Blue Cross Health Services, Inc. v. Sauer
800 S.W.2d 72, 14 U.C.C. Rep. Serv. 2d (West) 799, 1990 Mo. App. LEXIS 1600 (1990)
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Rule of Law:
A claim for unjust enrichment to recover money paid by mistake constitutes an action at law for money had and received, granting the defendant a right to a jury trial; however, the denial of a jury trial is harmless error if the plaintiff is entitled to a directed verdict as a matter of law.
Facts:
- William R. Sauer's health insurance coverage with Blue Cross, paid for by his father Robert T. Sauer, was terminated for non-payment on March 1, 1984.
- On June 6, 1984, William R. Sauer was admitted to a hospital and provided his terminated Blue Cross information along with a post office box address belonging to his father's business, the R.T. Sauer Agency.
- A hospital employee, searching for William R. Sauer's coverage, omitted his middle initial and mistakenly identified an active policy for a William J. Sauer of Wisconsin, updating that policy's address to the P.O. Box provided.
- From July 1984 to February 1985, Blue Cross mistakenly mailed 66 checks totaling $22,023.29, intended for William J. Sauer's child, to the P.O. box.
- William R. Sauer, Robert T. Sauer, and the R.T. Sauer Agency endorsed and deposited these checks into their personal and corporate bank accounts.
- In March 1985, Blue Cross discovered its mistake and sent a demand letter for repayment to William R. Sauer, who acknowledged receipt but did not repay the funds.
Procedural Posture:
- Blue Cross filed a suit in equity against William R. Sauer and the R.T. Sauer Agency in the trial court.
- By consent of the parties, Robert T. Sauer was added as a defendant.
- An interlocutory default judgment was entered against defendant William R. Sauer.
- Defendants twice moved to transfer the case to a law division for a jury trial; the trial court denied both motions.
- Following a non-jury trial, the court entered judgment in favor of Blue Cross against all three defendants.
- The trial court then granted a motion by defendants Robert T. Sauer and R.T. Sauer Agency for a new trial, ordering the case be transferred to the civil docket for a jury trial.
- Blue Cross, as appellant, appealed the order granting a new trial to the intermediate appellate court.
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Issue:
Does a claim for unjust enrichment seeking recovery of money paid by mistake invoke the court's equity jurisdiction, thereby precluding the defendant's right to a jury trial, when the plaintiff requests a constructive trust but fails to identify a specific, identifiable fund or res?
Opinions:
Majority - Carl R. Gaertner
No. A claim for unjust enrichment to recover mistaken payments is an action at law, not in equity, when no specific res is identified, and therefore defendants are entitled to a jury trial. The court reasoned that a plaintiff cannot convert a legal action into an equitable one merely by requesting an equitable remedy like a constructive trust. To invoke equity jurisdiction for a constructive trust, the plaintiff must plead and prove the existence of a specific, identifiable property or fund (the res) upon which the trust can be imposed, and demonstrate there is no adequate remedy at law. Because Blue Cross failed to identify any such res, its claim was properly an action at law for 'money had and received,' and the trial court erred in denying the defendants' motion for a jury trial. However, the court concluded this error was harmless because Blue Cross was entitled to restitution as a matter of law. The defendants’ affirmative defenses—including contributory negligence, change of position, and holder in due course—all failed. The payor's negligence is not a defense, no evidence supported a change of position, and the defendants were not holders in due course because they lacked good faith and failed to give value, as the trial court properly found their payments for their son's expenses were gratuitous gifts, not antecedent debts. Since no disputed issue of fact existed for a jury to decide, Blue Cross would have been entitled to a directed verdict, making a new trial unnecessary.
Analysis:
This case clarifies the critical distinction between legal and equitable remedies for unjust enrichment, reinforcing that the substance of a claim, not the label applied by the plaintiff, determines the right to a jury trial. The decision establishes that merely praying for a 'constructive trust' is insufficient to invoke equity jurisdiction without identifying a specific res. Furthermore, the court's application of the harmless error doctrine is significant; it prevents parties from obtaining a new trial based on a procedural error (denial of a jury) when the evidence is so overwhelmingly one-sided that the outcome would have been the same. This precedent strengthens the finality of judgments and discourages appeals based on procedural technicalities where the substantive result is legally inevitable.
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