Proctor v. Marshall & James

Hemphill, Ch. J. The only question in this case, of much importance, is in relation to the appropriation of the money, collected by plaintiffs as agents for the defendants, for insurance on the first bill of goods which were lost on the coast of Texas. The plaintiffs applied it first to the payment of the open account for the last bill of goods, the balance being credited on the note for the first invoice of goods ; and the defendants contend that it should have been applied first to the discharge of the note, and the remainder entered as a credit upon the open account. The general rule of law is, that a debtor owing several debts to the same creditor, has a right to apply the payment at the time of making it, to which debt he pleases. If he makes a payment without appropriating it, the creditor can apply it at his election ; and where neither appropriates it, it will be applied by the law, according to its own view of the justice and equity of the case. (2 Greenleaf, Evi. §529; Story on Equity, §459b; Chitty on Contracts, p. 382; 9 Cowen, 747; 1 Mason, 338; 2 Cond. U. S. R. 613.) The defendants in this case gave no directions as to the appropriation of the money received from the insurance office; and the plaintiffs were left to their election to make the appropriation. The principles and rules on which a creditor should act in the ascription of payments to several debts, when no directions are given by the debtor, have been fully discussed in a cause decided, at the last Term not yet published, and I shall not now attempt to examine at large the doctrines; or deduce the rules on that subject. For this case it will be sufficient to say, that at most there is no such want of equity [67] in the plaintiffs’ applying the payment first to the open account, as would authorize a reversal of the judgment. Neither note nor account was properly bearing interest at the date of the payment. The note was taken for the first bill of goods, but these were substantially sold on a six months’ credit; for, though six months’ interest was included in the note, yet no part of the note was due or payable for twelve months. The insurance money was received and applied before the end of six months, consequently before interest had properly commenced running on the note, so that even under the rules of the Oivil Law, requiring the creditor to apply the payment to the most onerous debt, the defendants would, in this case, have but slight ground of complaint. Had the payment been applied to the note, or had the defendants requested such application, the result would have been, doubtless, immediate suit upon the open account, instead of indulgence for nearly two years, (as was the case,) before suit on the note, an indulgence for which one at least of the defendants seems to have been sufficiently grateful; so that substantially no possible benefit could have accrued from the ascription of the payment as now insisted on by the defendants. The letter purporting to be from the plaintiffs was proven on interrogatories addressed to them, ]to have been written by one of their young men without their knowledge. The letter was evidently intended to be an answer to one from the defendants in relation to matters foreign to the insurance money or its appropriation ; and it is written on the assumption, manifestly, that a note was given as well for the last bill of goods as the first. Had this been the fact, it would have been perfectly immaterial in what manner the payment should be applied, whether to the extinguishment of one note or the other. But such was not the fact, and if the notice to the de. fendants that the money would be imputed to the note, could, under any circumstances, be binding where it does not appear that the agent had sufficient authority to give such notice, it [68] could not be held as obligatory when the suggestion was made under a mistake, and on a supposition that both debts were liquidated by note. Judgment affirmed.