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Chase Manhattan Bank v Israel-British Bank

[1981] Ch 105

Case summary last updated at 24/02/2020 17:29 by the Oxbridge Notes in-house law team.

Judgement for the case Chase Manhattan Bank v Israel-British Bank

A New York bank, had by mistake paid the same sum twice to the credit of the defendant, a London bank. Shortly thereafter, the defendant bank went into insolvent liquidation. The question was whether Chase Manhattan had a claim in rem against the assets of the defendant bank to recover the second payment. In the State of New York, where a payment under a mistake of fact of money which the payee cannot conscientiously withhold gives rise to the imposition of a constructive trust => Goulding J said this was in accord with the law in England too => it is common ground that if (as I have decided) there is a right in English law to trace money paid by mistake, it rests on a persistent equitable proprietary interest. Moreover, as I have already indicated, the right to trace given by New York law is, in my judgment. on the evidence, likewise founded on such a proprietary interest
Goulding J: “a constructive trust, unlike an express trust, is a remedial and not a substantive institution. The court does not give relief because a constructive trust has been created; but the court gives relief because otherwise the defendant would be unjustly enriched: and because the court gives this relief it declares that the defendant is chargeable as a constructive trustee.”. 

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