Putnam v. Russell

The opinion of the court was delivered by Hebard, J. These are bills brought to foreclose the equity of redemption in certain mortgaged premises. The notes secured, and the mortgage deeds, were executed by one Francis Dow, now deceased, to one Samuel Austin, Jr., and the notes and deeds were duly assigned by said Austin to the orators, after the decease of said Dow. The estate of Dow was represented insolvent by the administrators upon their appointment, and upon the settlement it turns out to be so in fact. There were other notes executed by Dow to Austin, not secured, and which were, by Austin, assigned to other individuals, to whom Austin was indebted. These orators, together with the assignees of the notes not secured, agreed to present the notes, by them all respectively held, to the commissioners, for allowance against said estate, in the name [59] of said Austin; — and they were so presented, and were allowed by the commissioners at the sum of $745,11, in the whole; — and at the same time the defendants, as administrators, presented a claim in offset, which was allowed, by the commissioners, in favor of the estate, and against Austin, to the amount of $493,61, — leaving a balance against the estate of $251,51, which was a sum less, by about $30, than was due upon the notes held by the orators, and secured in the mortgage deeds; — and this sum the orators ask to have the defendants decreed to pay to them, within sorbe equitable time, or, in default, that the equity of redemption in the mortgaged premises be foreclosed. ' The defendants insist that the claim that was presented by them, and allowed in offset, should be treated like a payment, and that, in making the application of that payment, they have a right to elect upon what indebtedness it shall apply. The first difficulty to be overcome, in acceding to that doctrine, will be to liken this claim, that was allowed, to a payment. -The administrators presented a certain claim in favor of Dow against Austin; but what constituted that claim does not appear. Whether it consisted of mutual dealings between the parties, upon running accounts, or whether it was a claim upon some separate and independent contract, or for damages for the non-performance of some contract, or of some other name, or kind, does not appear. But whether it was for some one of these, or for some other that might be named, is not very material, there is a marked distinction between a payment, technically as such, and a claim that may be enforced to recover a sum in damages. From anything that appears we are to understand this claim to be of the latter kind ; and the most the defendants could insist upon would be to have this claim, held by Dow against Austin, balance an equal amount of the claims held in Austin’s name. The orators were under no necessity of presenting their notes to the commissioners for allowance; they might have relied upon their mortgage security as well without it ;r and if they had done so, and left the assignees of the notes, not secured, to have presented their notes for allowance, without the orators presenting theirs, the result would have been a balance of $30, in favor of the estate; — and in [60] that case, when the orators should bring their bills as they now have, for a foreclosure, the most, that the defendants could insist upon, would be, the deduction of this $30 from the amount due upon the notes secured by the mortgage, which would leave the same sum due in equity that the orators now claim. The orators, it is to be presumed, acted upon some such understanding of the law, when they presented their notes for allowance. What has already been said in relation to this claim against Austin, which was allowed by the commissioners, being a payment will dispose of the whole question. If it yvas not to be regarded as a payment, then nothing need be said about its application. The doctrine, I believe, is as well established, as any other, that, where a debtor makes a payment, he may, if he choose, direct its application. And if he do not direct, the creditor may elect as to the application. And in the case of Briggs v. Williams, 2 Vt. 283, the court held, that, if a payment has been made, and neither party has elected as to the application, the court will direct the application to those debts which have the poorest security. As Dow mortgaged the premises to secure these notes, and did not secure the others, it is to be presumed, as matter of law, that he intended to make a distinction between the two classes of notes, and that the premises should remain as security, till the debt was extinguished by payments in fact made, and the application directed to these notes, or until a full settlement and adjustment of the dealings between him and Austin would liquidate and swallow up those notes; and I think the authority cited, — Niagara Bank v. Rosevelt, 9 Cowen 409, — goes no farther than that. The decree of the Chancellor is affirmed, with additional costs.