Where a running account is kept at the Post Office Department
between the United States and a postmaster in which all postages
are charged to him, and credit is given for all payments made, this
amounts to an election by the creditor to apply the payments, as
they are successively made to the extinguishment of preceding
balances.
This the creditor has a right to do in the absence of
instructions from the debtor.
The English decisions and those of this Court examined.
The Act of Congress of 1825, 4 Stat. 102, which exonerates the
sureties if balances are not sued for within two years after they
occur, does not apply to this case because, by this mode of keeping
the account, the balance due from the postmaster is thrown upon the
last quarter.
This was a suit brought by the United States upon a postmaster's
bond against Walter F. Jones (the postmaster at Norfolk, in
Virginia) and Thomas Ap Catesby Jones and Duncan
Page 48 U. S. 682
Robertson, his sureties. Judgment went by default against the
postmaster and Robertson.
The act of Congress upon which the defense rested was the
following,
viz.:
The act of 3 March, 1825, 4 Stat. 102, is entitled "An act to
reduce into one the several acts for establishing and regulating
the Post Office Department," and in its third section enacts
"That it shall be the duty of the Postmaster General, upon the
appointment of any postmaster, to require and take of such
postmaster bond, with good and approved security, in such penalty
as he may judge sufficient, conditioned for the faithful discharge
of all the duties of such postmaster required by law, or which may
be required by any instruction or general rule for the government
of the department, provided however that if default shall be made
by the postmaster aforesaid at any time and the Postmaster General
shall fail to institute suit against such postmaster and said
sureties for two years from and after such default shall be made,
then and in that case the said sureties shall not be liable to the
United States, nor shall suit be instituted against them."
Jones was postmaster from 1830 to August, 1839, during which
time a running account was kept up with him at the Post Office
Department, with only one rest -- namely in August, 1836, when the
account was added up and a balance transferred to a new account.
The following is the debit side of the account.
To balance transferred from old account . . . . $ 345.50
To balances due the United States on his
quarterly returns as postmaster,
viz.:
From July 1 to Sept. 30, 1836 . . . . . . . . . 2,073.77
" Oct. 1 " Dec. 31, " . . . . . . . . . 2,488.16
" Jan. 1 " March 31, 1837 . . . . . . . . . 2,746.04
" April 1 " June 30, " . . . . . . . . . 2,634.93
" July 1 " Sept. 30, " . . . . . . . . . 2,187.79
" Oct. 1 " Dec. 31, " . . . . . . . . . 2,298.13
" Jan. 1 " March 31, 1838 . . . . . . . . . 2,450.65
" April 1 " June 30, " . . . . . . . . . 2,422.47
" July 1 " Sept. 30, " . . . . . . . . . 2,233.48
" Oct. 1 " Dec. 31, " . . . . . . . . . 2,618.26
" Jan. 1 " March 31, 1839 . . . . . . . . . 2,829.60
" April 1 " April 3, " . . . . . . . . . 53.11
----------
$27,381.89
==========
To balance . . . . . . . . . . . . . . . . . 5,515 89
==========
To interest from August, 1839, to
Page 48 U. S. 683
The credit side of the account ran on continuously as in the
following, which is the conclusion of the account:
1838
By amount brought over . . . . $18,198.64
Dec. 4, By draft No. 8448. . . . 62.54
" 4, " " " 8452. . . . 42.94
" 4, " " " 8455. . . . 77.19
" 4, " " " 8465. . . . 98.57
" 15, " " " 8745. . . . 50.26
" 15, " " " 8746. . . . 43.64
" 17, " " " 8768. . . . 132.79
" 31, " " " 8967. . . . 88.52
" 31, " " " 8968. . . . 206.48
1839
Jan. 19, " " " 9100. . . . 45.00
Feb. 19, " " " 9792. . . . 750.00
" 20, " " " 9801. . . . 863.29
March 13, " " " 271. . . . 46.04
" 13, " " " 274. . . . 38.56
Aug. 31, cash . . . . . . . . . . 1,121.54
Balance . . . . . . . . . . . 5,515.89
----------
$27,381.89
The substance of the pleadings in the court below and the
prayers of the respective counsel are given in the opinion of this
Court, and need not be here repeated.
Page 48 U. S. 684
MR. JUSTICE DANIEL delivered the opinion of the Court.
The case in the circuit court was an action of debt instituted
to recover the amount of a default claimed by the United States of
Walter F. Jones as Postmaster of the Borough of Norfolk in the
State of Virginia. The said Walter F. Jones, having been appointed
Postmaster of Norfolk, executed, on 8 August, in the year 1836, his
bond, with the plaintiff in error and one Duncan Robertson as his
sureties, in the penalty of ten thousand dollars, conditioned for
the faithful performance of the duties of his office. In the year
1839, Walter F. Jones was removed from office, the United States
claiming against him a balance of $5,515.89 as due from him on 31
August in the year last mentioned, and to recover this balance the
action on his official bond was instituted in the circuit court
against him and his sureties. After the institution of the suit, it
was abated as to Walter F. Jones by his death; Robertson made
default in the case, and as to him a writ of inquiry of damages was
executed; the plaintiff in error alone appeared and made defense
upon four several pleas, as to each of which replication and issue
were taken. The first plea interposed was that of condition
performed generally. The second and third pleas, presenting
substantially the same defense, rely upon the Act of Congress of 3
March, 1825, entitled "An act to reduce into one the several acts
establishing and regulating the Post Office Department," and
particularly upon that portion of the act which prescribes that the
Postmaster General shall obtain from the postmasters their accounts
and vouchers for their receipts and expenditures once in three
months or oftener, with the balances therein arising in favor of
the General Post Office, and that if any postmaster or other person
authorized to receive the postage of letters &c. shall neglect
or refuse to render his accounts and pay over to the Postmaster
General the balance due by him at the end of every three months, it
shall be the duty of the Postmaster General to cause a suit to be
commenced against the person so neglecting or refusing, and if
default be made by the postmaster at any time and the Postmaster
General shall fail to institute suit against such postmaster and
sureties within two years after such default shall be made, then
and in that case the said sureties shall not be held liable to the
United States, nor shall suit be instituted against them. These
pleas further aver that subsequently to the execution of the bond
of Walter F. Jones on 8 August, 1836, and during the year 1837,
sundry defaults were made by him in failing to pay over money
received by him as postmaster, and that these defaults were
permitted to remain unclaimed by suit up to 12 March,
Page 48 U. S. 685
1840, the period at which this suit was instituted, a length of
time from the occurrence of those defaults comprising an interval
of more than two years.
The fourth plea of the defendant below is simply a general
averment that the causes of action in the declaration mentioned did
not occur within two years next before the institution of the
suit.
The only evidence adduced in this case on behalf of the
plaintiffs below was the account certified under the act of
Congress from the Treasury Department against the postmaster,
brought down to 31 August, 1839, exhibiting a balance in favor of
the United States, at that date, of $5,515.89, and all the evidence
on behalf of the defendant was a letter to him from the Postmaster
General dated 19 December, 1837, announcing the fact, that a draft
had been drawn on the defendant in favor of the Treasury Department
for the sum of $5,000 in specie and requesting the deposit of that
sum with the Bank of Virginia at Richmond as the agent for the
Treasury. Upon the aforegoing pleadings and evidence, the following
prayers were made and instructions given at the trial.
The attorney for the United States moved the court to instruct
the jury
"That all payments made by the postmaster, Walter F. Jones, to
the General Post Office after the execution of his official bond on
8 August, 1836, and subsequently to any default at the end of a
quarter, without any direction by him or by the Postmaster General
as to the application of said payments, should be applied in the
first instance to extinguish each successive default in the order
in which it fell due, and if by such application of said payments
the jury shall believe from the evidence that all of the defaults
which occurred two years before the institution of this suit were
extinguished within two years after the same were respectively
committed, that the act of Congress which limits the institution of
suits against the sureties of a postmaster to two years after the
default of the principal has no application to this case and cannot
affect in any degree the plaintiffs' right to recover in this
action."
And the counsel for the defendant moved this Court to instruct
the jury
"1st. That if the jury shall find that the said deputy
postmaster, Walter F. Jones, committed any default or defaults in
office at any time or times more than two years before the
commencement of this suit, and that such default or defaults were
then known to the Postmaster General, and further that the said
deputy postmaster continued in default to an equal or greater
amount thenceforth until he was discharged
Page 48 U. S. 686
from office, that the Postmaster General failed to institute or
cause to be instituted a suit against the said deputy postmaster
and his sureties for two years from and after such default or
defaults were made -- then the defendant, Thomas Ap Catesby Jones,
one of the sureties of the said deputy postmaster, is not liable to
the United States, nor can any suit be maintained against him on
the official bond of the said deputy postmaster wherein the
defendant was bound as one of the sureties for any default or
defaults committed by the said deputy postmaster."
"2d. That as this suit was commenced on 12 March, 1840, the jury
should inquire whether any default was committed by the said deputy
postmaster, Walter F. Jones, in not duly paying over any balance or
balances of money which became due from him on account of
collections by him officially made before the end of the quarter
next preceding 12 March, 1838 -- namely the quarter ending on 31
December, 1837. And if the jury shall find that the said deputy
postmaster was so in default in not duly paying over such balances
or balance due from him on account of collections by him officially
made before the end of the quarter ending 31 December, 1837, and
that such default was then known to the Postmaster General, then
they should apply, towards the discharge of such balances or
balance, all such payments made by the said deputy postmaster
during his continuance in office subsequently to 31 December, 1837,
as they shall find to have been made out of moneys officially
collected by him before that date or out of his private funds, and
they should apply all other payments made by him after that date
and during his continuance in office towards the discharge of the
balances or balance which became due from him on account of moneys
by him officially collected after 31 December, 1837, during his
continuance in office."
"3d. And that as to the payment of $1,121.54, which was made by
the said deputy postmaster after he was discharged from his office,
the jury should inquire whether that payment was made by him out of
moneys remaining in his hands on account of collections officially
made by him before 31 December, 1837, or out of his own private
funds, or whether that payment was made out of moneys officially
collected by him during his continuance in office subsequently to
31 December, 1837, and if the jury shall find that that payment was
made, and of moneys remaining in his hands of collections by him
officially made prior to 31 December, 1837, or out of his own
private funds, then the jury should apply that payment towards the
discharge of the balance
Page 48 U. S. 687
which was due from him on 31 December, 1837, but if the jury
shall find that that payment of $1,121.54 was made by the said
deputy postmaster out of money officially collected by him during
his continuance in office subsequently to 31 December, 1837, then
they should apply the said payment towards the balance that accrued
and became due from him on account of moneys officially collected
by him during his continuance in office subsequently to 31
December, 1837."
"Whereupon, the court gave the said instruction prayed by the
attorney for the United States and refused to give the said
instructions prayed by the counsel for the defendant, to which
opinion of the court the defendant by his counsel excepted and
prayed the court to sign and seal this bill of exceptions, which is
done accordingly."
The jury found a verdict for the United States assessing their
damages to the sum of $4,387.09, with interest thereon from 31
August, 1839, till payment, and upon this verdict a judgment was
entered for the sum of $10,000, the penalty of the bond, to be
discharged by the damages and interest by the jury assessed, and
the costs of suit.
It is apparent that the only question of law raised in this
cause is the question of an appropriation of payments by debtor and
creditor, it being insisted in behalf of the United States and
being so ruled by the court below that when, at the end of a
quarter, there might be a default on the part of a postmaster, it
was competent for him to supply such default or to extinguish the
debt then due from him by payments made posterior to the end of the
quarter, and that in the event of an omission by the postmaster to
appropriate the payments so made by him, it was the right of the
government to apply them at its discretion to the extinguishment of
previous balances, and that if by such application all defaults
occurring within two years previously to the institution of the
suit had been extinguished, the act of Congress did not affect the
plaintiff's right of recovery.
On behalf of the defendants below, it is insisted that the
receipts by the postmaster within a given quarter should be
applied, exclusively or primarily, to the debt due from the
postmaster for that quarter, and that, if there should have existed
any balances for previous quarters, these should not be
extinguished by subsequent receipts, and that, if permitted to
remain for the space of two years without being claimed (as such
balances) by suit on the part of the government, the omission
should operate a complete exoneration of the sureties. With respect
to the position contended for as above, it may be
Page 48 U. S. 688
remarked, that a construction of the act of Congress which, in
numerous instances, would interpose in the way of a debtor
obstructions to the voluntary payment of his own debt, and compel
the creditor to resort to a reluctant, dilatory, and expensive
litigation for its recovery, would never be adopted except under
the influence of some controlling principle or necessity, rendering
such a proceeding unavoidable, and no such principle or necessity
can be perceived where a creditor is willing to receive his money,
the debtor is willing to pay it, and the surety assents to, or
acquiesces in, the payment. We cannot therefore approve an
interpretation of the act of Congress like that assumed in the
defense, which would require that quarterly balances should at all
events, and in opposition to the will of the parties, justly
inferred from their conduct, remain open and unsatisfied, to become
the subjects of future contest.
Upon the question of the appropriation of payments, some
diversity, and even contrariety, may be found in the doctrines of
the courts; yet nothing of the kind, it is thought, can be deduced
from them which should embarrass the adjudication in this case. In
the general proposition upon this subject all the courts agree. It
is this:
"That the party paying may direct to what the application is to
be made. If he waives his right, the party receiving may select the
object of appropriation. If both are silent, the law must
decide."
With the third branch of this proposition, the most fruitful of
uncertainty and embarrassment -- namely the decision which the law
would make in the silence or entire forbearance of the parties, we
are here not particularly called on to deal, the subject here being
more immediately the right of the creditor to make an appropriation
of payments, and the limitations upon that power resulting from the
delay or lapse of time, from the character of the transactions
between the debtor and creditor, and the rights of third persons
which may be affected by those transactions. In instances of
official bonds executed by the principal at different times, with
separate and distinct sets of sureties, this Court has settled the
law to be, that the responsibility of the separate sets of sureties
must have reference to, and be limited by, the periods for which
they respectively undertake by their contract, and that neither the
misfeasance nor nonfeasance of the principal, nor any cause of
responsibility occurring within the period for which one set of
sureties have undertaken, can be transferred to the period for
which alone another set have made themselves answerable. Such is
the rule established in the case of
United
States v. January and Patterson, 7 Cranch 572, and
of
United States v. Eckford's
Executors,
Page 48 U. S. 689
1 How. 250. The case before us is free from any embarrassment of
conflicting interests between separate sets of sureties. In this
case, there is but one bond; it presents the instance of an
appropriation of payments between a single debtor and creditor.
Upon the question, as understood in this form and with this
limitation, there is not a perfect uniformity in the decisions
either in England or in this country.
The opinion of Sir William Grant in
Clayton's Case, 1
Merivale 604, has often been referred to as a high authority in
favor of the restriction of the right of the creditor to make the
application to the exact period of time at which the payment was
made. A close examination of the opinion of this able judge,
however it may show the inclination of his mind on this subject,
can hardly be received as an express adjudication upon the point in
support of which it is adduced. In
Clayton's Case, page
605, speaking of the right of appropriation in the creditor in the
absence of express direction, Sir Wm. Grant says:
"There is certainly a great deal of authority for this doctrine;
with some shades of distinction, it is sanctioned by the cases of
Goddard v. Cox, 2 Strange 1194; of
Wilkinson v.
Sterne, 9 Mod. 427; of
Newmarch v. Clay, 14 East 239;
and of
Peters v. Anderson, 5 Taunt. 596."
He proceeds:
"There are, however, other cases, which are irreconcilable with
this indefinite right of election in the creditor, and which seem,
on the contrary, to imply a recognition of the civil law principle
of decision. Such are, in particular, the cases of
Meggott v.
Mills, 1 Ld.Raym. 287, and
Dowe v. Holdworth, Peake's
N.P. 64. The cases then set up two conflicting rules -- the
presumed intention of the debtor, which, in some instances at
least, is to govern, and the
ex post facto election of the
creditor, which, in other instances, is to prevail. I should
therefore feel myself a good deal embarrassed, if the general
question of the creditor's right to make the application of
indefinite payments were now necessarily to be determined. But I
think the present case is distinguishable from any of those in
which that point has been decided in the creditor's favor."
Again, on page 609, we find the following statement from this
same judge -- namely that the creditor received his account drawn
out by his debtor, the banker
who kept the account, and
made no objection to it whatever, and the master stated in his
report that the silence of the customer (the creditor), after the
receipt of his banking account, is regarded as an admission of its
being correct. "Both creditor and debtor must therefore," says the
judge, "be considered as having concurred in the appropriation."
This case has been adverted to somewhat at length, although it is
often referred to as high and express authority, with the view of
showing that it does
Page 48 U. S. 690
not adjudge directly the point of the creditor's discretion in
the appropriation of payments, however strongly it may intimate the
inclination of the Master of the Rolls as to that question. Later
decisions in the English courts would seem to be wholly
irreconcilable with the remarks of Sir William Grant in
Clayton's Case. Thus, in
Simpson v. Ingham,
decided in 1823, and reported in 2 Barn. & Cres. 65, Bayley,
Justice, speaking of the right of creditors to appropriate
payments, uses this language:
"It has been insisted, that, at that period of time, they had no
right so to do, because they were precluded by the entries which
they had already made in their own books in the intermediate space
of time. If indeed a book had been kept for the common use of both
parties as a passbook, and that had been communicated to the
opposite party, then the party making such entries would have been
precluded from altering the account, but entries made by a man for
his own private purposes are not conclusive on him until he has
made a communication on the subject of those entries to the
opposite party. Until that time, he has the right to apply the
payments as he thinks fit."
Holroyd, Justice, in the same case, says:
"The persons paying the money not having made any direct
application of it, the right of making such application devolved on
the receivers; and if they have done no act which can be considered
as such an application, it is equally clear, that although they did
not apply it at the moment of payment, they would have the right to
make the application at a subsequent period. The question therefore
is whether, from any entry in the books, there appears to have been
a complete election by them to apply the payments in any other way
than they are applied in the accounts which have been actually
delivered. Now these entries not having been communicated to the
opposite party, it seems to me that the election was not complete.
The effect of making the entries in their own private books shows
only that the idea of so applying the payment had passed in their
own minds. It is much the same thing as if they had expressed to a
stranger their intention of making such application of the
payments, and had afterwards refused to carry such intention into
effect."
Still later (in 1834), in the case of
Philpot v. Jones,
2 Adolph. & Ellis 41, Denman, Chief Justice, says: "The
defendant made no application of that payment; the plaintiff
therefore may elect
at any time to appropriate it to this
part of his demand." And so Taunton Justice, in the same case:
"Here the �17 were paid without any application to the
particular items of the account. The plaintiff then might apply
that payment to the items in question, and he was not bound to tell
the defendant at the time that he
Page 48 U. S. 691
made such application; he might make it
at any time before
the case came under the consideration of the jury."
In
Smith v. Wigler & Turnicliffe, 3 Moore &
Scott, 175, Tindall, Chief Justice, said that the creditor must
make the appropriation at the time the money comes to his hands.
Yet in
Mills v. Fowkes, 5 Bingham's New Cases 455, the
same Chief Justice said, that, in conformity with the rule in
Simpson v. Ingham, the creditor may make the application
at any time before action brought. Bosanquet, Justice, said in the
same case that the receiver might appropriate the payment if the
debtor had not at any time before action commenced, and Coltman,
Justice, that notwithstanding the doubt expressed by the Master of
the Rolls in
Clayton's Case, the more correct view seemed
to be, "that the creditor
is not limited in point of
time."
In the case of
Mayor of Alexandria v.
Patton, reported in 4 Cranch 320, Chief Justice
Marshall said, in pronouncing the decision:
"It is a clear principle of law that a person owing money on two
several accounts, as upon a bond and simple contract, may elect to
apply his payments to which account he pleases, but if he fails to
make the application, the election passes from him to the creditor.
No principle is recollected which obliges the creditor to make the
election immediately. After having made it, he is bound by it, but
until he makes it he is free to credit either the bond or the
simple contract."
So too, Justice Story in delivering the decision in the case of
Kirkpatrick v. United
States, 9 Wheat. 720,
22 U. S. 737,
says
"The general doctrine is that the debtor has a right, if he
pleases, to make the appropriation of payments; if he omits it, the
creditor may make it; if both omit it, the law will apply the
payments according to its own notions of justice. It is certainly
too late for either party to claim a right to make an application
after the controversy has arisen, and
a fortiori at the
time of the trial."
The two cases last cited, with those of
United States v.
January, and of
United States v. Eckford's Executors,
comprise the substance, it is believed, of all that has been ruled
by this Court upon the subject of the appropriation of payments.
There are several state decisions upon this subject, which are not
adverted to, but amongst these, if examined, there will be found
some contrariety. An attempt to reconcile any discrepancies, either
real or apparent, amongst either the English or American cases,
would seem to be at least useless here, inasmuch as, with regard to
the only principle connected with the appropriation of payments
which we deem to be involved in this case, all the decisions
concur. There is not even a decision to be found which denies to
the creditor, where the debtor has been quiescent, the right to
appropriate payments at
Page 48 U. S. 692
the periods at which they shall be made, and the concession of
the restricted right we hold to be decisive of the character and
fate of the transaction under review. That transaction exhibits one
general account of debit and credit continued from its commencement
to its close, when, and at no prior time, the balance is struck. On
the due side of the account are presented the amounts received by
the postmaster for postages within the periods there stated, and on
the other side are entered to his credit the sums paid by him,
either in cash or in drafts from the Postmaster General, in an
exact conformity with the dates at which the transactions occurred.
By this application any balance which may have existed at the end
of a previous quarter was extinguished, and sometimes overpaid, and
the account thus brought down to the final balance. To this mode of
application no just objection can be perceived; the parties
interested in the payments were the same throughout and equally
liable for all; the payments being made generally, and without any
appropriation by the debtors who were thus liable, it was the
undoubted right of the creditor to apply them to any sums
antecedently due. Indeed, in the case of
United States v.
Kirkpatrick, this Court said that
"in long running accounts, where debits and credits are
perpetually occurring, and no balances otherwise adjusted than for
the purpose of making rests, we are of opinion that payments ought
to be applied to extinguish the debts according to the priority of
time."
In this case they have been so applied, and in strict conformity
with the times at which such payments were made.
We conclude our view of this question in the language of Judge
Hopkinson in the case of
Postmaster General v. Norvell,
Gilpin 134:
"The application of the moneys received in a subsequent quarter
to the payment of the debt or balance antecedently due being
perfectly correct and lawful, it follows that no part of the
default for which suit is brought accrued two years before; on the
contrary, all the balances antecedent to the last quarter were
extinguished by the successive payments, and the final balance
falls on the last quarter."
A contrary result could be attained only by changing the manner
in which the accounts have been kept, and by arranging the actual
transactions as they have occurred between the parties -- a
proceeding which we think is required neither by the letter nor the
objects of the act of Congress. The judgment of the circuit court
should therefore be and is hereby
Affirmed.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Eastern
Page 48 U. S. 693
District of Virginia, and was argued by counsel. On
consideration whereof, it is now here ordered and adjudged by this
Court, that the judgment of the said circuit court in this cause
be, and the same is hereby affirmed.