Callahan v. Boazman

LIGON, J. 1. The first charge asked by the defendant in the court below was correctly refused, since it appears by the proof that he had made the payment with no other direction for its application, either when the contract for the sale of the cotton was made, or when the cotton was delivered, than that it should be applied to “all just demands which Boazman might hold against him;” and as there were two, and the justice of neither is at all questioned by Callahan, Boazman had the legal right to appropriate the payment to either, if the payment were really made before suit brought. If the pay'ment had not been applied until suit brought, and no directions had been given by Callahan until after that time, neither party would be allowed to direct its application, but the law will appropriate it, and such an appropriation will be made of it as justice requires. To this point, the case of the United States v. Kirkpatrick, 9 Wheat. 720, is a direct authority. In that case, Mr. Justice Story, who delivered the opinion of the court, says: “ The general doctrine is, that the debtor has a right, if he pleases, to make the appropriation of payments; if he omit it, the creditor may make it; if both omit it, the law will apply the payment according to its own notions of justice. It is certainly too late for either party to claim the right to make an appropriation, after the controversy has arisen, and a fortiori at the time of the trial.” See also, Mills v. Fowlkes, 35 Eng. Com. Law Rep. 179, opinion of Bosanquet, J. 2. There is nothing in the terms of the agreement, to take this case out of the general rule in all cases of payments [250] made by a debtor to a creditor who bolds two demands against him, without directions for their application. Callahan agrees to sell his cotton to Boazman, and the proceeds, by the agreement of sale, are to be applied to the payment of all demands justly due from him to Boazman; but by the terms of the agreement, a future day, and that beyond the maturity of the account, is lixed to ascertain the amount of the proceeds of the cotton. The payment, therefore, cannot be considered as made until the cotton was delivered, and the price to be paid for it ascertained; for, until that time, the precise amount which should be passed to the credit of the debt- or, was unknown to both parties. The bill of exceptions does not show, at what precise point of time the credit for the value of the cotton was entered on the account, nor does it show that Callahan ever varied his agreement as to the time when such value was to be fixed. By that agreement, he evidently contracted for the advantage of the market for cotton on the 1st day of March, 1849, and before this time Boazman, for the reasons before stated, could not have made the application. It is shown by the record, that Boazman sued Callahan both on the note and the account, on the 28th of February, 1849, the day before the credit could have been applied according' to the terms of the agreement. Under the cases before cited, the right of appropriation was taken away from both parties, by the institution of the suits, before the sum to be credited could be ascertained; so the law must apply the payment. The court could apply the credit to either of the demands, as to it might appear just and proper under all the circumstances of the cases, and since the. justice of the peace has applied it to the account, and, we presume, has rendered judgment in that suit accordingly, it would be manifestly unjust to apply it again to the note on which this suit is brought, and thus enable the plaintiff in error to take a double benefit from the payment. The application of the payment by the creditor, if afterwards sanctioned by the court, in cases like the present, in which both parties have lost the right to appropriate it, in consequence of suit being brought before either had exercised it, must be regarded as the act of the court under the authority conferred on it by Jaw. [251] As these views of the agreement, and of the rights of the parties, are inconsistent with the second charge asked, we are of opinion that the court did not err in refusing it. 3. We have been unable to find any case in which it has been held, that, where a creditor has two demands, the one a specialty debt, and the other an open account, and the debtor pays generally, without directions as to the application of payment, that the creditor is bound to apply the payment to the older of the two demands. Such a rule has been frequently applied by the courts, in cases in which an action is brought on an account consisting of several items falling due at different times, and, for the benefit of sureties, when the creditor has two demands, the one older than the other, and the sureties on the two are not the same. 1 Har. & J. 754; 4 ib. 98 ; 9 Wheat. 720 ; 10 Conn. 174; 5 Bingham 455. But this case bears no analogy to cither of those cited, or any of that class, and consequently is not subject to the rules which govern them. As the object of the third charge asked was, to subject it to those rules, there was no error in refusing it. 4. Neither in eases like the present, nor indeed in any case of direct payment made by a debtor to his creditor, without declaring at the time in what manner, and to what demand he desires to apply it, is the creditor bound to notify the debt- or of the manner in which he has appropriated it, before the debtor will be deprived of his right to control its application. The election being vested in the creditor, by the failure of the debtor to exercise it at the time of the payment, the former may exercise it at his own pleasure, and apply the payment to either demand. The only obligation he owes to the debtor in this respect is, to make the application in good faith, so as to extinguish the demand, pro tanto, to which it is applied. There is no error in the record, and the judgment is affirmed.