## Facts

- Edwin and Ida Lewis obtained a judgment for proceeds under two life insurance policies on their missing daughter’s life after invoking Kentucky’s presumption-of-death statute.
- The insurer paid the judgment ($14,436.79).
- The daughter was later discovered alive, and the insurer obtained relief from the judgment.
- On remand, evidence showed the Lewises had spent most of the proceeds in good faith on debt repayment, home improvements, their son’s education, automobiles, and expenses related to their daughter’s care.
- Although they had little of the proceeds remaining as cash, their net worth exceeded the amount they had received.
- The trial court ordered restitution of one-half of the paid amount ($7,218.40) and denied interest.
- The insurer appealed seeking full restitution; the Lewises cross-appealed seeking no restitution.

## Issues

1. Whether a party that paid money under a judgment later set aside is entitled to full restitution as a matter of right.
2. Whether, and to what extent, a court may reduce or deny restitution on equitable grounds when repayment would be inequitable.

## Decision

- The court affirmed the judgment ordering partial restitution of one-half of the amount paid and no interest.
- The court rejected the insurer’s claim to full restitution.
- The court rejected the Lewises’ request to deny restitution entirely.

## Legal Principles

- Money paid in compliance with a judgment that is later reversed or set aside is generally subject to restitution.
- Restitution after reversal or vacatur is not automatic; it may be reduced or denied when full restitution would be inequitable.
- In assessing equity, a court may consider good-faith reliance on the prior judgment, dissipation of funds, and the payee’s overall financial condition.
- A trial court has discretion to fashion a restitution remedy, including ordering partial repayment and declining to award interest, to avoid inequitable results.

## Conclusion

When a judgment that compelled payment is later set aside, restitution is the ordinary remedy, but equity may justify limiting repayment; under the parties’ circumstances, ordering repayment of one-half without interest was a permissible equitable resolution.


Alexander Hamilton Life Ins. Co. of Am. v. Lewis, 550 S.W.2d 558 (Ky. 1977)