22 F. 570 | U.S. Cir. Ct. | 1884
On the ninth of December, 1881, Poe & Co., merchants, doing business at Clinton, in this state, were indebted to Adler, Goldman & Co., commission merchants, doing business in St. Louis, in the sum of $7,258.21. At this time, Adler, Goldman & Co. had on hand cotton for sale for account of Poe & Co., which it was estimated would reduce the amount due the former to about the sum of $3,400, and for this amount Poe & Co., on the day named, executed their note, payable to Adler, Goldman & Co., due January 1, 1883, and, to secure payment of the same, executed a deed of trust on lands to Jones, as trustee. After the maturity of the note, the trustee advertised the lands for sale under the déed, whereupon the plaintiffs filed this bill to enjoin the sale, upon the ground that they were
The plaintiffs insist that Adler, Goldman & Co. must be held to the state of the case disclosed on the face of their books, and, after that is done, they insist upon the application of the rule that, in case of running accounts, the first item on the credit side of the account will be applied to extinguish, the first item on the debit side of the account. The rule for the appropriation of payments in the case of running accounts is accurately stated, but it lias no force when the proof shows an understanding of the parties to the contrary. Price v. Dowdy, 34 Ark. 285; 2 Whart. Cont. § 933. If regard is had to the books alone, the indebtedness existing at the dL.te of the note, and which constituted its only consideration, would appear to be paid, and its payment would extinguish the note and the lien to secure its payment. But in fact that indebtedness lias not been paid. The legal effect of the understanding of the parties was to segregate from
On these fkcts, in the absence of an agreement, the law would apply the credits to extinguish the debts which were due, and not to the note which was not due, and, of course, not to the items of the account which constituted the consideration for the note. 2 Whart. Cont. § 931. But, independently of this rule, and of the original understanding-of the parties, the plaintiffs’ case fails. It will be observed that Poe & Co., the debtors, are not objecting, but consenting, to the appropriation made by the creditors. What right have the plaintiffs to demand a change in the appropriation of payments assented to by the debtor and creditor ? Upon what principle can a stranger come between a creditor and his debtor, and dictate the appropriation of payments against the will of both ? Adler, Goldman & Co. owed no duty to the plaintiffs. No principle of law or equity required them to apply the payments to their secured debt in order to give the plaintiffs the benefit of their security: The most the plaintiffs can demand is that the credits shall be applied to extinguish bona fide debts; and that has been done. Nor is it a fraud on the plaintiffs for Poe & Go. to consent that the credits shall be applied so as not to extinguish the secured debt. The debtors had an undoubted right to appropriate their credits to the payment of any debt they owed, whether secured or not. This was nothing but the exercise of the right of preference which belongs to every debtor. The question, whether an appropriation once made by agreement between the debtor and creditor can afterwards be changed to the prejudice of other creditors of the debtor who have acted on the faith of the first appropriation, does not arise in this case. Efere the debtor and creditor are insisting on the appropriation agreed upon between them from the beginning. No other appropriation was ever made. No representations were made to plaintiffs by the debtor or creditor that any other appropriation had been or would be made. There is no suggestion of actual fraud in the case. It is well settled that the &x-