| W. Va. | May 25, 1915
Plaintiff, as special receiver of the Bank of Spencer, on July 25, 1913, sued in assumpsit to recover of defendant seven hundred and forty-six dollars and seventy-six cents, the amount of an overdraft as shown on the bank book of defendant, balanced and returned to him by the auditor, March 2, 1912, after the failure of the bank.
The only plea interposed by defendant was the plea of the statute of limitations of five years, and the case was by agreement of the parties submitted to the court in lieu of a jury on issues joined on this plea.
The bill of particulars filed with the declaration, a copy from individual ledgers number 7 and number 8, of said bank, and in which the account with defendant was kept, begins June 9, 1906, with a credit balance of $262.83, and, with the exception of a break in the debits and credits from May 8, 1907, to May 22, 1911, runs to February 29, 1912, just before the failure of the bank. And the ledger account, as introduced in evidence by defendant in support of his plea, shows
On May 8, 1907, just before the apparent break in the ledger account, the amount of the overdraft, or' the red ink balance, is shown as $676.76, and on May 22, following, is the entry of a deposit of $676.76; but such was not the correct balance on that date, and defendant swears that he knew at that time that he was indebted to the bank on account of overdraft in about the sum of $746.76.
Defendant swears that at no time before or since May 22, 1911, the time he resumed his transactions with the bank, after the apparent interim, when making his deposits, did he ever make any application of payments to any particular balance or'overdraft. He says he just passed in the money to the cashier and never made any arrangement with him as to what disposition should be made of it.
In support of his plea of the statute of limitations defendant relies solely on the fact that the bank did not bring forward in red ink in ledger number -8 the overdraft existing in ledger number 7, and allowed him to check on his account, after May 22, 1911, and that the bank commissioner, after the failure of the bank, accepted his check for $43.85, which he swears was to settle the overdraft shown in the third column of the account on that ledger. The claim of defendant’s counsel is that this method of keeping the account amounted to an election by the bank to let the overdraft existing May 22, 1907, stand as a loan, and to apply the deposits made subsequently to the checks drawn on the bank
A number of legal propositions are advanced and elaborately argued by counsel, all in some degree related to the subject of the plea, but in our view of the case it is unnecessary to consider all of them. One of controlling force is that while it is the absolute right of the debtor at the time of making payments to direct to which of his debts the' payments shall be applied, yet, if he omits to exercise that lúght, then the creditor may make the appropriation according to his will and pleasure. Chapman v. Commonwealth, 25 Grat. 721; Jones v. United States, 7 How. 682, 12 L. Ed. 870" court="SCOTUS" date_filed="1849-03-13" href="https://app.midpage.ai/document/jones-v-united-states-86491?utm_source=webapp" opinion_id="86491">12 L. Ed. 870.
And of some pertinency also is the well settled equitable rule that when neither debtor nor creditor makes application of the payments, they will be applied, first to the discharge of the oldest debt, and so on in order until all are paid,. Smith v. Loyd, 11 Leigh 512; Howard v. McCall, 21 Grat. 205; Chapman v. Com., supra; Genin v. Ingersoll, 11 W. Va. 549" court="W. Va." date_filed="1877-11-17" href="https://app.midpage.ai/document/genin-v-ingersoll-6591833?utm_source=webapp" opinion_id="6591833">11 W. Va. 549.
And as having some bearing on the case at bar is another well settled rule, that where no appropriation of payments has been made by debtor or creditor the court will apply them according to the principles of justice and equity in the particular case. Norris v. Beaty, 6 W. Va. 477" court="W. Va." date_filed="1873-07-17" href="https://app.midpage.ai/document/norris-v-beaty-6591386?utm_source=webapp" opinion_id="6591386">6 W. Va. 477; Smith v. Loyd, supra; Buster v. Holland, 27 W. Va. 510" court="W. Va." date_filed="1886-02-06" href="https://app.midpage.ai/document/buster-v-holland-6593408?utm_source=webapp" opinion_id="6593408">27 W. Va. 510.
And this court has affirmed the proposition that if an account sued upon contains credits, either in money or anything else, they will be applied, in the absence of any special application by the parties themselves, to such portions of the account, if any there be, as would otherwise be barred by the statute of limitations. Hanly v. Potts, 52 W. Va. 263" court="W. Va." date_filed="1902-12-13" href="https://app.midpage.ai/document/hanly-v-potts-8175212?utm_source=webapp" opinion_id="8175212">52 W. Va. 263; Genin v. Ingersoll, supra; Wood on Limitations, section 110.
As noted, however, the contention of the defendant.is that as the bank carried in its ledgers this daily balance column, as stated, for its own information and convenience, it thereby made application of the deposits to the payment of the checks as drawn, and that it could not afterwards make a different application thereof, and is forever concluded by
Affirming the trial court, and the proposition of the district attorney, and denying the counter proposition of the defendant’s counsel in instructions given and refused, the federal Supreme Court held, that all payments made by the postmaster to the general postoffice, after the execution of his official bond, and subsequently to any default at the end of a quarter, without any direction by him or by the Postmaster-General as to the application of said payments, should be applied in the first instance to extinguish each successive default in the order in which it fell due; and if, by such application of said payments, the jury should believe from the evidence that all of the defaults which occurred two years before the institution of the suit were extinguished within two years after the same were respectively committed, that the federal statute limiting suits against sureties to two years after the default of the principal had no application to the case, and could not effect in any degree the right of the government to recover in the action.
Combating that suggestion, however, the court, in terms ■applicable to the case herd, says: “Later decisions in the English courts would seem to be wholly irreconcilable with the remarks of Sir William Grant in Clayton’s case. Thus, in Simpson v. Ingham, decided in 1823, and reported in 2 Barn. & Cress., 65, Bayley, Justice, speaking of the right of •creditors to appropriate payments, uses this language: ‘It has been insisted, that, at that period of time, they had no right so to do, because they were precluded by the entries which they had already made in their own books in the intermediate space of time. If, indeed, a book had been kept for the common use of both parties as a pass-book, and that had been communicated to the opposite party, then the party making such entries would have been precluded from altering the account; but entries made by a man for his own private purposes are not conclusive on him until he has made a communication on the subject of those entries to the opposite party. Until that time, he has the right to apply the payments as he thinks fit.’ Holroyd, Justice, in the same case, says: ‘ The persons paying the money not having made any direct application of it, the right of making such application devolved on the receivers; and if they have done no act
“In the case of The Mayor of Alexandria v. Patton, re
Clayton’s ease, like the case at bar, involved transactions between banker and customer. The actual point decided, and applicable to banker and customer, was, that where a current account' is kept by a bank, and communicated to the customer, in the absence of any specific appropriation by the parties, the payments are appropriated according to the priority in order of the entries on one side and on the other of the account, and that until the account is communicated to the customer the bank continues to have the option of applying the several payments as it sees fit, but after communication by means of a pass-book or otherwise, the bank cannot recede from its mode of stating the account to its customer.
In the recent case of Deeley v. Lloyd’s Bank, (1912) A. C. 756, a ease involving similar transactions between banker and customer, the customer had executed a mortgage to- secure to the bank an overdraft on his current account limited to twenty-five hundred pounds, and afterward a second mortgage was executed to a third person, subject to the first, to secure another sum of money, notice of which was given to the bank on the day of its execution. Thereafter they continued the account as one unbroken account, instead of opening a fresh account. The customer continued to make deposits or payments into his account, which, if applied according to the rule in Clayton’s case, would have paid off
On these and many other authorities that might be cited we are of opinion that defendant has failed to sustain his plea, and our conclusion is to affirm the judgment.
Affirmed.