Thomas Randall, Appellant, vs. William R. Pettes, Cashier, &c., Appellee, 12 Fla. 517

RANDALL, C. J., delivered the opinion of the Court: The en’ors assigned are properly reducible to two points, viz,: 1st. The proper construction of Ordinance No. VIII. of the convention of 1865; and 2d. The debtor’s right of appropriation of funds deposited by him in the bank, and to make the appropriation after the debt became due, and even after the funds so deposited had been entirely drawn out by him. The ordinance referred to was adopted by a convention of delegates elected by the people soon after the close of the late war, while the countzy was in a peculiar condition on account of the war and its results.

It is unnecessary to consider, in determining this case, tlie general question as to the force and effect of an ordinance of that convention, not incorporated into or referred to in the constitution framed by the convention. Nor is any question raised as to the legality of the consideration of the notes in suit. I. The appellant claims that the court did not conform to the spirit of the ordinance, and insists that the “ scaling proces” is applicable, not at the date of the contract, but at the time when the cause of action occurred, and even later.

The ordinance applies to all “ contracts made and entered into during’ the late war, * * and the courts arc thereby authorized to admit testimony as to the value of the property or consideration contemplated by the parties to said contracts, and to instruct the jury to find accordingly ; provided, that the defendant shall allege by plea under oath, and prove to the satisfaction of the jury, that the currency contemplated in payment of said contract was Confederate or State Treasury notes, or upon what basis the consideration or the value of the property or its use, which was estimated at the time of the formation of said contract.” This ordinance contemplated the accomplishment of two principal ends : the recognition of the currency, or the thing which supplied the place of currency during the war, and which really formed the standard of nominal values in the transaction of business during the war, not necessarily as a thing of real value, but as a medium of commercial transactions ; and to provide the mode of ascertaining the actual money value of the consideration of the contract, whether such consideration were Confederate or State notes or any thing else.

It was a measure of relief extended to tho'se who at the close of the war were found indebted upon contracts founded upon fluctuating and uncertain values. It was not intended to relieve from any and all liability to perform such contracts. Even if the language of the ordinance in this respect were more obscure than this is claimed to be, the evident intention of its framers, founded in a spirit of equity and as a “ peace measure,” was that no debtor should be holden to pay or return more than he actually received ; and on tho other hand that the creditor should sustain no loss.

The language used is, “the value of the consideration contemplated,” &c ; and when it should be pleaded that the currency contemplated in payment was Confederate notes, &e, then the courts are authorized to admit the testimony and to instruct the jury to find accordingly, to wit : according to the value of tho property or the consideration contemplated,.

The testimony of the defendant is that the notes “ were given for Confederate money and in connection with a Confederate money transaction.” Other than this there is no evidence that shows upon what basis tho consideration was estimated ; that any “ estimate” was made ; or that the “ currency contemplated in payment” was one thing or another. The currency in use at the time of the making of these notes was worth, eighty-five to ninety cents upon the dollar in gold. The defendant then received what was nearly equal in value to gold, and could have exchanged it for gold.

When the notes became due these Treasury notes were greatly depreciated, and by estimating the value of his promissory notes by their nominal value in Confederate currency, if he had paid his notes therewith ho would have made a handsome margin, and tho lender would have encountered a serious loss. We do not believe the framers of the ordinance intended that the debtor should satisfy the debt contracted by him by paying a smaller amount of money or of value than he received; or that the loss by depreciation should fall upon any other than the holder of currency, according to the ordinary rule.

If they had so intended they would doubtless have said so in plain words; and in that caso, the appellee here would doubtless have attacked tho ordinance in another direction, and other questions would have been raised in this cause. II.

The appellant, asserting his prior right of appropriation of a sufficient amount of tlie Confederate notes, in the payment of the notes in suit, out of a balance claimed to be due to liim on his dojmsit account with the bank on December 31, 1863, offered to prove the specie value of Confederate Treasury notes March 4, 1864; for the purpose of scaling any balance which the jury might find in his favor at that time, inquired to that end, and the appellee’s counsel objected thereto.

Tlie objection was made upon the grounds that no direction had boon given by defendant to make the appropriation; no payment had been directed ; all the deposits had been drawn out by the defendant; the question was irrelevant, there being nothing to which the value if shown could be applied. Tlie court sustained the objection, and restricted the evidence to proof of the specie value of Confederates notes at the date of each note, and refusing to admit proof of such value at any subsequent time. Tliis presents the second general ground of exception.

It is a well-settled general rule that if one owes two or more, separate debts and pays money to his creditor, the debtor has a right to apply the payment to which of the debts he pleases, provided he elects at the time of payment the purpose for which it is made. If ho does not so designate, the j>a_yee may elect how it shall he applied. It has been held in some cases that the creditor may appropriate at a future day, oven at tho time of bringing his action, and is not compelled to make the appropriation immediately, like the debtor.

The rule of the civil law is that where no application is made by either party at the time, the law will make the application upon tho presumed intention of the debtor. There has been much confusion on the subject in England. Equitable principles have frequently controlled, and the courts have made the application in sucb manner as to secure either part}'- from tho greater hardship or sacrifice. See Pattison vs. Hull, 9 Cowen, 747, reviewing and collating the decisions of the English and American courts. 19 Vt. R., 26; Stone vs. Seymour, 15 Wend., 19.

A porsoii owing money under distinct contracts, has undoubtedly a right to apply his payments to whichever debt he may choose, and although prudence might suggest an express direction of the application of his payments at the time of their being made, yet there may be cases in which this power would be completely exercised without any express directions given at the time. A direction may be evidenced by circumstances as well as by words. A payment may be attended by circumstances which demonstrate its application as completely as words could demonstrate it.

A positive refusal to pay one debt, and an acknowledgment of another, with a delivery of the sum due upon it, would be such a circumstance. The inquiry then will be whether the payments were accompanied with circumstances which amount to an exercise of his potoer to apply them. Tayloe vs. Sandiford, 7 Wheat., 13. Ch. Justice Marshall says, in the Mayor, &c., vs.

Patten, 4 Cranch, 317, “ It is a clear principle of law, that a person owing money on two several accounts, as upon bond and simple contract, may elect to apply his payments to which amount lie pleases ; but if he fails to make the application, the election passes from Mm to the creditor.” It is equitable to apply payments first to extinguish those debts for which the security is most precarious. 7 Cranch, 572; 6 Cr., 8. It is too late for either party to claim a right to make an appropriation after tho controversy has arisen, and a fortiori, at the' time of trial. 9 Wheat., 720; 1 Mason, 328.

If the debtor waive his right to direct the application of a payment, acourt of equity will not disturb it. 10 S. & M., 113.

The rules applicable to the subject of the appropriation of payments were so fully and ably discussed that we have deemed it fit and proper to examine the authorities to some extent. “The appellant submits whether in this case, where tho appellee was the debtor of the appellant to the extent of the balances in his favor on deposit, the appellee was not bomid in good faith to apply such balances to the payment of the notes.” He cites several cases showing the creditor’s right to apply deposits, or to retain them against the depositor’s indebtness on other accounts and insists that because he had a right to do so,, it was equally his duty in a case like the present.

The doctrine of “ appropriation of payments ” will scarcely apply to the present case.

Here were no payments made upon these notes; no directions to apply any of the moneys on deposit standing to his credit toward the extinguishment of the notes ; the cotton pledged to secure those notes remained in his possession and was sold by him, and the bank was not notified that the moneys deposited by him and passed to his credit in Ms deposit account were the proceeds of the sale of the cotton pledged; and he draws his checks from day to day against his deposits until his funds are all drawn out; and on the 4th of March, 1864, had overdrawn to the amount of over §400, which, he made good on that day, leaving the notes now in suit still unpaid lie expressed surprise when the notes were produced, and said he supposed them to be paid, and had forgotten them.

This is doubtless true, and yet the bank bad had no intimation that ho had desired them to be cancelled by an appropriation of his deposited funds, without express orders to that end, and without his check for the amount upon his deposits. He had exercised his right of appropriation of his funds by withdrawing and using them for other purposes, and having done so, it is too late to make the appropriation now that the funds are gone, pursuant to his express directions, beyond the reach of the hank, and have been used by the appellant himself.

It was urged in the argument that by the pledge of sixty hales of cotton by the appellant to the appellee, the latter became the bailee of said cotton, and that it was his duty, therefore, on the sale of the cotton, to apply the proceeds to the extinguishment of the notes. It is difficult to perceive, however, in view of the fact that the bailor retained the possession of the cotton, and thereby became the bailee of his bailee, and afterwards sold it and appropriated the proceeds to bis own use, how be expects to avail himself of these circumstances to be relieved.

Had the bank disposed of the cotton, it would have been liable to account to the party therefor, and to apply the proceeds to the payment of the notes. But the pledgor disposes of thé pledged property, converts the proceeds to his own use, the existence of the notes passes from his memory, and now he demands the extinguishment of the indebtedness because the bank did not arbitrarily make the application of his deposit funds, but allowed him to make such application of them as he saw fit. The judgment of the circuit court must be affirmed.