30 Money Had and Received

• Library: Elements of Civil Causes of Action (SCBar) (2015 Ed.)

30 Money Had and Received¹

A. Definition²

The action for money had and received is ancient and aptly named. Its appellation almost entirely describes the action: the plaintiff had a sum of money, the defendant received it, and the plaintiff is bringing suit to get it back.³ The early South Carolina appellate decision of Marvin v. M'Rae,⁴ succinctly stated the gist of the action when it said that if one has money in his or her hands that belongs to another, the latter may sue the former in an action for money had and received.⁵

The action emerged from the old common law action of assumpsit and was known as one of the "common counts" in assumpsit⁶ Assumpsit is a term one occasionally finds in modern South Carolina decisions,⁷ and, in relation to money had and received, was more frequently used in 19^th and early 20^th Century South Carolina cases.⁸ The United States Supreme Court explained the cause many years ago where it said that an action to recover a tax erroneously paid was an action at law, but equitable in function and was the lineal successor of the common count in indebitatus assumpsit for money had and received. The action was, said the court, originally one for recovery of a debt and was favored for its convenience and flexibility. Gradually, it expanded to become a means for recovery on "every form of quasi-contractual obligation in which the duty to pay money is imposed by law, independently of contract, express or implied in fact."⁹

Assumpsit had a colorful past,¹⁰ so much so that the South Carolina Supreme Court once referred to the distinction between its different forms as "confounding."¹¹ It appears to have encompassed everything from breach of warranty,¹² unjust enrichment,¹³ and quantum meruit,¹⁴ to a "case by simple contract"¹⁵ as well as money had and received. As the spawn of a shadowy parent, the action for money had and received is a bit difficult to pin down. It is variously described as a contract action,¹⁶ an action at law governed by equitable principles,¹⁷ an equitable remedy,¹⁸ and as nearly identical to unjust enrichment.¹⁹ Trying to fit it into a specific slot — rather than treating it as a discrete action with a unique function — is a dangerous enterprise. The South Carolina Court of Appeals faced that peril in Okatie River, L.L.C. v. Southeastern Site Prep, L.L.C. ²⁰ In so doing, it placed the very viability of money had and received as an independent cause of action in considerable doubt by stating that "in theory and actual practice" it has been "subsumed and amalgamated under the theories of quantum meruit/quasi-contract/implied by law actions."²¹ There are, however, several problems with that statement.²²

First, the court began its analysis by saying that an "... action for money had and received is based upon a quasi-contract or a contract implied in law." Thus, it straightaway mired itself in the terminological quagmire that assumpsit conceived. It did so when it conflated "based upon" with "identical to." Money had and received is based on quasi or implied contract in the sense that it came from the branch of assumpsit concerned with equitable results, but it is not identical to quasi or implied contract.²³ The most serious problem, however, is that, having equated money had and received with quantum meruit/ quasi-contract/contract implied by law, the Okatie River court announced it was bound by Myrtle Beach Hospital and what that court called the Scudder May quantum meruit test which is: benefit conferred by the plaintiff on the defendant, realization of that benefit by the defendant, and retention of the benefit by the defendant under circumstances that make it inequitable for him or her to retain it without paying its value.²⁴ The problematic aspect of that test in the context of an action for money had and received is the "benefit."²⁵Indeed, it is not only a problem, it illustrates why money and received cannot logically be "subsumed and amalgamated" under quantum meruit.²⁶ The benefit element could present a real predicament for the plaintiff when the defendant is merely an agent holding money the plaintiff claims since the agent arguably receives no benefit from holding that money.²⁷There are any of a number of solutions to that dilemma, but the elegant one is to retain money had and received as a discrete action in which the plaintiff need only show that his or her money is in the hands of the defendant who, regardless of any benefit realized, should by right return it, in other words, the M'Rae formulation. The reality is, however, that Okatie River is the law. Plaintiffs, therefore, need to be prepared to meet the Scudder May test by showing "benefit" while perhaps simultaneously arguing there is no need to show benefit in those cases where one is not evident.

Ordinarily, money had and received is the principle action; however, it appears that it may be raised as a counterclaim.²⁸

Money had and received must be compared with, and sometimes distinguished from, conversion. The two actions have an interesting interrelationship. It is sometimes thought that money cannot be the subject of an action for conversion, but that is not the case. Money may be the subject of conversion when it is capable of being identified.²⁹ In the early case of V. P. Randolph & Co. v. Walker,³⁰ the South Carolina Supreme Court explained the tort and contract actions. In Walker the complaint alleged that the plaintiff deposited a sum of money with the defendant as his agent. The defendant was to hold the money subject to the plaintiff's order but refused to pay the money over to the plaintiff. Instead, so the complaint said, the defendant "tortiously converted the money to his own use and unlawfully refused" to return it. The court noted that the allegation was that a particular amount of money was "deposited" with the defendant, not that a particular package or bills of money were left with defendant to be kept in trust. The language, said the court, implied that the amount deposited was to be in the defendant's hands at all times and subject to the order of the plaintiff, not that the identical bills were to be held by the defendant. The allegation distinguished the case from those where conversion of a particular article of property, for example a particular package or piece of money, was alleged.³¹ When the trust funds are not to be kept in their original form "as the identical property of the principal," only an action ex contractu — presumably money had and received,³² although the court never uses the phrase — may be brought against the agent for misappropriation. On the other hand, concluded the court, if the plaintiff alleges conversion of money that has retained its identity in the hands of the agent, the action must be ex delicto, that is, for the tort of conversion. At the same time, it is commonly said that when a defendant has converted the personal property of the plaintiff to money, the plaintiff has the option to sue for the proceeds — an action of assumpsit for money had and received — or for damages for conversion. The South Carolina Supreme Court accepts that proposition.³³ Generally, if the plaintiff has a choice, money had and received is the better one,³⁴ except that punitive damages may be available for the tort of conversion.³⁵

B. Elements

The simplest statement of the action for money had and received is found in the early case of Marvin v. M'Rae³⁶ where the court said that if a party has money in his or her hand that belongs to another, that other party may sue the first in an action for money had and received. Subsequent decisions expand on that statement a bit to say that the action may be maintained whenever one has money in his or her hands belonging to another that, in equity and good conscience, he or she ought to pay over to that other.³⁷ Thus, under the traditional formulation, the plaintiff must show: (1) the defendant holds money (2) that, in equity and good conscience, belongs to plaintiff. These are the elements explicated below. However, as previously discussed, the plaintiff may instead now need to meet the Scudder May quantum meruit test.

Privity between the parties is not required,³⁸ and, although the money at issue may have been wrongfully obtained, wrongfulness is not at issue and not an element.³⁹

It is usually said that no demand is required,⁴⁰ and therefore, a prior demand would not be an element of the action. There does, however, seem to be some authority in South Carolina requiring a demand.⁴¹ On the surface, a requirement that the plaintiff make a demand on the defendant as a condition of bringing the action makes sense. If the plaintiff can recover the money at issue by simply making a demand on the defendant, the court's time should not be taken up with the action. On the other hand, the complaint itself constitutes a demand and if the defendant answers, denying liability, little would seem to be gained, either for the court or the parties, by dismissing the complaint for failure to state a cause of action and requiring the plaintiff to make a formal demand that will inevitably be refused. Thus, this statement of elements does not include a demand. Nonetheless, a formal written demand is easy enough to make, and the plaintiff is well advised to make one and to briefly mention it in the complaint.

C. Elements Defined

1. The Defendant Holds Money

Courts often state that an action for money had and received requires that the defendant holds the money in question in his or her hand.⁴² That suggests that the money must presently be in the hand of the defendant.⁴³ The complaint probably need only briefly state that fact, leaving it to the defendant to deny that he or she has the money. If the defendant no longer has the money in hand, he or she may be subject to some other action — conversion, for example — but presumably is not liable in an action for money had and received.

2. The Defendant Ought in "Equity and Good Conscience" Pay the...