## Facts

- Indiana, through its Joint Purchasing Committee, had a valid contract for a year’s coal supply for the Indiana State Prison at $3.40 per ton delivered.
- While that contract was in force, Michigan Central Railroad Company possessed a carload of coal for interstate shipment.
- By mutual mistake of the railroad and state agents, the coal (same kind and quality as the contract coal) was delivered to the prison and consumed.
- The stipulated market value at the time and place of delivery was $6.85 per ton.
- After discovering the mistake, the railroad paid the true consignee the market value and demanded reimbursement from the State, which refused.
- The railroad sued the State and the prison warden, expressly waiving any tort claim and proceeding on a restitution/implied-contract theory.
- On stipulated facts, the trial court entered judgment for the railroad but limited recovery to $3.40 per ton; the railroad appealed seeking $6.85 per ton.

## Issues

1. In a restitution action for mistakenly delivered and consumed goods, is the measure of recovery the goods’ market value at delivery or the value of the benefit to the defendant measured by the defendant’s existing contract price for equivalent goods?

## Decision

- The appellate court affirmed the judgment.
- The railroad’s recovery was properly limited to $3.40 per ton, not the $6.85 per ton market value.
- The court treated the claim as restitution based on unjust enrichment rather than tort, consistent with the railroad’s waiver.

## Legal Principles

- A party that receives and consumes goods delivered by mistake may be liable in restitution to pay for the benefit retained.
- Restitution aims to prevent unjust enrichment and generally measures recovery by the value of the benefit to the defendant, not the plaintiff’s loss.
- When the defendant had a binding, lower-priced contractual source for equivalent goods at the relevant time, the defendant’s benefit may be measured by that contract price rather than market value.
- Restitution will not be used to shift the full cost of the plaintiff’s mistake to the defendant when doing so would require payment beyond the defendant’s actual enrichment.

## Conclusion

The court held that although the State had to pay for coal it mistakenly received and used, restitution was capped at the value of the benefit to the State—here, the preexisting contract price for equivalent coal—rather than the higher market value paid by the railroad to the true consignee.


Michigan Cent. R.R. Co. v. State, 85 Ind. App. 557 (Ind. Ct. App. 1927)