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Baker v. Stackpoole

9 Cow. 419 Court N.Y. Ct. Err. English

Contents

Majority

p. 442
William Baker, impleaded with Christian H. Kauffman, appellant, against Francis Stackpoole, respondent.
ALBANY,
Dec. 1827.

Headnote

The admission of one partner, either of an account, or any fact, made after the dissolution of the partnership, is not admissible as evidence, to affect any other member of the firm.
A person indebted to the same creditor on different accounts or demands, and making payment, may apply the payment to which account or demand he pleases 5 and if he fails to make the application, the creditor may apply the payment to which account or demand he pleases.
Where neither party makes an, appropriation, the law will appropriate the payment upon certain rules of presumption. The authorities to this point examined.
Where A. has a demand against B. and C. and a more recent demand against B. alone, who makes an indefinite payment, semble the law will appropri»
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ate the payment first to the extinguishment of the individual demand, and then the residue, if any, to the extinguishment of the joint demand, though if both demands were against B. alone, it might appropriate the payment first to the extinguishment of the oldest debt.
But in such case A. cannot wait after the payment, till B. becomes farther indebted, and then appropriate the payment, to the extinguishment of the newly created demand, leaving the previous demands unpaid.
In no case can a creditor who receives payment generally, retain and appropriate it to the extinguishment of a demand created after the payment, leaving a prior demand unpaid.
On appeal from the court of chancery. The pleadings, report of"the master, and decision of the court below, so fai as they are material, were as follows :
The bill was filed September 1, 1821; and charged that some time in August, 1817, the defendant below, Kauffman *and the respondent Stackpoole, purchased jointly the brig William Henry, each one undivided half. That shortly after, the respondent proceeded in the brig to Havre de Grace in France, and back to New York; the net profits of the voyage, for joint account, being upwards of $1200, the whole of which was received by Kauffman. That after the purchase, and previous to the return of the brig to New York, the defendants below, Kauffman and Baker, formed a partnership, whereby Baker became part owner in Kauffman’s share of the brig. That after the partnership, and some time in January, 1818, the respondent proceeded with the brig as master on a second voyage to Havre, with a cargo, partly belonging to Kauffman and Baker, and partly to others, on freight, the moneys received for which exceeded $3000, which the respondent, by Kauffman and Baker’s instructions, invested in merchandise, with which, and other goods on freight and passengers on board the brig, the respondent returned to New York in May 1818. That the net profits of the voyage exceeded $2000, and all the profits and proceeds were received by the defendants below. That about the 1st of June, 1818, the defendants below, or one of them, urging the respondent, he agreed to become interested to the extent of the balance then due him from the defendants below on the account of the two previous voyages, after deducting his share of expense in fitting for
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the purpose, in a purchase of cotton for part of a cargo oi the brig from Savannah to Havre. That he did not know the extent of such balance; and could not ascertain it from the defendants below. That he directed the defendants below to ship the cotton in his own name, with a separate invoice and bill of lading, which they neglected to do. That in June, 1818, the respondent sailed in the brig for Savannah, addressed to R. & J. Bolton, merchants there, by whom a cargo of cotton was furnished for the brig, partly on freight and partly on account of the defendants below. That with this cargo he sailed from Savannah to Havre, where he arrived in August, 1818; that the freight of the voyage, about $4000, was collected by Baker in Havre, who also took charge of the cotton belonging to the respondent *and the defendants below, and made arrangements for the sale and disposition of the proceeds. But Baker there declined, though requested, to give the respondent an account of his interest in the cotton; and appropriated all the freight money, alleging that he wanted it to pay a debt due from the defendants below to Opperman, Mandrott & Co., of Havre, That the brig sailed from Havre, with a full cargo, together with passengers, among whom was Baker, one of the defendants below, and arrived at New York in December, 1818; and that the freight and passage money was received by the defendants below, for which they had not accounted, and the respondent could not, therefore, state the amount. That about the beginning of February, 1819, the brig was chartered for a voyage to Limerick in Ireland, where she arrived in March following, whence she returned with passengers in August following; when the brig was libelled on a bottomry bond executed by the respondent, in the district court of New Jersey, and taken into the custody of the marshal. That the defendant below, Kauffman, who had shortly before dissolved his partnership with Baker, the other defendant below, bonded the brig, and she was released and taken into his exclusive custody; and he, without consulting the respondent his joint owner, sent her to Lisbon, with a cargo on freight, under the command of a stranger as master. That at Lisbon, a
p. 445
return cargo of salt was purchased with the freight of the outward voyage, (one half of which belonged to the respondent,) with which, and other merchandise on freight, she proceeded on her voyage for New York; but was surveyed and condemned at an intermediate port, (St. John’s, Porto Rico,) as unseaworthy; and Kauffman, one of the defendants below, or his assigns, received $2600 insurance money on the brig, $1700 on the cargo and $700 on the freight for the return voyage, he having abandoned to the underwriters ; one half of all which sums the respondent claimed, with his wages for the whole voyage out and home ; Kauffman having agreed that he (the respondent) should act as master. The respondent also claimed large sums for wages as master, against Kauffman, with large expenses and disbursements while acting as .master of the brig; and that the defendants ®below owed the respondent $5000 in respect to their dealings set forth in the bill; which prayed an account.
.Kauffman, (one of the defendants below,) answered, (Nov. 28th, 1821,) admitting the purchase of the brig, the first voyage to Havre and back as stated in the bill, and annexed an account with the brig and the respondent respecting the voyages; admitting the partnership with Baker, the other defendant below; but denying that Baker became interested in the brig; and asserting that he (K.) still continued to own one half, though the accounts were made out in the name of the firm during its continuance: admitting the second voyage to, and return from Havre; the outward voyage being on freight, amounting to $2,351 88, which was invested by the consignees at Havre (not by the respondent) in plaister of Paris and hair nets, which, with merchandise on freight and passengers, formed the return loading to New York. He denied that the respondent was entitled to half a share in the brig or her earnings, he not having paid one half the price in full; but his interest was only 4 out of 11 parts; yet he admitted that (wishing to act liberally) he allowed the respondent half of the pro coeds of the investment, and half the freight and passage money of the return voyage; the whole profits of the
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second voyage being only $1,472 81, of which he annexed an account; that the brig, on her voyage from Savannah to Havre, (the third voyage,) was laden with cotton the one third of which was shipped on the joint account of the respondent and Kauffman; and he denied that the respondent’s interest was limited to the extent of his moneys in the hands of the' defendants below, after deducting the respondent’s share of the expenses in the shipment; and denied any direction for a separate invoice and bill of lading. He admitted the sailing from Savannah with the cotton ; and that the" respondent paid a part of the disbursements (in the whole $265 32) out of his own funds, Kauffman paying the . residue, and insisted that the freight out was only $3,353 56, and was collected by the consignees. He denied the other transactions charged to have taken place at Havre; insisted there was a loss on the cotton of about $5,200; denied disbursements *by the respondent in any of the voyages; insisted that the respondent received and converted moneys to his own use ; admitted the return to New York; and annexed an account of the Outward and homeward voyages, showing a balance due Kauffman of $2,638 07, including a charge for embezzlements through the respondent’s neglect. The balance he carried to general account. He admitted the voyage to Limerick, where the respondent received all the freight and passage money, $3,086; that the brig was chartered for the voyage out about the time mentioned in the respondent’s bill, that the partnership of Kauffman and Baker, the defendants below, was dissolved in February, 1819, which the respondent knew before sailing on the outward voyage to Limerick; insisted that he (Kauffman) was put to damage by a seizure of the vessel at Ireland, in consequence of the illegal conduct of the respondent; that one demand, for which the vessel was libelled in New Jersey, was paid by Kauffman; that several months after her arrival there, the brig was again libelled under pretence of bottomry, in New Jersey; bonded and released to Kauffman, who prepared her for sea at great expense; and with the assent of one Smith, who claimed to be the assignee of the respondent’s interest, the
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Vessel was sent to Lisbon on Kauffman’s individual account; that the proceeds of the voyage there were laid out in purchasing salt with which, and 10 pipes of wine on freight, she proceeded on her return voyage to New York; but was surveyed, condemned, abandoned, &c., at an intermediate port, (St. Johns,) as stated in the bill. Kauffman annexed an account of the voyage from New York to Lisbon, and thence to St. Johns, showing a balance in favor of the brig of $178 08. Accounts with the brig were also annexed to the answer, of all the voyages mentioned in the respondent’s bill, and a general account with the respondent.
On the 14th of December, 1831, Baker, the other defendant below, answered; admitting his entering into partnership with Kauffman, in October, 1817 ; but denying his part ownership in the brig. He insisted that the respondent was jointly concerned with Kauffman in one third of the cotton shipped on the third voyage to Havre; denied that the respondent’s interest in the cotton was confined to the amount of his moneys \yith Kauffman or Kauffman and Baker, or any directions to ship the respondent’s share of the cotton in his own name, with a separate invoice and bill of lading. He insisted that, on the contrary, whenever the respondent spoke to the defendant Baker about the 129 bales of cotton, (this being the amount of the one third in which he was interested,) he addressed himself to Bake1-as the half owner of it. Baker denied the transactions at Havre imputed to him by the bill; insisted that the copartnership between the defendants below was dissolved in January, 1819 ; and concurred in other respects with Kauffman’s answer, so far as the matters in it were within his (Baker’s) knowledge.
The respondent filed a general replication; and various proofs were taken on the points disputed between the parties.
On the 19th of June, 1822, the chancellor made an order of reference to a master to take and state the accounts of the parties.
The report recited that the master had been attended by
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the solicitor and counsel of the respondent, and of Kauff man; and having proceeded to take the accounts directed by the order, he found that there was- due to the respondent from Kauffman $2095 79 ; and stated how he disposed of a claim of commissions and port- money by the' respondent against Kauffmaii.-
The master further stated that it' had been admitted before him on the part of the defendant, “ that the interest of the complainant (respondent) in a certain parcel of cotton shipped from Savannah on board the brig William Henry, 1 on her' voyage to Havre, was to the amount of his funds then in the hands of the defendantsand the master stated, that in order to ascertain the amount, he had ascertained the available funds and cash balance in the' hands of the defendants belonging to the respondent- on the 8tb of May, 1818, which he had taken as the date of the corritoexcement of the adventure; that on this basis- the' amount invested by the respondent in the cotton- was $1341- 38-.
The master then, after disposing of the items: charged by Kauffman for embezzlements reported that the principal questions *ift dispute between- the parties, arose'from transactions' on the voyage to Limerick, and the return to Amboy, (New-Jersey:) that the vessel sailed (with a view to this voyage) from New York in February, 1810, Kauff matt then being indebted to the respondent-in $1256 20,-by reason of the brig’s account on the third Voyage to Havre solely, (the balance of the two prior voyages being then justly held by the defendant as the amount of the respondent’s investment in cotton.) That the vessel arrived at Limerick; and having discharged her cargo and procured passengers for her return home, sailed thence the 15t"h of _ April 1819. That after her arrival at Limerick, and-before her being detained, (as the report afterwards1 mentioned,) the respondent was a creditor of Kauffman in about $1680, charging the respondent with his share of disbursements and' responsibilities of thedefendant'(K.) is the outfit "of the Vessel, and crediting him with one half his wage's' and other perquisites at that time, and with his proportion of the Cot- ° ton sold at Havre prior thereto, (which proceeds Were cred
p. 449
ited to the adventure in the books of Kauffman in May, 1819, and were credited as sold by the consignees in Havre, in March, 1819,) It appeared that the respondent received at Limerick the whole of the outward freight, and the whole of the passage money paid by the passengers, to be conveyed in her. to the United States on the return voyage, amounting in the whole to $3086 35; that one half of that sum belonging to the respondent, the other half being set off against the sum then due from Kauffman, would leave a balance against him of $140. That the vessel proceeded from Limerick about April 15th, 1819, to Kilrush, where she was arrested by the collector for exceeding the number of passengers allowed her b.y act of parliament. The master then detailed the particulars of the arrest and detention, which was till the 24th of May, 1819; when the vessel was further detained for another cause, in consequence of which considerable expense was incurred and disbursed by the respondent, and by Kauffman after the vessel reached New York; but the master acquitted the respondent of all blame, and held that the expenses should be charged to the vessel. He then reported that -the respondent, having applied *his receipts for the outward voyage to Limerick, to pay his own debts there, bottomried the vessel for $2870, at a premium of $204 ; and she then sailed, (July 6th, 1819.) That more money was obtained on bottomry than was necessary ; and he therefore charged the respondent with all expenses resulting from it. That the vessel arrived at Amboy (N. J.) August 30th, 1819, where she was libelled -for seamen’s wages, the expenses of which proceeding, the master charged Kauffman. The master farther reported, that in April 1820, the vessel was libelled on the bottomry bond, but was .finally given up to Kauffman, in August of the same year, upon his bond and went upon a voyage to Lisbon for him; and upon her return, was compelled to put into St. John, .(Porto Rico,) where she was condemned as unseaworthy; and.the defendant, Kauffman, received $2600 insured upon her voyage, for one half of which, the master concludes, Kauffman should answer to the respondent.
The master further reported that it was proved before
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him that the partnership between the defendants was dis • solved February 12th, 1819, and the dissolution, advertised in a New York paper the 19th of February, 1819 ; that the brig was registered at the custom house as belonging to Kauffman and the respondent, and' continued so from August 16th, 1817, to April 18th, 1821, after her condemnation as unseaworthy ; that on the formation of the partnership between Kauffman and Baker, the brig was brought into the books of the partnership as part of its stock, as follows, by an entry in the journal of “ Capital Dr. to Christian H. Kauffman, for sundry vessels brought into the partnership concern, and, among other items, to one half of the brig William Henry, at a valuation of $1750.” The master farther reported, that some testimony had been adduced to him respecting declarations of Baker as to his part ownership of the vessel. From the whole, he concluded that no partnership was constituted between the respondent and Baker in relation to the brig, by the sub-contract between Baker and Kauffman for a participation in the moiety of her earnings, however responsible such participation may have made him to third persons ; and further, if such partnership was constituted, it could bind *B alter for such ' responsibilities only as were incurred prior to the date of the dissolution. And as by the receipt of the money at Limerick, the sum then due to the respondent on account of former voyages was discharged, the defendant Baker was not answerable to the respondent on any subsequent transactions concerning the vessel, nor for the proceeds of the cotton in which the respondent and defendants below were concerned in the third voyage to Havre, inasmuch as the proceeds were received by Kauffman after the dissolution of the partnership. This report was dated March 7th, 1823.
To this report the respondent excepted,.because the master charged the respondent’s share of the proceeds of the cotton shipped to Havre, on the third voyage to that place, against Kauffman individually, whereas the proceeds were received by Kauffman and Baker, the defendants below; and the master should have charged the proceeds against them jointly.
p. 451
On the 2d of August, 1824, the chancellor allowed the exception; and ordered the master to correct his report by-charging the respondent’s share of the proceeds of the cotton against both of the defendants below (Kauffman and Baker) jointly. The report having been corrected accordingly,
On the 19th of July, 1825, it was confirmed; and a final decree made upon it on the 26th of October, 1825.
Baker br'ought his appeal to this court, from that part of the order or decree of the 2d of August, 1824, which allowed the exception.
The proofs, so far as they are material to the points decided in this court, will be found stated in the opinion of the chief justice.
J). Selden, for the appellant, made the following points:
1. The admissions made by Kauffman before the master or otherwise, were not binding upon the defendant Baker. ( 3 John. 536 . ■ 15 id. 409.)
2. Independent of those admissions, it appears that the losses upon the cotton absorbed the whole of the funds of *Stackpoole, as, by the pleadings and proofs, Stackpoole’s interest in the adventure appears to be one half.
3. By reason of the partnership formed between Kauffman and Baker, the relation between Stackpoole and Kauffman as owners of the vessel was not changed, and the profits belonging to Stackpoole arising out of the previous voyage are not to be considered as coming into the hands of Kauffman and Baker, but to Kauffman alone, the agent of Stackpoole, under their agreement, and his tenant in common.
4. The first Havre voyage was completed, and the second Havre, voyage was commenced previous to the formation of the partnership of Kauffman and Baker. The proceeds of the voyages came to the possession of Kauffman, and if carried into the books of Kauffman and Baker, must be considered as carried to the credit of Kauffman.
5. No part of the proceeds of the cotton speculation came into the possession of the house of Kauffman and Baker;
p. 452
for that house was dissolved- before the proceeds of that speculation were returned by the house of Opperman, Mandrott & Co., the consignees of the cotton at Havre.
6. If the cotton speculation should be considered as undertaken for the purpose of obtaining freight, then it must be held as constituting part of the brig’s account, and not a separate account, and could therefore only be considered as a claim against Kauffman, as one of the tenants in common of the brig William Henry.
7. Even supposing that Baker might be considered as indebted to Stackpoole jointly with Kauffman, for his portion of the proceeds of the cotton adventure, yet we say that that indebtedness was subsequently discharged by Kauffman in his subsequent transactions with Stackpoole, and that funds came into the hands of Stackpoole from the Limerick voyage sufficient to discharge that indebtedness. (1 Her. 586 to 604.14 East, 239. 2 B. & B. 70. 3 B. & A. 611.)
Lastly. The case ought to have been sent back to the master for further proof, inasmuch as the admissions of Kauffman not being sufficient to bind Baker, there was not other sufficient evidence before the master whereon to ground the *report, especially as Baker was not represented before the master.
R. Emmet, contra.

The principal questions arising in this case are

1. Whether the admissions of one partner, after the dissolution of the partnership, are evidence against the other late partner;

2. When one partner retires, leaving a balance due a third person, and the remaining partner continues to make payments to such third person, enough to discharge the balance against the late firm, but without any specific appropriation by any one, the payments being made and received on account generally, whether such payments do not discharge the balance against the firm.

p. 453
I shall state only such facts as appear necessary to raise these questions.

On the 16th of August, 1817, the respondent and one of the defendants below, Kauffman, purchased the brig William Hemy, and the respondent went in her as master on a voyage to Havre. After the departure of the brig, and before her return, the defendants below, Kauffman and Baker, entered into partnership in mercantile business. ■ In January, 1818, the brig made her second voyage to Havre; and her earnings were invested in certain articles for the defendants below. The earnings of the brig, in this way, came into their hands, though Baker, the appellant, seems to have had no permanent interest in the brig herself.

In June, 1818, a proposition was made to the defendant, Kauffman, by the agent of Opperman, Mandrott & Co. of Havre, to purchase a quantity of cotton at Savannah, and send it by the brig to Havre, consigned to Opperman, Mandrott & Co. Kauffman proposed to the respondent to be interested in the cotton, which was assented to; but the extent of that interest is disputed; the defendants below contending that the respondent was half owner of 129 bales, one ihird of the cargo, and the respondent contending that his interest was only the amount of funds which he then had in *the hands of the defendants below, a little rising 1300 dollars. On this speculation, there was a loss eventually, as Kauffman says, of 5,200 dollars and upwards. Of course, if the respondent was owner of one half, his loss must have been 2,600 dollars, double the amount which he claims to have been invested. If his investment was but 1,341 dollars, as computed by the master, then, by the same calculation, there were proceeds of the cotton in the hands of the defendants below amounting to 791 dollars.

In January or February, 1819, Kauffman and Baker dissolved their partnership; Baker retiring with a gross sum, and Kauffman carrying on the business, with authority from Baker to liquidate and settle all unsettled concerns of the company.

In the same month of February, 1819, the respondent went in the brig to Limerick, and brought home passen

p. 454
gets. He recieved the freight out and the passage money back, amounting, by the master’s report, to 3,086 dollars and 35 cents, the one half of which belonged to him, and the other half, 1,543 dollars and 17 cents, is credited by the master to Kauffman. When this voyage commenced, according to the master’s calculation, Kauffman owed the respondent, on account of the third voyage to Havre, 1,256 dollars and 20 cents, of which 828 dollars and 5 cents were the proceeds of the cotton and interest. But in consequence of the other charges against Kauffman growing out of the Limerick voyage, when the respondent received the sum of 3,086 dollars and 35 cents, after crediting one half to Kauffman, he was still debtor to the respondent about 140 dollars.

The principal controversy between the respondent and Kauffman, grows out of the subsequent transactions in relation to the brig; but as Baker was in no wise connected with those transactions, and as he alone appeals, I shall not pursue them farther.

The cause having been put at issue, a reference was made to a master, to take and state an account between the parties.

On the hearing before the master much testimony was taken ; but I find nothing to prove the extent of the respondent’s interest in the cotton. From the testimony of Brown and Bokee, it appears to have been the subject of dispute between the respondent and Baker. The latter does not admit the claim of the former ; but insists that his (the respondent’s) interest was one half. It is evident from the report, that the master did not rely on the testimony to ascertain the fact. He says, “that it has been admitted before me on the part of the said defendant, (Kauffman,) that the interest of the complainant in a certain parcel of cotton, shipped from Savannah on board the said brig William Henry on her third voyage to Havre, was to the amount of his funds then in the hands of the defendants.” This fact had-been averred by the respondent in his bill: it was denied by both the defendants below, in their answer ; and was, therefore, a fact to be proved

p. 455
The admission of Kauffman was, no doubt conclusive, as to him; but did it prove the fact as against Baker? Kauffman and Baker were partners when the purchase was made of 129 bales of cotton; and also when the cotton was sold. It seems they were jointly interested in the cotton; but the partnership ended in February, 1829 ; and the admission was made by Kauffman in 1823. From the manner in which the case was considered by the master, it did not become necessary for him to discuss or decide upon the admissibility of such evidence as against Baker. His conclusion was, that no partnership existed at any time between the respondent and Baker; but if a partnership did exist, it could bind Baker only for responsibilities incurred prior to the dissolution, and that by the receipt of the freight and passage money on the voyage to Limerick, the sum then due to the respondent on account of former voyages, was discharged: and further, that Baker was not answerable for the proceeds of the cotton, they having been received by Kauffman after the dissolution of his partnership with Baker.

The respondent excepted, because the proceeds of the cotton were charged to Kauffman alone, when they should have been charged to the defendants jointly. The exception was allowed by the chancellor, who decreed that Kauffman and Baker should pay to the respondent 1124 dollars and 4 *cents, the proceeds of the cotton and interest ; and that Kauffman alone should pay 1056 dollars and 75 cents, with costs against both defendants!

1. Were the admissions of one partner, after the dissolution, proof against the other partner as to the extent of the respondent’s interest in the cotton adventure ? On this question a different rule prevails in the courts of this state from the one which seems to be established in England. There the rule is, that an admission made by one of two partners after the dissolution of the partnership, concerning joint contracts that took place during the partnership, is competent evidence to charge the other partner. In the case of Wood v. Braddick, (1 Taunt. 104,) a letter of one defendant, a former partner was produced, written after the

p. 456
dissolution of the partnership, acknowledging' a balance due the plaintiff; and it was held conclusive against the other partner; Mansfield, chief justice, says, clearly the admission of óne partnér, made after the partnership has ceased, is not evidence to charge the other in any transaction which has occurred Since their separation; but the power of partners with respect- to rights created pending the partnership, remains after the dissolution. The same rule prevails in South Carolina. ( 2 Bay. 533 .)

In the same year with Wood w. Braddick in the common pleas in England, the case of Hackley v. Patrick, 3 John. 536 ,) was decided by the supreme court of this state. In that case a partnership had existed betWeéh Patrick & Heriry Hastie, the latter of whom, on the dissolution, was authorized to settle the unsettled business of the firm. Two or three years after the dissolution, he acknowledged a balance due the plaintiff. Upon this admission the plaintiff sought tó recover against Patrick; On the argument, the court stopped the ¿btinsel in fbply; and said this is a clear case. After a dissolution of a copartnership, the power bf one partner to bind the others wholly ceases;[3] There is rib reason why his acknowledgment of an account should bind his cd-partnersj any more than his giving a promissory note in the name of the firm, or any other act. Ten years afterwards; the point was again raised before the same court; *in Walden v. Sherburne, ( 15 John. 424 .) In that case Wood v. Braddick was cited, and presented to the court as containing the true principle; but Spencer, justice, in giving the opinion of the court, sáys, “ According to the decision of this court in Hackley v. Patrick, ( 3 John. 536 ,) one partner cannot, after a dissolution; bind his copartner by acknowledging an account, any more than he can give a promissory note to bind him. It seems that the court of common pleas in England have held otherwise ; (1 Taunt. 104;) but I believe there is more safety in the rule of this court than in a contrary One. For about twenty years the rulé has been considered Settled as laid down in Hackley v.

p. 457
Patrick; and has been very recently recognized by the supreme court. (Hopkins v. Banks, 7 Cowen, 650.) I would not, therefore, unsettle it, even if I thought the English rule the' more correct.

A distinction was attempted, upon the argument, between the admission of an account and the admission of a fact; but I can perceive none in principle. The same consequence follows. The admission of the fact determines the amount of liability which attaches to the other partner, with as much certainty as if Kauffman had admitted the amount of the proceeds of the cotton in the hands of the firm.

If, therefore, the court below erred, as I think it did, in considering the fact proved as against Baker by the admission of Kauffman, it follows that the case must be sent back to that court, with instructions to refer it again to the master, unless upon the other point in the case such reference becomes unnecessary.

2. I proceed, therefore, to inquire, whether the respondent’s claim for the proceeds of the cotton, was extinguished by the moneys received at Limerick.

In discussing this point, I must necessarily consider the evidence sufficient to charge Baker with the proceeds of the cotton, though I have endeavored to show that that fact has not been proved by competent testimony, so far as regards Baker.

*For the purpose of the argument, then, I am to consider the proceeds of the cotton* 828 dollars and five cents, in the hands of Kauffman and Baker, before the commencement of the voyage to Limerick. At Limerick the respondent received money of the defendant Kauffman, amounting to 1,557 dollars and 60 cents. Nothing was done at the time which amounted to an appropriation .of the money to any particular demand. The respondent had in fact a demand for the cotton, and no other, except disbursements by him, on account of that voyage.

There is no doubt but a person indebted to the same creditor on different accounts or demands, making a pay

p. 458
ment, may apply the payment to any demand he pleases ; and if the debtor fails to make the application, or rather appropriation, the creditor may make such appropriation as he pleases.[3] But if no appropriation is made by either, but the money is paid and received generally on account, how does the law make the appropriation ? In Goddard v. Cox, (2 Str. 1194,) it was decided that in such case the creditor has the right of applying when there is no dispute about liability; but if the debtor is liable in one demand personally, and in another as executor which depended upon the question of assets, then the creditor cannot make the application to such demand. The case of Devaynes v. Noble, Clayton’s case, (1 Mer. 584 to 610,) gave rise to much discussion as to the rules governing the application of indefinite payment. Sir William Grant, master of the rolls, examined the subject at some length; but his decision did not rest upon it, as he distinguished the case before him from all the cases which had been cited. He considered the rule of the civil law to be, that the election, whether by debtor or creditor, should be made at the time of payment; and if neither applied the payment when made, then the law made the payment upon certain rules of presumption ; and in applying presumption, the presumable intention of the debtor was first considered. The master of the rolls considered the case of Goddard v, Cox, (2 Str. 1194,) and the cases of Wilkinson v. Sterne, (9 Mod. 427,) Newmarch v. Clay, (14 *East, 239,) and Peters v. Anderson, (5 Taunt. 506,) as establishing this proposition : that in the absence of any express appropriation, it is the presumed intention of the creditor which is to govern; and he may, at any time, elect how payments made shall retrospectively receive their application. While he admits the rule thus established by those cases, he considers it an extension of the original rule. Meggot v. Mills, (Ld. Raym. 287,) and Dawe v. Holdsworth, (Peake’s N. P. Cas. 64)
p. 459
were decided apparently upon the originalrule ofthe civil law; but they are said by Chief Justice Gibbs to be distinguishable on- the ground that the defendant would have been liable to be declared a bankrupt, unless the payment had been appropriated to the prior debt. Clayton’s case was decided on the ground of* there being no distinct demands in his favor against the banking house; but one continued running account; and in that case the drafts were held to apply to the oldest deposits. But this case is distinguishable from that. Here the respondent had distinct demands against different individuals; and when a payment was received by him, or moneys of Kauffman came into his hands, he might have good reason for applying such money to a recent indebtedness of Kauffman- alone, and retaining his claim upon the firm for what was due upon the cotton adventure. It will be seen, however, that the moneys received at Limerick were sufficient to discharge his individual claims upon Kauffman, and the joint claim upon Kauffman and Baker also, except $140. No case has been cited, and I presume none can be found, carrying the creditor’s right so far as to retain money in his hands to apply t upon any future indebtedness, leaving a prior demand unpaid. The moneys received by the respondent, therefore, should he applied to pay, as far as they went, all the claims he had, giving him the election in the appropriation. According to this rule, if we consider the liability of Baker established by the admission of *Kauffman, still the decree against both defendants is for too much.[3]

= Whether, therefore, Baker is liable or not, the decree of his honor, the chancellor, should be reversed, and the cause sent back to the master for further proof.

Woodworth, J. and the whole court concurred in this opinion, except

[1] [1] In Van Renssellaet’s ex’rs v. Roberts, it was decided, that where one individually and jointly indebted with another, to the same creditor, makes a general payment, the creditor may apply it to the joint account, although he has given the parly who paid him, a receipt, in which the name of the other joint debtor was not mentioned. 5 Denio, 470 .

p. 460
Sutherland, J., who not having heard the argument, gave no opinion.

Ordered, adjudged and decreed, “ that the decree of his honor, the chancellor, appealed from in- this cause, be revérsedarid that the record- and proceedings be remitted, &c.

Footnotes

  1. [1] [1] National Bank v. Norton, 1 Hill 572 . Bristan v. Boyd, 4 Paige 17 ; Vari Kuren v. Parmelee, 2 Comst. 532. See Ante, Gleason v. Clark, 59 n. 1.
  2. [1] [1] Bank Niagara v. Rosevelt, ante, 411, n. 2. U. S. v. Wardwell, 5 Mason, 82. Hillyer v. Vaughn, 1 J. J. Marsh, 583 . Hanmer’s adm’rs. v. Rochester, 2 id. 145. Burke’s adm’rs v. Albert, 4 id. 97. Bacon v. Brown, 1 Bibb, 324 , Post 746, 773-777. See also, 5 Denio 470 , 3 Denio 248 ; 15 Wen. 23 Am. Ch. Dig. by Waterman, tit. Debter & Creditor.