Source: https://supreme.justia.com/cases/federal/us/48/681/
Timestamp: 2019-04-22 20:04:12+00:00

Document:
Where a running account is kept at the Post Office Department between the United States and a postmaster in which all postages are charged to him, and credit is given for all payments made, this amounts to an election by the creditor to apply the payments, as they are successively made to the extinguishment of preceding balances.
This the creditor has a right to do in the absence of instructions from the debtor.
The English decisions and those of this Court examined.
The Act of Congress of 1825, 4 Stat. 102, which exonerates the sureties if balances are not sued for within two years after they occur, does not apply to this case because, by this mode of keeping the account, the balance due from the postmaster is thrown upon the last quarter.
Robertson, his sureties. Judgment went by default against the postmaster and Robertson.
"That it shall be the duty of the Postmaster General, upon the appointment of any postmaster, to require and take of such postmaster bond, with good and approved security, in such penalty as he may judge sufficient, conditioned for the faithful discharge of all the duties of such postmaster required by law, or which may be required by any instruction or general rule for the government of the department, provided however that if default shall be made by the postmaster aforesaid at any time and the Postmaster General shall fail to institute suit against such postmaster and said sureties for two years from and after such default shall be made, then and in that case the said sureties shall not be liable to the United States, nor shall suit be instituted against them."
Jones was postmaster from 1830 to August, 1839, during which time a running account was kept up with him at the Post Office Department, with only one rest -- namely in August, 1836, when the account was added up and a balance transferred to a new account. The following is the debit side of the account.
The substance of the pleadings in the court below and the prayers of the respective counsel are given in the opinion of this Court, and need not be here repeated.
1840, the period at which this suit was instituted, a length of time from the occurrence of those defaults comprising an interval of more than two years.
The fourth plea of the defendant below is simply a general averment that the causes of action in the declaration mentioned did not occur within two years next before the institution of the suit.
The only evidence adduced in this case on behalf of the plaintiffs below was the account certified under the act of Congress from the Treasury Department against the postmaster, brought down to 31 August, 1839, exhibiting a balance in favor of the United States, at that date, of $5,515.89, and all the evidence on behalf of the defendant was a letter to him from the Postmaster General dated 19 December, 1837, announcing the fact, that a draft had been drawn on the defendant in favor of the Treasury Department for the sum of $5,000 in specie and requesting the deposit of that sum with the Bank of Virginia at Richmond as the agent for the Treasury. Upon the aforegoing pleadings and evidence, the following prayers were made and instructions given at the trial.
"That all payments made by the postmaster, Walter F. Jones, to the General Post Office after the execution of his official bond on 8 August, 1836, 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 shall believe from the evidence that all of the defaults which occurred two years before the institution of this suit were extinguished within two years after the same were respectively committed, that the act of Congress which limits the institution of suits against the sureties of a postmaster to two years after the default of the principal has no application to this case and cannot affect in any degree the plaintiffs' right to recover in this action."
from office, that the Postmaster General failed to institute or cause to be instituted a suit against the said deputy postmaster and his sureties for two years from and after such default or defaults were made -- then the defendant, Thomas Ap Catesby Jones, one of the sureties of the said deputy postmaster, is not liable to the United States, nor can any suit be maintained against him on the official bond of the said deputy postmaster wherein the defendant was bound as one of the sureties for any default or defaults committed by the said deputy postmaster."
"2d. That as this suit was commenced on 12 March, 1840, the jury should inquire whether any default was committed by the said deputy postmaster, Walter F. Jones, in not duly paying over any balance or balances of money which became due from him on account of collections by him officially made before the end of the quarter next preceding 12 March, 1838 -- namely the quarter ending on 31 December, 1837. And if the jury shall find that the said deputy postmaster was so in default in not duly paying over such balances or balance due from him on account of collections by him officially made before the end of the quarter ending 31 December, 1837, and that such default was then known to the Postmaster General, then they should apply, towards the discharge of such balances or balance, all such payments made by the said deputy postmaster during his continuance in office subsequently to 31 December, 1837, as they shall find to have been made out of moneys officially collected by him before that date or out of his private funds, and they should apply all other payments made by him after that date and during his continuance in office towards the discharge of the balances or balance which became due from him on account of moneys by him officially collected after 31 December, 1837, during his continuance in office."
which was due from him on 31 December, 1837, but if the jury shall find that that payment of $1,121.54 was made by the said deputy postmaster out of money officially collected by him during his continuance in office subsequently to 31 December, 1837, then they should apply the said payment towards the balance that accrued and became due from him on account of moneys officially collected by him during his continuance in office subsequently to 31 December, 1837."
"Whereupon, the court gave the said instruction prayed by the attorney for the United States and refused to give the said instructions prayed by the counsel for the defendant, to which opinion of the court the defendant by his counsel excepted and prayed the court to sign and seal this bill of exceptions, which is done accordingly."
The jury found a verdict for the United States assessing their damages to the sum of $4,387.09, with interest thereon from 31 August, 1839, till payment, and upon this verdict a judgment was entered for the sum of $10,000, the penalty of the bond, to be discharged by the damages and interest by the jury assessed, and the costs of suit.
It is apparent that the only question of law raised in this cause is the question of an appropriation of payments by debtor and creditor, it being insisted in behalf of the United States and being so ruled by the court below that when, at the end of a quarter, there might be a default on the part of a postmaster, it was competent for him to supply such default or to extinguish the debt then due from him by payments made posterior to the end of the quarter, and that in the event of an omission by the postmaster to appropriate the payments so made by him, it was the right of the government to apply them at its discretion to the extinguishment of previous balances, and that if by such application all defaults occurring within two years previously to the institution of the suit had been extinguished, the act of Congress did not affect the plaintiff's right of recovery.
remarked, that a construction of the act of Congress which, in numerous instances, would interpose in the way of a debtor obstructions to the voluntary payment of his own debt, and compel the creditor to resort to a reluctant, dilatory, and expensive litigation for its recovery, would never be adopted except under the influence of some controlling principle or necessity, rendering such a proceeding unavoidable, and no such principle or necessity can be perceived where a creditor is willing to receive his money, the debtor is willing to pay it, and the surety assents to, or acquiesces in, the payment. We cannot therefore approve an interpretation of the act of Congress like that assumed in the defense, which would require that quarterly balances should at all events, and in opposition to the will of the parties, justly inferred from their conduct, remain open and unsatisfied, to become the subjects of future contest.
"That the party paying may direct to what the application is to be made. If he waives his right, the party receiving may select the object of appropriation. If both are silent, the law must decide."
1 How. 250. The case before us is free from any embarrassment of conflicting interests between separate sets of sureties. In this case, there is but one bond; it presents the instance of an appropriation of payments between a single debtor and creditor. Upon the question, as understood in this form and with this limitation, there is not a perfect uniformity in the decisions either in England or in this country.
"There is certainly a great deal of authority for this doctrine; with some shades of distinction, it is sanctioned by the cases of Goddard v. Cox, 2 Strange 1194; of Wilkinson v. Sterne, 9 Mod. 427; of Newmarch v. Clay, 14 East 239; and of Peters v. Anderson, 5 Taunt. 596."
"There are, however, other cases, which are irreconcilable with this indefinite right of election in the creditor, and which seem, on the contrary, to imply a recognition of the civil law principle of decision. Such are, in particular, the cases of Meggott v. Mills, 1 Ld.Raym. 287, and Dowe v. Holdworth, Peake's N.P. 64. The cases then set up two conflicting rules -- the presumed intention of the debtor, which, in some instances at least, is to govern, and the ex post facto election of the creditor, which, in other instances, is to prevail. I should therefore feel myself a good deal embarrassed, if the general question of the creditor's right to make the application of indefinite payments were now necessarily to be determined. But I think the present case is distinguishable from any of those in which that point has been decided in the creditor's favor."
"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 passbook, 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."
"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 which can be considered as such an application, it is equally clear, that although they did not apply it at the moment of payment, they would have the right to make the application at a subsequent period. The question therefore is whether, from any entry in the books, there appears to have been a complete election by them to apply the payments in any other way than they are applied in the accounts which have been actually delivered. Now these entries not having been communicated to the opposite party, it seems to me that the election was not complete. The effect of making the entries in their own private books shows only that the idea of so applying the payment had passed in their own minds. It is much the same thing as if they had expressed to a stranger their intention of making such application of the payments, and had afterwards refused to carry such intention into effect."
made such application; he might make it at any time before the case came under the consideration of the jury."
In Smith v. Wigler & Turnicliffe, 3 Moore & Scott, 175, Tindall, Chief Justice, said that the creditor must make the appropriation at the time the money comes to his hands. Yet in Mills v. Fowkes, 5 Bingham's New Cases 455, the same Chief Justice said, that, in conformity with the rule in Simpson v. Ingham, the creditor may make the application at any time before action brought. Bosanquet, Justice, said in the same case that the receiver might appropriate the payment if the debtor had not at any time before action commenced, and Coltman, Justice, that notwithstanding the doubt expressed by the Master of the Rolls in Clayton's Case, the more correct view seemed to be, "that the creditor is not limited in point of time."
"It is a clear principle of law that a person owing money on two several accounts, as upon a bond and simple contract, may elect to apply his payments to which account he pleases, but if he fails to make the application, the election passes from him to the creditor. No principle is recollected which obliges the creditor to make the election immediately. After having made it, he is bound by it, but until he makes it he is free to credit either the bond or the simple contract."
"The general doctrine is that the debtor has a right, if he pleases, to make the appropriation of payments; if he omits it, the creditor may make it; if both omit it, the law will apply the payments according to its own notions of justice. It is certainly too late for either party to claim a right to make an application after the controversy has arisen, and a fortiori at the time of the trial."
"in long running accounts, where debits and credits are perpetually occurring, and no balances otherwise adjusted than for the purpose of making rests, we are of opinion that payments ought to be applied to extinguish the debts according to the priority of time."
In this case they have been so applied, and in strict conformity with the times at which such payments were made.
"The application of the moneys received in a subsequent quarter to the payment of the debt or balance antecedently due being perfectly correct and lawful, it follows that no part of the default for which suit is brought accrued two years before; on the contrary, all the balances antecedent to the last quarter were extinguished by the successive payments, and the final balance falls on the last quarter."
District of Virginia, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this Court, that the judgment of the said circuit court in this cause be, and the same is hereby affirmed.

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