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Chase Manhattan Bank V. Israel British Bank Notes

BCL Law Notes > Restitution of Unjust Enrichment BCL Notes

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CHASE MANHATTAN BANK V. ISRAEL BRITISH BANK FACTS This action concerns a sum of money paid by mistake. In July 1974 the plaintiff, Chase Manhattan Bank N.A., and the defendant, Israel-British Bank (London) Ltd., were carrying on business as bankers, the plaintiff in New York and the defendant in London. On or before July 2 an Italian bank instructed the plaintiff to pay U.S. $2,000,687.50 to Mellon Bank International, another bank in New York, for the defendant's account. The plaintiff duly made that payment through the New York clearing house system on July 3. Later on the same day, July 3, the plaintiff made a further payment of the same amount, also through the clearing system, to the same recipient, Mellon Bank International, again for the account of the defendant. This second payment purported to be made on the instructions of a bank in Hong Kong. But no such instructions had been given, and the second payment was a pure mistake. Its original cause was a clerical error made by a servant of the plaintiff earlier on July 3. Winding up proceedings by the Defendant Bank: On August 2, 1974, the defendant presented a petition to the English High Court, praying to be wound up by the court. A winding-up order was made on the defendant's petition on December 2, 1974. Meanwhile, on September 23, the defendant had also filed its bankruptcy petition in New York. On August 3, 1976, with the leave of the Companies Court, the plaintiff began the present action, in which it seeks to trace and to recover in equity the sum which it paid by mistake in 1974. Defendant's knowledge: In the result, I am satisfied on a balance of probabilities that on July 5, 1974, the defendant learned of the mistaken payment, and either knew it was a mistake, or was put fully on inquiry by facts that should have indicated it might be a mistake. ISSUES Whether the plaintiff is entitled in equity to trace the mistaken payment and to recover what now properly represents the money. HOLDING Court relied on the US decision in In re Berry (1906) 147 Fed. 208: "On no possible theory could the retention of the money by Berry & Co. be justified; it was paid to them and received by them under mistake, both parties believing that Raborg &
Manice owed the amount. If $1,500 had been placed in a package by Raborg & Manice and delivered to a messenger

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