Wittkowski v. Reid, 84 N.C. 21 (1881)

Jan. 1881 · Supreme Court of North Carolina
84 N.C. 21

S. WITTKOWSKI Surviving Partner, &c., v. S. W. REID.

Debtor and Creditor — Right to apply Payment

Where a debtor ow«s notes ancl accounts to the same creditor and pays money on general account without directions as to its application, the creditor has the right to appropriate it to either debt.

{Sprinkle v. Martin, 72 17. C., 92, cited and approved.)

Civic Action tried on appeal from a justice of the peace at Fall Term, 1580, of Mecklenburg Superior Court, before Seymour, X

Verdict and judgment for plaintiff, appeal by defendant. Same case, 82 N. C.f 116. •

*22 Messrs. Dowd & Walker, for plaintiff.

Messrs. Jones & Johnston and Bynum & Grier, for defendant.

Smith, C. J.

This action, commenced before a justice of the peace and carried by appeal to the superior court, is brought upon a note executed by the defendant to the firm (of which the plaintiff is the surviving member) in the sum of $275 with a credit of $125 endorsed thereon by the plaintiff as a payment from moneys received from the defendant,, and the point presented in the appeal is his right to make the appropriation and thus bring the claim within a justice’s jurisdiction.

The concurring testimony of the plaintiff and the defendant on the trial of the issues before the jury was substantially this: The indebtedness of the defendant, over $600, consisted of two notes of $275 each, (this in suit being one of them) and two open accounts of about $80. On the morning of January 27th, 1876, the defendant came to the plaintiff’s store and handed him $250 in money, remarking, “ this is all I can pay to-day, and you must wait a while longer for the balance,” and the plaintiff replied, “ let us arrange the debt you owe and make a final settlement.” To this the defendant assented and requested the plaintiff to have the papers ready in the afternoon on his return. The plaintiff thereupon directed his book-keeper to add up the amounts of the notes and accounts, deduct the money paid, draw three notes in equal sums for the balance, payable in twenty, forty, and sixty days, and cancel the old notes. This was done, and when the defendant came in the afternoon, the new notes were handed to him for his signature, when he remarked, “why not have them all in one note?” and the plaintiff answered, “why not have all in three notes?” The notes were not signed, and without giving any further directions the defendant left. During that evening or on *23the neat morning, the plaintiff-entered a credit of $425 on •each one of the notes.

There were several issues submitted presenting the transaction, as detailed, in different legal aspects, the first of which was in these words : Did the defendant on the morning of the 27th of January, -1876,-pay the $250 on general account, or-did'he then reserve the right to make the application in the afternoon?” and the jury responded, "“it was paid on general account.*’ The finding of the jury upon this in the opinion of His Honor dispensed with the finding-upon the other issues, and in this we concur.

The-facts testified -and which are net controverted are few -and -simple, and their -effect is a -question of law to be -decided and declared by the court.- The general rule governing the application -of payments when there are several debts and the sum paid is insufficient to discharge them all, is well settled, and is stated in -clear and concise terms i-n Sprinkle v. Martin, 72 N. C., 92, following other previous cases cited : “A debtor owing two •or moredebts to the-same creditor and making a payment, -may at the time direct the application of it; if the debtor does not direct the application at the time, the creditor may make it.; if neither debtor nor creditor makes it, .then the law will apply it to that debt for which the creditor’s security is most precarious.”

In the present ease it is plain the defendant made no application, nor did the plaintiff in preparing the statement •of the aggregate indebtedness. This, as contemplated by •both, was to be an extinguishment of all existing claims in •whatever form and the substitution of-a new security for the residue. No discrimination between the debts was intended by either. As the proposed plan of settlement failed .by reason of the disagreement as to the giving of one or three new notes for what remained of the- debt, it did not impair -the rights-of .-either or-change -their respective xela-*24ti&ns as to- the. disposition, and- appropriation/, of the- money; The. plaintiff then had and. soon alten exercised? the right), nested, in. hira, by law to. make the appropriation, and his act is binding upon both. The judge should have instructed, the jury that as the-previous-facts did not amount to an, application, by the debtor-nor-a reservation of' the right to. make it afterwards, and such power has not been attempted? to. be- exercised^, the- appropriation by the plaintiff'was valid* and. effective; and.the omission is supplied by the-fin&ing.-©f the jury.. There is no- error in the ruling of the court of which the defendant can complain, and the general charge-in relation to. the application of payments,.though not called! for perhaps by the evidence-, is-not erroneous imlawnor unfavorable-to the-defendant. The verdict of the jury is-fully supported by the evi.den.ce!. The judgment must therefone-be affirmed..

No. error.. Affirmed..