Case ID: nc_167/html/0041-01.html
Source: Caselaw Access Project
Author: {"author": "Waleer, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

F. J. FRENCH v. G. T. RICHARDSON.
    (Filed 17 October, 1914.)
    1. Reference — Report—Omission of Findings — Approval of Trial Judge — ■ • Conclusions of Law — Appeal and Error.
    Where the report of a referee fails to find a material fact necessary to the determination of the controversy, and his report has been approved by the court without further finding, and the judgment appealed from, the affirmation of the report by the lower court will have no conclusive effect, and this Court will remand the case, to the end that the necessary fact be found; and while the conclusions of law found by the referee in this ease seem to regard the fact as found,' the Court will not supply the omission or pass upon the matter. .
    2. Limitations of Actions — Reference—Debtor and Creditor — Application of Payment — Intent—T rials — Evidence.
    In an action by the mortgagor against the mortgagee for an account, etc., it appeared that the parties had various and sundry dealings, the defendant mortgagee keeping the accounts, and there was evidence tending to show that certain credits were made by him on the mortgage note in time to prevent the running of the statute of limitation in plaintiff’s favor, with conflicting evidence as to whether the plaintiff had authorized these credits to he made upon the note, some of it tending to show that the plaintiff had contended that the credits should be in a larger amount. Held, the direction of the creditor as to the application of his payment may be express or deduced from circumstances tending to show his intention; and in this case the question was one of fact as to the authority of the defendant creditor to enter the credit upon the note, which should have been passed upon and determined by the referee.
    Appeal by defendants from Daniels, at May Term, 1914, of CRAVEN.
    This action was brought to cancel two mortgages and to set aside a sale of the land made under one of them. Plaintiff borrowed the money and paid off one of the mortgages. The other mortgage was given by plaintiff to defendant on 5 March, 1892, to secure three notes for $50 each, with interest, and due respectively 15 December of the years 1892, 1893, and 1894. The parties had had various and sundry dealings and transactions, the defendant, by consent, keeping the account and making all entries of debit and credit. The three notes were written on one sheet of paper, and in June, 1898, it was found from the balance sheet that defendant owed plaintiff $1.75, which the former credited on the three notes, and in December, 1905, he also credited $2.50, due by him to plaintiff for work and labor of his son, Lewis French. The plaintiff pleaded payment and the statute of limitations to the three mortgage notes, and the question arose, whether the credits had been placed upon the notes by the consent and authority of the plaintiff.
    The cause was referred to the Hon. Charles R.’ Thomas to take and state an account between the parties of all their dealings. He filed a report and found that the plaintiff had not paid the three mortgage notes, and that they were not barred by the statute, but were existing obligations of the plaintiff. He recommended that the sale under the mortgage be set aside and a resale ordered, as defendant bought at his own sale, unless plaintiff paid the debt secured thereby. The report is a very able and intelligent one, disposing of each and every contested item of a long and very difficult account with fine discrimination and judgment. The court approved all the 'findings of the referee, but reversed his conclusion of law, that defendant was entitled to foreclose the mortgage by sale to pay the $150 indebtedness due by the three notes, and adjudged that the sale under it be set aside and the notes and mortgage be canceled. Defendant appealed.
    
      No counsel for plaintiff.
    
    
      D. L. Ward for defendant.
    
   Waleer, J.,

after stating the ease: The judgment seems to have been based upon the ground that the debt secured by the mortgage was barred, because the entry of- credit on the notes was not authorized by the debtor. If his Honor thought that there was not a sufficient finding of the fact as to authorization, he was right; but he should not have concluded therefrom that the debt was barred, the proper course being to find the fact from the evidence, one way or the other, or to recommit the case to the referee, with directions to make a more specific finding of the fact. If the learned judge thought there was no evidence of such authorization, he was in error, as we think there was sufficient evidence for the consideration of the referee and judge. It may be doubted, though, if the learned referee has distinctly found the ultimate fact, viz., that plaintiff authorized the credit to be entered on the notes. He made a supreme effort to prove that he was entitled to a larger credit, by reason of the fact that a greater balance was due, and even insisted that he was entitled to a larger credit for his son’s services. There is much evidence of the same kind, showing, or rather tending to show, that such authority existed. We must send the case back for a definite finding of the ultimate fact of authorization, as we cannot safely infer from the referee’s report that he intended to find, as a fact, that the credit was entered upon authority received from the plaintiff to that effect, or whether that was his legal inference. We are convinced that the referee, in his own mind, so found, and intended that we should understand his report by the language we find in his conclusions of law. He says: “The partial payments credited upon the notes by defendant G. T. Bichardson were credited under such circumstances as to warrant the inference that the debtor recognized the debt as then existing, and his intention to pay the balance. It was a voluntary payment of the debtor, or authorized by him. There is nothing to indicate the contrary. The accounts were all kept by G. T. Eichardson, with the knowledge and concurrence of the plaintiff, so as to make the credit a payment. Supply Co. v. Dowd, 146 N. C., 196.” But we may do an injustice by thus construing his report, as he may have intended this as his legal conclusion from the facts. There is an excellent résumé and analysis of the evidence in the report, the evidence itself not having been set up; but however strongly it should convince us that the entries of the credits were authorized and that the referee intended to so find, we would Unduly risk something, at the expense of the plaintiff, if we should undertake, ourselves, to declare that the testimony so conclusively established an authorization' as to require us to declare the fact to be in accordance with this trend of the evidence, however irresistible it may be, or to construe the report with a view of declaring what was the referee’s intention. It is far better to let him make the findings distinct, rather than attempt to solve the doubt as to the true meaning. We therefore prefer, in the interest of justice and a decision of the case upon its real merits in conformity with settled procedure, to have a specific statement of the referee upon this point.

We may add, though, that the doctrine as to the application of payments is now a familiar one. The debtor, at or before the time of the payment, bas tbe right to direct its application. I£ be fails to do so, tbe creditor may apply it at bis option to any existing debt, and in case be fails to exercise bis right thus acquired, tbe law will make tbe application to tbe most precarious debt, or, as is sometimes said, tbe court will make tbe application in such manner, in view of all tbe circumstances of tbe case, as is most in accord with justice and equity, and will best protect and maintain tbe rights and interests of tbe parties. 30 Cyc., 1227, 1240 to 1247; Jenkins v. Beal, 70 N. C., 440; Sprinkle v. Martin, 72 N. C., 92; Moss v. Adams, 39 N. C., 42, and Stone v. Rich, 160 N. C., 161, where tbe subject is fully discussed and tbe cases cited. Tbe first and paramount right of appropriation of tbe payment rests with tbe debtor, and bis will and direction may be shown, not only by an express agreement or a distinct application of tbe payment to tbe debt or a simple declaration as to bow it shall be applied, but it may be deduced from circumstances tending to show bis intention. 30 Cyc., p. 1230; Moose v. Marks, 116 N. C., 542; Roaks v. Bailey, 55 Vt., 542; Pearce v. Walker, 103 Ala., 250. Tbe evidence in this case is sufficient to prove, by tbe course of dealings between tbe parties throughout a long serious of years and otherwise, that plaintiff intended and directed tbe balance due him by defendant to be applied to tbe debts owing by him to tbe latter; but tbe referee must find tbe fact, as we do not pass upon tbe evidence in tbe first instance, however clear and strong it may be. Nothing that we have said in this opinion should influence tbe referee, one way or tbe other, in making bis finding.

Tbe judgment will, therefore, be set aside, with costs against tbe plaintiff, and tbe judge will remand tbe case to tbe referee under a dirction to find clearly and decisively, from tbe evidence already taken by him, as to tbe question whether tbe plaintiff authorized tbe credits to be placed upon tbe notes. In all other respects, not inconsistent with this opinion, tbe findings and rulings of tbe referee and tbe judge are approved and confirmed; and tbe single question reserved for future decision, if tbe case should find its way back to this Court; will be as to tbe decision upon tbe question whether tbe credits were authorized by tbe plaintiff. As to this, either party may except to tbe ruling and appeal from tbe final judgment, if so advised.

"We recognize tbe well-settled practice in this Court to tbe effect that we will not, generally, review findings of fact by a referee, when they have been approved by tbe judge (Harris v. Smith, 144 N. C., 439; Fry v. Lumber Co., ibid., 759), but this case is not within that rule, 'as here tbe finding of tbe ultimate and determinative fact, as to tbe consent of plaintiff to tbe entry of tbe credits, is not definitely stated by tbe referee, and, therefore, approval of bis findings by tbe judge does not add any force thereto, in that respect, or tend to clarify its meaning-

Error.