Court Opinion

ID: 6423642
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:02:03.788167+00
Date Added: 2024-06-11T15:51:50.191666
License: Public Domain

Devens, J,
The question which the case presents is, whether the receipt of certain notes, which the plaintiffs credited on the account of the defendant, are to be treated as a part payment *537made by him on that date, from which a promise to pay the balance of the debt due may be implied, or whether the claim of the plaintiffs is barred by the statute of limitations. The defendant, on November 1, 1881, owed the plaintiffs a balance on account, which with interest amounted to $1,810, and gave the plaintiffs an order on one Howland for this sum, or any less sum due to him from Howland then in Howland’s hands. Howland was notified of the order, and promised to pay the same when he could ascertain the amount due from him to the defendant. After repeated and unavailing efforts to collect this amount from Howland, the plaintiffs, on August 8, 1883, accepted from Howland his notes on time as discounted for the sum of $1,125.30, and gave the defendant credit for the same on account.
The defendant requested a ruling that the claim against him was barred by the statute; that the application of the $1,125.30 must be made on the account as of the date of the acceptance of the order by the plaintiffs; that no part payment had ever been made by the defendant, or on his behalf, under such circum- \ stances as to give rise to the inference that the defendant renewed his promise to pay; and that therefore the plaintiffs could not recover. The court refused so to rule, and found as facts, that the order was taken with the understanding that whatever might be received upon it should be applied to the indebtedness of the defendant, and that it was not understood that the plaintiffs should accept it in full payment, or in accord and satisfaction. The court further ruled, that in this state of things, when the plaintiffs settled with Howland by taking his notes, it amounted to a part payment then made by the defendant; and found for the plaintiffs. While the evidence was conflicting as to whether the order was given in accord and satisfaction of the debt due the plaintiffs, these findings of fact are justified by the evidence.
In order that part payment of a debt shall lead to the inference that it is at that time an acknowledgment of the debt which revives the original promise of payment, it is not necessary that such payment should be made by the debtor personally. It is sufficient that it be made by his direction and authority, and it takes effect from the time when it is thus *538made. Where a debtor deposits with his creditor notes, accounts, etc. against third persons, not in satisfaction of his debt, but as collateral security therefor, to be applied in payment of the debt as the same may be collected, if the creditor acts in good faith and with reasonable expedition when he realizes thereon, his collections are to be regarded as payments by the principal as of the date and at the time when they are received. Porter v. Blood, 5 Pick. 54. Brown v. Tyler, 8 Gray, 135. Whipple v. Blackington, 97 Mass. 476. Hancock v. Franklin Ins. Co. 114 Mass. 155. Butler v. Price, 115 Mass. 578. Haven v. Hathaway, 20 Maine, 345.
The fact that this claim against Howland was not received in full payment, or accord and satisfaction, and only with the understanding that whatever was received on it was to be applied toward the indebtedness, was evidence that it was received only as collateral security for the debt, that the plaintiffs were made the agents of the defendant to collect it, and that these collections, when made, were to be received by the plaintiffs as payments of that date. There was no evidence that the plaintiffs had not acted in good faith, and made every reasonable effort to collect this claim against Howland. After the defendant was informed that the plaintiffs had taken notes therefor, which were credited to him, he contended only that more» should have been got from Howland than was received; and, further, that the plaintiffs had received this claim in satisfaction of their debt. The finding was, that the order was not received in satisfaction of the debt; and there was no evidence offered that the notes which the plaintiffs accepted were not equal in amount to the debt due from Howland.
The defendant relies much upon Campbell v. Baldwin, 130 Mass. 199; but the case at bar is quite distinguishable. It was there held that, if the assignee of a mortgage of real estate containing a power of sale sells the mortgaged premises, and, after paying the expenses of the sale, applies the balance to the mortgage debt, this does not operate as a part payment on the note so as to take it out of the statute of limitations as to the mortgagor, who at the time of the sale had conveyed the premises to a third person, upon the latter’s agreement to pay the note. In that case, at the time of the sale the debtor had no *539interest in the property sold, and no right to the proceeds of the sale. The money which was applied in part payment of the note was not his money. Even if it would be applied by law to the extinguishment, pro tanto, of his debt, the application was not under his control, and involved no action of his mind. In the case at bar, that which the plaintiffs had must be deemed collateral security for the debt due to them. The money, or the notes which the plaintiffs accepted as money, was the property of the defendant. While the plaintiffs had the right to apply these to the liquidation of the defendant’s debt, it was as money that they received them of the defendant; and had the amount received exceeded the amount due, the defendant would have had a right to this balance. It was as agent for the defendant that the plaintiffs received the notes from Howland and applied them on the debt.
The case of Harper v. Fairley, 53 N. Y. 442, — which has been followed in New York by other cases holding that, where an obligation of a third person has been transferred to a creditor as security for a debt, and a payment has subsequently been made thereon by such third person, it cannot be deemed evidence of a new promise of that date by the debtor, — is not in accordance with the current of our authorities heretofore cited. In Smith v. Ryan, 66 N. Y. 352, 357, where this rule is followed, it is suggested that the case of Whipple v. Blackington, ubi supra, is perhaps distinguishable from the decision there made, on account of the different language used in the statutes of the two States. However this may be, by our decisions the doctrine is fully recognized that collections made upon collateral security are to be regarded as payments by the principal debtor at the time the money is received. If, as in the case at bar, the plaintiffs received the notes of the third person as money, giving the debtor credit therefor as such, the same rule must apply.

Judgment on the finding.