agreement of compromise with the defendant, under which her suit against it was discontinued, without costs. The agreement recited the facts, and provided for the settlement and discontinuance of the action; that the defendant should pay to the beneficiary "the sum of $666 in cash promptly"; that said $666 "is not to be returned in any event"; that $1,334 should be placed by defendant in the hands of a trustee, to be held by him until July 1, 1897, subject to the condition that if before that time the defendant should produce reasonable proof that the insured was alive the money so deposited was to be returned to it, but failing in such proof it was to be paid to the beneficiary, and, in the language of the agreement, "she shall take full title to the same." Twenty days after the execution of this agreement, and before the defendant had made the absolute payment of $666 as agreed, the insured was proved to be alive. Thereupon the beneficiary demanded payment of the $666, which was refused, and she assigned her claim under the agreement of compromise to the plaintiff. The facts are undisputed. The special term rendered judgment for plaintiff, which was reversed by the appellate division with a divided court.

The defendant rests its defense on the legal proposition that the agreement on which plaintiff seeks to recover was made while both parties thereto were laboring under a material mistake of fact, to wit, the supposed death of the insured, and is therefore unenforceable. The counsel for the defendant has cited us to many authorities to the general effect that where parties to a contract have entered into it under the impression that a certain state of facts existed, which proved to be error, equity will afford relief. This is a sound proposition of law, but it has no application to the facts in this case. The material facts may be briefly stated: The insured disappeared absolutely, leaving his wife as beneficiary under his certificate of insurance issued by the defendant. She waited nine years, and then sued to recover the total insurance of $2,000. In this situation the defendant seeks a compromise. It is not unreasonable to assume that the defendant regarded the chances of success in the litigation as decidedly in favor of the plaintiff. The legal presumption arising at the end of seven years that the insured was dead had existed for two years. What, then, was there to compromise in the action then pending? Clearly, but one thing was dealt with or could be in the agreement of settlement, to wit, the possibility that the insured should prove to be alive. That this was the basis of compromise upon which the agreement rested is perfectly apparent on the face of the instrument. The defendant said to the beneficiary: Give us sixteen months' more time to prove the insured is alive and discontinue your suit at once. If you do this, we will make you a cash payment of $666, which is not to be paid back in any event, and, at the expiration of the sixteen months, if we fail to prove the insured is alive, we will pay you $1,334, which is to be held for both of us by a trustee meanwhile, and, if we do prove it, the money is to be returned to us.

It is urged that there is no consideration for this agreement. The discontinuance of the action, the extension of time in which defendant was to pay the insurance, and the compromise of a doubtful claim were a sufficient consideration.

It is also urged that the trial judge found that when the agreement was entered into both parties believed the insured was dead. It was also found that notwithstanding such belief the contract recognized, contemplated, and provided for the possibility of the insured being alive. It is to be kept in mind that the present action is limited to the cash payment that was to have been made under the agreement, and in regard to which the defendant was in default at the time it was discovered that the insured was alive. This payment should have been made when the contract was signed, and it was then distinctly agreed that it should not be paid back "in any event," which meant it should not be repaid even if it were subsequently proved that the insured was alive. In view of all the circumstances, it cannot be said that the parties entered into the agreement laboring under a mutual mistake of fact. Mr. Pomeroy, in his work on Equity Jurisprudence (section 855, 2d Ed.), states the correct rule governing this case: "Where parties have entered into a contract or arrangement based upon uncertain or contingent events purposely as a compromise of a doubtful claim arising from them, and where parties have knowingly entered into a speculative contract or transaction, one in which they intentionally speculated as to the result, and there is in either case an absence of bad faith, violation of confidence, misrepresentation, concealment, and other inequitable conduct mentioned in a former paragraph, if the facts upon which such agreement or transaction was founded or the event of the agreement itself turned out very differently from what was expected or anticipated, this error, miscalculation, or disappointment, although relating to a matter of fact and not of law, is not such a mistake, within the meaning of the equitable doctrine, as entitles the disappointed party to any relief, either by way of canceling the contract and rescinding the transaction, or of defense to a suit brought for its enforcement. In such classes of agreements and transactions the parties are supposed to calculate the chances, and they certainly assume the risks.' Again, in section 849, Mr. Pomeroy, after dealing with relief where a party is mistaken as to his legal rights, interests, or relations, closes with these words: "It should be carefully observed that this rule has no application to compromises, where doubts have arisen as to the rights of the parties, and they have intentionally entered into an arrangement for the purpose of compromising and settling those doubts. Such compromises, whether involving mistakes of law or fact, are governed by special considerations." A number of instructive authorities are cited by the learned author under both of these sections.

It may be observed, in this connection, that the trial court found that there was no fraud on the part of the beneficiary, and, substantially, that she had acted throughout in good faith. The agreement

was in furtherance of a lawful compromise, and enforceable without regard to the validity of the beneficiary's claim under the original certificate of insurance. Compromises of disputed claims fairly entered into are final, and will be sustained by the courts without regard to the validity of the claims. Wehrum v. Kuhn, 61 N. Y. 623; White v. Hoyt, 73 N. Y. 505; Dunham v. Griswold, 100 N. Y. 224; 3 N. E. 76; Crans v. Hunter, 28 N. Y. 389; Mowatt v. Wright, I Wend. 355. The defendant, in executing the agreement of compromise, assumed the risk and calculated the chances of being placed in the present situation, and there would seem to be no reason in law or public policy why plaintiff should not recover. It would be a harsh rule, indeed, that would preclude insurer and beneficiary nine years after the insured had disappeared from entering into an enforceable agreement of compromise under the state of facts here disclosed. The judgment of the appellate division should be reversed, and the judgment of the trial term affirmed, with costs to the plaintiff in all the courts.

PARKER, C. J., and MARTIN, VANN, CULLEN, and WERNER, JJ., concur. GRAY, J., dissents.

Judgment reversed, etc.1

RHEEL v. HICKS.

25 N. Y. 289.-1862.

ACTION to recover back money as paid under mistake. On the 28th of February, 1856, the defendant, who was the superintendent of the poor of the county of Dutchess, was notified that one Louisa Hehr was pregnant of a child, likely to be born a bastard, and he thereupon applied to a justice of the peace to make examination. The justice took the examination of the woman in writing, wherein she testified, under oath, that she was so pregnant, and that Rheel, the plaintiff, was the father. Rheel was arrested, and on the 5th of March, 1856 (and before the examination of the two justices),

1 Accord as to effect of mistake in cases of compromise, Stuart v. Sears, 119 Mass. 143 (1875); Troy v. Bland, 58 Ala. 197 (1877); and see especially the decision in Kowalke v. Milwaukee Elec. Ry. Co., 103 Wis. 472 (1899), and in Riegel v. Amer. Life Ins. Co., 153 Pa. 134 (1893). In the Riegel case a creditor who held a policy for $6,000 on the life of her debtor, whose whereabouts were unknown, finding it difficult to pay the premiums, made an arrangement with the insurance company, under which the policy was surrendered and a paid up policy for $2,500 was issued by the company and accepted by her in lieu of the policy surrendered. At the time of this transaction both parties acted on the supposition that the assured was alive, but he had then been dead for ten days. The creditor brought a suit in equity to compel the reinstatement of the policy, and it was held that the transaction was not in the nature of a compromise, but made under a mutual mistake of fact, and the policy was reinstated. (Paxson, Ch. J., and Mitchell, J., dissenting.)

In New York Life Ins. Co. v. Chittenden, 134 Iowa 613 (1907), the company was not allowed to recover back the amount of a life policy which it had paid in conscious ignorance as to whether the person who was the subject of the insurance was alive or dead.

compromised with the defendant relative to the support of such child. At the request of Rheel, the matter was compromised by his paying to the superintendent $50 in consideration of a full settlement and release for the child's future support. It appeared on the trial of the action (and so the jury found specially), that Louisa Hehr was not pregnant on the 28th of February, 1856; that she was never delivered of a bastard child of which the plaintiff was the father, and which became chargeable to the county of Dutchess; and that such county had been to no expense or damages on account of the woman or any child of which she was pregnant in February, 1856. The only witness to prove that there was no pregnancy was Louisa Hehr herself. On being inquired of, why she testified before the justice in February, 1856, that she was pregnant, she answered that she believed so then. Rheel had had connection with her two or three times, in November, 1855. Upon ascertaining that there had been no pregnancy, the plaintiff demanded the $50 of the defendant, who refused to pay it back.

The plaintiff had judgment for the $50, with interest and costs. WRIGHT, J.-* * ** There can be no doubt of the general principle that, when one pays money without any legal obligation to do so, under a mistake of fact, and without the means of ascertaining the truth, he may recover it back. The cases founded on mistake, says SAVAGE, Ch. J., in Mowatt v. Wright (1 Wend. 355), seem to rest on this principle, that if parties, believing that a certain state of things exist, come to an agreement with such belief for its basis, on discovering their mutual error they are remitted to their original rights. Error of fact takes place, says the same learned judge, either when some fact which really exists is unknown, or some fact is supposed to exist which really does not exist. The question is, whether the law, as to the payment of money under the influence of a mistake, applies to this case. I think it does. The liability of a putative father for the support of his bastard child is created wholly by statute (he not being liable at common law), and the remedy there prescribed must be pursued. The statute authorizes a compromise and arrangement with the putative father relative to the support of such child. The compromise under the statute is merely a mode of getting indemnity on the part of the county for the support of the bastard. Whether the superintendent takes a bond or a sum of money, he but indemnifies the county against an actual or impending expense; and when there has been no expense to the county, and there is to be none, against which the money was paid as an indemnity, then the money, ex aequo et bono, belongs to the person paying it. The plaintiff was charged with being the father of a child likely to be born a bastard, of which Louisa Hehr was alleged to be pregnant. Both the plaintiff and defendant acted upon an erroneous assumption that she was pregnant, and they compromised relative to the support of the child that, it was supposed, would be born a bastard and become chargeable to the county. It is true that this compromise and settlement was made after the

arrest of the plaintiff, and after he had been charged with being the father of the child; but I do not think that, because the matter was in process of legal investigation, the plaintiff was concluded by such compromise from ever afterwards denying the pregnancy. The fact as to who was the father of the child may have been waived by the compromise, but not the vital fact which gave it all its force and without the existence of which the superintendent had no power to act, viz., the pregnancy of Louisa Hehr. There was no disagreement or compromise between the plaintiff and the defendant as to the fact of pregnancy. They both believed and acted upon the assumption that she was pregnant, and it turns out that they were both mistaken. As there was no pregnancy, the county has not been put to any expense, and never can be, and as the plaintiff paid his money to indemnify the county under a mistake of fact, I think he was entitled to maintain this action. It has been repeatedly held, that when money was paid under a mistake which there was no ground to claim in conscience, the party may recover back.

It is urged that this action cannot be maintained against the defendant, for the reason that he had no power to pay the money back. The superintendent, in compromising with the plaintiff, was acting under a special power conferred on him by law, and the money was paid to him in the first instance to provide for the child that was expected to be born. Bastards, it is true, are supported as paupers, and the superintendent has no power to retain moneys that may come into his hands, and disburse them for the support of the poor. He must pay over such moneys to the county or into the poor fund, and then draw on the county treasurer for all necessary expenses incurred in the discharge of his duties. It did not clearly appear in this case that the defendant had paid over the money to the county or into the poor fund. But if it had, it would have made no difference. I entirely concur with the learned judge who tried the cause, that "when it was ascertained that the woman had not been pregnant and that all parties had acted under a complete mistake of the fact, as the defendant would no longer hold the money for the original purpose, he simply held it for the plaintiff. He had then no more right to pay the money to the county, or place it in the poor fund, than he would have had to bestow it on any charitable object. If this action will lie at all, it cannot be defeated by the voluntary transfer of the money by the defendant after the cause of action had accrued."

The judgment of the Supreme Court should be affirmed.1

'But contra, where there was a dispute as to the fact of pregnancy, and compromise of the dispute. Thompson v. Nelson, 28 Ind. 431 (1867).