Bank of United States v. Daniel (1838)
In Bank of United States v. Daniel (1838), 37 U.S. 32, recovery was sought of ten percent damages paid to a bank on a bill of exchange pursuant to a Kentucky statute which all the parties mistakenly believed to be applicable, the statute at that time not having been judicially interpreted.
The Supreme Court regarded the mistake as one of law, and not remediable under the circumstances of the case.
The Court said that the parties "were perfectly aware of the facts", that no "fraud, imposition, or undue advantage" was involved, that the parties believed "the ten percent damages were due by force of the statute", that though the statute was inapplicable, nevertheless, by commercial usage the bank was "entitled to reexchange [damages] when protest for non-payment was made", that the parties themselves having liquidated the damages, the court, in the absence of proof to the contrary, regarded the ten percent paid as fair compensation, and "the equities of the parties equal."
Furthermore, the court said that the statute of limitations was a bar to recovery.
In that case, a bill in equity was filed to recover money paid as damages for the nonpayment of a bill of exchange, as provided by a statute of Kentucky, which had not at the date of payment received judicial interpretation.
Subsequently, in other cases, it was held that, the bill being payable without the state of Kentucky, the statute did not apply. Respecting the settlement made, the court said:
"The main question on which relief was sought by the bill, that on which the decree below proceeded, and on which the appellees relied in this court for its affirmance, is: Can a court of chancery relieve against a mistake of law? Vexed as the question formerly was, and delicate as it now is, from the confusion in which numerous and conflicting decisions have involved it, no discussion of cases can be gone into without hazarding the introduction of exceptions that will be likely to sap the direct principle we intend to apply; indeed, the remedial power claimed by courts of chancery to relieve against mistakes of law, is a doctrine rather grounded upon exceptions than upon established rules. To this course of adjudication we are unwilling to yield. That mere mistakes of law are not remediable, is well established, as was declared by this court in Hunt v. Rousmanier 26 U.S. 1 (1828), and we can only repeat, what was there said, `that whatever exceptions there may be to the rule, they will be found few in number, and to have something peculiar in their character,' and to involve other elements of decision. Testing the case by the principle `that a mistake or ignorance of the law forms no ground of relief from contracts fairly entered into with a full knowledge of the facts,' and under circumstances repelling all presumptions of fraud, imposition, or undue advantage having been taken of the party, none of which are chargeable upon the appellants in this case, the question then is, were the complainants entitled to relief? To which we respond decidedly in the negative."