160 N.C. 161 | N.C. | 1912
Tbis case was before us at a former term, under tbe title of Stone Co. v. McLamb & Co., A. D. Rich, and others, 153 N. C., 378. "We tben beld tbat Mrs. M. M. Yann, a feme covert, was liable for tbe debts of tbe firm of McLamb & Go., under tbe statute, Eevisal, sec. 2118, and tbat tbe order appointing a receiver of tbe partnership effects was erroneous and should be vacated, and tbe property, which was under mortgagee to A. D. Eicb, should be restored to him. Tbe ease was remanded for tbe settlement of tbe other matters involved. Tbe parties thereupon agreed tbat an issue be submitted to a jury to ascertain if a paymnet of $333, made by McLamb & Go. to Eicb, should be applied to tbe debt' of tbe firm, amounting to $1,650, which is secured by bis mortgage, or to an unsecured debt of $300 beld by him against McLamb & Go. Tbe jury returned tbe following verdict: “Should tbe $333-credited to A. D. Eicb on page 453 of tbe ledger be appliéd to the mortgage debt of McLamb & Co. to A. D. Eicb? Answer: Yes.” Tbe court adjudged, upon tbe verdict, tbat tbe payment be so applied.
Tbe defendant’s exception raises tbe question whether there was any evidence to show tbat be bad been instructed by tbe" firm to so apply tbe payment, be having requested tbe court to charge substantially tbat there was none. We have examined tbe testimony carefully, and have failed to find any evidence to sustain tbe charge of tbe court or tbe verdict of tbe jury. Tbe most tbat can be made of it, when considered favorably to McLamb & Go. and tbe other interested.parties, is tbat tbe firm made some payments, at different times, aggregating $333 and entered them upon its books as credits on the mortgage notes, but did not direct Eicb bow to apply them, and Eicb did not know of tbe entries until some time after they were made, when be promptly objected to them. It was tben agreed tbat they should be applied to tbe unsecured debt. It is admitted tbat Eicb did not apply tbe payments to either of tbe debts.
There is no rule in tbe law better settled than tbe one in regard to tbe application of payments:
1. A debtor owing two or more debts to tbe same creditor, and making a payment, may, at tbe time, direct its application
2. If the debtor fails to make the application at the time of the payment, the right to apply it belongs to the creditor.
3. If neither debtor nor creditor makes it, the law will apply it to the unsecured debt or the one for which the creditor’s security is most precarious, or, as sometimes expressed, according to its own view of the intrinsic justice and equity of the case. Sprinkle v. Martin, 72 N. C., 92, and cases cited; Vick v. Smith, 83 N. C., 80; Moss v. Adams, 39 N. C., 42 (Anno. Ed.); Jenkins v. Beal, 70 N. C., 440; Ramsour v. Thomas, 32 N. C., 165; Wittkowski v. Reid, 84 N. C., 21; Long v. Miller, 93 N. C., 233; Lester v. Houston, 101 N. C., 605; Pearce v. Walker, 103 Ala., 250.
The weight of authority is that the debtor must direct the application at or before the time of his payment, and that he cannot do so afterwards. 30 Oye., p. 1230, and cases in note. A direction by the debtor as to the application of payments may be shown by an express agreement with the creditor, by the declaration of the debtor, or it may be implied from circumstances showing the debtor’s intention at the time of payment. 30 Cyc., p. 1230. Again: The communication need not be expressed in writing, nor in any technical‘or formal words, nor the instruction delivered in any particular manner., It will be sufficient if the intention is manifest, and that it comes to the knowledge of the other party at the proper time. 2 Am. and Eng. Ene. of Law (2d Ed.), 448. “It is certainly too late for either party to claim a right to make an appropriation after the controversy has arisen, and a fortiori at the time of the trial.” U. S. v. Kirkpatrick, 9 Wheaton (U. S.), 721, 737.
When a party, indebted to another on more than one account, makes a partial payment, the burden of proving that at or before the time of such payment he directed its application to a particular debt, as pleaded by him, and that this direction was made known to his creditor, is upon the debtor. Pearce v. Walker, supra.
Coming to the special facts of this case, it is said in Parsons on Contracts (6 Ed.), sec. 630: “It is not necessary that the
In a case with substantially tbe same facts, Terhune v. Colton, 12 N. J. Eq. (1 Beasley), 232, tbe Court, after stating tbe general rule as to tbe appropriation of payments, held tbat while tbe intention of tbe debtor to apply tbe payment to a particular debt or part of a debt may be shown by circumstances attending tbe act of payment, they must be known to the creditor, or tbe intention to do so must be signified to him in some way, and tbat an entry in bis own books of account by tbe debtor is insufficient to determine tbe application in bis favor, as be bad not, by showing tbe entry to tbe creditor, or otherwise, indicated bis intention as to bow tbe money should be applied.
Tbe result of tbe cases ■ is tbat an undisclosed intention to apply tbe payment will not do. Tbe right of tbe creditor to apply tbe payment, when tbe debtor by bis silence has lost control of it, is stated more in detail by Justice Rodman in Jenkins v. Beal, supra: “Tbe rule is tbat where a debtor owes several debts to a creditor and makes payments, be may appropriate the payments to any of the debts be may please; but if be fails to do so at tbe time, tbe creditor may appropriate them as be pleases (subject to some exceptions not material here) at any time before be brings suit for tbe balance.” And in another case tbe Court held: “Although as between tbe immediate parties tbe creditor has a right to appropriate when the debtor has failed to do so, yet this right must be exercised within, at tbe furthest, a reasonable time after the payment, and by tbe performance of some act wbicb indicates an intention to appropriate. It is too late to attempt it at tbe trial.” Harker v. Conrad, 12 S. and R. (Pa.), 301; Reiss v. Scherner, 87 Ill. App., 84.
Where neither party has exercised bis right of appropriation, and a dispute subsequently arises, tbe court will make tbe appli
As the burden was upon McLamb & Co. to show that they had directed how the "payment should be applied at the time it was made, and as the mere entries, without the knowledge of A. D. Eieh, were, in law, insufficient to show such an appropriation of the money, the court should have instructed the jury that there was no evidence of an ’appropriation by the debtor, McLamb & Co., and to answer the issue “No,” as the law applied the payment to the unsecured debt or open account. For this error, the verdict and judgment thereon are set aside.
It appears that while the issue was found against the defendant A. D. Rich, and judgment entered thereon that the .payment, $333, be applied to the mortgage debt, the Court has given á final judgment in favor of A. D. Rich, by dismissing the action as to him and taxing the plaintiff with the costs of said defendant. As our decision disposes of the principal question in the case and is given upon facts virtually admitted, or at least uncontroverted — that is, the book of McLamb & Co., and the oral testimony, which the parties agreed should be decisive of their rights, so far as the application of the payment is concerned — the defendant A. D. Rich would seem to be entitled to the final judgment. It will, therefore, be allowed to stand, and the action is dismissed as to him.
The plaintiffs have called our attention to the anomaly presented in this case, of a verdict against Rich and judgment on
Action dismissed.