## Facts

- Pilot Life Insurance Company issued a life insurance policy on Lewis Edward Cudd, naming his aunt and foster mother, Carrie E. Cudd, as beneficiary.
- During World War II, the U.S. Navy reported Lewis missing and later issued official notice that he was presumed killed in action, with a certificate of presumptive death.
- Mrs. Cudd submitted the Navy documentation, and Pilot Life paid policy proceeds and a premium refund totaling $1,013.36.
- Months later, Lewis was found alive as a prisoner of war and eventually returned to the United States.
- Pilot Life demanded repayment on the ground the payment was made under a mistake of fact; Mrs. Cudd refused, asserting the payment was voluntary and a compromise settlement.
- The trial court entered judgment for Pilot Life in an equitable action for restitution; Mrs. Cudd appealed.

## Issues

1. Whether an insurer may recover life-insurance proceeds paid in reliance on a presumptive-death certificate when the insured is later shown to be alive, on a theory of mutual mistake of fact.
2. Whether the voluntary payment doctrine or a purported compromise settlement bars restitution when payment was made on a mistaken assumption of death.
3. Whether restitution for money paid under mistake of fact requires proof of fraud, misrepresentation, or other wrongdoing by the beneficiary.

## Decision

- The Supreme Court of South Carolina affirmed the judgment for Pilot Life.
- The court held the payment was made under a mutual mistake of material fact (the insured’s death) and was recoverable in equity.
- The court rejected the defenses of voluntary payment and compromise because the payment rested on an erroneous factual assumption shared by both parties.
- The court held fraud or wrongdoing by the beneficiary was not required for restitution.
- Pilot Life was entitled to recover $1,013.36.

## Legal Principles

- Money paid under a mutual mistake of material fact is recoverable in equity when, in good conscience, the payee has no right to retain it.
- Restitution for payment made under mistake of fact does not depend on fraud or misrepresentation by the payee.
- The voluntary payment doctrine does not bar recovery where the payer acted on a fundamental mistake of fact rather than knowingly assuming a disputed risk.
- Restitution may be limited where the payee has materially changed position such that repayment would be inequitable, but no such bar was shown here.

## Conclusion

An insurer that pays life-policy benefits based on an official but incorrect presumption of death may obtain restitution when the insured is later discovered alive, because the payment was induced by a mutual mistake of fact and is recoverable in equity without proof of fraud.


Pilot Life Ins. Co. v. Cudd, 208 S.C. 6, 36 S.E.2d 860 (S.C. 1945)