Court Opinion

ID: 3631198
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:10:41.306368+00
Date Added: 2024-06-11T14:07:40.487418
License: Public Domain

Plaintiffs are dealers in building materials. Between October 14, 1925, and August 16, 1926, plaintiffs sold and delivered to the defendant building materials of the aggregate value of $7,686.54. In August, 1926, after the last delivery was made, plaintiffs rendered to the defendant an itemized account. The account rendered was upon a printed form which stated: "Terms cash — Accounts overdue subject to interest." The account showed that material of the value of $2,286.50 was delivered "as per contract October 14/1925/" denominated job No. 8; merchandise of the value of $1,995.83 was delivered as "per contract Dec. 2, 1925," denominated job No. 9, and merchandise of the value of $3,404.21 delivered as "per contract Jan. 18, 1926," denominated job No. 10. Credit was allowed for a small amount of material returned on job No. 10. The defendant did not challenge then, and does not challenge now, the correctness of the account rendered. Through her son as agent she paid $162.99 on account in September, 1926. She paid another $2,000 in October, 1931, and made eight payments of $500 each between January, 1931, and March, 1936. The defendant gave no express direction that payments on account should be applied upon the principal debt. Interest was running upon that debt from the date when the account was rendered. Application of payments made on account in reduction of the principal debt would correspondingly reduce interest thereafter accruing upon the unpaid debt. The plaintiffs were free to apply all payments made on account in reduction *Page 265 
of the principal debt, or they might, if they chose, apply such payments first upon interest which had accrued, and apply only the balance in reduction of the principal debt. The choice might be made at any time. (Bank of California v. Webb, 94 N.Y. 467. ) The problem in this case is whether the plaintiffs exercised the choice and irrevocably applied, in reduction of the principal debt, all payments made by the defendant on account. If so applied, the principal debt was reduced to the sum of $1,484 and the defendant has tendered that amount with interest from August 18, 1926, the date when the account was first rendered.
The Appellate Division, reversing findings to the contrary made by the trial justice, has held that the plaintiffs did irrevocably apply upon the principal debt all payments on account. There is no controversy in regard to the evidentiary facts upon which the Appellate Division based its conclusions. The plaintiffs concede that no express agreement was ever made by the defendant to pay interest. They concede that at no time prior to October, 1936, was interest referred to in any conversation or in any written communication, except that each account rendered by the plaintiffs was upon a form or billhead upon which, under the name and description of the plaintiffs, the words "Terms cash — Accounts overdue subject to interest" were printed. Their claim rests largely, perhaps entirely, upon these words.
It is said that, by accepting the account rendered in 1926 without objection and making payments on account, the defendant impliedly agreed to pay interest upon the account. Undoubtedly the parties agreed that the account rendered correctly states the amount due from the defendant, and the defendant impliedly agreed to pay that amount. The law as an incident to a debt imposes an obligation to pay interest from the time of default. The statement upon the bill is merely a notice by the creditor that from failure to pay the account when due an obligation to pay interest will arise. It is difficult to understand how anagreement to pay interest can be implied from failure to object to an account rendered which correctly states the amount due and *Page 266 
the incidental obligation imposed by law in case of failure to pay that amount. Denial of the incidental obligation would not have served to free the defendant from it nor would acknowledgment of the obligation give to it any added force. The obligation to pay interest indisputably existed. It is unimportant whether it is created solely by law or based also on consent and agreement. The defendant does not deny the obligation. She maintains that she has satisfied it.
After the defendant paid $2,000 on account in 1931 and had made two payments of $500 each in 1932, the plaintiffs rendered a statement of the account as it then stood. The same notice that accounts not paid when due were subject to interest was printed upon the billhead. The account rendered stated that the $2,000 check received in 1931 was applied in payment of the sum of $1,995.83, the entire amount due for materials furnished on job No. 9, and that the remainder of the payments which had been received were applied on the amounts due for materials furnished on job No. 8, leaving a "Bal. due of 1119.34/100" on that job and a balance of $3,365.41 still due for materials delivered on job No. 10. There is no room for dispute that this account was rendered and accepted as a correct statement of the account as it then stood. The parties agreed that the balances stated in the account were correct and had been arrived at by application of all payments, made on account, upon the principal debt as stated therein. It is an unequivocal statement by the plaintiffs that they had made such application; it is an unequivocal statement that as a result of such application the balance remaining due upon the original account is reduced to the sum of $4,484.75. Though the defendant had given no direction as to how such payments should be applied, she accepted the account and agreed to the correctness of the balance. There is no room here for recourse to technical rules as to how moneys paid on account may be applied where the parties have not agreed otherwise. Here application made by the creditor has been agreed to by the debtor, and by agreement the rights of both parties became fixed. In 1932 it appears *Page 267 
from incontrovertible evidence that the balance then still due upon the account rendered in 1926 was $4,484.75, and thatbalance was "subject to interest" in accordance with the law and the notice printed upon the billhead.
In 1935 after the defendant had made four more payments of $500 each on account, the plaintiffs again sent a statement of the account as it then stood. That account, like the account rendered in 1932, shows that the indebtedness of $1,995.83 for materials delivered on job No. 9 was extinguished by application of the first payment made on account, and that other payments on account were applied on jobs Nos. 8 and 10, leaving a "Bal. due of $2484.75." Again there was agreement by both parties in regard to the application of moneys paid on account and agreement that through such application the balance still remaining due on the original account rendered in 1926 has been reduced to $2,484.75. When shortly thereafter the defendant made two more payments of $500 each she could properly assume that even without directions from her the payments would be applied in accordance with the earlier practice of the parties established by agreement.
Only after such payments were made did the plaintiffs claim the right to apply payments on account in satisfaction of accrued interest. They had made their choice when the payments were received; they had notified the defendant of the choice made, and the defendant acquiesced; they had rendered accounts based upon that choice; they had stated the balance due, and the defendant accepted the account rendered and made payments thereon. It is too late to claim that no choice was made, after the plaintiffs reported the choice in an account upon which they intended the defendant to act. It is too late to repudiate the choice and change the account when the parties have acted upon it.
Judgment should be affirmed, with costs.
O'BRIEN, HUBBS and FINCH, JJ., concur with RIPPEY, J.; LEHMAN, J., dissents in opinion, in which CRANE, Ch. J., and LOUGHRAN, J., concur.
Judgment accordingly. *Page 268