Wachovia Bank of South Carolina, N.A. v. Thomasko
2000 S.C. App. LEXIS 46, 339 S.C. 592, 529 SE2d 554 (2000)
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Rule of Law:
A party that pays money to another under a mistake of fact may recover that money through a claim of unjust enrichment, and the recipient's use of those funds to pay a pre-existing debt does not constitute a detrimental reliance that would bar recovery.
Facts:
- In January 1993, the Mexican government devalued its currency, the peso, by a factor of 1,000, issuing 'nuevo pesos' while old pesos remained in circulation.
- On March 10, 1997, Martha B. Thomasko presented 183,000 old Mexican pesos and 78,000 Spanish pesetas to a Wachovia Bank teller for exchange into U.S. currency.
- The Wachovia teller mistakenly calculated the value of the old pesos as if they were new pesos, resulting in a total currency value of $21,741.10 instead of the actual value of $527.46.
- Wachovia issued Thomasko a cashier’s check for $21,503.44, representing the erroneously calculated value minus a transaction fee, resulting in an overpayment of $21,213.64.
- Two days later, on March 12, 1997, Wachovia discovered its error.
- Wachovia immediately contacted Thomasko to inform her of the mistake and requested the return of the overpayment.
- Thomasko refused to repay Wachovia, stating she had already spent the money on pre-existing medical bills.
Procedural Posture:
- Wachovia Bank of South Carolina, N.A. filed an action for unjust enrichment against Martha B. Thomasko in the trial court.
- Thomasko answered, asserting defenses including that she had already spent the money on medical bills and that repayment would cause financial hardship.
- The trial court granted summary judgment in favor of Wachovia.
- The trial court ordered Thomasko to repay Wachovia $21,213.64 plus prejudgment interest.
- Thomasko (appellant) appealed the trial court's grant of summary judgment to the Court of Appeals of South Carolina, with Wachovia as the appellee.
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Issue:
Does a recipient's use of mistakenly overpaid funds to pay pre-existing debts constitute detrimental reliance sufficient to bar the payor from recovering the overpayment under a theory of unjust enrichment?
Opinions:
Majority - Goolsby, J.
No. A recipient's use of mistakenly overpaid funds to pay pre-existing debts does not constitute a valid defense of detrimental reliance against an unjust enrichment claim. The court reasoned that the general rule allows a party who pays money under a mistake of fact to recover it. While detrimental reliance can be a defense in limited circumstances, the recipient must demonstrate that repaying the money would place them in a worse position than they were in before receiving the overpayment. Paying a pre-existing debt does not meet this standard, as it merely restores the recipient to their prior status of owing a debt, but now to the payor instead of the original creditor. Therefore, Thomasko's use of the funds for prior medical bills did not constitute a change in position sufficient to make restitution inequitable.
Analysis:
This decision clarifies the scope of the detrimental reliance defense in unjust enrichment actions. It establishes a clear precedent that settling pre-existing debts with mistakenly received funds does not constitute the kind of prejudicial change in position required to defeat a claim for restitution. The ruling reinforces the principle that equity aims to restore the parties to their status quo prior to the mistake, and a windfall recipient is not entitled to keep funds they had no right to. This case provides a useful distinction between using funds to incur new obligations versus satisfying old ones, narrowing the applicability of the detrimental reliance defense in similar commercial and banking disputes.
