Court Opinion

ID: 6582959
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:39:52.024391+00
Date Added: 2024-06-11T15:57:21.324557
License: Public Domain

The opinion of the court was delivered by
Walker, J.
The foregoing cases stand upon the same facts as reported by the auditor, and the result reached in either case necessarily determines the other.
On the seventh day of October, 1882, J. W. Horskins held, as surviving partner of the firm of Horskins & Grates, a partnership account against E. D. Briggs, which accrued prior to the dissolution of that firm, January 1, 1866. This , account had never been balanced, but on said seventh day of October it showed a balance against Briggs of $593.05. No payment had been made thereon by Briggs since 1873, nor had it been otherwise acknowledged ; and it was consequently then barred by the Statute of Limitations.
On the same seventh day of October, Horskins also held an individual account against Briggs, independent of the partnership account, which contained their matters of deal from *447January, 1866, to 1882, and a balance of an old account, that accrued prior to the partnership account, brought forward as the first item thereof, which on that day showed a balance against Briggs of $54.78. This individual account, which contained a large amount of deal between the parties, had at all times during its existence shown a balance against Briggs, varying from $50 to $500, but had never been examined and balanced.
With these two accounts standing as thus stated, and without any examination of them, or any definite knowledge of their standing upon the books or of the balances against him upon either, but supposing that he was owing Horskins a considerable amount, Briggs made three cash payments to Hor-skins upon his indebtedness generally, without any directions as to their application, of the dates and amounts following, to wit: October 7, 1882, $100; January 24,- 1884, $46.86; March 14, 1884, $53.14, aggregating $200. All these payments were credited by Horskins without any examination or balancing of the books or definite knowledge of the standing of the two accounts, in his individual account with Briggs. Soon after the last payment, and in April, 1884, Horskins died. Gates died in 1878, and Briggs, after the commencement of his action against Horskins’ estate.
On balancing up the individual account after Horskins’ death, it was ascertained that the $100 payment made October 7, 1882, overpaid it $45.22, and that when the last two payments were made there was nothing due from Briggs on the individual account; and that the three payments which Hor-skins had credited upon.it overpaid the same $145.22. Briggs thereupon presented a claim for this excess to the commissioners upon Horskins’ estate, which passed to the County Court by appeal; and for this excess the administrator of Briggs seeks to recover in his action against Horskins’ estate. On the other hand, the administrator of Horskins, in his action against Briggs’ estate, seeks to recover the unpaid balance of $593.05, standing against Briggs in the partnership account, *448less tbe $145.22, which he claims Briggs’ estate cannot recover, because, as he contends, the three payments, of which the $145.22 is a part, were made to apply on Briggs’ indebtedness generally, and after the application of a sufficient amount thereof to extinguish the individual debt, the law applies the excess, as of the date of the several payments, upon the partnership debt, and thus removes the statute bar.
The question, then, for consideration is, whether the $45.22 paid in excess of the individual debt October 7, 1882, and the two payments made in 1884 after the individual account was extinguished, all being general payments without directions by the debtor as to their application, and credited by the creditor in the individual account without ascertaining how the two accounts stood, warrant the implication of a new promise to pay the partnership debt.
It has long been well settled that a part payment of a debt barred by the statute, if made without protestation against further liability, is a conclusive recognition and acknowledgment on the part of the debtor of such debt at the time of making it, from which tlie law implies an admission of the actual existence of the balance as a subsisting debt, notwithstanding the statute, and a promise to pay it, which prevents the operation of the statute.
It is also well settled that the debtor in making the payment, where there. are several demands against him, may direct its application. He has the primary right to appropriate the payment to whatever debt he chooses, and his direction, when given in express terms or when implied from the circumstances of the payment, must govern its application. But if no application is directed by the debtor, or implied from the circumstances of the payment, the creditor may make it. If neither the debtor or creditor make the application, the laAv will make such application of the money as may be just. The debtor’s intention as to the appropriation may be said to govern. This intention, when no designation of-demand is made by the debtor at the time of payment, is gathered from the circum*449stances of the transaction. If a general payment is made without direction tó a creditor holding only one demand, the intention of the debtor is manifest.
When a voluntary payment is made by a debtor on his indebtedness generally to his creditor, holding two or more known demands against him, without direction as to its application, and not under circumstances clearly showing to which debt he intended the money to be appropriated, the law regards him as having Avaived his right in favor of the creditor, and as intending that the payment should be applied as part payment of such debt or debts, if more than sufficient to pay one, as the creditor may justly and reasonably elect to appropriate it to ; and on the creditor’s failure to make the appropriation, as intending such an application as the laAV upon the principles of equity will make. So that the application of a general payment, whether directed by the debtor, creditor or the law, may be said, in a legal sense, to be made in accordance with the debtor’s intention; and such an application of. a payment in either way will have effect to remove the statute bar from the debt or debts, if the payment is more than sufficient for one demand, upon AAdiich the payment is thus applied. This principle applies only to voluntary payments and payments authorized by the debtor. Ayer v. Hawkins, 19 Vt. 26; Corliss & Way v. Grow, 58 Vt. 702; Walker v. Butler, 6 El. & Bl. 506.
Briggs knew of the existence of both debts. He made payments to Horskins upon both after the dissolution of the co-partnership. He supposed he was owing Horskins a considerable amount, and on the day of Hoskins’ death spoke of paying $100 more to him. With all this knoAidedge he made the payments in question upon his indebtedness generally, and waived the right of appropriation. There is no fact found Avhich shows that Briggs intended to pay only the individual debt and not the partnership debt.
On the contrary, the auditor finds that there Avas nothing to show that he intended that the payments, or either of them, *450should be applied wholly upon either of the accounts to the exclusion of the other. He clearly did not intend them as loans or gifts. They were made and intended as part payments of a greater subsisting indebtedness, and must be so appropriated. The debtor’s intention is controlling. There were only two debts to which the payments could be appropriated. Hoi’skins applied them first to the extinguishment- of the individual debt which was not barred by the statute. Of this Briggs could not complain, for it was most favorable to him. Horskins could legally appropriate to the individual debt only so much of the payments as was necessary for its extinguishment. When that debt was extinguished, the balance must be appropriated to the payment of the partnership debt, which was barred by the statute, as of the dates of the payments making up this balance. When so applied, whether by the creditor or the law, they have effect to take the debt out of the operation of the statute, because they were payments upon a general indebtedness, of which the partnership debt was a part, and after the extinguishment ‘of the individual debt, the only remaining demand upon which they could be applied.
Payments must be applied according to the intention of the parties or the intention of the party paying, when that can be ascertained. It conclusively appears from the auditor’s report that Briggs made the payments for the purpose of reducing his general indebtedness to Horskins, and that Horskins received the money with that understanding. And this purpose was not defeated by Horskins, crediting in his individual account, without ascertaining the balance due thereon, the $45.22, the excess of the October payment over the amount duo on the individual account, and the tivo payments made after it was in fact extinguished. This erroneous entry did not appropriate the whole amount of the payments to the payment of the individual account. It appropriated only so much of the money as was necessary for the payment of the balance due thereon, and left the residue to be applied by-the laws, which applies it as of the date of the payments upon the part*451nership debt, which was the only remaining demand in the hands of the creditor. This is not a change of appropriation made by the creditor, but an application of money paid on general indebtedness, and not appropriated by him.
With this application, the payments making up the $145.22 were by implication payments upon the partnership debt as a larger subsisting debt, and an acknowledgment of the actual existence of the balance, from which the law implies a new promise, which prevents the operation of the statute.
The right of Horskins’ administrator to recover the balance found due on the partnership account is clear, if the payments removed the statute bar. As we hold that the payments removed the statute bar, the consequence is that the judgment of the County Court is reversed in both cases; and in the case of W. C. Robie, administrator of the estate of J. W. Horskins, v. The estate of E. D. Briggs, judgment is rendered upon the auditor’s report for the plaintiff to recover of the defendant $447.83, and interest thereon since March 14, 1884, damages and costs. In the case of Chauncey Temple, administrator of E. D. Briggs’ estate v. The estate of J. W. Horskins, judgment is rendered upon the auditor’s report for the defendant to recover costs. Both judgments are ordered to be certified to the Probate Court.