15 Wend. 19 | Court for the Trial of Impeachments and Correction of Errors | 1835
The following opinions were delivered:
.Upon examination I have been surprized that there does not appear to be any settled rules, except in two or three cases, as to the application of indefinite payments where the creditor has different claims against his debtor, either in England or the United States, or in those countries whose general principles of jurisprudence are based upon the rules of the Homan or civil law. Some of the fundamental principles oftheeivillawappeartohave been adopted everywhere and to admit of no doubt: 1. If both debts are due at the time of the partial payment, the debtor is at liberty to apply the payment to which he pleases, if his intention is manifested at the time of the payment; subject to this restriction, however, that the creditor is not obliged to receive a partial payment of any particular debt, of which the whole is due at the time the offer of payment is made. 2, Where the debtor neglects to manifest his intention as to the application of the payment, at the time it is made, the creditor may, at the time he receives the money, apply it to which debt he-pleases, unless the debtor objects ; the creditor manifesting his intention at the time, either in the acquittance which he gives, or in some other way. 3. If a partial payment is made, on account of debts, one part of which debts consists of the principal and another of the interest or compensation due for the use of the capital of such debts, so much of the payment as is necessary to satisfy the interest or arrears then due, shall be first applied for that purpose, and the residue only shall go to reduce the amount of the principal debt. These rules prevailed in the Homan or civil law, and are now the settled law of France, Spain, Holland-, Scotland, England and the United States. 1 Domat, B. 4, tit. 1, § 4. art. 1, 3, 5, 6. Nap. Code, art. 1253, 1254, 1255. 5 Partida, tit. 14, Law 10. 2 Moreau & Carl Transl. 912. Vander Linden's Inst. of Holland, B. 1, ch. 18, § 1. Henry's Transl. 267. Bell's Law of Scot. art. 562, p. 135. 2 Bell's Com. 535. Wood's Civ.Law, 293. 1 Evans' Poth. 328, No. 528. Anon. Cro. Eliz. 68. Bois v. Cranfield, Style, 239. Haynes v. Harrison, 1 Ch. Ca. 106. Crisp v. Bluck, Finch's Rep. 89. Wilkinson v. Sterne, 9 Modern, 427. Field v. Holland, 6 Cranch, 27. United States v. Kirkpatrick, 9 Wheat. 737. Taylor v. Talbot, 2 J. J. Marsh. Rep. 49. Baker v. Stackpole, 9 Cow. 420. Civ. Code of Louis, art. 2159, 2160, 2161. Hart v. Dewey, 2 Paige's Rep. 207. The last of these principles is also
Thus far the English and American decisions are uniform, and correspond with the principles of the law of Scotland and of the continent of Europe. To this extent the maxim quicquid solvitur, solvetur secundum modum solventis, prevails ; and the application of the payment is made according to the supposed intention of the debtor, whether such intention is actually expressed or only implied from the circumstances under which the payment was received. Indeed courts have very frequently applied a payment, in conformity with the implied intention of the debtor at the time he made such payment, upon circumstantial evidence alone. See Shaw v. Picton, 7 Dow & Ryl. R. 101; Taylor v. Rymer, 3 Barn, & Adol. 333 ; Marryatts v. White, 2 Starkie, 101; Scott v. Fisher, 4 Monro, 387; Robert v. Garnie, 3 Caines, 14 ; Brett v. Marsh, 1 Vern. 469. This principle is applicable in the present case to the several payments of the 30th of May, the 22d of July, and the 23d of August, 1825 ; for, from the circumstances proved on the trial, there can be no possible doubt that at the times those several payments were made, Van Slyck intended they should apply to the tolls of April, May and June of the same year. He knew at the time each payment was made, or rather he supposed that his account for a previous month, corresponding in amount with such payment, was the only account standing against him on the books of the comptroller ; unless it might have been the small sum of $15.84 for the tolls of March. The account for the previous year had been paid in full on the 9th of April, and the errors in that account had not then been discovered and charged to him. He also knew, from the regulations then in force, requiring monthly returns only, that it was not expected he would pay the moneys collected for tolls into the treasury oftener than once a month. In each instance, therefore, he waited a few days after the payment (for the amount of his return of one month) had been sent to the comptroller, before he made the affidavit and transmitted the return-for the next month ; and apparently for the sole object of having the first account upon the books of the office for the tolls of one month satisfied, before he was charged with the tolls received in the next. Under these circumstances, I not only think the jury was authorized to find, but I do not see how they could do otherwise than find, that Van Slyck actually intended, at the time he made those payments respectively, that they should apply to the payment of the tolls for the previous months, as then charged to him upon the comptroller’s book, corresponding therewith in amount.
A recent decision in the house of lords in England is directly in point on this part of the case. I refer to the case of Lysaght v. Walker, 5 Bligh, N. S. 1. In that case, Walker & Co. were brewers, and had an agency for the sale of ale and porter, at Banagher in Ireland. P. Considine, wishing to be employed as their agent at that place, brought a letter of credit to them from Lysaght, in which the latter promised that he would be answerable to them in the sum of £500, for the faithful discharge of the trust reposed in Considine as such agent. Weekly returns of the receipts and disbursements of the agency were transmitted
In cases not coming within the four preceding rules, which are uniform every where, the laws of no two states or countries appear to agree with each other-in all respects ; and in many cases there are numerous conflicting decisions and opinions, even in the same-state or kingdom.- Thus, in most countries where the civil law-prevails, it is.settled that if neither debtor or creditor makes the appropriation when the payment is made, neither, without the consent of the other, can afterwards elect as to the manner in which the payment shall be applied; but in such cases the law or the court applies the payment upon certain fixed principles of imputation, although these rules of imputation - are different in different countries. And yet in Scotland, where the civil law also prevails,- this general principle is departed from, and the creditor, after an- indefinite payment has been received by him generally, may ascribe it to which debt he pleases, subject to certain specified restrictions.
The Roman law proceeded upon the erroneous principle, that where there was an indefinite payment, the-creditor was bound to' act upon the golden rule of doing as he would be done by, if he- was himself the debtor; and must therefore apply it in that way which would be most beneficial for the debtor. See 1 Domat, b, 4, tit. 1, § 4, art. 2, 3. In adopting this principle, the Roman law givers overlooked the fact that where there were conflicting interests, the golden rule applied to the debtor as well as the creditor ; and that, upon the same principle, it would be the .duty of the debtor, to allow his creditor to apply the payment in the way that he might consider the most beneficial to himself. In other words, that the debtor as well as the creditor, should be required to do as he would be done .by under like circumstances; the effect, of which conflicting duties would be, to .leave the application to be made according to equity between the parties. And this rule of equity- would not require the creditor, where both debts were due and ought to be paid, to apply the payment to that which was secured upon the debtor’s property and drawing interest; instead of the one which was insecure, and from which he was deriving no income while he was deprived of the use of his money-.by the negleet of the debtor to pay both debts. The true principle, unquestionably, is that stated by Chief Justice Marshall in Field v. Holland, 6 Cranch 27: that the debtor, by neglecting to manifest his .intention, or to direct as to the application of a partial payment, tacitly surrenders the right to the creditor, and enables him to apply the payment in such manner as he shall- think proper, provided such application is not inequitable ;: and if the creditor is not in a situation, to exercise the right, or if he declines the exercise of the - power to make the appropriation, because he has no interest in the question and the rights of third persons only are concerned, the court upon whom fhe exercise of the
In Spain, the principle of the Roman law is followed, in requiring the payment to he applied in that way which is most beneficial to the debtor, where one debt is more onerous than another; and if that is not the case, the payment is to be applied ratably to each debt. Inst. of the Law of Spain, b. 2, tit. 11, Johnston’s Transl. 186. The laws of France and of Holland are the same, except-that where the debts are not of the same dates, and it is equally beneficial to the debtor, the law imputes the payment to the oldest debt. Code Nap. Art. 1256. Van Der Linden's Inst. of Holland, b. 1, ch. 18, § 1, p. 267. By the Civil Code of Louisiana, no preference is given on account of priority in date ; but when both' debts are not of a like nature, the imputation is made to the less burthensome ; and if all things are equal, it is made proportionably. Cm Code of Louisiana, Art. 2162. And by the law of Scotland, as I have before said, the creditor is permitted to make that application which is most beneficial to himself. The rule adopted there appears to have in view the interest of the creditor more than that of the debtor, except that a debt in judgment must be first paid. Also where a third person is a cautioner or surety for one of the debts, the payment is applied pro rata; the interest of the cautioner counterbalancing that of the creditor. 2 Bell's Law Diet, art.' Indefinite Payment. Bnt the learned commentator on the Laws of Scotland and of Mercantile Jurisprudence, seems to doubt the correctness of. this last rule. He says it requires further consideration, although he refers to two adjudged cases in which it was held that a surety was entitled to have a pro rata application made. 2 Bell’s Com. 535.
In England and the Uuited Sates and in Ireland, where the common law prevails, the right of the creditor to make the appropriation to which debt he pleases, is generally admitted, subject to some exceptions ; but the decisions are very much in conflict with each other as to the time within which the creditor must exercise his right of election, and also as to the right itself, The decisions also conflict with each other as to the principles upon which the court is to make the application, where the right is not exercised by the creditor or the debtor. In Haywood v. Lomax, 1 Vernon, 24, Lord Nottingham decided that where an indefinite payment was made by the debtor, it should be applied most beneficially for him, as in paying off a mortgage drawing interest, instead of an account not secured and on which no interest was payable. This decision has been followed in Bacon v. Brown, in our sister state of Kentucky. 1 Bibb's R. 334. This rule of the civil law, of applying the payment in the way which would be most beneficial for the debtor, was also adopted by Lord Holt, in a case before him in 1697.. Anon. Comb. R. 463. But in a subsequent case before Lord Cowper, in 1707, it was held that where the payment was general, the application was in the party who received the money, and it was decreed to be applied upon the simple contract debt, which did not draw interest, as being most beneficial for the creditor. See Manning v. Western, 2 Vern. 607, n. 1. The principle of this decision was followed by the supreme court of the United States, in Field v. Holland, 6, Crunch, 27, and also by the court of appeals in Kentucky, in Blanton v. Rice, 5 Monro’s R. 253, so far as to apply the payment to the debts which were most precarious. But in the last case the court still adhered to the principle of applying the payment to the debt on which the creditor was entitled to interest, instead of that on which none was payable. In Wilkinson v. Sterne, 9 Modern, 427, Lord Hardwicke decided that the debtor must make the application at the time of payment, and that it was too late for him to appropriate it in a particular way afterwards , that upon a general payment, the creditor might make the appropriation at' any time; and that in the case then before him, if the creditor had been still living, ho, might have made it, even at that time. In Baker v. Stackpole, 9 Cowen, 435, Chief Justice Savage recognized the right
Amid these conflicting opinions and contradictory decisions, it-will not be strange if we should not be able to find any other rule to govern this anomalous case, and to apply the payment of the 5th of June, than to apply it equitably, having at the same time a due regard to the rights of all concerned. Equality among creditors and sureties is equity ; and if there was any reason for supposing that this' payment was made out of the moneys received for tolls during 'the boating season of 1825, as well as in the spring of 1826, or that it was the collector’s own money, the equitable rule would be to appropriate it ratably between the three bonds, so as to give to the sureties in each bond the benefit of the payment in proportion to the amounts for which they were severally holden. But if the payment was made out of the moneys received for tolls in the spring of 1826, all of which, except $557.90, was received after the sureties in the third bond became answerable for the faithful appropriation of the money collected by Van Slyck, it would.not be equitable to apply any of the proceeds of those tolls to relieve the sureties in the first and second bonds, from their liabilities for the tolls of the previous year, which has been wasted or misapplied. If the debtor himself had manifested such an intention at the time the payment was made, it might have determined the rights of the parties, although it was not such an appropriation as the court would make, unless the sureties in the last bond could, satisfy the court that such appropriation by the debtor was not made in good faitlr. At the time of this payment, in Juné,, 1826, Van Slyck had in his hands about $11,000 of tolls, which he had received in April and May of that year. It cannot, therefore, be presumed that he made the payment out of his own money, without proving any fact from which such a presumption could arise; and as he had then been removed from office, he had then no inducement to apply the payment to one part of his indebtedness in preference to another.
The result of my examination is, that if indefinite payments are made, on account of public moneys received, and the moneys are placed in a general account by the officers of the treasury or the comptroller, from time tó time, without any specific appropriation thereof, and the accounts have not been stated and settled after the receipt of such payment, and where no intention was manifested by the debtor as to the application of the money, such general payments are not neces
By Senator Maison. At the time of the giving of the bond now in suit, Yan . Slyck was largely indebted to the treasury for tolls which he had collected and had not paid over. A portion of the toll moneys collected by Van Slyck, after the liabilities of the parties had commenced upon the bond in controversy, has been applied, or is claimed to be applied, to make good his previous defalcations. It does not appear that Yan Slyck ever directed any specific appropriation of the tolls by him received on or after the 1st June, 1825. And any intention of appropriation to the injury of his sureties, is not to be inferred. Nor does it appear that the comptroller made any specific appropriation thereof; he gave Yan Slyck a credit on his general account, for all the moneys he paid, on the books in the comptroller’s office, and the comptroller cannot be allowed to make any appropriation specifically, .after a controversy has arisen in relation to it. Nay, so far from there having been any appropriation made of these moneys, the comptroller expressly testifies, that there was no specific appropriation made of them, either by himself or Van Slyck.
Yan Slyck did, in the months of June and July," literally and strietly comply with the very letter and spirit of this bond, by paying into the treasury all moneys during those months received as collector ; yet has the sum of $1,093.64 of tolls collected on the first of June been in effect applied, in relief of the sureties in the former bond, to the part payment of an arrearage due from Yan Slyck to the treasury, anterior to the time, of the giving the bond in controversy ; and to that amount is Yan Slyck made a defaulter under the new bond, and the jury, under the directions of the circuit judge, have, in effect, found that the sureties of the bond in suit -must respond to the treasury in that amount. I say, this amount has in effect been applied as suggested. The credit of May 30, of $9,936.-63, was made by a check or draft upon the Rochester bank ; the cashier of that bank testifies, that the check or draft was not presented or paid at the bank until the 4th of June ; that on the 30th May, Yan Slyck had not cash enough in the bank to meet that draft; that nearly all the deposit of $1,100 of tolls made on the 1st of June, being required to make good that draft, and out of which moneys- the draft was paid. The money in deposit up to the 1st of June was $8,842.99, which was short of the amount of the draft by $1,093.64, before mentioned. This amount, therefore, which should havebeen credited to the defendants on their bond, has gone to pay in part a defalcation which existed before the giving the bond in question. Not only the tolls collected on the first day of June, but the tolls collected on every day of that month have gone in the same way, in relief of the parties of the first bond. I cannot assent to such manifestly unjust and illegal diversion and inequitable appropriation of these moneys, to the injury of the sureties in the bond in suit.
I have before remarked, that the testimony shows, that neither Yan Slyck nor the comptroller made any appropriation of the moneys collected by Yan Slyck on and after the 1st of June; both having omitted it, “the law,” says Mr. Justice Story, in the case of The United States v. Kirkpatrick, 9 Wheaton, 737, “ will apply the payments according to its own notions of justice.” I think that I am safe
, It appears to me that.-justice. and-.equity, concur in declaring,that.all-the toll moneys collected by Van.Slyck during the life of this bond, and.which had been paid by him over t.o the treasury, should be-credited .to.these defendants .; and they cannot, in judgment of law, be deemed responsible, only for-those.moneys .collected during the life of this bond, and not paid over pursuant to.its .conditions. As the judgment, in this case has .not -been ..rendered .in accordance with this rule, I am for reversing it. ■
By Senator TRACT. The main principle involved .in this case, is that of the appropriation of payments, and the determination of.it depends essentially on the manner in which the account for the monies, received for tolls should be. arranged, whether, as an account.between the collector and .the state,.or as. one between the state and the several sets of sureties. The plaintiffs in. error complain, and -with some show of reason,.that,the supreme court has treated the account, in both-these, aspects, so as to deprive them of the benefit of credits to which they, would have been entitled if either of the two.modes of arranging the account had-been adhered.to. This error,-if it exists, has proceeded, I have no doubt, from an effort.-.on the. part-both of the court and the financial-officers of the state, to do. what they .supposed equal justice to. all parties interested in the subject, whether.they were the parties, to the suit or not; ■ But it.is our business to confine our decision :to the legal rights of the parties as.they, appear before us, without anticipating contingent -questions of equity that may hereafter arise. -
That the comptroller did always treat the account- as one between the state and the collector, and not as one between the state and the several sets of sureties, is a fact about which there is no.room for dispute.. The copy of the account returned with the bill- of. exceptions shows it; and the comptroller testifies, ■ “ that in keeping the account he had no reference • to the different sureties of the. collector ,” that the charges-were made against the collector for monies received, according to. the .returns: furnished by him, and all payments credited in general account, as and when received. ..That this was the proper and-legal mode.of keeping, the account is, I. think, .equally, plain. The collector received his appointment from the canal eommissioners under the general powers eonfided-to .them by the.laws.of 1817 and 1820. . These'laws.prescribed nothing as to the form or duration of :his appointment, or the security he should give for the faithful performance .of his duties: .all was -left to the discretion of the commissioners. • By the law-of. 1820, p, 189; § 20,-they were authorized to make all needful rules and regulations in respect .to the. collection -of tolls and the payment thereof to the commissioners of the canal fund.- • Under this authority, they appointed collectors, and adopted a regulation requiring fresh security at stated periods. There is nothing in the case to justify the opinion that the taking of fresh security was a discharge' of the former .security, or that it should be. regarded otherwise than cumulative security. This is a fact which materially distinguishes this case from The U. States v. January and Patterson, 7 Cranch, 572, where the second bond was given on a renewal of the commission or second appointment to the office. Here there-appears but one appointment and a continu
The inquiry then occurs as to the appropriations to be made of payment on such an account. The whole law on the subject of the application,- or as it sometimes called, the imputation of payments, was learnedly discussed and fully expounded in Clayton’s case, Devaynes v. Noble, 1 Merivale, 572 ; and the rules there settled are, 1. Where there are several debts or liabilities, the debtor has the power to direct to which the payment shall apply ; 2. If the debtor does not make the direction, the creditor may elect how to apply it; 3. If there is but one general account and no specific direction, the payments shall apply to extinguish .the indebtedness in the order of its time, or pro tanto. The question which has given birth to most of the English cases on the subject, and occasioned decisions not very reconcilable with each other, does not arise, I think, in the present case ; certainly not, if the rights between the different sureties are kept out of view, as they should be in arranging the account as one strictly between the principal and the state. But still a brief reference to this question may aid to illustrate the point of the present controversy.
The rule of the civil law is, that if the creditor, from the failure of the debtor to direct the appropriation of the payment, obtains the right to make it; he must exercise the right when the payment is made, and testify his election by an acquittance or some other sufficient evidence to the debtor. But if he fail to do so, his right of election is gone, and the law applied the payment most beneficially for the debtor in the extinguishment of that portion of his indebtedness which was most burthensome to him — as of á debt bearing interest in preference to one that did not — of one secured by a penalty rather than of one resting on a simple stipulation; and if the debts were equal, then to the oldest. This is on the presumable intention of the debtor to make the best use he could of his money, and which intention the law would execute, though the debtor failed to declare it. But the course of the English decisions and of some in this country has been rather to reverse this rule of the civil law, by presuming for the creditor, in the absence of any express appropriation by either party, the benefit of an intention to apply the payment most to his advantage, at least to extend the time to him for testifying his election. The eases of Goddard v. Cox, 2 Strange, 1194, Newmarch v. Clay, 14 East, 239, Peters v. Anderson. 5 Taunt. 596, are of this tendency; and so also is to be regarded the opinion of Chief Justice Marshall in the Mayor, &c. of Alexandria v. Patten, 4 Cranch, 317, where he says, “ no principle is recollected which obliges, the creditor to make the election of appropriation immediately.” But the direction of the decisions has not been uniform; for the cases of Maggot v. Mills, Ld. Raym. 287, Dowe v. Holdsworth, Peake's N. P. 64, Robert v. Garnie, 3 Caines, 14, are in support of the civil law rule, denying to the creditor the advantage of án ex post facto election. And the point is still so much unsettled, that the master of the rolls
ments which Yan Slyck made in July, after the defendants became his sureties, although it was pretty evident that this payment was made entirely from monies collected after their liability commenced. And it is on this principle alone, that this refusal can stand; for if the court had disregarded the rule in the same degree in reference to this payment, 'that it did in reference to the last payment which Yan Slyck made, it could not have sustained the charge of the circuit judge, that the jury might infer the intention of Yan Slyck from the circumstances, and if they believed he intended its application to the May tolls, they should not allow it in the present suit. This position was erroneous, because the testimony of the comptroller is positive that Yan Slyck never gave to him any intimation whatever for a specific appropriation of the payment, and that he in fact never made any, but credited it generally, without regard, and probably without knowledge of the coincidences which are relied on afterwards for establishing an intention in Yan Slyck of making a specific appropriation of it; an appropriation, it may be here observed, which he could not have produced in fact, had he distinctly directed it. If, therefore, this part of the case were to be disposed of in regard to the principle advanced by the court in the other part of it, that where there are different sets of sureties, each should have the benefit of the amount actually received by his principal during the period of his suretyship, there would be no doubt that the charge of the judge was erroneous, inasmuch as it took from the jury the inquiry whether the payment in July was of money received by Yan Slyck after the defendants became sureties. But if the principle adopted in fact by the comptroller, of applying the payments generally, is correct, then the direction of the circuit judge was immaterial, and the verdict
On the question'being put, Shall this judgment le reversed ? the members of the court voted as follows :
In the affirmative — Senators Fox, Geieein, Lacey, Maison, Segee, Teácy —6.
In the negative — The Chancelloe and Senators Aemsteong, Beaedsley, Beckwith, Bishoe, Edmonds, Fisk, Halsey, Lawyee, Macdonald, M’Dowell, Willes, Young — 13.
Whereupon the judgment of the supreme court was AEEiemed.