## Facts

- Frances Messersmith contacted G.T. Murray & Co. to sell stock she identified from her certificate as “Western Preferred,” stating she did not know its value.
- The broker, James King, checked a market quote of about $46–$47 per share and executed a sale as if the Messersmiths owned 200 shares.
- The Messersmiths received net proceeds of $9,260.70 for the purported sale of 200 shares at $47 per share.
- Months later, the firm learned the certificate represented pre–reverse-split shares; the issuer had required holders to exchange old certificates, and the ratio was one new share for forty old shares.
- Because the Messersmiths had not exchanged the certificate, their 200 “old” shares equated to five “new” shares worth about $235 gross, not the amount paid.
- G.T. Murray sued to recover the overpayment; after a bench trial, the district court ordered restitution, and the Messersmiths appealed.
- The Messersmiths argued they had used or committed funds after receiving the check and claimed it would be inequitable to require repayment.

## Issues

1. Whether a unilateral mistake of fact by the brokerage justified rescission and restitution of the overpayment.
2. Whether the brokerage’s greater sophistication and access to information required it to bear the loss of its own mistake.
3. Whether the Messersmiths’ alleged detrimental change of position in reliance on the payment barred or limited restitution.

## Decision

- The Wyoming Supreme Court affirmed the judgment requiring the Messersmiths to return the overpaid proceeds.
- The court held the payment resulted from a material mistake of fact and was recoverable in restitution even if unilateral.
- The court rejected the argument that the brokerage’s expertise, by itself, shifted the loss to the brokerage as a matter of equity.
- The court concluded the Messersmiths’ claimed reliance did not establish a change-of-position defense sufficient to let them retain the windfall.

## Legal Principles

- A payor who transfers money under a material mistake of fact may obtain restitution when retention by the recipient would be unjust enrichment.
- Unilateral mistake does not bar equitable restitution where the recipient has no valid entitlement to the benefit and retention would be inequitable.
- A change-of-position defense requires a substantial, good-faith, causally related detrimental change; routine spending or commitment of funds is generally insufficient to defeat restitution, especially where the overpayment is large relative to the true entitlement.
- Relative sophistication or negligence by the payor in discovering the mistake does not necessarily preclude restitution when the recipient would otherwise receive an unearned benefit.

## Conclusion

The court required restitution of mistaken stock-sale proceeds because the payment was based on a material mistake about the shares’ validity and quantity, and the customers’ asserted reliance and the broker’s greater expertise did not make it equitable for the customers to keep the overpayment.


Messersmith v. G.T. Murray & Co., 667 P.2d 655 (Wyo. 1983)