Dey v. Anderson

39 N.J.L. 199

• Court: Supreme Court of New Jersey
• Decided: February 15, 1877
• Status: Published

Opinions

The opinion of the court was delivered by

Reed, J.

It appears that there was a running account against Anderson, for materials furnished him as the builder of several houses. One was upon land of Voorhees, against which this lien is filed. The items of the account for which this action is brought went into this house; the other items went into other houses. For the entire account a note was given. This note was renewed by another.

At the maturity of the last note, the claim was divided, and two notes were given, covering the entire amount due. One note for $150, payable in one month ; another, for the balance, $419.50, payable in three months.

"When the first-mentioned note matured, "it was not paid. The remaining note, it is observed, did not mature until after the statutory period for filing a lien for any of the account had elapsed.

The effect of giving such a note was to suspend all right of action upon the account, pro tanto, until the maturity of the note. Green v. Fox, 7 Allen 85; The Highlander, 4 Blatch. C. C. 55; Edwards v. Derrickson, 4 Dutcher 33.

The question in this case is this: upon the failure of the maker to pay the note for $150, at its maturity, what part of this account revived? or, stated differently, upon what part of this account is the still outstanding immatured note applicable ? Two questions arise:

First. Is the rule as to the appropriation of payments, applicable to the appropriation of an undue promissory note ?

Second. If so, how is the application to be made in this instance ?

It is true that the taking of the debtor’s own note was not technically a payment, unless, by agreement at the time, it is understood to be such.

There was- no such agreement in this case. Although not a payment, yet, until due, the note merged in the account proportionately.

The claim itself was as dormant as if paid, unless it was subsequently revived by the failure of the maker of the note to perform his new promise. It may be termed a conditional payment.

There is no reason why the same general rule should not be applied in the application of a note still undue, as if it was strictly a payment.

It is manifest that the party giving it has the right to apply it to any one or more of several debts, or any part of a single debt, just as the voluntary payer of money.

If the maker failed to apply it at the time of giving it, there is no reason why the creditor should not have the power to do so.

If both failed, then that the law should apply it by rules analogous to those directing the application of payments of money. How, then, should this outstanding note be applied ?

I think this should be treated as an open running account. It is admittedly such, by the books between creditor and debtor, and the liens are dependent upon the debt due for the materials furnished.

Although different portions of this account are enforceable against properties of third parties, yet, as the debtor and ■creditor have treated the account as a current, account in making an application of payment by the debtor to the creditor, we must consider it so treated.

Now, the rule as to payments made on current accounts is, that the debtor may apply when he pays; if he does not, the creditor cannot apply, and the law, if nothing in the circumstances shows a different intent, will apply to the earliest items. 1 Am. Lead. Cas. 291.

For does the rule differ, although part of the account may be secured and another portion unsecured.

In the leading case of Devaynes v. Noble, 1 Meriv. *528, .a balance of debt due from a firm was carried over into the account of the firm after a change in its membership, by death of Devaynes. An attempt was made to apply all payments to the later items of debt, so as to hold Devaynes’ estate for the part of the account contracted while he was still in the firm. The court refused to make such application, but applied the payments to the earlier items, because the creditor had treated the account as a running account.

There are but few cases in which the doctrine of application •of payments has been applied to current accounts, for the security of different parts of which there are distinct liens. In Beckel v. Petticrew, 6 Ohio St. P. 247, materials were furnished, at different times in the same year, for the erection of buildings on adjoining lots, but the items were all entered in one general account, in the order of the dates of delivery, although liens attached to the several buildings and lots for the use of which they were furnished, yet sums paid generally were applied to the earlier items.

In Waterman v. Younger, 49 Mo. 413, the creditor was .allowed to make the application to a part of the account, for which there was a particular lien, but the creditor, upon his journal, had made a distinct charge of the materials furnished to that building.

I think if the furnisher of materials to the builder of several houses, desires to have the lumber which goes into, or is delivered upon the faith of each house, treated as a distinct debt, he should so charge it and treat it. Then, upon the failure of the debtor to apply any payment, he can do so.

Treating this as a running account, and applying the outstanding note to the earlier items, there was no right of action upon the lien against the owner, at the time of bringing the suit, and the Circuit Court is advised that the non-suit was right.

Beasley, Chief Justice, and Scudder, Justice, concurred.