Chase Manhattan Bank v Israel-British Bank [1981] Ch 105

A New York bank, had by mistake paid the same sum twice to the credit of the defendant, a London bank. Shortly thereafter, the defendant bank went into insolvent liquidation.

The question was whether Chase Manhattan had a claim in rem against the assets of the defendant bank to recover the second payment.

In the State of New York, where a payment under a mistake of fact of money which the payee cannot conscientiously withhold gives rise to the imposition of a constructive trust.

Goulding J said this was in accord with the law in England too.

• It is common ground that if (as I have decided) there is a right in English law to trace money paid by mistake, it rests on a persistent equitable proprietary interest.

• Moreover, as I have already indicated, the right to trace given by New York law is, in my judgment. on the evidence, likewise founded on such a proprietary interest.