Court Opinion

ID: 6619243
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:27:33.516926+00
Date Added: 2024-06-11T15:58:38.813922
License: Public Domain

GILL, J.
Statement. In the latter part of 1892 the defendants, Stewart Brothers, undertook to erect for defendant Hoffman a large building in Sedalia. They purchased the necessary lumber from the plaintiff corporation. This is a suit to enforce a mechanic’s lien against Hoffman’s building for an alleged balance of $2,023.13. The Stewarts made no defense, but Hoffman contests the lien upon the ground that the lumber account for his building, so furnished by the plaintiff, is entitled to several credits aggregating $T,000; this because of three payments made by Stewart Brothers to plaintiff, to wit: September 7, 1892, $250, September 26, 1892, $500, and October 17, 1892, $250. The real controversy at the trial, was as to *460whether or not the Hoffman building account should be credited with these several payments.
The case was referred and the referee found in favor of the plaintiff, disallowing the payments. But the court sustained Hoffman’s exceptions to the referee’s, report, and the cause then being submitted on said report and evidence taken by the referee, judgment was entered allowing said payments, and thereupon plaintiff appealed.
No instructions being asked or given, we are called on to decide whether or not the judgment of the lower court should be sustained on the evidence contained in the record.
Stewart Brothers were building contractors at Sedalia and ordinarily purchased their lumber from the plaintiff, the latter keeping a separate account for each building. It seems that when the Stewarts undertook the Hoffman contract they were in need of ready money, and to aid them, Waddell and Zimmerman, plaintiff’s managing officers, went their security on a note for $1,000 to a Sedalia bank, whereby the Stewarts were enabled to raise that amount of money. This note was dated September 1, 1892, was due in ninety days, and was renewed several times, until May, 1894, when said sureties paid it off — Stewarts having in the meantime become insolvent. In this suit plaintiff claims the right to apply the payments before mentioned (made in September and October, 1892) to the satisfaction of this $1,000 which Waddell and Zimmerman had been forced to pay on the Stew-Brothers’ note on which they were securities.
At the trial plaintiff’s ledger and cash book (the latter being the book of original entries) were introduced, and there it appeared that when the three payments were made (to wit: September 7, 26, and October 17, 1892) the respective amounts were entered in both books to the credit of “Stewart Bros. Hoffman Building.” In this ledger account (Stewart Brothers’ account of Hoffman building) there were charged on the left hand page the various items of lumber that were *461furnished and went into the IToffman building, and on the right side appeared the credits or payments on account of said IToffman building. These charges and credits too were kept separate from other building accounts run in the name of the Stewarts. The three credits in dispute were the first payments made, and are followed on the ledger by numerous other payments in like manner made by Stewart Brothers. It seems also that these three disputed items of credit came from money paid by Hoffman to the Stewarts.
The question is now, should this plaintiff be permitted, to take away these three payments entered on its books to the credit of the Hoffman building account, and appropriate the same to the satisfaction of Stewart Brothers’ liability to Waddell and Zimmerman arising from their payment of the $1,000 note on which they (said Waddell and Zimmerman) were securities. The trial court has correctly answered this in the negative.
Payments : application of: debtor and creditor and tingent debt. The rule on the application of payments is well settled. When there are two or more debts owing by one party to another a payment shall be applied to the one or the other according to the direction of the debtor. ° jf however, the debtor at the time fails to elect to which claim the payment shall apply then the cred.itor may make the application. If both fail, then the law will direct how such payment shall be applied.
Plaintiff can not be allowed to appropriate the payments in question to the purpose attempted, under any view of the foregoing rule. In the first place, at the time these payments were made, two separate debts did not exist between plaintiff and the Stewart Brothers. The latter owed the plaintiff for lumber that went into the Hoffman house, but were not indebted to it on account of the note. This is so for two reasons: first, because the plaintiff corporation was not a party to the note as security or otherwise; and second, if it had been, the security had not then paid the debt and there *462was not then anything owing by the debtor to the security. Indeed the proof shows that the security debt did not mature until some time after the payments in dispute were made. It is well settled law that until the security pay the debt or a part thereof he has no claim against the principal obligor. If then Stewart Brothers were at the time of said payments indebted to plaintiff on the lumber account only, then such payments must be treated as intended for that account. We have then no occasion to consider the rule relating to the application of payments where there are two or more debts.
But even should we concede that when these payments were made, Stewart Brothers stood indebted to plaintiff both on account of the lumber and on account of the note, and further that Stewart Brothers failed to elect upon which said payments should apply, even then plaintiff’s contention can not be upheld, for the evidence overwhelmingly shows that the creditor saw proper to, and did apply the payments to the lumber account. The books of account (kept in the most solemn manner by plaintiff’s officers) 'clearly evince an intention at the time to devote this $1,000 as a partial payment on the lumber account. We have read with care the evidence adduced at the trial and can come to no other conclusion. At all events this was manifestly the holding of the trial judge and we are authorized to defer to his finding. The account books of the creditor, though not conclusive, are competent evidence to show the appropriation intended. Van Rensselaer v. Roberts, 5 Denio (N. V.), 470. At most, plaintiff’s testimony would only tend to prove that the officers of the plaintiff corporation intended to hold these payments to reimburse themselves for any liability they might incur by reason of having indorsed the note of Stewart Brothers. Their liability then was only contingent; and of course any claim on that account against Stewart Brothers was dependent on a future event — that is whether or not the principal on the note should default and the securities be compelled-to pay. In a case of that kind the law will apply the *463payment to the admitted debt rather than to one pending on a future contingency. In Parsons on Contracts, volume 2, page 632, it is said: “If one of the debtor’s liabilities be contingent, as where the creditor is his indorser or surety, .but has not yet paid money for him, the court will apply a general payment to the certain debt, and will not permit the creditor to apply it to the contingent debt.” See, also, 2 Whar. Cout., sec. 931; Cloney v. Richardson, 34 Mo. 370; Niagara Bank v. Rosevelt, 9 Cow. 409. “It is not competent,” says the opinion in last case, “for a creditor who has one existing debt, to apply money received generally to extinguish his liability as indorser on a note which he may or may not be compelled to pay. If the maker takes up the note there is an end to the liability.”
The judgment is for the right party and will be affirmed.
All concur.