Runyon v. Latham, 27 N.C. 551, 5 Ired. 551 (1845)

June 1845 · Supreme Court of North Carolina

27 N.C. 551, 5 Ired. 551

BENJAMIN RUNYON, CASHIER, &c. vs. THOMAS LATHAM, & AL.

Where a hank receives a bill of exchange from the drawer for collection, it acts as the agent of the drawer, and is entitled to no damages if the bill be protested; it can only claim expenses.

Where a debtor by note to a bank paid the' full amount of the note to the cashier, declaring that the payment was intended to discharge that debt, the cashier was bound to make the application accordingly, and could not apply any part of the sum so paid to the payment of damages on a protested bill, which he alleged to be due to the bank from the debtor.

Appeal from the Superior Court of Law of Beaufort County at the Spring Term 1845, his Honor Judge Settle presiding.

This was an action of assumpsit. The plaintiff declared on a promissory note for one thousand dollars, payable to him, as Cashier, and negotiable and payable at the branch of the Bank of Cape Fear at Washington — the execution of which note was admitted. Thomas ffardenberg, a witness for the plaintiff, proved, that the note became due on the 10th of November, 1840, when the defendant, Latham, called at the Bank to pay it; that he handed to the plaintiff a letter from his agent in Philadelphia, and requested him to draw a draft for the amount due to the defendant, and handed him money, sufficient, with the draft, to make the sum of seven hundred dollars. He also handed to the witness a note for three hundred dollars, which was to be offered to the Bank, of which the plaintiff was Cashier, for discount. The f 300 note was not discounted by the Bank, and the draft came back protested, in consequence of having been drawn for too much. Latham then told the Cashier he would pay the debt¿ and requested him to draw another draft for the true amount, whieh draft was received by the Cashier for collection, and paid at maturity. He also gave the Cashier money enough tp make up the sum of §1000, as he supposed, the last draft and the money in bank constituting a part of that sum. He a^s0 Pa^ ah the expenses of the protested draft, except the damages, which he insisted he was not liable to pay. At the tjme pjace an(j the calculation was made by the plaintiff, as to what amount would pay the $1,000 note, and the expenses of the protested draft, except the damages thereon, the defendant Latham declared his determination to pay the $1000 note and the expenses of the protested draft, except the damages; and 69 cents change was handed him by the cashier. The calculation, which the plaintiff had made, was erroneous, as stated by the witness, being too little by $35 60 .cents, which sum the defendants had not paid at the bringing of this suit. The fact, in relation to the error, was never, to this witness’ knowledge, communicated to the defendants. The witness further stated, that there was in Bank to the credit of the defendant, Latham, and had been ever since the settlement made by the cashier, the sum of $931, and that the .damages on the protested draft and the error made by the plaintiff in his calculation would make up the sum due to the bank for the $1000 note and all costs upon the protested draft, except damages; and the witness further stated, that it was the practice of the bank not to receive partial payments.

The court charged the jury, that the debtor had the right, in making payments, to direct their application, and the creditor was bound, in receiving payments, to apply them as directed by the debtor; and, o:n the failure of the debtor, at the time of a payment, to direct its application, it was the right of the creditor to apply the same as he,thought proper. And the court left it to the jury to find from the testimony, whether the defendant, at the time of the payment and settlement, directed the creditor to apply the same to the discharge of the note now sued on, and, if he did so, the creditor was bound to make the application accordingly. The courtfurther instructed the jury, that, if they could collect from the testimony, that the debtor directed the application at the time of settlement and payment, and the creditor refused so to receive it, on the ground that it was not a payment in full, oj ,«?$ any other ground or for any other reason,. and the debtor paid the same under such circumstances, they might consider it a eral payment by the debtor, and the creditor would have the right to make the application. The jury were further instrue-ted, that the usual and ordinary way to recover damages, on a protested draft or bill of exchange, was by an action on the draft or bill, but the plaintiff had a right to apply the funds of the defendant in the Bank to the satisfaction of the said damages, if the defendant did not, at the time of payment or depositing the funds, expressly direct the application otherwise. In reference to a question asked by a juror, whether it was not a rule of the Bank, that settlements at the counter were final, the court instructed the jury, that, whatever' the rule of the Bank might be, it could not alter the rule of law, by which mistakes in calculation were allowed to be corrected, whenever they could be proved.

The jury found a verdict for the defendants. On a motion for a new trial, the court informed the defendants’ counsel, that the verdict would be set aside and a new trial granted, unless the defendants paid the amount of the mistake in the calculation thereon ; and, this being done by the defendants in open court, a new trial was refused, and judgment being rendered for the defendants, the plaintiff appealed.

Badger for the plaintiff.

J. H. Bryan for the defendants.

Ruffin, O. J.

Under the instructions to the jury, it must be taken on this verdict, that there was no mistake in reckoning the debt. But if there was a mistake, it has been corrected, so that the only question now is, whether any of the money, paid by the defendant, could be applied by the plaintiff to the damages on the protested bill of exchange.

The defendant contended, that he was not liable for damages ; and nothing is stated which shews that he was. It does riot appear, that the bill was discounted; or, if it was, that the proceeds were put to the credit of the defendant in his general account, so as to give him the control of the money at his pleasure. It was understood, no doubt, that the mo-ney produced by the bill was to cover tho balance due on the note; and the bank would hardly have paid it for any other pUrp0se< ]\fow- as the bank kept the note,, and interest was running on the whole amount of it, we cannot suppose that the debtor would have the bill discounted, when the proceeds would be idle in bank, not stopping the interest on his debt, and yet not under his control or subject to his use in any other way, than in the discharge at a future day of this debt on the note. It is not a natural course of dealing; and the probability, upon the state of facts sent here, is, that the first bill was taken for collection, as is expressly stated in reference to the second. If that was the fact, no damages would have been due ; for the bank would be but the defendants’ agent, and could only claim expenses.

But, admitting that claim to have been well founded, the plaintiff has no ground to complain of the directions to the jury. His own witness proved expressly, that the defendant positively refused to pay the damages, but was desirous of paying the note, and (after paying the expenses on the bill) did pay just what covered the note, or was supposed to cover it. Indeed, he paid a little more, and the plaintiff handed back a small sum in change, after retaining an amount equal to the principal and interest of the note. That, of itself was strong evidence of the application of the money to that debt. Roberts v. Garnee, 3 Caines’ Rep. 14. His Honor, therefore, went further to sustain the plaintiff’s case than the evi-. device justified, when he told the jury, they might find this a general payment, and consequently, applicable to these damages, provided the. creditor refused to receive it as a partial payment of the note; for there is not the least evidence of any such refusal on any ground whatever. The witness said, indeed, that it was the practice of the bank not to receive partial payments. But that has nothing to do with this question, for no intimation was given of that to the defendants; and, indeed, this was not a case of partial payment. The defendants paid in the money as a full payment, and, except the corrected mistake, it was a full payment. It is only made to assume the appearance of being partial, by an application-^' subsequently of a part of it to another demand, by that means leaving a balance due on the note. But there was an express refusal of the defendants, at the time, to let any of the money go to those damages, and a precise application of it to the note. Under those declarations, the plaintiff silently accepted the money; and it would be a most unfair trick on the defendants to divert the application from the only debt the defendants meant to pay, or acknowledged, to one which they utterly denied. It was the debtors’, privilege, at the time they made the payment, to declare on what account they made it; and they did so in a way not to be misunderstood.- Therefore, the plaintiff could not change the appropriation of the money, and the judgment must be affirmed.

Per Curiam, Judgment affirmed.