Early v. Flannery

The opinion of the court was delivered by Royce, J. The facts which we find from the bill, answers, and evidence, are, that at the time Henley executed the notes described in the bill, the orator paid him as the consideration for said notes, $780, and agreed to pay him $220 more within a short time thereafter; but instead of paying said last-mentioned sum, it was agreed -between Early and Henley that Early should indorse that amount on the note that would first fall due. Early made the indorsement, leaving $30 which would be due on that note, with the interest on the same, on the 20th of April, 1866. About the 1st of February, 1866, the orator purchased four negotiable notes for $200 each of one John Glynn, which were given by Henley on the 10th of April, 1865. The first of said notes was made payable on or before the 1st day of May, 1866, and the rest were payable yearly thereafter. The orator gave Henley notice that he owned said notes soon after he purchased them. On the 7th day of July, 1866, Henley paid the orator $600, and gave him no directions as to where it should be applied, except “ to give him credit for it.” On the 10th day of March, 1867, Henley paid the orator $200, without giving any direction as to its application. The orator indorsed the whole of the money thus paid by Henley, upon the Glynn notes, which were unsecured. The interest on the three last notes described in the petition, and $30 of the principal of the first note, and the interest on the same, was due on the 20th of April 1866. The question presented is, whether the orator had the right to apply the payments made, upon demands he held against Henley, though unsecured, that 256 were not then due, to the exclusion of those that he held that were due. The general rule, that in the absence of any directions made by a debtor as to the application to be made of payments made by him, the right devolves upon the creditor to make such application, has been so far qualified as to require that such an application should be made as the debtor could not reasonably or justly object to ; and in the absence of any express directions by the debtor, whenever, from the facts and circumstances, his intention is rendered sufficiently clear and certain, such application should be made as he intended. We think it is clear that the debtor intended that the payments should be so applied as to extinguish any right of action that the creditor had against him at the time they were made, and that he could reasonably and justly object to any other application. When a debtor makes payments to a creditor without directing the application to be made of them, and the creditor holds claims against him, some of which are due at the time the payments are made, and others are not due, the creditor, ordinarily, must first apply such payments upon the claims which are due. Bacon v. Brown, 1 Bibb, 324; McDowell v. Canal Co. 5 Mason, 11; Seymour v. Sexon, 10 Watts, 255; Clony v. Richardson, 34 Mo. 370. The orator should have so applied the payments, before making any application of them upon the Glynn notes. The pro forma decree of the court of chancery dismissing the bill,-is reversed, and cause remanded, with mandate that a decree be entered for orator for the amount which may be found to be due on the three last notes described in his bill, with annual interest to be computed on the same since the 20th of April, 1866.