Jackson v. Bailey, 12 Ill. 159 (1850)

Dec. 1850 · Illinois Supreme Court

12 Ill. 159

John E. Jackson, Pltff in Error, v. William S. Bailey, Deft in Error.

error to McDonough.

A debtor paying money, has the right to direct how it shall be appropriated ; and if tile creditor misapplies the payment, he. cannot complain if he loses the benefit of it. The application of the payment cannot be changed without the consent of the debtor.

Bailey sued Jackson before a justice of the peace, in two suits at the same time, one for the balance due upon a note amounting to $10 85, and the other, to recover the amount of an account for $18 00. Judgment was rendered, by default in both cases, as follows: for $10 85 on the note, and for $8 00 on the account. Jackson paid the amount of the judgment on the account, and took an appeal from the judgment upon the note to the Circuit Court.

On the hearing in the Circuit Court, it appeared that Jackson had paid Bailey ten dollars, which he directed should be endorsed upon the note; instead of doing this, Bailey had credited that sum upon the account, which was originally for $18 00, but was reduced by the credit to $8 00, for which sum the judgment was rendered. The Circuit Court, Minshall, Judge, presiding, at the May term, 1850, to whom the cause was submitted, affirmed the judgment of the justice of the peace.

Jackson brings the case to this Court, and seeks to reverse the judgment of the Circuit Court; and assigns for error, the not allowing to him credit upon the note for the ten dollars, which he directed should be so applied; and the rendition of a judgment for eleven dollars, when only one .dollar was due upon it; and in not declaring that the judgment upon one suit, was a bar to a judgment in the other.

Wabben and Edmunds, for Pltff in Error.

Both suits were of the same nature, and together amounted to less than $100 00, and should have been consolidated, and the payment of one judgment satisfies both. A debtor may direct on what particular indebtedness money paid by him shall be credited. 2 Greenleaf’s Ev., 529-30; Pattison v. Hall, 9 Cowen, 747; 4 Phillip’s Ev., C. & Hill’s Notes, p. 131, note F, 371-2.

R. S. Blackwell, for Deft in Error.

1. The doctrine relative to the appropriation of payments was borrowed from the Civil Law, and adopted first by the Equity Courts, thence transplanted to Courts of Law. The doctrine is purely equitable, and each case must be governed by its own peculiar circumstances.

The general rules are simple and of easy application. The debtor may appropriate it on what debt he pleases at the time of payment. If he neglect to do so, the creditor may, at any time, before litigation arises touching the appropriation. But if neither party exercises his right of appropriation until a controversy springs up, the law will apply it as justice and fair dealing may dictate, according to the intrinsic equity of the case. Bayley v. Wynkoop, 5 Gil., 449.

But a party may waive his legal rights. Bank of Columbia v. Okely, 4 Whea., 235, 4 U. S. Cond., 439.

Even after the debtor has exercised his right and directed the application of his payment-, the appropriation may be changed by the mutual consent of the parties; and in such case, the indebtedness first discharged, is revived by implication of law without an express promise by the party. Rundlett v. Small, 25 Maine, 29.

And this assent may be implied from the acts of the parties. 25 Maine, 31; 5 Gil., 449.

In this case the debtor directed the application, but his directions for some cause were disobeyed. The credit was placed on the account, instead of the note, and the creditor took his judgment for the balance of the account. This balance was paid by the debtor and the judgment satisfied. This is a waiver of his original rights.

By allowing the credit on the note, also, injustice will he done, and another law suit will be the consequence.

Treat, C. J.

We think the Court erred in not allowing the debtor credit, for the amount claimed to have been paid on the note. The amount in controversy was received by the creditor, with the written directions of the debtor to apply it on the note. It was, therefore, accepted as a payment on the note. It was, jpro tanto, a discharge of that particular indebtedness. It was the clear right of the debtor so to appropriate the money. He expressly exercised the right, and the creditor, in accepting the money, received it in part satisfaction of the note. The instant it was received, the. note, to that extent, was paid, whether the credit was ever endorsed thereon or not. "The creditor was not at liberty to disregard the appropriation made by the debtor, and apply the payment on another debt. The application of the payment could not he changed, without the consent of the debtor. Perhaps the parties might, by mutual consent, have transferred the credit to another demand, and, in that way, have revived the indebtedness originally discharged. But there is no evidence in the case to show, that the debtor ever assented to the payment being applied on the account the creditor held against Mm. The payment of the judgment recovered on the account, on which the ten dollars may have been credited, was no waiver by the debtor of his original rights, and no ratification of the ■change in the credit by the creditor. If he had, before the judgment was rendered, voluntarily paid the account, with knowledge that the payment was credited thereon instead of on the note, there would be more propriety in holding that he had assented to a transfer of the credit, and in not permitting him afterwards to insist on the benefit of the payment on the note. But this is a very different case. The payment of the judgment was compulsory. The debtor lost none of his defences to the note by paying the judgment. The creditor cannot complain, if he loses the benefit of the payment in question. It will be the result of his own wrongful misapplication of the appropriation.

The judgment of the Circuit Court will be reversed, with costs, and the cause remanded for further proceedings.

Judgment reversed.