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Where money is paid under a mistake of fact, and payment would not have been made had the facts been known to the payor, such money may be recovered. The fact that the person to whom the money was paid under a mistake of fact was not guilty of deceit or unfairness, and acted in good faith, does not prevent recovery of the sum paid, nor does the negligence of the pay or preclude recovery.
On September 13, 1975, Mrs. Catalano took out a $ 4,000 loan from the Bank of Naperville, secured by a note on which Mr. Catalano was guarantor. The note was renewed seven times and was due following the last renewal on July 5, 1977. As of August 3, 1977, the note was approximately 30 days past due, and Mrs. Catalano's checking account was overdrawn in the amount of $ 35.95. Mr. Stearns, the bank's president, determined that the loan was a "troublesome credit" which had been renewed too many times and that there was considerable difficulty with the checking account. Accordingly, he instructed that the checking account be closed and that the loan be paid off. On August 4, 1977, Mr. Catalano went to the bank's drive-in window to make a deposit. The teller asked him to step inside, at which time an employee told him that his deposit could not be accepted and that his account had been closed. The employee tendered to Mr. Catalano a group of documents, including a paid-up loan statement, a cashier's check drawn on the bank for $ 1,825.45 and the documents which had accompanied the attempted deposit. Mr. Catalano refused to accept these papers and asked to see the bank president. He was shown into Mr. Stearns' office shortly thereafter. Mr. Stearns testified that he told Mr. Catalano that the bank would charge his savings account for the principal and interest due on the note and for the overdraft, with the balance being returned to him in the form of a cashier's check. Mr. Catalano admitted at one point that Stearns had said the money came from a savings account, but elsewhere denied having been so informed. Mr. Catalano stated that his money was "scattered all over," implying that he was uncertain as to which accounts had been used by the bank to produce the cashier's check. Mr. Stearns testified that Catalano had thereafter made a telephone call from the bank lobby and cashed the check. According to Mr. Stearns, Catalano then threatened Stearns' life and Stearns called the police. Following arrival of the police, Catalano left the premises. Mr. Catalano, on the other hand, denied threatening Stearns' life. Catalano testified that Stearns had said that the bank did not choose to do business with people of Catalano's character, and that Stearns had called the police when he had refused to accept the various papers given to him. The police advised Catalano to accept the documents, so Catalano, not trusting the bank, had cashed the cashier's check and departed. Subsequent to these events, it was discovered that defendants did not maintain a savings account at the Bank of Naperville, and that the money which the bank had applied to the overdraft, the loan and the cashier's check had been inadvertently taken from the savings account of a third party who coincidentally was also named Robert Catalano. Mr. Stearns admitted that preparation of the cashier's check had been done in "a less than careful manner."
May a bank which erroneously applies funds on deposit from one party to obligations owed the bank by a second party obtain restitution of those funds from the second party?
After review, the trial court's award of restitution was affirmed because it was not precluded by a negligent overpayment. Where money is paid under a mistake of fact, and payment would not have been made had the facts been known to the payor, such money may be recovered. The fact that the person to whom the money was paid under a mistake of fact was not guilty of deceit or unfairness, and acted in good faith, does not prevent recovery of the sum paid, nor does the negligence of the payor preclude recovery. Denial of interest and attorney's fees to the bank was affirmed, and the Catalanos’ request for attorney's fees for defense of the cross-appeal was denied because of an absence of statute.