Hill v. Cross Country Settlements (Ct. of Special Appeals)

Decided January 5, 2007 – Opinion by Judge J. Frederick Sharer.

Reaffirming the maxim that "money paid under mistake may be recovered when it is against good conscience for the recipient to retain the money," the Court of Special Appeals affirmed the grant of summary judgment to Cross Country Settlements in this case involving monies mistakenly paid to Appellant Hill following the sale of a house.

Hill's mother had conveyed the property to her in 1991, reserving a life estate. The life estate reservation required Hill to apply the proceeds from a future sale of the property to any mortgage indebtedness existing at the time of such sale. In 1999 and again in 2002, Hill's mother obtained a home equity loan from Provident Bank. The mother died in May 2003, thereby extinguishing the life estate and vesting entire fee simple ownership in Hill, who continued making payments on the 2002 mortgage (the only one remaining), until she agreed to sell the property in 2004.

At that time Provident mistakenly assured Cross Country several times - once in writing - that there was no outstanding lien on the property and that a certificate of satisfaction had been forwarded to the appellant. While the Court recognized that full responsibility for the error rested with Provident, it reasoned that, "To suggest that the substantial overpayment to [Hill] was not a windfall strains credulity and brings to mind the fictions of the tooth fairy and Easter bunny." Thus the Court concluded that Hill was favored with receipt of funds that, in equity and good conscience, she ought not retain.

Hill also challenged the standing of Cross Country to sue, arguing that it had no obligation to pay off the unpaid mortgage debt. The Court rejected this argument, noting that the evidence below showed that Cross Country did have an obligation to pay pursuant to its underwriting agreement.

Observing that the lack of an express contract or privity between Hill and Cross Country would not preclude application of the principles of unjust enrichment, the Court ruled that it would be unconscionable and contrary to equity to permit Hill to retain the wrongly paid funds, and so it affirmed.

The full opinion is available in WordPerfect and PDF.