Harrison & Robinson v. Johnston

GrOLDTHWAITE, J, The casé upon the record stands thus : The appellants were the factors and commission merchants of N. G-. Friend, and there was a current account kept up between them, from April, 1850, until the death of Friend, which was subsequent to July, 1853. On the 29th of April, 1852, if the accounts had been made out and the balance struck, Friend would have been indebted about $400 ; and on-that day, he made two notes, each for $2,500, payable at nine and ten months, with the appellee, Johnston, as surety ; which he delivered to the appellants, who passed 'them to his credit on their books,-and held them as bills receivable, and charged them against him in general account when they became due. An account was made up against Friend, on the 2d April, 1853, consisting of many debits and credits, in which the notes were thus charged and credited ; and the balance which ap [453] pears to be clue from Eriend at that date was $5,750, which balance was carried forward, and the account continued to 22d July, 1853, up to which time he was charged with the following additional items : Doct. N. G. Eriend in account with Harrison & Robinson. 1853. Dr. Apl. 2. To balance, as pr. account rendered, duo us in cash, “• 8. “ invoice goods, pr. Ambassador, “ 26. “ acceptance yr. dft. favr. J. G. Eriend, due May 21-24-, ’54, “ “ “ commissions accepting do. June 11. “ acceptance yr. dft. favr. self, due March 1-4, ’54, “ “ “ commissions accepting do. July 22. “ acceptance dft. favr. J. G. Friend, due Jan. 1-4, '54, $5750 23 36 03 1075 00 26 88 1200 00 30 00 2500 00 “ “ “ commissions accepting do. 62 00 On the 6th June, 1853, Eriend made a payment of #2,882 61, and on the 9th June of the same year another of $2,680, giving no direction as to the application; and these payments were passed to his credit in general account, as of those dates. Suit is brought against Johnston on the notes, and the question is as to the application of these payments. If we concede the rule, as contended for by the counsel for the appellants, that when a partial payment is made, by one owing distinct and separate debts, the law, if called upon to make the application, will apply the payment to the debt which is the least secured, or most precarious; still this principle does not apply in the case presented by the record before us. The evidence here shows, that the appellants were the factors and commission merchants of Eriend, and that there was a running account between them ; and in that case, a different principle applies, and there, in the absence of any application of the payments by the parties, the law applies them to the charges in the order of time in which they accrue, without reference to the fact that one item may be better secured than another. — Clayton’s case, 1 Mer. 608; Bodenham v. Purchas, 2 B. & A. 39; Brooke v. Enderby, 2 Brod. & Bing. 70; Story’s Eq. § 459 g. It does this, on the principle, that such an appropriation is most consonant to the intention of the parties. Where the factor, from time to time, makes advances, receives payments, and blends the debts and the credits together in one common account, then the parts have no longer any separate existence, but it is the balance only [454] which is considered as due. — Per Bayley, J.. in Bodenham v. Purchas, supra. Suppose the firm of Harrison & Robinson, in which there were three partners, had been owing Friend, on the 2d April, $5,000, and on that day one of them went out of the concern, and Friend subsequently drew on the new firm, who continued the business for $3,000; then they sold cotton belonging to Mm, for $2,000, and he then drew upon them for $2,000 ; keeping a running account, and charging up the balance due from the old firm against the new, and the other items of debit and credit on general account:— would he be allowed, on the failure of the new firm, to say, ‘I will hold the retiring partner of the old firm responsible for the balance of $2,000 which is unpaid’ ? and would the law'aid him to do so, by holding that the payments made by the new firm should be applied to the transaction on which the other partner was not responsible, because it was the most precarious debt. This-is the precise'case put by Sir William Grant in Clayton’s case, and, in principle, it is identical with the one under consideration. We would not be understood to say, that the rule is inflexible, or that it extends to cases in which the different transactions between two parties are made to assume the form of an account, when in reality the items of which it is made up are such as to repel any inference that there was intended to be any account running; or where the character of the dealings is such as to show that it was not the intention of the parties that the payments should be thus applied. If a different application is expressly shown, or is to be inferred from the particular course of dealing, or from the particular circumstances of the case, the rulo would not apply. — Taylor v. Kymer, 3 B. & A. 320, 333; Capen v. Olden, 5 Met. 268 272; Dulles v. DeForest, 19 Conn. 191, 204. Here, however, the record discloses no evidence which would warrant the inference that a different application was to be made. There is an account opened with Friend by the appellants, who are his factors. Contemplating advances to be made by them, he passes to them the notes sued on for their security. They make advances, sell his cotton, charging the notes, as well as the advances made upon the faith of [455] them, and credit Mm with the notes and other payments made. The whole i§ blended together, and a balance struck against Eriend as the result of all the transactions : the account is rendered to him, and the balance carried forward to a new account, of which it forms the first item. Under these circumstances, upon principle as well as authority, the payments being charged to general account by the creditor, without making any other appropriation, he should be held to the election he has. thus made and manifested, and the payments be applied to the balance due, as rendered in the account of 2d April, which is the first item of the new account. Eor the same reasons, the three first charges, as well as the last, requested, were correctly refused. There was no error in the refusal to give the fourth charge, for the reason that the payments made in June could not, in the absence of evidence showing most unmistakably the intention of the parties, be referred to debts which had not even an existence at that time. — Gass v. Stinson, 3 Sumn. R. 99; Pattison v. Hull, 9 Cowen, 765, 773, 777. Judgment affirmed.