be barred from his equitable remedy against the recipient by reason of laches. Therefore he could not unreasonably prolong the exercise of his remedy, lulling the recipient into a false security.

Upjohn, K.C., in reply. The recipients are strangers to the estate and the onus is on the next of kin to show that they have a right to recover the money from them. The onus is not on the recipients to prove the existence of some lesser equity excluding them. The equity must be narrower than that proposed by the next of kin. They suggested that the equity they sought to establish was confined to the case of the administration of assets of deceased persons but such an equity could not, for historical reasons, embrace third parties in an administration and exclude third parties in the case of trusts. If the law be that in the case

(82) 1 Vern. 90.

(83) 2 Ventris 360.

(84) 3 Ves. Sen. 194.

of a personal representative making a wrong payment there is a right in an unpaid beneficiary to recover from the recipient of the wrong payment, there must be a similar remedy for the cestui que trust. The next of kin submit that under the equity there is a remedy against a supposed beneficiary, but no authority states such a proposition. They also suggest that if a beneficiary could not recover in the present circumstances nor could a creditor, but that is a proposition unsupported by any authority. The position of a creditor may well be different from that of a beneficiary. The two are not in pari materia.

The equity in its true nature is applicable only to mistakes of fact. Then an unpaid or underpaid creditor or beneficiary in a direct action can enforce in equity a claim in personam against an overpaid beneficiary, even in a case where the personal representatives themselves are precluded from obtaining recovery. The existence of this equity is founded on the fact that in such a case the parties are all linked by the common relationship of being entitled to a share in the assets of the deceased. In such a case the beneficiary who receives a distribution does so on the footing that he will refund if in the event he is proved to have received more than his share. He takes under a title which is essentially defeasible in favour of other parties having a prior or co-ordinate title. The liability to refund does not involve the denial of his title since he may receive a further distribution if further funds fall into the estate.

The circumstances are different when the recipient is sued on the ground that he never had a title at all. Two cases may be distinguished: (a) the case where the recipient has asserted a title (e.g., by claiming to be a next of kin), and (b) such a case as the present where the recipient never did or could have asserted a title at all. The equity available against a beneficiary is not available in either of these cases. Even if available in the former it is certainly not available in the latter. There is no general right to recover ex aequo et bono. The equity is set out in Roper on Legacies (4th ed.), Vol. I, pp. 456-60. The line must be drawn as a result of legal reasoning and not in the light of cases of individual hardship. Further the right of adjustment between legatees is confined to the case of persons who have valid legacies, for true legacies, though paid, remain legacies in the hands of the legatee: see Chamberlain v. Chamberlain (85). Again, when next of kin are paid, nearer of kin may come in: David v. Frowd (86). Defeasibility is the point. The principles of David v. Frowd (86) cannot be applied to this case at all. Where a person takes as an object of the testator's bounty he takes subject to a liability to recoup in order to achieve equality

(85) 1 Ch. Cas. 256.

(86) 1 My. & K. 200.

or to pay legatees of a higher rank, if at the time he was overpaid. Persons who take as next of kin know that they take subject to the possible claims of nearer of kin. But nobody takes on the footing that his gift is invalid. This is the general principle to be extracted from the decided cases. In the case of a pure money claim between people who are strangers it is of the essence that one should be able to fasten on the conscience of the person against whom the claim is made. [He referred to Thomas v. Griffith (87); In re Rivers (88); David v. Frowd  [2v(89) and Cooper v. Phibbs (90).]

As to the limitation point,, from 1623 to 1939 if A paid money to B under a mistake of fact he could only claim to recover it within six years of the mistake: see Baker v. Courage & Co. (91). That limitation has not been changed by the Act of 1939. It is inconceivable that s. 2 does not include the action for money had and received or that the limitation should have been so extended by the omnibus cover in s. 20. The time runs from the wrongful payment and not from the date when the next of kin have exhausted their remedy against the executors. [He referred to Clark v. Hougham (92).]

Their Lordships took time for consideration.

Nov. 23.LORD SIMONDS. My Lords, I think that the reasoning and conclusion of the Court of Appeal are unimpeachable, and it is right to add that, if Wynn-Parry, J., had had the advantage of the citation of authorities and of the argument based upon them which the Court of Appeal and your Lordships have had, he might have come to a different conclusion.

The problem for determination can be simply stated and it is perhaps surprising that the sure answer to it is only to be found by examination of authorities which go back nearly 300 years. Acting under a mistake the personal representatives of a testator whose residuary disposition is invalid distribute his residuary estate upon the footing that it is valid. Have the next of kin a direct claim in equity against the persons to whom it has been wrongfully distributed? I think that the authorities clearly establish that, subject to certain qualifications which I shall state, they have such a claim.

I think that it is important in the discussion of this question to remember that the particular branch of the jurisdiction of the Court of Chancery with which we are concerned relates to the administration of assets of a deceased person. While in the

(87) 2 Giff. 504, 507-8.

(88) [1920] 1 Ch. 320, 324-5.

(89) 1 My. & K. 200, 202.

(90) (1867) L. R. 2 H. L. 149.

(91) [1910] 1 K. B. 56.

(92) (1823) 2 B. & C. 149.

development of this jurisdiction certain principles were established which were common to it and to the comparable jurisdiction in the execution of trusts, I do not find in history or in logic any justification for an argument which denies the possibility of an equitable right in the administration of assets because, as it is alleged, no comparable right existed in the execution of trusts. I prefer to look solely at the authorities which are strictly germane to the present question: it is from them alone that the nature and extent of the equity are to be ascertained.

Before I turn back to the 17th century when the Court of Chancery was gradually wresting from the Spiritual Courts the jurisdiction in administering the assets of deceased persons and framing apt rules to that end, I will first refer to a statement made by Lord Davey early in this century, which, as I think, illuminates the position. In Harrison v. Kirk (93) Lord Davey says this: "But the Court of Chancery, in order to do justice and to avoid the evil of allowing one man to retain what is really and legally applicable to the payment of another man, devised a remedy by which, where the estate had been distributed either out of court or in court without regard to the rights of a creditor, it has allowed the creditor to recover back what has been paid to the beneficiaries or the next of kin who derive title from the deceased testator or intestate".

The importance of this statement is manifold. It explains the basis of the jurisdiction, the evil to be avoided and its remedy: its clear implication is that no such remedy existed at common law: it does not suggest that it is relevant whether the wrong payment was made under error of law or of fact: it is immaterial whether those who have been wrongly paid are beneficiaries under the will or next of kin, it is sufficient that they derive title from the deceased. It is true that Lord Davey expressly dealt with the case of a claimant creditor not a beneficiary or next of kin. I shall show your Lordships that what he said of the one might equally well be said of the other. It would be strange if a court of equity, whose self-sought duty it was to see that the assets of a deceased person were duly administered and came into the right hands and not into the wrong hands, devised a remedy for the protection of the unpaid creditor but left the unpaid legatee or next of kin unprotected.

I think, my Lords, that it is not necessary for me to review all the authorities. This has been done with exhaustive accuracy by the Court of Appeal. I will refer only to certain cases which appear to me to be landmarks in the history of the equitable doctrine. In any such history the name of Lord Nottingham must have first place. In Noel v. Robinson (94) the Lord

(93) [1904] A. C. 1, 7.

(94) 1 Vern. 90, 93.

Chancellor, after referring to the practice of the Spiritual Courts under which the executor was entitled to demand security of the legatee before paying his legacy in case the amount was required in discharge of debts, said: "... but in this court, though there be no provision made for refunding, yet the common justice of this court will compel a legatee to refund. It is certain that a creditor shall compel the legatee to refund, and so shall one legatee compel the other, where the assets become deficient ..."

I pause here for two purposes. First, I point out that already in 1682 a creditor and a legatee shared the remedy established by the common justice of the Court of Chancery. Secondly, it is a proper moment at which to deal with an argument which was put forward by learned counsel for the appellant. They urged that it was only in a limited class of cases that the Spiritual Court required a legatee, who was paid his legacy, to give security; first, to meet the contingency of further creditors appearing, and, secondly, to meet the case of a deficiency of assets to pay all legacies of equal rank pari passu; and that the remedy which the Court of Chancery gave should be similarly circumscribed. The purpose and effect of the argument, if accepted, would be to deny any remedy against persons wrongly paid to next of kin rightfully entitled. I cannot accept this argument. In the first place I am by no means satisfied that the practice of the Spiritual Court was so limited. The contention was largely based on the fact that the only two precedents of bonds which had been discovered did not cover any other than the contingencies already mentioned. At this distance of time I do not think that this can be regarded as conclusive evidence of the practice. But in the second place I see no justification for regarding the equitable doctrine of the Court of Chancery as limited to the previous practice, if it was the practice, of the Spiritual Court. That it was not so regarded will appear from a later case to which I will shortly refer.

I pass over numerous cases in which the equitable remedy was refined and elaborated: their effect is stated in the judgment of the Court of Appeal and summarized in the passage from Roper on Legacies (4th ed., 1847), Vol. I, c. VII, s. III, pp. 456-60, which is cited in that judgment(95). But I should in passing mention Orr v. Kaines (96) in which it was clearly established that the right of an underpaid legatee to claim directly against the overpaid legatee is subject to this qualification, that he must first exhaust his remedy against the executor who has made the wrongful payment. It was for this reason that I mentioned at an earlier stage of this opinion that the next of kin must be deemed to have recovered from the executors all that they could

(95) [1948] Ch. 465, 483.

(96) a Ves. Sen. 194.

recover. They had then no other way to recover the balance that was due to them than by proceeding directly against the appellant and other institutions amongst which the executors had distributed the estate.

It must at this point be said that a distinction on which Wynn-Parry, J., relied has no validity. Not, having had his attention called to the earlier authorities, the learned judge was disposed to think that the equitable remedy, even where it existed, was only available to an unpaid creditor or legatee if the estate had been administered by the court. There is no ground for this broad distinction, though it may well be that a distinction exists, viz.: that, where the executor has distributed the estate under an order of the court, the unpaid creditor would not be required to bring a further action against him before proceeding against persons wrongfully paid.

I go forward nearly a century, during which the equitable doctrine had been recognized by successive Lord Chancellors and Masters of the Rolls, and come to David v. Frowd (97) a case upon which the respondents rely as most nearly resembling the present case. The resemblance lies in the fact that there too the plaintiff was next of kin of an intestate who claimed against the defendants that the estate of the intestate should have been paid to her but had been wrongfully paid to them. The distinction, if it is a material one, is that there the payment had been due to a mistaken view (whether of fact or law) that the defendants were the true next of kin, here it was due to a mistaken view as to the validity of the residuary bequest.

My Lords, I think that, subjects always to one point to which I shall presently refer, David v. Frowd (98) is an authority strongly in favour of the respondents. It is fatal to the appellants' argument, which I have already mentioned, that the equitable remedy was confined to the cases of unpaid creditor or legatee, and is consistent only with the view that the remedy was one (to adapt Lord Davey's words) devised by the Court of Chancery in the administration of assets of a deceased person to avoid the evil of allowing one man to retain money legally payable to another and was applicable wherever it could appropriately be applied.

Two other cases upon which the respondents relied I will mention before I examine those which the appellant cited as supporting his contention, the first Peterson v. Peterson (99), in which Lord Romilly, M.R., once more asserted the equity, making no distinction between claimant residuary legatees and

(97) 1 My. & K. 200.

(98) Ibid.

(99) L. R. 3 Eq. 111.

next of kin, and, the second, In re Rivers (100), where Eve, J., recognized and applied it.

Here then, my Lords, is a long line of authority extending over more than 250 years, resting on decisions of judges of the highest authority and broken by no dissentient voice. Why should it not cover the present case? Three arguments put forward by the appellant I have already mentioned and disposed of, the first founded upon a supposed relation between the assumed practice of the Spiritual Court and the scope of the remedy provided by the Court of Chancery, the second based upon a distinction between wrongful payments made when there has and when there has not been administration by the court, and the third (which is bound up with the first) that there is a distinction between claimant residuary legatees and next of kin.

It remains to deal with two other arguments. It was said that the equity was not applicable against a "stranger" and that the appellant (or the hospital through whom it claimed) having been paid money to which it was not lawfully entitled, since the disposition under which it took was invalid, was to be regarded as a stranger. This argument is wholly without substance. The hospital received 4,000l. for no other reason than that the executors thought that it was a proper object for the testator's bounty. It was treated as a beneficiary under the testator's will and, to use Lord Davey's words, derived title under it. It does not appear to me that a person so receiving money from the estate of a testator is in a different position from any other person to whom money is paid upon the footing that under the testator's will money can be lawfully paid to him though in fact the payment is wrongful.

I come finally to the argument upon which counsel for the appellant laid the greatest stress, relying not only on the judgment of Wynn-Parry, J., but upon the other cases which have yet to be examined. It was that the equitable remedy was subjects at least to this qualification, that it was not applicable where the wrongful payment was made in error of law. It was said that in every case where it had been applied the wrongful payment had been made under a mistake of fact and that wherever the principle had been stated without any such qualification, it must be read, nevertheless, as subject to it. I think, my Lords, that this argument which found favour with the judge is misconceived.

In the first place, though in almost all the reported cases the probability is that the wrongful payment was made under a mistake of fact, that is not true of all of them and in many of them, while the probability is in one direction, there can be no

(100) [1920] 1 Ch. 320.

certainty without further information which is not now available. This leads directly to the second reason. In not one of the many cases where the equity was applied was any suggestion made in argument or judgment that the issue depended on the nature of the mistake under which the wrongful payment had been made. It is not credible that, if the distinction between mistake of fact and law was relevant, it would never have been mentioned, particularly at a time when in the courts of common law is was being established. And here it may be observed that the equitable doctrine was well settled before that event took place: for such cases as Farmer v. Arundel (101); Bize v. Dickason (102); Brisbane v. Dacres (103); Bilbie v. Lumley (104), show that up to the end of the eighteenth century there were in high places doubts as to the validity of the distinction in the common law.

In the third place the most satisfactory reason for the distinction rests in the maxim, itself probably taken from the criminal law, ignorantia juris neminem excusat: see Baylis v. Bishop of London (105). The man who makes a wrong payment because he has mistaken the law may not plead his own ignorance of the law and so cannot recover what he has wrongfully paid. It is difficult to see what relevance this distinction can have, where a legatee does not plead his own mistake or his own ignorance but, having exhausted his remedy against the executor who has made the wrongful payment, seeks to recover money from him who has been wrongfully paid. To such a suit the executor was not a necessary party and there was no means by which the plaintiff could find out whether his mistake was of law or of fact or even whether his wrongful act was mistaken or deliberate. He could guess and ask the court to guess but he could prove nothing. I reject therefore the suggestion that the equitable remedy in such circumstances was thus restricted and repeat that it would be a strange thing if the Court of Chancery, having taken upon itself to see that the assets of a deceased person were duly administered, was deterred from doing justice to creditor, legatee or next of kin because the executor had done him wrong under a mistake of law. If in truth this were so, I think that the Father of Equity would not recognize this child.

I turn now to the cases on which the appellant relies. The first of these is Rogers v. Ingham (106) and, as it, is placed in the forefront of the appellant's argument (as it was in the judgment of the judge), it is worth examining in some detail. The headnote reads as follows: "The court will not in all cases relieve

(101) 2 W. Bl. 824.

(102) 1 Term Rep. 285.

(103) 5 Taunt. 143.

(104) 2 East 469.

(105) [1913] 1 Ch. 127

(106) 3 Ch. D. 351.

against a payment of money under mistake of law. An executor, acting on the advice of counsel on the construction of a will, proposed to divide in certain proportions a fund between two legatees. One of the legatees being dissatisfied took the opinion of counsel, which agreed with the former opinion. The executor then divided and paid over the fund in accordance with the opinions. Two years afterwards the dissatisfied legatee filed a bill against the executor and the other legatee, alleging that the will had been wrongly construed, and claiming repayment from the other legatee: Held (affirming the decision of Hall, V.-C.), that the suit could not be maintained".

As appears from the headnote, the case came first before Hall, V.-C., and, though there is no note of the argument before him, it is clear from his judgment how he regarded the issue. "It seems to me," he said(107), "that the fund was divided as a matter of arrangement between the parties, and that having taken place more than two years before the bill was filed, I ought not to give the assistance of this court for the purpose of recalling that fund from the defendant, who received it upon the faith and footing of what took place on that occasion." From his judgment the plaintiff appealed, and again it is clear how the issue was regarded both by counsel and by the court. "Payment by my trustee is payment by me, and I ought to recover the money. ... A court of equity ca relieve against the consequences of a mistake of law; moreover this is hardly a pure question of law." Thus argued the counsel for the appellant(108). He made no reference to the long line of authority which confirmed the equitable right that arises in an administration of assets, perhaps because the act of wrongful distribution was done by Ingham, the surviving executor and trustee, not in his capacity of executor (in this respect the headnote is misleading) but in his capacity of trustee distributing a trust fund. He may have thought and he may have rightly thought (I do not think it necessary to decide it) that the cases had no relevance to an alleged breach of trust. Nor on the other hand did counsel for the respondent legatee point out that according to the established rule the plaintiff could not recover from him until she had exhausted her remedy against Ingham or his estate. Ingham had in fact died and his executor was a party to the suit, but he seems to have taken no part in the proceedings and there was no evidence that Ingham's estate was insolvent.

It was in these circumstances that James, L.J., almost in the opening words of his judgment said(109): "When trustee, by the direction or with the authority of his cestui que trust, pays

(107) 3 Ch. D. 353.

(108) Ibid. 354.

(109) Ibid. 355.

money to a third person, no matter under what claim of right or under what circumstances, it is exactly the same as if the cestui que trust had received the money from the trustee, and had herself paid it to that person. It is simply a question of money paid by the lady, or by the lady's direction, out of money of hers which the trustee had in hand to a person who said that he had a claim to the money".

Already it is sufficiently clear what are the facts to which the relevant law must be applied, but I will cite a few lines more which are a clue to the whole judgment. "That being so," the Lord Justice goes on, "it is reduced, as it appears to me, to a mere action for money had and received, and it is the same as if A through a third person had paid money to B, thinking that B was entitled to it, B thinking also that he was entitled to it; there having been, as it is now said, a mistake of law which was common to both parties." It is in this context that he later uses the words so much relied on by the appellant: "I have no doubt that there are some cases which have been relied on, in which this court has not adhered strictly to the rule that a mistake in law is not always incapable of being remedied in this court; but relief has never been given in the case of a simple money demand by one person against another, there being between those two persons no fiduciary relation whatever, and no equity to supervene by reason of the conduct of either of the parties". It is, I think, clear that the Lord Justice, whose every word on a question of equitable principle is weighty, was dealing solely with a case where (in his own language) a trustee by the direction or with the authority of his cestui que trust pays money to a third person, and was not dealing with a case where without his acquiescence or even his knowledge an executor wrongs a creditor or beneficiary by paying to another money which should be paid to him.

The next case to be considered is In re Robinson (110). Two preliminary observations may be made, first, that the case was not concerned with a wrongful distribution of assets in the administration of an estate, secondly, that the sole question was what, if any, Statute of Limitations was applicable to the claim. The claim was by a beneficiary under a trust, who alleged that he had been underpaid, directly against a beneficiary under the same trust who had been overpaid. The judge had first to determine its nature. It was, he said(111), a "mere money demand by the plaintiff against the defendant". He then states the rival contentions, the defendant saying that it was in reality a common law action for money had and received and therefore barred by the lapse of six years under the statute of James I,

(110) [1911] 1 Ch. 502.

(111) Ibid. 507

the plaintiff on the other hand saying that, where a trust fund: had by mistake been paid by the trustee to the wrong beneficiary, there was not in the old Court of Chancery any bar by lapse of time to the recovery of lost money. He says that the defendant's contention would prima facie appear to be right, analysing the position and saying that the party whose money has been wrongly paid away could at all events have maintained a suit in equity for it - a statement which points the contrast between such a suit and one by a legatee against a legatee in which the joinder of the executor as plaintiff was fatal (see Hodges v. Waddington (112) - and concludes(113): "But whether the action is treated as a strict claim in law for money had and received, or whether it is brought as a claim in equity through the medium of the trustee - in whichever way it is regarded - at first sight, inasmuch as the court has always acted by analogy to the statute, one can see no reason why the period fixed by the statute should not bar the right of the plaintiff to recover".

The judge then deals with certain cases on which the plaintiff had relied and sums up by a classification of the cases in which mistakes have been made by trustees in payment of trust funds. I doubt, with respect, whether the classification is exhaustive, but in any case it is made for no other purpose than to show in what cases a court of equity regarded a claim by a cestui que trust as not barred by any lapse of time. The judge concludes thus(114): "The present case resolves itself into this - that although, owing to the fact that the plaintiff is not the person who paid the money, the action is one which could not have been maintained at common law, it is in substance a mere money demand to which a court of equity, acting by analogy to the statute, would apply the same period of limitation".

I have been led to examine this case at some length because of the emphasis laid upon it by the appellant. Having done so, I lind in it no support for the contention that the equity which is the foundation of the present claim is qualified by the condition that the wrongful payment must not have been made under a mistake of law. The judge was not considering that question. With great respect, I cannot (notwithstanding the subsequent approval of Romer, J., in the case to which I next refer) accept his reading of the decree made by Lord Romilly, M.R., in Harris v. Harris (No. 2) (115), for it is, I think, clear that the defendant in that suit was in effect held liable to repay moneys which he had been wrongly paid, though in form the liability was declared to be to replace certain annuities of which he had received the proceeds of sale. Nor, with respect, can I assent to the view

(112) Vent. 360.

(113) [1911] 1 Ch. 502, 508.

(114) Ibid. 513.

(115) 29 Beav. 110.

first expressed by the judge(116) that the action is prima facie "in reality a common law action for money had and received", though I would be inclined to accept the modified statement already cited with which he concludes his judgment. I see no reason to doubt that to a claim whether made by legatee against legatee or by cestui que trust against cestui que trust, in respect of a payment made under a mistake of fact or of law, a court of equity could properly before the Limitation Act of 1939 came into force apply by analogy the statute of James I. Nor do I understand that counsel for the respondents on this appeal dissents from that proposition.

I am brought now to the case of In re Mason (117). The judgment of Romer, J., in that case, so far as it was in any way relevant to the matter under appeal, was that a petition of right presented by the next of kin of a lunatic who had died in 1798 was barred by the statute of James I. I do not doubt that the decision was correct for the same reasons that I have given in regard to the decision in In re Robinson (118). But the appellant relies upon certain statements by the judge which in his contention militate against the view that the equitable doctrine relied on by the respondents was applicable where the wrongful payment was made under a mistake of law.

The judge makes the assumption that the whole of the estate of the lunatic had come into the hands of King George III and says(119): "On that assumption the claim of the suppliants is one to recover from the Crown moneys that in fact belonged to Maria L'Epine's next of kin, but was wrongfully paid over by her administrators to King George III. It is, in other words, a claim by a cestui que trust to recover from a third party money which his trustee has by mistake paid to that third party. Such a claim is one for money had and received". I pause to observe that the judge, who had had cited to him none of the long line of cases involving claims for refund in the administration of assets, treated the claim as if it were a claim by one cestui que trust against another and then referred to such a claim as one for money had and received. And it was upon that footing that after referring to the case of In re Robinson (120) he said(121) that "if the claim of the trustee would be barred in an action at law by any Statute of Limitations, the claim of the cestui que trust, so far as it was one for money had and received, would be equally barred". My Lords, I must with the greatest deference to the judge observe that an action by legatee or next of kin to recover money paid to the wrong person

(116) [1911] 1 Ch. 502, 507.

(117) [1928] Ch. 385.

(118) [1911] 1 Ch. 502.

(119) [1928] Ch. 385, 391.

(120) [1911] 1 Ch. 502.

(121) [1928] Ch. 385, 392.

in the administration of assets is not a claim by one cestui que trust against another, and that, whatever may be said of the latter, it cannot with any formal accuracy be said that the former is an action for money had and received. Such an action is an action at common law deriving from indebitatus assumpsit: I will not embark upon the rather arid dispute whether its gist was an implied promise, but it has, I think, no relation to the equity by which for 300 years such a claim as the respondents now make hals been supported. It is true that in Moses v. Macferlan (122) Lord Mansfield, C.J., said, "In one word, the gist of this kind of action is, that the defendant ... is obliged by the ties of natural justice and equity to refund the money", but this broad statement contained perhaps less the basis upon which the action at common law was founded than an aspiration as to the area over which it might one day extend. There remained a field over which "this essentially common-law action" (as Lord Sumner called it in Sinclair v. Brougham (123)) did not extend. The plaintiff in David v. Frowd (124), for instance, could not, I think, have maintained an action for money had and received in a court of common law. If this is so, the fact that, as the common law action developed, it was established that a mistake of law would not support a claim for repayment, appears to me to afford no justification for saying that this equitable right was similarly limited. Therefore while, as I have said, I do not question the decision, which was indeed affirmed by the Court of Appeal, I do not think that it helps the appellant's case. In the Court of Appeal Lawrence, L.J.(125), agreed that the proceedings were "in effect" proceedings for money had and received. My respectful comment would be that this is not an inaccurate statement since the effect of the action, if it succeeds, would be the same.

The appellant next relied on some observations made by Maugham, J., in In re Blake (126), a case not unlike In re Mason (127), in that here too it was pleaded by the Crown that a claim made by petition of right was barred by the statute of James I. In the course of his judgment the judge said(128): "An action in the Chancery Division brought by the next of kin against a person to whom the administrator had wrongly paid part of the personal estate of the intestate under a mistake of fact (not joining the administrator and seeking administration) would be in the nature of a common law action for money had and received, and the court acting on the analogy of the statute of James I (21 Jac. 1, c. 16) would hold the claim to be barred

(122) (1760) 2 Burr. 1005, 1012.

(123) [1914] A. C. 398, 456.

(124) 1 My. & K. 200.

(125) [1929] 1 Ch. 1, 12.

(126) [1932] 1 Ch. 54.

(127) [1928] Ch. 385; [1929] 1 Ch. 1.

(128) [1932] 1 Ch. 54, 60.

after the lapse of six years from the date of payment". It would, I think, be hypercritical to quarrel with this statement in which the judge so guardedly refers to such an action as being "in the nature of a common law action". In my judgment it gives no support, to the appellant's contention. Two other cases I will do no more than mention, Hilliard v. Fulford (129) and In re Hatch (130), for I am fully satisfied with the observations of the Court of Appeal upon them.

Finally, my Lords, I must say some words on an argument of a more general character put forward on behalf of the appellant. The Court of Chancery, it was said, acted upon the conscience, and, unless the defendant had behaved in an unconscientious manner, would make no decree against him. The appellant or those through whom he claimed, having received a legacy in good faith and having spent it without knowledge of any flaw in their title, ought not in conscience to be ordered to refund. My Lords, I find little help in such generalities. Upon the propriety of a legatee refusing to repay to the true owner the money that he has wrongly received I do not think it necessary to express any judgment. It is a matter on which opinions may well differ. The broad fact remains that the Court of Chancery, in order to mitigate the rigour of the common law or to supply its deficiencies, established the rule of equity which I have described and this rule did not excuse the wrongly paid legatee from repayment because be had spent what he had been wrongly paid. No doubt the plaintiff might by his conduct and particularly by laches have raised some equity against himself; but if he had not done so, he was entitled to be repaid. In the present case the respondents have done nothing to bar them in equity from asserting their right. They can only be defeated if they are barred at law by some Statute of Limitations.

It is common ground between the parties that the only statute now applicable is the Limitations Act, 1939, which came into operation on July 1, 1940, and the question is which of the sections of this Act is applicable to the present case. I hope I shall not be thought wanting in respect to the elaborate argument of counsel for the appellant if I deal with this question very shortly. I do so because on the main point, viz., the applicability of s. 20, which the respondents assert and the appellant denies, I am in complete agreement with the reasoning and conclusion of the Court of Appeal and cannot usefully add anything of my own. The present action is precisely within the language of the section: it is in respect of a claim to the personal estate of Caleb Diplock, and there is nothing in the ancestry of the section which justifies, much less requires, a narrower meaning being given to

(129) 4 Ch. D. 389.

(130) [1919] 1 Ch. 351.

its words than they ordinarily bear. It is suggested that there is something awkward or inapposite in the terminus a quo, inasmuch as the relevant period is to run "from the date when the right to receive the share ... accrued". I think that this criticism is ill-founded. There is nothing inappropriate in a legatee or next of kin who has brought no action for twelve years after the executor's year has expired being barred from such action whether against the executor himself or against the person to whom the executor has made a wrongful payment. At the least there is nothing so inappropriate in such a result as to deprive the substantive words of the section of their plain meaning. Section 20 applying to this action and, it being conceded that the relevant period had not expired before it was brought, the defence under the statute fails. I think it therefore unnecessary to say anything about s. 26 by way of approval or disapproval of what fell from the Court of Appeal. It is a section which presents many problems.

One thing only remains to be said. The action was brought by three only of the next of kin, who are said to be a numerous body, and their claim was not that their share of the 4,000l. wrongfully paid away should be paid to them but that the whole of that sum should be paid to their co-plaintiff the judicial trustee to be dealt with by him in due course of administration of the estate. No objection was taken by the appellant to this course at any stage of the action and his counsel has expressly disclaimed any wish to do so now. Accordingly this appeal must be dismissed. But he has at the same time properly said that his present disclaimer should not prejudice any other of the numerous charitable institutions against whom similar actions are pending. I agree and express no opinion whatever whether any such objection could be sustained.

I move, my Lords, that the appeal be dismissed with costs.

LORD NORMAND. My Lords, I concur.

LORD OAKSEY. My Lords, I agree.

LORD MORTON OF HENRYTON. My Lords, I also agree.

LORD MACDERMOTT. My Lords, I also agree.

Solicitors: Trollope & Winckworth; White & Leonard.