## Facts

- Blue Cross mistakenly issued and mailed 66 checks totaling more than $22,000 to “William Sauer” at a Missouri post office box address associated with R.T. Sauer Agency.
- The checks were intended to pay for medical services provided to the child of a different insured, William J. Sauer of Milwaukee, Wisconsin, after a hospital data-entry error matched the wrong “William Sauer” and inserted the Missouri address into the Wisconsin insured’s file.
- William R. Sauer (who had medical, drug, and alcohol problems and whose coverage had lapsed for nonpayment months earlier) provided the Missouri address when admitted to a hospital and indicated he had Blue Cross coverage despite not having a card.
- William R. Sauer and/or R.T. Sauer Agency and/or Robert T. Sauer endorsed and deposited the mistakenly issued checks; each check was accompanied by an explanation-of-benefits form.
- Blue Cross sued seeking equitable relief (constructive trust) and restitution based on mistake and unjust enrichment; a default was entered against William R. Sauer, and Robert T. Sauer was added later.
- After a bench trial, the court entered judgment for Blue Cross ordering restitution against defendants.
- The trial court then granted R.T. Sauer Agency and Robert T. Sauer a new trial on the ground they were entitled to a jury, and transferred the matter to the civil docket; Blue Cross appealed that post-trial order.

## Issues

1. Whether the facts supported equitable relief via constructive trust, or instead supported legal restitution for money paid by mistake.
2. Whether defendants were entitled to a jury trial based on the legal nature of the remedy, and if so, whether denial of a jury required a new trial.
3. Whether defendants’ asserted defenses (including holder-in-due-course status and satisfaction of antecedent debts) barred restitution.

## Decision

- The appellate court reversed the order granting a new trial and remanded with directions to reinstate the original judgment for Blue Cross.
- The court held that a constructive trust was not warranted because no specific, identifiable res was established for trust imposition.
- The court held Blue Cross was entitled to restitution for mistaken payments and that liability was established as a matter of law.
- Although the claim was pleaded in equitable terms, the court treated it substantively as a legal restitution claim, making the right to a jury applicable in theory.
- The court concluded any jury-trial error was harmless because no triable fact issues remained and defendants’ defenses failed on the record.

## Legal Principles

- Restitution is available to recover money paid under mistake when the recipient lacks entitlement and retention would unjustly enrich the recipient.
- A constructive trust generally requires an identifiable, traceable res; where funds are not identified as a specific fund or property, restitution—not constructive trust—is the proper remedy.
- The right to a jury depends on the substance of the remedy sought; pleading labels do not control.
- Denial of a jury trial does not require a new trial when the record shows the prevailing party is entitled to judgment as a matter of law and no material fact disputes remain.
- Holder-in-due-course and “value” defenses require evidentiary support (including good faith and value); unsupported assertions do not defeat restitution for mistaken payment.

## Conclusion

The court required reinstatement of a restitution judgment for an insurer that mistakenly issued checks to non-entitled recipients, rejected constructive trust for lack of an identifiable res, and held that any denial of a jury trial did not warrant a new trial where liability and failure of defenses were established as a matter of law.


Blue Cross Health Servs., Inc. v. Sauer, 800 S.W.2d 72 (Mo. Ct. App. 1990)