Court Opinion

ID: 6601974
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:08:29.962223+00
Date Added: 2024-06-11T15:58:02.896944
License: Public Domain

Cole, J.
The doctrine in regard to the appropriation of payments, as generally statéd in the books, is this: Where the debtor makes any payment to the creditor holding different demands against him, he has the right to apply it to what debt he pleases. If the debtor makes no specific appropriation, the creditor may apply the money as he pleases. And wdien neither party appropriates the payment, the law will apply it according to its own notion of the intrinsic equity and justice of the case. These rules obviously presuppose a payment made by the debtor to the creditor where the former has the power of exercising an election as to its appropriation. If the debtor neglects to exercise an option either at the time *306of payment or before tbe creditor exercises bis right, then tbe act of appropriation devolves upon tbe latter.
In tbe case at bar, tbe circuit court assumed that 'payments were made which came within tbe application of these rules of law. Tbe jury were instructed, that if they found tbe fact to be that tbe deceased was at work as a servant of tbe defendant and entitled to wages, and that at tbe time be commenced laboring, and during tbe time be was at work, be held a promissory note against tbe defendant, then any payments made while be held tbe note and performed tbe labor might and should be applied on tbe note, unless they found that tbe defendant elected, as payments were made, to apply them in payment of services, or that the deceased then, or in bis lifetime, made an election to apply tbe payments upon bis claim for services, if be bad such a claim. It appeared from tbe evidence that tbe deceased bad charge of tbe mill, and that from, time to time be drew out money and cbai'ged it to himself in tbe day book which was kept at tbe mill. These several sums of money thus drawn out by tbe deceased and charged to himself, were treated by tbe court as payments made by the defendant where tbe latter could exercise tbe right of appropriation. It seems to us that this is a mistaken view of these transactions. These were not payments in tbe proper sense of tbe word; and it is obvious from tbe nature of tbe case that tbe defendant bad not tbe power to control the application of tbe moneys, as be would have where payments are made. Doubtless tbe defendant knew of tbe existence of this running account, and that tbe deceased, Griffiths, was drawing out money which be charged to himself in tbe account. But there was no direction on bis part that these sums should be treated as payments, nor is there any evidence that Griffiths so regarded them. Under these circumstances, tbe counsel for tbe defendant insists, and with great reason, that tbe most that can be said in respect to the moneys thus taken and charged in tbe account is, that they *307were in tbe nature of cross demands or setoffs, and did not amount to payments where the defendant could make an appropriation, or where the principles of the application of payments apply. Prof. Parsons lays down the rule on this subject as follows: “In general,” he says, “the creditor’s right of appropriation, springing from the neglect or refusal of the debtor to make such appropriation, exists only where the debtor has in fact an opportunity of making it, and not ■where the payment was made on his account by another, or in any way which prevents or impedes his exercise of the right of election.” 2 Parsons on Con., 631. And Waller v. Lacy, 1 Man. & G., 54, is referred to in support of the doctrine of the text. That was the case of an attorney having several demands against his clients, some of which were barred by. the statute of limitations, and some not, and who had received from a third person a sum of money on behalf of his client, which he claimed the right to apply to the payment of the earliest items in his account against his client. Put says TiNdaí, C. J., inasmuch as the client “ never liad the power of exercising any election as to the application of this sum, the right of the plaintiff to appropriate it never arose.” BosaN-quet, J., observes: “ The doctrine of appropriation cannot apply to the present case, where money has come to the plaintiff’s hands, not by the act of the defendant, but by the act of a third party.” The other two judges are equally clear and emphatic in laying down the doctrine that the right to appropriate only applies where payments have been made by debtors to creditors, and where the former have an opportunity of directing the application. The creditor’s right of appropria-' tion springs from the failure or neglect of the debtor to exercise his right to make the application when he has the power to make it. This is obviously the reason and philosophy of the rules in regard to the application of payments.
The undisputed facts of this case take it out of the application of these rules. The moneys drawn out by the deceased, *308and charged to himself on the account book at the mill, were not payments made by the defendant. There is no evidence whatever that either party so regarded them. They were strictly cross demands or matters of setoff, which would be applied on settlement of the accounts between the parties, but do not fall within the rules of the application of payments. Nor do we think the facts bring the case within the rule in regard to an open current account which is applied in the cases cited in the note to Mayor, etc., v. Patten and Field v. Holland, 1 Am. Lead. Cas., p. 306. For, not only is it inaccurate to treat the sums drawn out by Griffiths as payments made by the defendant, but there does not appear ever to have been any settlement of these accounts or balance struck by the parties. So that, in whatever view the case is considered, it seems to us the circuit court was wrong in holding that the law in regal’d to the appropriation of payments applied to and governed the case.
By the Oowrt. — The judgment of the circuit court is reversed, and a new trial ordered.