Caldwell v. Wentworth

Parker, C. J.

In relation to the first two items of the plaintiff’s account, the sale was lawful, being made under a license, and for these and for the items for saleratus and molasses, which were lawful subjects of sale, if the plaintiff has not already received payment, he is entitled to recov *436 er. The sales of rum in August and September, 1839, when the plaintiff had no license, were within the prohibition of the statute, and for that part of the account no cause of action ever accrued to the plaintiff. 10 N. H. Rep. 377 , Pray vs. Burbank ; Ante p. 294, Lewis vs. Welch ; Carthew 252, Bartlett vs. Vinor; 1 B. & Pul. 264, Ribbans vs. Crickett, and cases cited; 1 M. & S. 593, 596, Langton vs. Hughes ; 8 B. & C. 553, Helps vs. Glenister; 5 B. & Ad. 887, Forster vs. Taylor; 3 Taunt. 226, Scott vs. Gillmore.

But if the defendant has voluntarily paid for the rum thus illegally sold, he cannot now insist that the payment shall be rescinded, and the money applied to the legal claims against him. So if payments have been made under such circumstances as show that they were intended as payments towards the rum, the application cannot lawfully be changed so as to discharge the legal indebtedness.

There is no question upon the facts that the defendant, through his agent Brown, who purchased the articles, has made three payments of cash to the plaintiff upon account, besides delivering some hogsheads for the same purpose. The defendant having authorized Brown to. act as his agent in making the purchases, and in making payments also, must be bound by his acts. The act of purchase was not prohibited, although the sale was so by reason of the penalty imposed upon the vendor, and there is no principle rendering it illegal to pay a claim which can not be enforced by reason of its illegality. The case stands, therefore, as if the purchases and payments had been made by the defendant himself.

If at the time when Brown paid any of those sums he had directed the money to be applied to the discharge of any particular item of the account; the plaintiff, receiving it with such directions, would have been bound to apply it accordingly. 2 Verm. 283 , Briggs vs. Williams; 1 Mason 323, 338 , Cremer vs. Higginson; 9 Wheat. 720, 737 , U. States *437 vs. Kirkpatrick ; 12 S. & R. 301, 305, Harker vs. Conrad; 2 B. & C. 65, 72, Simson vs. Ingham.

A debtor paying money to a creditor who has several claims against him, may direct the application of the payment to which claim he pleases. The creditor can not apply what he thus receives against the will and directions of him who makes the payment, and who has at the time a right to control what is then his own. Cro. Eliz. 68, Anonymous ; 5 Co. R. 117, Pinnel's case; Style 239, Bois vs. Cranfield; 12 Wheat. 505 , U. States vs. Nicholl; 5 Mason 82 , U. States vs. Wardivell; 5 Taunt. 596, Peters vs. Anderson. There is no evidence, however, in this case, that Brown gave any express direction respecting the application of the payments.

Another rule is, that if the debtor makes no application of the payment, the creditor may at the time apply it to any demand due from the debtor. 5 N. H. Rep. 297, 301 , Morse vs. Woods; 2 Caines 99 , Mann vs. Marsh; 2 Vernon 606, Manning vs. Westerne; 8 Modern R. 236, Anonymous; Andrews 55, Bowes vs. Lucas ; 2 Strange 1194, Goddard vs. Cox; 2 B. & C. 65, Simson vs. Ingham; 4 Cranch. 317, 320, Alexandria vs. Patten. And of course to the worst secured demand. 5 Taunt. 596, Peters vs. Anderson; 10 Conn. 181 , Fairchild vs. Holly; 15 Conn. 440 , Stamford Bank vs. Benedict. It has been held that the creditor may make the application at any time before suit, but this is, perhaps, not quite clear. 9 Cowen 765, Pattison vs. Hull. But the right of the creditor to apply a payment made generally to which claim he pleases, extends only to lawful demands. 2 Greenl. Ev. § 533, p. 439, and cases cited at note 5. If he have two claims, one of which is legal and the other illegal, he has no right even at the lime of payment, to apply the payment to the illegal claim. 3 B. & C. 165, Wright vs. Laing. The suggestion thrown out in Hilton vs. Burley, 2 N. H. Rep. 193 , as to the application of payments, so far as they relate to illegal charges, *438 cannot be sustained. But there is no evidence in the present .case that the plaintiff has at any time made any special application of these payments.

Another rule which has been laid down is, that if no application of the payment be made at the time by either debtor or creditor, the law will make the application. 13 Verm. R. 15, Emery vs. Tichout. Some decisions say to the earliest debt. 10 Conn. R. 175, Fairchild vs. Holly, and cases cited; 3 Phillips' Ev. 131, (note 9.) Following out his principle in Bosanquet vs. Wray, 6 Taunt. 597, the creditor was permitted to apply the payment to a purely equitable debt, and to sue at law for the later legal debt. Other decisions qualify this rule respecting the application to the .earliest debt. Particular equities have a precedence, and the principle may be stated to be, that where there is no particular equity or reason for a different application, the law will apply the payment to the earliest debt. 1 Cromp. & Meeson. 33, Goddard vs. Hodges; 3 Tyrr. 209, S. C.; 3 Phil. Ev. 131, (9) ; 1 Ld. Raym. 286, Meggot vs. Mills; 2 Brod. & Bing. 73, Brooke vs. Enderby; 2 Greenl. Ev. & 535; Chitty on Con. 755. Some cases hold, in favor of a surety, that such an application shall be made as will be for his benefit. 2 Stark. R, 101, Marryatts vs. White; 12 N. H. Rep. 327 , Merrimack Co. Bank vs. Brown; 13 Verm. R. 17, Emery vs. Tichout; 7 Dow. & Ryl. 201, Shaw vs. Picton; 2 Greenl. Ev. § 529, note. Other cases hold, that for the benefit of the creditor, the application shall be made to the debt least secured. 1 Pick. 332 , Brewer vs. Knapp ; (Ditto, notes, Rand's Ed.;) 4 Pick. 314 , Dedham Bank vs. Chickering; 2 N. H. Rep. 193, 196 , Hilton vs. Burley ; 6 Crunch. 8, 28, Field vs. Holland; 7 Cranch. 572, United States vs. January; 5 Mason 87 , note, S. C. Perhaps these two classes of cases do not present any conflict in principle, although one is in favor of the creditor as against the debtor, and the other favors the surety at the creditor’s expense. They may well stand together, applying the last *439 to those cases where there is no surety. They constitute exceptions to the rule applying the payment to the earliest debt, but the present case raises neither of these exceptions.

Another exception or principle is, that if the earlier debt is not due and payable at the time of the payment, the law will apply it to the debt which had a later origin but was then due, upon the obvious presumption that the one party intended to pay, and the other must have understood that he was receiving the money in discharge of something which the creditor had the right to claim at the time. 5 Mason 11 , McDowell vs. The Blackstone Canal Co.; 3 Sumner 112, Gass vs. Stinson; 9 Cowen 775, (note,) Patlison vs. Hull. Divers other rules upon this subject have been settled by judicial decisions applicable to different classes of cases, which are, however, not material to our present purpose.

Upon the principles which have been stated, the law will apply the payments in this case to the first two items of the account, for two reasons ; they are the earliest claims, and they are legal charges. The plaintiff would have been precluded from applying the payments to the subsequent charge® for rum sold in August, September and October, 1839, when he had no license, and leaving the earlier legal indebtedness,- or part of it, unsettled, had he attempted at the time to make that special application, because of the illegality of those items of charge. But the amount of the payments is more than sufficient to discharge the first two items of the account, and the remaining question is, whether the balance, or rather' whether the last payment can be applied to the charge for molasses, which is the last item in the account. If it may be, it will more than cover the amount of that charge. Whether it can be so applied must depend upon the question whether the money was due for that charge when the last payment was made. If it was due then, the law will apply a sufficient amount of it to that as a legal claim, and the plaintiff can not recover.

*440 There is evidence in the case tending to show that the sale of the molasses was upon a credit of four months. If such be the fact, the money was not due at the time even of the last payment; and the law cannot apply the payment to that item, for the reason that it was not due. The plaintiff could not have done so. In making the payment the defendant gave no special directions respecting its application. It was a payment and not money advanced, and the circumstances under which it was paid may show an application to a certain extent.

The question, then, comes to this; do not the circumstances show that the defendant, although he gave no special directions respecting the application, made the payment upon that part of the account which was then payable according to the dealings of the parties, without reference to the legality or illegality of the items ? If he did, and the plaintiff so received it, the application has been made to that extent by the parties; and the law, although it may make any application of the payments within the limits of the claims which were due, cannot, against the intention of the parties, apply them to demands without those limits. That is, although as between the claims which were payable, the law may apply the payments in the first place to the legal claims, yet it cannot consider the claim not due as within the range of the payment, and must therefore leave the balance as a payment made in fact upon the illegal claim.

It certainly can not be pretended that the defendant intended to make a payment upon a debt not due when there were claims existing and payable, which, although illegal, he had not then objected to. Still less can the creditor in this case be supposed so to have received it. In the language of the court in McDowell vs. The Blackstone Canal Co., 5 Mason 11, “ the obvious presumption is, that the one party intended to pay, and the other must have understood that he was receiving the money in discharge of something that the creditor had a right to claim at the time.” The *441 fact that a part of the items were for illegal sales does not rebut the presumption, and there is nothing else in the case that has such a tendency. The case is within the principle of Stamford Bank vs. Benedict, before cited. See, also, 1 Moody & Rob. 100, Cruickshanks vs. Rose; 13 Verm. 15, 17 , Emery vs. Tichout.

The conclusion to be drawn would be perfectly clear if the account had consisted of but two items, one for runt sold illegally, but for which according to the contract the money was due, and the other for molasses lawfully sold, but on a credit which had not expired. A payment made generally upon account under such circumstances, if of no greater amount than the illegal item, must be understood and deemed to be intended and received as a payment upon the illegal claim, notwithstanding there were no special directions so to apply it, and the law could not afterwards appropriate it to the legal indebtedness. The principle is equally applicable in the present case, and for this reason there must be a new trial, in which if there be any doubt of the fact, the question whether the molasses was sold upon a Credit may be farther investigated.

Verdict set aside.