¶1delivered the opinion of the court:
¶2The trial court refused three propositions asked by the plaintiff to be held as law in the decision of the case, and in so deciding appellant alleges there was error. The first ignored the evidence that Callender sent the money to VanMarter at the request of Gray, and was therefore properly refused. The other two were abstract propositions of law, and were prefaced thus: “The court holds the law of this case to be,” etc. Manifestly the court could not hold the proposition as the law of the case unless the facts as found made the proposition applicable, and as the court found the facts the second proposition was not applicable and therefore could not be “the law of the case.” The third proposition was, we think, applicable to the $15 which Gray retained to pay an insurance debt which VanMarter owed him. The substance of Callender’s contention, and of the holdings- of the courts below, is, that he was not liable to Gray for the $1200 which he received from Gray with which to pay the interest on the notes, for the reason that Gray knew he did not then have the notes but that VanMarter had put them up as collateral, and that Gray requested him, Callender, to Send the money to VanMarter and to request an extension of the note then due. We must assume such to be the facts, and that Gray was willing to trust to VanMarter to see to the application of the money forwarded to him by Callender. That being so, Callender would not be liable to Gray for the failure of VanMarter to make the application. Callender complied with Gray’s request to the extent of sending to VanMarter $1185, but paid to himself the remaining $15 to discharge VanMarter’s debt to him. The retention of the $15 was clearly a misapplication of that much of the money which Gray placed in his hands to be forwarded to VanMarter. Gray’s purpose, as Callender knew, was to have the money applied to pay the interest he owed on the notes, and he was willing to trust VanMarter to so apply it whether he or some one else then held the notes, and Callender had no right or authority to retain or apply otherwise any part of it and was clearly liable to Gray for the amount retained. Suppose VanMarter had owed Callender the whole amount of $1200, and Cal-lender, instead of remitting it to VanMarter to pay the interest, as understood between Gray and Callender, had applied it in payment of VanMarter’s debt to him, could it be doubted that Callender would have been liable to Gray for the whole amount so retained or misappropriated? Callender’s right to appropriate the money depended on its ownership by VanMarter, and as it turned out that VanMarter did not own it and had no right to it, Callender is liable to Gray for the amount retained by him. It is immaterial that it might as well have been lost to Gray had Callender remitted it all; as he did not apply the $15 as directed, and it was lost to Gray, he is liable for it. To that extent the third proposition was applicable and should have been held. It contained the correct proposition that where one person pays money to another with the mutual understanding that it is to be applied to a particular purpose, and the person so receiving the money fails to apply it to that purpose but pays it over to a third person who has no right to it, then an action for money had and received lies in favor of the party so paying the money, against the one receiving it from him. Drovers’ Nat. Bank v. O’Hare, 119 Ill. 646.
¶3For the error indicated the judgments of the Appellate and circuit courts are both reversed and the cause remanded.
¶4Reversed and remanded.