Opinion
03-18-1820
Wells v. Washington's Administrator. [*]
OPINION
This was an action of debt in the County Court of Fairfax, instituted by Cornelius Wells assignee of Joseph Reid, against the administrator with the will annexed of Edward Washington deceased, on the 12th of March 1816, upon a promissory note of the said Washington dated August 14th, 1795.
At the trial, on the plea of payment by the testator, the defendant moved the Court to instruct the Jury that, " twenty years having intervened between the time when the note because due and the instituting of the suit, they ought to presume the note paid, unless evidence was offered to the Court of some acknowledgment of the debt within twenty years, or unless interest or a part payment was proved within twenty years:" --but the Court refused to give such instruction, for the following reasons; 1st, because the defendant in his application did not state the evidence on which he prayed the opinion of the Court, and which was given in the case; and 2dly, because, under the circumstances appearing in evidence, the principle of law, on which the Court's opinion was asked, did not apply; which circumstances were stated, in a bill of exceptions, to be, that, by the Will of the said Edward Washington, (set forth in haec verba,) the testator directed, that " all his just debts, due either by bond, note or open account, be paid without any regard to the Act of Limitation; " that, in the year 1810, a witness heard the said Washington acknowledge he owed Joseph Reid (the assignor) money; but on what account, or how much, the witness did not recollect; that, in the same year, as overseer of Washington, he delivered to Reid 2 1/2 bushels of wheat; that, at the end of the year 1809, Reid, who had been overseer, left the service of Washington, and part of a crop, consisting of 134 1/4 bushels of wheat, 4501bs. of tobacco, and about 701bs. of flax; that the witness knew not whether the said Reid ever received his share of that crop; that another witness swore that he knew the said Washington not to be punctual in paying his debts, but otherwise in collecting what was due him; that a third knew him intimately, and considered him a careless man, not attentive to his affairs; that he knew him to pay money without any receipt for it; and that Reid lived many years with Washington, who had a good opinion of him.
A Verdict was found, and judgment rendered for the plaintiff. The defendant obtained a Supersedeas from the Superior Court of law, which reversed the judgment, on the ground that the County Court erred in refusing to give the instruction requested; and that judgment, upon an appeal to this Court, was affirmed.
Note. In the petition for the Supersedeas, it was remarked, that the County Court, in it's opinion and instructions to the Jury, proceeded either on the principle that the presumption of payment, arising from lapse of time, was not admissible in relation to an instrument not under seal, or that, if admissible, such presumption was repelled by the evidence offered to the Jury on the part of the plaintiff. The petitioner was advised that presumption of payment arising from lapse of time, had been adopted as a rule of evidence generally, and, on principle, applied equally to cases of unsealed as of sealed instruments; or, if any thing, more strongly to the former; and, if such presumption is to be repelled by evidence, the Jury are the only judges of the weight of such evidence: --that, if the Court did not proceed on the principle first stated, then they had taken upon themselves the province of deciding on the weight of the testimony offered, and had not submitted it to the Jury; and thus, on either ground, the opinion and instructions. under which the Verdict was rendered, were erroneous. --Note in Original Edition.
PAYMENT.
I. Definition and Distinctions.
II. To Whom Made.
A. In General.
B. Payment to Agent,
C. Payment to Unbonded Commissioner.
D. Payment to Partnership.
E. Payment to Guardian.
F. Payment to Obligee before Notice of Assignment.
G. Possession of Evidence of Debt.
III. Time of Payment.
IV. Place of Payment.
V. Mode of Making Payment.
A. Remittance of Money by Mail.
VI. Payment by Stranger.
VII. Medium of Payment.
A. Payment in Confederate Money.
1. In General.
2. Presumption.
3. Acceptance of Payment in Confederate Money.
4. Payment of Confederate Money to Agent or Attorney.
5. Payment of Confederate Money to Executors and Administrators.
6. Duress.
7. Scaling Amount of Recovery.
8. Parol Evidence.
B. Payment in Counterfeit Money.
C. Promissory Notes.
1. In General.
2. Agreement of Parties.
a. Question for Jury.
b. Burden of Proof.
3. Receipt.
4. Extension of Credit.
5. Right of Action Suspended.
D. Draft.
E. Bill of Exchange.
F. Check.
G. Choses in Action.
H. Novation.
I. Payment in Services.
J. Payment in Commodities.
K. Collaterals.
VIII. Acceptance by Creditor.
IX. Presumption of Payment.
A. Lapse of Time.
1. Presumption Rebu ttable.
B. Payment or Loan.
C. Payment or Gift.
D. Possession by Debtor of Evidence of Indebtedness.
E. Nonproduction of Evidence of Indebtedness.
X. Recovery of Payments.
A. Voluntary Payments under Mistake of Law.
1. Compulsory Payments.
B. Payments under Mistake of Facts.
C. Payments on Contracts the Consideration of Which Has Failed.
D. Payments on Judgments Afterwards Reversed.
XI. Application of Payments.
A. Application by the Debtor.
1. In General.
2. Time of Application When Made by Debtor.
B. Application by Creditor.
1. In General.
2. Illegal Demands.
3. Debts Arising after the Payment.
4. Time of Application When Made by Creditor.
5. Change of Application.
C. Application by the Court.
1. In General.
2. Rules Governing the Court in Making Application of Payments.
a. Oldest Debt.
b. Debt Least Secured.
c. Interest Preferred to Principal.
d. Debt of Highest Dignity.
D. Rights of Third Parties.
XII. Pleading.
A. Nature of Plea of Payment.
B. Evidence of Payment under General Issue.
1. Rule at Common Law.
2. Rule by Statute.
C. Conclusion of Plea.
D. Allegation of Nonpayment Where There Are Several Joint Plaintiffs.
E. Replication to Plea of Payment.
Cross References to Monographic Notes. Accord and Satisfaction, appended to Scott v. OsborneMunf. 413. Subrogation, appended to Janney v. Stephen'sPatton & H. 11. Tender, appended to Shobe v. Carr, 3 Munf. 10.
I. DEFINITION AND DISTINCTIONS.
Payment has been defined to be the fulfillment of a promise. 2 Bouv. Law Dict. p. 303. Quoted in Exchange Bank v. Cookman, 1 W.Va. 69.
But payment of a debt is not necessarily a payment of money; but that is payment which the parties contract shall be accepted as payment. Huffmans v. Walker, 26 Gratt. 314.
Distinction between Payment and Set-Off. --The distinction between payment and set-off is that a payment is by consent of the parties, express or implied, appropriated to the discharge of the debt, in whole or in part, whereas a set-off is an independent demand, calling for its own action, which the parties have not applied on the debt. What was in its origin a set-off may, by agreement of the parties applying it, become a payment. Kennedy v. Davisson, 46 W.Va. 433, 33 S.E. 291.
II. TO WHOM MADE.
A. IN GENERAL.
Payment must be made to the creditor himself, or his assigns, or to some person authorized by him to receive it, either expressly or by implication, and when properly made discharges the debtor from his obligation. 2 Bouv. Law Dict. 303. Quoted with approval in Exchange Bank v. Cookman, 1 W.Va. 69 at 77.
In Smith v. Waugh, 84 Va. 806, 6 S.E. 132, the court said: " It is a well settled principle that payment by one who is primarily liable to one entitled to collect the debt is an extinguishment of the debt, and all liability thereunder. However held or however transferred or assigned, it is ever afterwards a mere nullity."
Thus, where the creditor, by a special agreement, authorizes his debtor to make payment by depositing the money in a certain bank, he thereby makes the bank his agent to receive the money and payment to them discharges the indebtedness. And in the face of this special agreement, the debtor is not bound by a custom requiring him to give the creditor notice of the payment or deposit before the indebtedness is discharged. Exchange Bank v. Cookman, 1 W.Va. 69.
B. PAYMENT TO AGENT.
Payments made by a debtor to the agent of an alien enemy are valid payments. Hale v. Wall, 22 Gratt. 424.
Revocation of Agent's Powers to Receive Payment.--Where an agent is specially authorized to sell a tract of land and receive payment of the purchase money, the principal is bound to allow credit for payments to the agent before notice that the powers of the agent are revoked. Spencer v. Wilson, 4 Munf. 130.
Medium of Payment to Agent.--Without express authority, an agent or attorney authorized to collect a debt can receive payment thereof only in money, and he has no right to accept anything else in satisfaction. If he does, it will be no payment, unless ratified or assented to by his principal, or unless he actually collects the claims, other than, money, that he receives in payment of the debt. See monographic note on " Agencies" appended to Silliman v. Fredericksburg, etc., R. Co., 27 Gratt. 119; and monographic note on " Attorney and Client" appended to Johnson v. Gibbons, 27 Gratt. 632.
C. PAYMENT TO UNBONDED COMMISSIONER.
It has been held repeatedly that where a purchaser of land at a judicial sale pays the purchase money to a commissioner who has not given the required bond, the payment is invalid and does not discharge the purchaser, because the payment is made to one without authority to receive it. The purchaser, before paying the purchase money to the commissioner, should ascertain whether the requirements of the decree and of the statute have been complied with. Hess v. Rader, 26 Gratt. 746; Lloyd v. Erwin, 29 Gratt. 598; Tyler v. Toms, 75 Va. 116; Woods v. Ellis, 85 Va. 471, 7 S.E. 852; Whitehead v. Bradley, 87 Va. 676, 13 S.E. 195; Donahue v. Fackler, 21 W.Va. 124.
D. PAYMENT TO PARTNERSHIP.
A payment to one partner is a payment to the company, unless, perhaps, where such payment is forbidden by the company. Scott v. Trent, 1 Wash. (VA) 77. See monographic note on " Partnership" appended to Scott v. Trent, 1 Wash. (VA) 77.
E. PAYMENT TO GUARDIAN.
Payment to the guardian, of rent for ward's land, is good. Ross v. Gill, 1 Wash. (VA) 87
F. PAYMENT TO OBLIGEE BEFORE NOTICE OF ASSIGNMENT.
Payment by an obligor to an obligee, of the amount of a bond which has been assigned, the obligor having no notice of the assignment at the time of payment, is a valid payment, and the assignee cannot recover upon the bond from the obligor. Preston v. Grayson County, 30 Gratt. 496. See Hatcher v. Cabell, 6 353; Green v. DulanyMunf. 518; Ruffners v. Barrett, 6 Munf. 207; Mitchell v. ThompsonPatton & H. 424.
Forged Assignment.--But where an obligor in a bond was sued thereon by a party who claimed under a forged assignment, and judgment was recovered, it was held that the obligor, having notice of the forgery, and of the right of another to the bond, is not protected from the claim of the rightful owner, though he makes payment under execution. Jameson v. Deshields, 3 Gratt. 4.
G. POSSESSION OF EVIDENCE OF DEBT.
If the debtor makes the payment to a party who has not in his possession the evidence of the debt, he takes the risk of his authority to make the collection, and the burden of proving that the payment is lawful rests on the debtor. Besides, the mere possession of the evidence of debt is not such an evidence of property as will justify a payment to the holder without an authority, express or implied from the true owner to receive payment from the debtor. Wooding v. Bradley, 76 Va. 614; Brown v. Taylor, 32 Gratt. 135.
III. TIME OF PAYMENT.
In General.--It seems that proof of payment of the debt after the day of payment is inadmissible to defeat the action under the general issue. Nichols v. Campbell, 10 Gratt. 560.
Right of Debtor to Pay in Advance.--And it has been held that a debtor has no right to anticipate the payment of a debt, payable at a future day, and bearing interest, without the consent of the creditor. Graeme v. Adams, 23 Gratt. 225.
But where the creditor authorizes his debtor to make payment by depositing the amount of the indebtedness in a particular bank to his credit, and such payment is made to, and received by the bank, which is the agent of the creditor, it is immaterial whether or not the deposit was made at or before maturity. Exchange Bank v. Cookman, 1 W.Va. 69.
Contracts in Respect to Real Estate.--Mere default in the payment of money at a stipulated time generally admits of compensation, and hence time of payment is seldom treated as essential in contracts in respect to real estate. Selden v. Camp, 95 Va. 527, 28 S.E. 877.
On the other hand, where payment was to be made in confederate currency for land purchased, time was of the essence of the contract, if injustice would result to the vendor from a delay in paying the purchase money. Booten v. Scheffer, 21 Gratt. 474. See monographic note on " Specific Performance" appended to Hanna v. Wilson, 3 Gratt. 243.
IV. PLACE OF PAYMENT.
Where No Place Named. --Where the contract does not specify any particular place of payment, the debtor must seek his creditor to pay him, unless the creditor be out of the state. Galloway v. Standard Fire Ins. Co., 45 W.Va. 237, 31 S.E. 969.
Payment in Goods.--But where a man is to pay money, or to deliver property, at a valuation, he is not bound to carry the property to the creditor, but the latter should receive it at the debtor's house. The court said: " This case, from its nature, is very different from the common one of a debtor, owing money, who is obliged to seek his creditor in order to pay the debt. Here property was to be delivered, which could not so easily be conveyed from place to place as money, and it would be natural to suppose that it was to be valued and received at the defendant's house." Dandridge v. Harris, 1 Wash. (VA) 326, 1 Am. Dec. 465.
V. MODE OF MAKING PAYMENT.
A. REMITTANCE OF MONEY BY MAIL.
A general direction by a creditor to his debtor to remit money to him, without prescribing the mode, does not authorize the debtor to remit by mail at the risk of the creditor. But such direction must be specific, both as to the mode of remittance and the subject to be remitted, before it can be made at the risk of the creditor. Gross v. Criss, 3 Gratt. 262.
Question for Jury.--But whether remittance of money by mail is the usual mode, when a creditor directs his debtor to remit money to him generally, without prescribing the mode, is a question of fact to be ascertained by a jury, and not to be decided by the court. Gross v. Criss, 3 Gratt. 262.
VI. PAYMENT BY STRANGER.
In General.--It is well settled that the payment or a debt by a stranger, if accepted as such by the creditor, discharges the debt so far as the credit of is concerned, and also as to the debtor if he ratifies such payment, and he becomes liable to the stranger for money paid to his use. Crumlish v. Central Imp. Co., 38 W.Va. 390, 18 S.E. 456, 45 Am. St. Rep. 872, 23 L. R. A. 120; Neely v. Jones, 16 W.Va. 625, 37 Am. Rep. 794.
Recovery by Stranger from Debtor.--But a stranger, who voluntarily and without request, pays the debt of another, cannot sustain an action at law against that debtor, unless he has in some way ratified the act of the stranger. But he may bring a suit in equity praying relief in the alternative; that is, that if the debtor has not ratified such payment the debt may be enforced in his favour, as its equitable assignee, or that, if the debtor does ratify it, he be decreed repayment of the amount paid for the use of the debtor. Neely v. Jones, 16 W.Va. 625, 37 Am. Rep. 794; Crumlish v. Central Imp. Co., 38 W.Va. 390, 18 S.E. 456, 45 Am. St. Rep. 872, 23 L. R. A. 120.
In one case, a married woman, purchasing land under order of the court, contracted with a third party for the payment of the unpaid purchase money, substituting him as purchaser, except as to a specified portion, the third party paying all the consideration money and the wife refusing to carry out the contract. It was held that such third party was entitled to have the purchase money treated as an unauthorized payment, and it was therefore no discharge of the debt due from her upon the original contract, and to have the same enforced for his benefit. Moore v. Ligon, 22 W.Va. 292.
Assignment of Debt from Creditor.--So also, the stranger, when he pays the debt of another, may take an assignment of it from the creditor, and enforce the debt against the debtor; and if, when he pays, the creditor agrees to assign the debt, though no assignment in writing be made, the stranger will be regarded as the equitable assignee of the debt, and the transaction will be regarded as equivalent to a purchase of the debt. Neely v. Jones, 16 W.Va. 625, 37 Am. Rep. 794; Crumlish v. Central Improvement Co., 38 W.Va. 390, 18 S.E. 456, 45 Am. St. Rep. 872, 23 L. R. A. 120.
Payment of Debt Barred by Limitation.--And it has been held that, where an administrator, after he has been removed, voluntarily pays a debt due by the default of his decedent as the treasurer of a public fund, after an action on the decedent's official bond is barred by limitation, he cannot recover the sum so paid from the decedent's estate either at law or in equity. Van Winkle v. Blackford, 33 W.Va. 573, 11 S.E. 26.
Payment by Request.--Where one man pays money for another at his request, the latter cannot resist the payment of it on the ground that the original debt was not legally due. Moseley v. Boush, 4 392.
VII. MEDIUM OF PAYMENT.
A. PAYMENT IN CONFEDERATE MONEY.
1. In General.
Formerly, in West Virginia, contracts payable in confederate money were held to be illegal and void. Brown v. Wylie, 2 W.Va. 502, 98 Am. Dec. 781; Calfee v. Burgess, 3 W.Va. 274; Weeden v. Bright, 3 W.Va. 548.
This rule, however, was very much relaxed in later cases. Gilkeson v. Smith, 15 W.Va. 44; Bailey v. Stroud, 26 W.Va. 614.
But in Virginia, all contracts for the sale of property to be paid for in confederate states treasury notes were held valid and binding when made in the usual course of business and not for the purpose of giving currency to the notes or otherwise aiding the rebellion. Hale v. Wilkinson, 21 Gratt. 75 (citing Thorington v. Smith, 8 Wall. 1, 19 L.Ed. 361); Walker v. Page, 21 Gratt. 636; Ambrouse v. Keller, 22 Gratt. 769; Dearing v. Rucker, 18 Gratt. 426; Effinger v. Kenney, 115 U.S. 566, 6 S.Ct. 179.
Notes deposited at a bank for collection during the war, when confederate money was the only currency, might properly have been paid in that money, in the absence of notice that other money was demanded. Alley v. Rogers, 19 Gratt. 366, 364.
Contracts Maturing after War.--But in a number of cases, contracts made during the civil war, but which did not mature until after hostilities had ceased, were held to be payable in currency in use when they fell due. Wrightsman v. Bowyer, 24 Gratt. 433; Morgan v. Otey, 21 Gratt. 619; Hilb v. Peyton, 21 Gratt. 386.
Decision Contra.--The decision in Calbreath v. Virginia Porcelain, etc., Co., 22 Gratt. 697, is directly opposed to the above rule, and cannot, it seems, be sustained by reason or authority. It was held that a bond executed in 1864, payable three years after date, " in the currency used in the common business of the country at the date of the maturity," was entered into with reference to confederate money as a standard of value. It is difficult to see how it can be maintained that this was a contract to be performed in confederate money when it was expressly stipulated that it was to be paid in currency used in business at the date of maturity, and at that date confederate currency had ceased to be used in the business of the country.
2. Presumption.
Where a bond was executed during the civil war, when confederate notes were the prevailing currency in circulation, it was held that there was no presumption as to the kind of currency in which the bond was payable. The question was one for the jury. Effinger v. Kenney, 24 Gratt. 116; Dyerle v. Stair, 28 Gratt. 800.
Contract Payable in Dollars.--It was held, even as to a contract made and entered into after the establishment of the confederate states, that wherever an obligation was given for the payment of so many dollars, the presumption was in favor of payment in sound currency, in the absence of all proof as to the kind of currency in which it was to be paid. Hansbrough v. Utz, 75 Va. 959; Omohundro v. Crump, 18 Gratt. 703.
But in a West Virginia case it was said that the natural and reasonable presumption, in the absence of all other evidence, was that a contract entered into during the civil war, by parties at the time residing within the jurisdiction of the confederate states, was made with reference to confederate states treasury notes as a standard of value, and was to be performed and fulfilled by payment in such currency. Bailey v. Stroud, 26 W.Va. 614 at 624. See Gilkeson v. Smith, 15 W.Va. 44.
3. Acceptance of Payment in Confederate MONEY.
Where contracts were made during the civil war, when confederate money constituted almost the sole circulating medium of the country, and nothing was said as to the kind of money in which payment was to be made, but according to the true understanding and agreement of the parties the court was satisfied that it was to be paid in confederate notes, then payment in that currency will discharge the indebtedness. Lohman v. Crouch, 19 Gratt. 331; Dearing v. Rucker, 18 Gratt. 426; Merewether v. Dowdy, 25 Gratt. 232; Gilkeson v. Smith, 15 W.Va. 44.
It was held that payment by a debtor to the minor son of his deceased creditor, during the existence of war, discharged the debt, where both debtor and payee were under the dominion of the same belligerent, though the personal representative be in the territory of the alien enemy, and where the minor, after he came of age, executed a paper ratifying the collections made while he was a minor, and directed that the collections be charged to him in the settlement of his father's estate. Small v. Lumpkin, 28 Gratt. 832.
And where a testator directed his estate to be kept together for the support of his widow and children, each child's part to be paid on coming of age, it was held that a payment in confederate currency to a child that came of age in 1863 was valid, the payment being voluntarily received and no undue influence or confidential relation existing. Boyd v. Townes', 79 Va. 118.
Parties in Pari Delicto.--It was held that where payment on a bond was made in confederate money, and received, without fraud or misrepresentation, both parties having full knowledge of the article paid and received, the indebtedness was discharged, because the parties were in pari delicto ; therefore the court would aid neither party. Washington v. Burnett, 4 W.Va. 84.
Anti-War Creditor.--But where an anti-war creditor refused to receive from a purchaser of property sold for the payment of debts in 1863, confederate currency in payment, and the purchaser obtained an order of the court to invest the amount in confederate bonds, it is the purchaser's money which is invested and he must bear the loss. Crockett v. Sexton, 29 Gratt. 46.
4. Payment of Confederate Money to Agent or Attorney.
It was held that an attorney or agent, in the absence of instructions to the contrary, was justified in receiving confederate currency, when that was the currency everywhere received and paid out at that time by business men, and was very little depreciated. Pidgeon v. William's, 21 Gratt. 251; Hale v. Wall, 22 Gratt. 424.
But where the creditor was a nonresident of the confederate states, it was held that the agent had no authority to receive payment in confederate money. Alley v. Rogers, 19 Gratt. 366. But see Hale v. Wall, 22 Gratt. 424, which is seemingly in conflict with this decision, because in that case the creditor was a nonresident of the confederate states (he resided in Missouri), yet a payment in confederate currency to his agent was upheld.
So, also, it was held that a payment of confederate money to an attorney who resided in the confederate states was no payment when the client resided within the federal lines, unless he gave the attorney authority to receive that currency. Harper v. Harvey, 4 W.Va. 539.
An authority given to an agent in December, 1861, to collect a debt, did not authorize the agent to receive payment in confederate money on the 10th of February, 1863, when that currency had very greatly depreciated in value. Time was of the essence of this authority. Ewart v. Saunders, 25 Gratt. 203.
So, also, a commissioner who, in April, 1860, is appointed to sell lands, is guilty of a breach of trust in receiving confederate currency from the purchaser in payment of his bonds in 1863. Omohundro v. Omohundro, 27 Gratt. 824.
Payment in Confederate Money by Order of Court.--Where money in possession of the court was lent out under its order in 1860, and was repaid in 1863, by authority of the court, the payment was held to be valid, though made in confederate money when that money was at a discount of four for one of gold. Taylor v. Lancaster, 33 Gratt. 1. See Dickinson v. Helms, 29 Gratt. 462.
5. Payment of Confederate Money to Executors and Administrators.
See monographic note on " Executors and Administrators" appended to Rosser v. Depriest, 5 Gratt. 6, and Washington v. Opie (W. Va.), 145 U.S. 214, 12 S.Ct. 822; Glasgow v. Lipse (Va.), 117 U.S. 327, 6 S.Ct. 757.
6. Duress.
Where a creditor was induced against his will, by fraud, or coerced by duress per minas, to accept confederate money in payment of his debt, such payment was void. Mann v. Lewis, 3 W.Va. 215, 100 Am. Dec. 747; Mann v. McVey, 3 W.Va. 232; Pilson v. Bushong, 29 Gratt. 229; Rhea v. Preston, 75 Va. 757. Compare Simmons v. Trumbo, 9 W.Va. 358.
7. Scaling Amount of Recovery.
Former Rule.--When the contract was for the sale of property, with reference to confederate currency as a standard of value, it was at first held that the scaling must be made as of the time the obligation fell due. Lohman v. Crouch, 19 Gratt. 331 at 346; Dearing v. Rucker, 18 Gratt. 426.
Confederate notes were not money, but, like bank notes, they were a mere commodity, and so, a contract to pay confederate notes, like a contract to pay bank notes, was a contract for quantity and not for value. When, therefore, the contract was for the payment of confederate notes in express terms, or of so many dollars in confederate notes, the sum to be recovered in an action on the contract was the value of the quantity of notes called for at the day of payment fixed by the contract, whether the payment was to be made on demand or at a future day, or whether the kind of dollars contracted for was specified on the face of the contract or was proved by evidence aliunde. In other words, the scale of depreciation was to be applied at the day when the money was payable. Dearing v. Rucker, 18 Gratt. 426.
Rule Subsequently Adopted.--But in subsequent cases the rule adopted by these decisions was departed from, though they have never been expressly overruled. It was held that confederate currency was to be scaled to its gold value, not at the maturity, but at the date of the contract. Myers v. Whitfield, 22 Gratt. 780; Fultz v. Davis, 26 Gratt. 903; Merewether v. Dowdy, 25 Gratt. 232; Tams v. Brannaman, 23 Gratt. 809; Stover v. Hamilton, 21 Gratt. 273; James v. Johnston, 22 Gratt. 461; Hilb v. Peyton, 22 Gratt. 550; Bowman v. McChesney, 22 Gratt. 609; Earp v. Boothe, 24 Gratt. 368; Walsh v. Hale, 25 Gratt. 314; Ashby v. Porter, 26 Gratt. 455; Bierne v. Brown, 10 W.Va. 748; Bailey v. Stroud, 26 W.Va. 614 at 615. Compare Gilkeson v. Smith, 15 W.Va. 44.
For example, where bonds were executed in 1862 for the deferred payments on a purchase of real estate, payable " in current money of Virginia," and it was shown by the evidence in the case that they were not to be paid in gold, nor in confederate currency, it was held that they were to be scaled as of the value of confederate currency at the time of the contract. Stearns v. Mason, 24 Gratt. 484.
So, also, in West Virginia, a tract of land was sold in 1862 for $ 1,000, with reference to confederate states treasury notes as a standard of value, of which sum $ 500 was paid and a bond for $ 500 given for the residue. In a suit in equity to enforce the vendor's lien for the amount of the bond given for the unpaid purchase money, it was held that the amount of the bond must be reduced to its gold value as of its date, and that the true value of the confederate states notes should be ascertained and measured by the average purchasing power of gold in the country of all kinds of property, real and personal, just before the war commenced, compared with the purchasing power of confederate states treasury notes at the date of the bond. Bailey v. Stroud, 26 W.Va. 614 at 615, citing and following Bierne v. Brown, 10 W.Va. 748. See Gilkeson v. Smith, 15 W.Va. 44.
Contract Payable on Demand.--A note or bond payable on demand, if given with reference to confederate states treasury notes as a standard of value, was scaled as of its date. James v. Johnston, 22 Gratt. 461; Bowman v. McChesney, 22 Gratt. 609; Gilkeson v. Smith, 15 W.Va. 44.
Generally, where the consideration of the contract was property sold and delivered, rented or hired, then the best mode of adjustment, and the best mode of ascertaining the value of the confederate currency agreed to be paid, was the fair value of the property which that amount of confederate currency bought, rented or hired at the time the contract was entered into. Pharis v. Dice, 21 Gratt. 303; Tams v. Brannaman, 23 Gratt. 809; Sexton v. Windell, 23 Gratt. 534.
See Effinger v. Kenney, 115 U.S. 566, 6 S.Ct. 179, holding the Virginia statute in this connection to be unconstitutional as impairing the obligation of contracts.
Contract of Loan.--But it was held that the statute for adjusting certain liabilities arising under contracts made during the civil war had no application to the loaning and borrowing of confederate money. Upon such a contract the scaling was, upon common-law principles, to be made as of the time when the money borrowed was payable. Jarrett v. Nickell, 9 W.Va. 345 at 346.
8. Parol Evidence.
Parol evidence was admissible to show what was the true understanding of the parties in respect to the kind of currency in which the contract was to be performed, or with reference to which, as a standard of value, it was made and entered into. Hilb v. Peyton, 22 Gratt. 550; Calbreath v. Virginia Porcelain, etc., Co., 22 Gratt. 697; Bailey v. Stroud, 26 W.Va. 614 at 623.
B. PAYMENT IN COUNTERFEIT MONEY.
If a debtor makes payment to his creditor in a bank, note which afterwards turns out to be counterfeit, it is not a good payment and the debtor is still liable, provided the creditor gives the debtor notice of the true character of the money and returns it to him within a reasonable time. Pindall v. Northwestern Bank, 7 Leigh 617.
C. PROMISSORY NOTES.
1. In General. --It is well settled that a promissory note will not be regarded as an absolute extinguishment or payment of a precedent note or preexisting debt unless it be so expressly agreed, whether the note received was that of one previously bound or of a stranger. Poole v. Rice, 9 W.Va. 73; Cushwa v. Improvement, etc., Co., 45 W.Va. 490, 32 S.E. 259; Merchants Nat. Bank v. Good, 21 W.Va. 455; Hornbrooks v. Lucas, 24 W.Va. 493; Lewis v. Davisson, 29 Gratt. 216; Feamster v. Withrow, 12 W.Va. 611; Stephenson v. Rice, 12 W.Va. 575; Morriss v. Harveys, 75 Va. 726.
But where a new note, given for a previous one which had become due, is that of a third person not previously bound for the debt, the taking of the new note and the surrender of the old will be treated prima facie as a discharge of the old note and a release of the maker thereof from personal liability for the debt; but where the debt is a lien on land of which the maker of the new note has become the purchaser, and as a part of the consideration therefor assumed to pay that debt, such new note given by such purchaser and surrender of the old note will not extinguish the lien on the land or be regarded as a payment of the debt, but will discharge the old note and operate prima facie as a release of the makers of the old note from responsibility for the debt. Hess v. Dille, 23 W.Va. 90.
If several small promissory notes be given for a large one, they are no satisfaction, unless paid; and therefore suit may be brought on the large one. M'Guire v. Gadsby, 3 Call 234.
Taking a note from the debtor, or a note of a third party, is no discharge of the debt, unless it is expressly agreed between the creditor and debtor that it is is an absolute payment thereof. Dunlap v. Shanklin, 10 W.Va. 662.
A promissory note, whether given for a precedent or cotemporary debt, does not operate as an extinguishment or payment of the debt, unless it be so accepted by the creditor; and if not paid at maturity the creditor may sue upon it or upon the original cause of action. Moses v. Trice, 21 Gratt. 556, 8 Am. Rep. 609.
The taking of a bill or a negotiable note for an existing debt is prima facie a conditional payment thereof, but it may be shown by direct or circumstantial evidence that the bill or negotiable note was taken either as an absolute payment or as collateral security merely. Sayre v. King, 17 W.Va. 562.
Antecedent Judgment Debt.--If an antecedent debt has passed into a judgment, the same rule applies; the new note is considered simply as a conditional satisfaction of the judgment, and upon the dishonor of the former the latter revives and may be enforced at law or in equity. Morriss v. Harveys, 75 Va. 726.
Where the parties provide for the extinguishment of the judgment, it may fairly be presumed that they contemplate the extinguishment of the debt upon which it is founded. If the substituted note is accepted in satisfaction of the judgment, the presumption is, in the absence of proof to the contrary, that it was accepted in satisfaction of the debt represented by the judgment. Morriss v. Harveys, 75 Va. 726.
But a negotiable note given in payment of a judgment debt will not be considered as a satisfaction or extinguishment thereof, unless it is clearly proven that such note was by agreement so accepted and received. Feamster v. Withrow, 12 W.Va. 611.
2. Agreement of Parties.
But if it is agreed between the parties that a note of a third person may be taken for a debt, and such note is so given and received, it will be a payment of the debt. Dryden v. Stephens, 19 W.Va. 1.
And where, before a note is due, a part of the debt is paid and a new note executed for the residue by the debtor, and an express agreement made between the parties that the old note shall be surrendered, such agreement is founded upon valuable consideration and extinguishes the old note, and no suit can be maintained thereon. Bantz v. Basnett, 12 W.Va. 772.
Individual Note of Partner.--For example, where there is an express agreement between a creditor and his partnership or joint debtor, whereby the creditor agrees to take and accept the individual note or obligation of the partnership debtor for a joint debt, such agreement is founded upon valid consideration and will have the effect to discharge the joint or partnership debt. Bowyer v. Knapp, 15 W.Va. 277.
Agreement of Creditor May Be Implied.--But the agreement of the creditor to accept the new security in absolute payment of the debt need not be express, but may be implied. It is not essential that any particular form of words shall be used, as " full satisfaction" or " absolute payment," but any language will be sufficient which, with the surrounding circumstances, plainly indicates a satisfaction of the debt by the adoption and acceptance of a new and different security. Morriss v. Harveys, 75 Va. 726.
Surrender of Old Note.--The surrender of the old note will not, of itself, raise a presumption of an agreement to extinguish the debt by the giving of the new note, especially where the creditor would thereby lose some security which he held when he took the new note. Merchants Nat. Bank v. Good, 21 W.Va. 455; Hess v. Dille, 23 W.Va. 90.
Agreement to Accept Note Procured by Fraud.--And a note will not be regarded as an absolute payment or extinguishment of a precedent debt, even when so expressly received, if such agreement was procured by fraudulent concealments and misrepresentations. Poole v. Rice, 9 W.Va. 73; Merchants Nat. Bank v. Good, 21 W.Va. 455.
a. Question for Jury.
Whether, by agreement of the parties, a note or check was given and received in full payment and absolute discharge and satisfaction of the debt, is a question of fact for the jury to determine. Blair v. Wilson. 28 Gratt. 165; Bantz v. Basnett, 12 W.Va. 772; Bowyer v. Knapp, 15 W.Va. 277.
b. Burden of Proof.
And the burden of proving that a negotiable note was by express agreement accepted by the creditor in absolute satisfaction of the debt rests upon the party alleging it. Feamster v. Withrow, 12 W.Va. 611.
3. Receipt.
A receipt from the creditor, acknowledging payment of the indebtedness in full, is not conclusive evidence, but it may be shown that payment was in fact made in notes of the debtor. Dunlap v. Shanklin, 10 W.Va. 662; Feamster v. Withrow, 12 W.Va. 611; Cushwa v. Imp., etc., Ass'n, 45 W.Va. 490, 32 S.E. 259. See Perkins' v. Hawkins', 9 Gratt. 649.
It has been held that a receipt for bonds given as a payment for the purchase of land, the bonds proving to be worthless and the vendor retaining the legal title, is not even prima facie an absolute payment of the purchase money. Dunlap v. Shanklin, 10 W.Va. 662.
But where a deed of emancipation set a slave free upon the payment of a certain sum and the interest thereon, and provided that a receipt in full for the payment should be taken as complete testimony of such discharge, it was held that payment of the money may be inferred from circumstances, and it is not essential to produce the receipt. Hepburn v. Dundas, 13 Gratt. 219.
Strangers.--The receipt of a person entitled to receive money is evidence of the fact of payment in a controversy between other parties as to that payment. Lee v. Bridge Co., 18 W.Va. 299.
4. Extension of Credit.
The giving of a new note for an old one which had come due, the amount and makers of the two notes being the same, will be regarded merely as an extension of credit upon the debt. Bank v. Good, 21 W.Va. 455; Hopkins v. Detwiler, 25 W.Va. 734; Farmers Bank v. Mut. Assur. Soc., 4 Leigh 69.
5. Right of Action Suspended.
Although the mere taking of a negotiable note of the debtor is no satisfaction of a precedent debt, yet it operates to suspend the party's right to sue on the old debt until there is a right of action on the new. For instance, a landlord, taking the negotiable note of his tenant for rent, may not distrain or sue for the rent until the maturity or nonpayment of the notes. Hornbrooks v. Lucas, 24 W.Va. 493, 49 Am. Rep. 277.
Where the creditor takes a negotiable note from the debtor for the amount of an account due, and the note is discounted for the creditor, his remedy on the account is suspended until the dishonor of the note. M'Cluny v. Jackson, 6 Gratt. 96.
D. DRAFT.
A draft will not be regarded in equity as a payment of a negotiable note secured by a deed of trust, in the absence of an express agreement to that effect by the parties to the transaction.
Thus, just before the maturity of a negotiable note payable to A. H. D. & Co., the makers applied to A. H. D. & Co. to permit them to draw a draft on D. & E., a firm in which A. H. D. was a partner, for the amount of the note, said draft to be payable in ninety days. D., for the firm of D. & E., agrees that this may be done for the accommodation of the makers of the note, the latter proposing to take up the draft with the note and to pay the draft at its maturity. Accordingly, the draft was drawn payable in ninety days. The makers of the note and drawer of the draft had the draft discounted by the bank which held the note for collection. Thereupon the bank surrendered the note to the makers and sent the amount thereof to A. H. D. & Co., the owners of the note. The makers of the note, immediately upon its surrender to them, sent it to D. & E., the firm upon which the draft was drawn. The drawers of the draft failed to pay it at maturity according to their promise, and it was paid by the drawees, D. & E. Thereupon A. H. D. & Co., the payees of the note, paid to D. & E. the full amount of the draft, D. & E. retransferring the note to A. H. D. & Co. Held, that this was not a payment of the note, but an extension of it for ninety days, and that its payment might be enforced by A. H. D. & Co. Hopkins v. Detwiler, 25 W.Va. 734.
A judgment debtor, with the property of the judgment creditor, but without his express authority, gave to one, who by virtue of an order from the judgment creditor had an interest in the same judgment, a draft on a third person, which was partly paid and never returned. The judgment creditor received of a person, who undertook the collection, a part of the draft amounting to more than his share of the judgment, and paid the surplus to the assignee of the person who had the interest in the same judgment by virtue of his order. It was held that the judgment debtor was entitled to a credit against the judgment for the full amount of the draft. Campbell v. Mosby, 4 Munf. 487.
E. BILL OF EXCHANGE.
It has been held that an annuity was extinguished in equity by a bond and bills of exchange given for the amount thereof. Thornton v. Spotswood, 1 Wash. (VA) 142.
F. CHECK.
The giving of a check by a debtor to his creditor is generally presumed to be only a provisional or conditional payment of the debt for which it is given; and if the check is not paid, and the payee is without fault, his right of action against the drawer for the debt, which has been merely suspended by the giving of the check, revives, and he may have recourse to the drawer either upon the debt or upon the check at his option. Blair v. Wilson, 28 Gratt. 165; Larue v. Cloud, 22 Gratt. 513; Finney v. Edwards, 75 Va. 44.
But a check may, by agreement between the parties, be given and received in full payment and absolute discharge and satisfaction of the debt; and whether it was so given and received is a question of fact for the jury. Blair v. Wilson, 28 Gratt. 165.
G. CHOSES IN ACTION. --If a bond or note, not negotiable, be given by a debtor to his creditor for an existing debt, such bond or note is presumed to be not a conditional payment, but collateral security for the original debt, though it may be proven either by direct or circumstantial evidence to have been intended by the party to be an absolute or conditional payment. And if such bond or note is received as collateral security, though it be payable at a future time, unless there was an agreement to postpone the right of action on the original debt, proved by either direct or circumstantial evidence, the taking of such collateral security does not suspend the right of action on the original debt, and therefore does not discharge the sureties from their liability. Sayre v. King, 17 W.Va. 562; Hoge v. Vintroux, 21 W.Va. 1. See Findley v. Findley, 11 Gratt. 434 (in this case payment in bonds was held good).
Bond of Administrator.--Where an administrator, being indebted to an insane distributee, offers to give to the committee of such distributee his bond for the indebtedness, and the committee accepts his offer and the administrator executes to the committee his bond and the latter gives him a receipt, reciting therein that the note of the administrator has been received for the amount of the indebtedness, and the administrator, in a subsequent ex parte settlement of his administration accounts, is credited with the amount, but the bond is never paid and the administrator having died and his estate found to be insolvent, it was held that the bond was not a payment of the indebtedness. Hoge v. Vintroux, 21 W.Va. 1.
Bond of Partner for Simple Contract Debt.--While the mere acceptance by the creditor of a bond given by one partner for a simple contract debt due from the firm destroys the right of the creditor to proceed at law against the member of the firm who was not a party in giving such higher security, yet a court of equity will not withhold relief against the member not uniting in the higher security merely because of the merger and destruction of the legal remedy against him, unless the higher security is given and accepted as a substitute for the original simple contract of the firm, and with the intention to absolve the firm. Niday v. Harvey, 9 Gratt. 454; Jordan v. Miller, 75 Va. 442.
H. NOVATION.
It is well settled that where one security is accepted by the creditor in satisfaction of another the debt evidenced by the latter is discharged. Fidelity Ins., etc., Co. v. Shenandoah Valley R. Co., 86 Va. 1, 9 S.E. 759, 19 Am. St. Rep. 858. See monographic note on " Novation."
No mere change in the form of the evidence of a debt secured by a mortgage, deed of trust, or vendor's lien, will operate to discharge the debt unless, so intended by the parties, and the giving up or the retention of the original security, when accepting another, will generally be decisive in determining the question whether the security so accepted was received in payment or only as additional security; for if the creditor means, in any contingency, to resort to the original indebtedness, he will scarcely be willing to surrender all evidence of that indebtedness to his debtor without fortifying himself with some acknowledgment of the real nature of the transaction. Gibert v. Washington City, etc., R. Co., 33 Gratt. 586 at 597, 1 Am. & Eng. R. Cas. 473; Morriss v. Harveys, 75 Va. 726; Stimpson v. Bishop. 82 Va. 190; Fidelity Ins., etc., Co. v. Shenandoah Valley R. Co., 86 Va. 1, 9 S.E. 759, 19 Am. St. Rep. 858.
I. PAYMENT IN SERVICES.
Where it appeared that the debtor, to whom money had been advanced, was a favorite nephew of the creditor; that he had been allowed by the creditor to sell the property covered by the deed of trust which he had given to secure the debt; that he had rendered valuable services to the creditor through a long course of years, which the latter admitted to be equal in value to the money advanced, it was held that, under the circumstances, the debt was forgiven and released to the debtor. Fitzhugh v. Fitzhugh, 11 Gratt. 210. See McGinnis v. Savage, 29 W.Va. 362, 1 S.E. 746.
J. PAYMENT IN COMMODITIES.
Where a creditor, at the solicitation of his debtor, refused to receive flour in payment of a debt, but agreed to send it to his own commission merchant, to be sold by him, and to apply the proceeds to his debt, but before the proceeds were remitted to the creditor the commission merchant failed and the money was lost, without any fault of the creditor, it was held that the debtor must bear the loss. Harpers v. Patton, 1 Leigh 306. See Crawford v. DaighVa. Cas. 521; Butcher v. Carlile, 12 Gratt. 520, and monographic note on " Debt, The Action of," appended to Davis' v. Mead, 13 Gratt. 118.
K. COLLATERALS.
When collaterals are put into the hands of an attorney or a commissioner of court by the debtor, to be collected and applied to the payment of a debt due to a client or to such commissioner, the collaterals will not be a payment on the debt, until the money comes to the hands of the attorney or commissioner by the collection of the collaterals. Blair v. Core, 20 W.Va. 265.
VIII. ACCEPTANCE BY CREDITOR.
Where money paid by the debtor to his creditor has not been accepted by the latter in satisfaction of the debt, such payment will not operate to discharge the debt. Moore v. Tate, 22 Gratt. 351.
If, however, one owing a sum of money, the amount of which is not ascertained and fixed, offers his creditor a certain sum, declaring that it is in full for all that is owing him, which sum is accepted by the creditor, such acceptance is in full discharge of the demand. American Manganese Co. v. Va. Manganese Co., 91 Va. 272, 21 S.E. 466.
IX. PRESUMPTION OF PAYMENT.
A. LAPSE OF TIME.
The well-settled rule of the common law is that a debt, after the lapse of twenty years from the time it became due, is presumed to have been paid, which presumption will be conclusive unless rebutted by distinct proof. It is a rule of evidence, founded upon the idea that, in the ordinary course of human affairs, it is not usual for men to allow real and well founded claims to lie dormant a great length of time. Booker v. Booker, 29 Gratt. 605, 26 Am. Rep. 405; Robertson v. Read, 17 Gratt. 544; Brown v. Campbell, 33 Gratt. 402; Tomlin v. How, Gilm. 1; Norvell v. Little, 79 Va. 141; Updike v. Lane, 78 Va. 132; Tunstall v. Withers, 86 Va. 892, 11 S.E. 565; Scott v. Isaacs, 85 Va. 712, 8 S.E. 678; Sadler v. Kennedy, 11 W.Va. 187; Calwell v. Prindle, 19 W.Va. 604; Criss v. Criss, 28 W.Va. 388; Seymour v. Alkire, 47 W.Va. 302, 34 S.E. 953.
For example, the debt of a sheriff, for clerk's tickets put into his hands for collection, may from length of time, connected with other circumstances, be presumed to have been paid, without positive proof to that effect. Ross v. Darby, 4 Munf. 428.
So, also, the payment of damages assessed in a mill case ought to be presumed, after a great length of time has elapsed, during which the owner of the land, to whom such damages were assessed, acquiesced in the building of the mill, without claim or objection on his part. Young v. PriceMunf. 534.
Effect of Statute of Limitations on Rule.--And the common rule of presumption of payment from lapse of time is not affected by the positive bar of the statute of limitations. Booker v. Booker, 29 Gratt. 605, 26 Am. Rep. 401; Brewis v. Lawson, 76 Va. 36; Hale v. Pack, 10 W.Va. 145; Turnbull v. Mann, 99 Va. 41, 37 S.E. 288.
The fact that the time in which a right of entry on land is barred, or the right to bring an action of ejectment, has been reduced to less than twenty years by statute, does not operate to reduce the time in which the presumption of the payment of such a debt arises. Criss v. Criss, 28 W.Va. 388.
Kinds of Indebtedness Covered by Rule--In General.--The presumption of payment of a debt arising from such lapse of time is in all cases the same, whether the debt be or be not secured by a deed of trust or mortgage, or whether it be evidenced by a bond, note or judgment. Criss v. Criss, 28 W.Va. 388.
Deeds of Trust.--Thus, the principle has been recognized in suits to enforce deeds of trust. Edwards v. Chilton, 4 W.Va. 352; Pickens v. Love, 44 W.Va. 725, 29 S.E. 1018; King v. King, 90 Va. 177, 17 S.E. 894; Turnbull v. Mann, 99 Va. 41, 37 S.E. 288; Camden v. Alkire, 24 W.Va. 674.
Vendor's Liens.--And in suits to enforce vendor's liens. Cox v. Carr, 79 Va. 28 at 29; Burbridge v. Sadler, 46 W.Va. 39, 32 S.E. 1028; Evans v. Johnson, 39 W.Va. 299, 19 S.E. 623; Tunstall v. Withers, 86 Va. 892, 11 S.E. 565.
Mortgages.--So, also, presumption from lapse of time will bar the right to enforce a mortgage, when the mortgagor is in possession, or will bar the right to redeem, where the mortgagee is in possession. Snavely v. Pickle, 29 Gratt. 27.
Bonds.--Moreover, it is well settled that a bond is presumed to have been paid after the lapse of twenty years from its maturity. Tinsley v. Anderson, 3 Call 329; Perkins' v. Hawkins', 9 Gratt. 649; Booker v. Booker, 29 Gratt. 605, 26 Am. Rep. 405; Norvell v. Little, 79 Va. 141; Doyle v. Beasley, 99 Va. 428, 39 S.E. 152; Sadler v. Kennedy, 11 W.Va. 187; Calwell v. Prindle, 19 W.Va. 604.
Promissory Notes.--And the same rule is applied in the case of a promissory note past due for twenty years. Wells v. Washington, 6 Munf. 532.
Order for Distribution of Assets among Creditors.--The lapse of twenty-one years, after an order directing an administrator to distribute the assets of the estate among creditors, raises a presumption of payment. White v. Offield, 90 Va. 336, 18 S.E. 436.
Execution.--But failure to return an execution does not, in a proceeding not against the sheriff or his sureties, create a presumption in favor of the debtor that it was paid to the sheriff, especially where it is shown that the debtor was not at the time possessed of personalty out of which the execution could have been satisfied. Paxton v. Rich, 85 Va. 378, 7 S.E. 531, 1 L. R. A. 639.
Legacy.--And payment of a legacy by an executor cannot be presumed from the mere lapse of time, during which there is no representative of the legatee entitled to demand and receive it; especially where, though there have been dealings between the executor and the distributee of the legatee, yet the executor, in settling his accounts, has not claimed credit for payment of the legacy. Burwell v. Anderson, 3 Leigh 348.
Notice of Debt Necessary.--But the presumption of satisfaction of a debt as against the debtor can begin to arise only from the time he had notice of it; and if twenty years have not since elapsed, the legal presumption has not arisen. Erskine v. North, 14 Gratt. 60.
Owelty of Partition.--Thus, it has been held that a woman who had been decreed owelty of partition, but who was not aware of the fact until twenty years afterwards, is not precluded from enforcing such decree on the ground of laches. Jameson v. Rixey, 94 Va. 342, 26 S.E. 861, 64 Am. St. Rep. 726.
Courts of Equity.--This common-law rule of presumption of payment, where twenty years have elapsed after the right of action accrued, obtains as well in courts of equity as at law. Updike v. Lane, 78 Va. 132 at 136, opinion of Richardson, J.
Lapse of Less Than Twenty Years.--It has been held repeatedly that this presumption of payment from mere lapse of time will not arise until the full twenty years have expired since the time the debt became due. If a shorter period, even a single day less than twenty years, has elapsed, the presumption of satisfaction from mere lapse of time does not arise. Sadler v. Kennedy, 11 W.Va. 187; Calwell v. Prindle, 19 W.Va. 604; Criss v. Criss, 28 W.Va. 388; Booker v. Booker, 29 Gratt. 605, 26 Am. Rep. 401; Hutsonpiller v. Stover, 12 Gratt. 579; Norvell v. Little, 79 Va. 141; Tunstall v. Withers, 86 Va. 892, 11 S.E. 565; James v. Life, 92 Va. 702, 24 S.E. 275.
Lapse of Shorter Period Coupled with Circumstances.--Payment, however, may be inferred from circumstances coupled with the lapse of a shorter period than twenty years. Tunstall v. Withers, 86 Va. 892, 11 S.E. 565; Sadler v. Kennedy, 11 W.Va. 187; Perkins' v. Hawkins', 9 Gratt. 649; Calwell v. Prindle, 11 W.Va. 307; Cheatham v. Aistrop, 97 Va. 457, 34 S.E. 57; Barbour v. Duncanson, 77 Va. 76; Clendenning v. Thompson, 91 Va. 518, 22 S.E. 233; Criss v. Criss, 28 W.Va. 388; Cox v. Carr, 79 Va. 28; Lightfoot v. Green. 91 Va. 509, 22 S.E. 242; McVeigh v. Chamberlain, 94 Va. 73, 26 S.E. 395; Jameson v. Rixey, 94 Va. 342, 26 S.E. 861, 64 Am. St. Rep. 726; Camden v. Alkire, 24 W.Va. 674.
When an action is brought on a bond, if twenty years elapse between the time of its becoming due and of the institution of the action, the defendant may, without pleading the statute of limitations, rely upon the presumption of payment; and, upon issue joined on plea of payment, payment may be inferred by the jury, from circumstances coupled with the lapse of a shorter period than twenty years. Sadler v. Kennedy, 11 W.Va. 187, citing Perkins' v. Hawkins', 9 Gratt. 649 at 656; Wells v. Washington, 6 Munf. 532; Tomlin v. How, Gilm. 80.
Circumstances--Pecuniary Condition of Parties.--And, therefore, on the trial of an issue made upon the plea of payment, evidence tending to show, on the one hand, that the creditor was in want of money, and, on the other, that the debtor had the means of payment when the debt became due and afterwards, is admissible evidence to be weighed by the jury with the other evidence in the case. Perkins' v. Hawkins', 9 Gratt. 649.
For example, payment of a bond after the lapse of less than twenty years has been presumed where it appeared that the obligor was a wealthy bachelor, prompt in the payment of every obligation, and that he died without owing a dollar, whereas the husband of the beneficial payee in the bond was hard pressed for means, had failed in business, and his wife was a favorite niece of the obligor, against whom, at the time of her husband's failure, she held this bond, and to whom at the same time she was appealing, to come to the aid of her husband. Clendenning v. Thompson, 91 Va. 518, 22 S.E. 233.
Insolvency of Debtor.--On the other hand, payment is not shown by the lapse of time, and the circumstance that no attempt was made to collect the debt, where it appeared that the debtor was insolvent and covered up his earnings so as to keep them out of the reach of his creditors, and where the creditor testified that he did not know the debtor had any property until shortly before his death, and that he thought his debt was barred. Cheatham v. Aistrop, 97 Va. 457, 34 S.E. 57.
In Calwell v. Prindle, 11 W.Va. 307, it was held that the mere circumstance that the debtor's administrator was unable to produce the bond or note evidencing the debt, in connection with the lapse of fourteen years since the debt became due, was insufficient to authorize a presumption that it had been paid.
1. Presumption Rebuttable.
It is perfectly well settled, however, that this presumption of payment arising after the lapse of twenty years is simply a presumption of fact, and may be rebutted by satisfactory evidence of any kind whatever showing that payment has not in fact been made. Jameson v. Rixey, 94 Va. 342, 26 S.E. 861, 64 Am. St. Rep. 726; Clendenning v. Thompson, 91 Va. 518, 22 S.E. 233; Snavely v. Pickle, 29 Gratt. 27; Eustace v. Gaskins, 1 Wash. (VA) 188; Brewis v. Lawson, 76 Va. 36; Erskine v. North, 14 Gratt. 60 at 61; Booker v. Booker, 29 Gratt. 605, 26 Am. Rep. 401; Hale v. Pack, 10 W.Va. 145; Criss v. Criss, 28 W.Va. 388; Johnson v. White, 8 Leigh 214.
The presumption of payment of a debt evidenced by a deed of trust, from lapse of time, may be repelled by circumstances which may account for the delay. Bowie v. Poor School Soc., 75 Va. 300.
Acknowledgment of Indebtedness.--Thus, an express or implied acknowledgment by the debtor of the subsistence of the debt within the twenty years will repel the presumption. Eustace v. Gaskins, 1 Wash. (VA) 188; Mulliday v. Machir, 4 Gratt. 1; Erskine v. North, 14 Gratt. 60 at 61; Wells v. Washington, 6 Munf. 532.
It has been held that the express admission of the obligor in a bond, within the twenty years, that the debt is unpaid, will rebut the presumption. Updike v. Lane, 78 Va. 132; Brewis v. Lawson, 76 Va. 36.
Part Payment of Interest or Principal.--Moreover, the presumption may be rebutted by the implied admissions of the debtor that the debt is unpaid, as from his paying interest, or part of the principal, which fact is provable by extrinsic evidence, or even by cotemporaneous indorsement by the creditor himself. Updike v. Lane, 78 Va. 132; Wells v. Washington, 6 Munf. 532; Bell v. Wood, 94 Va. 677, 27 S.E. 504.
Thus, payments made in 1885 on a judgment rendered in 1869 admit that up to that time the judgment has not been discharged. Rowe v. Hardy, 97 Va. 674, 34 S.E. 625.
So, also, the regular payment of interest will rebut the presumption of payment. Coles v. Ballard, 78 Va. 139. See Wells v. Washington, 6 Munf. 532.
Indorsement of Credits by Creditor.--An indorsement of credit on a bond, made by the obligee within the period that raises the legal presumption of payment, is evidence for him for the purpose of repelling that presumption. Dabney v. DabneyRob. 622, 40 Am. Dec. 761. See Coles v. Ballard, 78 Va. 139.
Fraudulent Conduct of Debtor.--And where the debtor amused the creditor with promises of providing for him in his will, this was held to be a circumstance repelling the presumption of payment. Eustace v. Gaskins, 1 Wash. (VA) 188.
Relationship of Parties.--It has been held that even the near relationship of the parties will repel this presumption. Updike v. Lane, 78 Va. 132.
Inability of Debtor to Pay--Insolvency.--Likewise, the presumption may be rebutted by showing the debtor's inability to pay during the twenty years; as, for example, by proof of his insolvency during that period. Updike v. Lane, 78 Va. 132; Erskine v. North, 14 Gratt. 60; opinion of Judge Green in Criss v. Criss, 28 W.Va. 388 at 405.
Pendency of Suit by Creditor.--The pendency of a suit by a creditor against an executor, for more than the testator's estate is worth, within twenty years before suit brought against him by legatees or distributees for their share of the estate, rebuts any presumption of payment arising from lapse of time against their demand, for until the debts are paid they have no claim to the estate. Winston v. StreetPatton & H. 169.
Inability of Creditors to Sue--In General.--In calculating whether the twenty years necessary to raise the presumption of payment has elapsed, such time must be excluded in which for any reason the creditor had no legal right or power to bring a suit for the debt. Criss v. Criss, 28 W.Va. 388.
Agreement Not to Sue Until Future Time.--It was held in Hale v. Pack, 10 W.Va. 145, that if it be shown that, by the understanding of the parties by whom the bond was executed, it was not to be paid until a future time, the time which elapsed from the giving of the bond to such future time should not be considered as forming any part of the time the lapse of which gives rise to such presumption, although the bond on its face be payable on demand.
Continued Absence of Parties.--Likewise, the continued absence from the country of the maker of a note would be a circumstance which would be entitled to much weight in repelling the presumption of payment arising from lapse of time; but the fact that the payee of the note has removed to another country or state would not even tend to repel presumption of payment. Hale v. Pack, 10 W.Va. 145 at 152; Criss v. Criss, 28 W.Va. 388. See Erskine v. North, 14 Gratt. 60.
Collection of Debt Suspended by Injunction.--And the presumption of payment of a debt which arises from lapse of time is repelled where the collection of the debt is suspended by an injunction. Hutsonpiller v. Stover, 12 Gratt. 579.
Existence of War.--If the parties to a bond reside in a county whose condition was such, during the war, as to render it highly improbable that debts could or would be collected while the war continued, it should not be considered as forming a part of the time the lapse of which gives rise to such presumption of payment. Hale v. Pack, 10 W.Va. 145; Updike v. Lane, 78 Va. 132.
In Criss v. Criss, 28 W.Va. 388 at 403, it was said: " No presumption of payment would properly arise during the time, however long it might continue, in which the creditor could not sue upon his debt by reason of the country in which he lived being at war with the country in which the debtor resided, or by reason of the closing of the courts from the existence of war or for any other reason."
Stay-Law Period Excluded.--In computing the twenty years by which a presumption of payment is raised, the war and stay-law period (the period between April 17, 1861, and January 1, 1869) must be excluded. Norvell v. Little, 79 Va. 141; Tunstall v. Withers, 86 Va. 892, 11 S.E. 565; Updike v. Lane, 78 Va. 132.
Distinction between Bar of Statute and Presumption of Payment.--There is a recognized distinction between the bar of the statute of limitations and the presumption of payment from lapse of time. In the former case, the bar is absolute; in the latter, it is a rule of evidence, and may be rebutted. Clendenning v. Thompson, 91 Va. 518, 22 S.E. 233; Lightfoot v. Green, 91 Va. 509, 22 S.E. 242; Coles v. Ballard, 78 Va. 139.
B. PAYMENT OR LOAN.
A check upon a bank implies that it was given in payment of a debt due by the drawer to the party in whose favor it is drawn, or for money loaned by the latter to the former at the time of the execution of the check; and though such implication may be repelled by evidence that the check was not so given, but was in fact given for a loan by the drawer to the payee, such evidence, being in conflict with the apparent purport of the transaction, ought to be very strong to repel such implication and to establish the contrary fact. Terry v. Ragsdale, 33 Gratt. 342. See McVeigh v. Chamberlain, 94 Va. 73, 26 S.E. 395; Beecher v. Wilson, 84 Va. 813, 6 S.E. 209, 10 Am. St. Rep. 883.
C. PAYMENT OR GIFT.
Where a father, being indebted to his children, afterwards conveys property to them, which is more than equal to the amount of the debt, this conveyance shall be presumed to be in satisfaction of the debt, if there are no circumstances to prove a contrary intention. Kelly v. Kelly, 6 176, 18 Am. Dec. 710.
In Wells' v. Ayers, 84 Va. 341 at 346, 5 S.E. 21 at 24, the court said: " The presumption is strongly against the idea of a gift by a creditor to her debtor of his debt, especially where the amount is so large and there are no ties of blood, and where the creditor is a widow, in need of money, and frequently calling for it; and the debtor, on the other hand, is a prosperous business man."
And where a check is given by the plaintiff to the defendant, and many years afterwards the defendant executes a note to the plaintiff for the accommodation of the former, it will be presumed that the check has been settled or accounted for. M'Rae v. Boast, 3 481.
D. POSSESSION BY DEBTOR OF EVIDENCE OF INDEBTEDNESS.
If a promissory note or bond should chance to be found in the hands of the debtor, or if it be crossed, erased, or torn in pieces, either of these circumstances will create a presumption that it has been acquitted, which presumption will remain until clear proof be offered that the debt is still owing. Norvell v. Little, 79 Va. 141 at 146.
Thus, it has been held that a presumption of payment of a debt evidenced by a bond will arise from the possession by the obligor of the bond. But this presumption may be rebutted. Lindsay v. McCormick, 82 Va. 479, 5 S.E. 534; McCleary v. Grantham, 29 W.Va. 301, 11 S.E. 949.
But it has been held that no presumption of the payment of a bond would arise from the fact that it was in the possession of the debtor at the time of his death, where it appeared that it had been assigned and delivered to the wife of the debtor, and was kept in a trunk at the common home of both debtor and his wife, to which trunk the debtor's wife kept the key until her death, and after the death of the debtor the bond was found in the same trunk, with papers of both husband and wife, and delivered to the wife's administrator. Mynes v. Mynes, 47 W.Va. 681, 35 S.E. 935.
E. NONPRODUCTION OF EVIDENCE OF INDEBTEDNESS.
Where the auditor drew a warrant in favor of one of the county commissioners, it was held that the court would presume payment by the treasurer, unless the warrant be produced, or he otherwise discharges himself of the receipt. Com. v. Garth, 3 Call 6.
X. RECOVERY OF PAYMENTS.
A. VOLUNTARY PAYMENTS UNDER MISTAKE OF LAW.
The rule is well settled that a party, who has voluntarily paid money with a full knowledge of all the facts and circumstances, but under a mistake as to the law, cannot recover it back. The principle applies as well in the case of money paid as city taxes to a corporation as in the case of money paid on a debt to an individual. The Mayor of Richmond v. Judah, 5 Leigh 305; Haigh v. United States, etc., Ass'n, 19 W.Va. 792; Beard v. Beard, 25 W.Va. 486, 52 Am. Rep. 219; Lee v. StuartLeigh 76.
For example, it has been held that a member of a building association, who has voluntarily paid more money to obtain a release of his deed of trust, than under its constitution the building association could have received, cannot recover it back, if he knew of the facts when he made the payment, but was mistaken as to his legal rights. Haigh v. United States, etc., Ass'n, 19 W.Va. 792.
Voluntary Payment by Administrators. --Money received and voluntarily paid over by the administrator of an estate, as agent of the creditor, is not recoverable back from the creditor to whom it is paid in satisfaction of a valid claim against the debtor's estate, even though there be preferred debts of the estate remaining unpaid. Findlay v. Trigg, 83 Va. 539, 3 S.E. 142; Staples v. Staples, 85 Va. 76, 7 S.E. 199.
And if an administrator, with full knowledge of all the facts, voluntarily pays to the guardian of the infant children of his intestate sums of money in excess of the amounts to which they are entitled, under a mistake of law arising out of a misapprehension of the facts, he cannot maintain a suit against such guardian to compel him to refund the amounts so paid him in excess. Shriver v. Garrison, 30 W.Va. 456, 4 S.E. 660.
So, also, where an administrator, with full knowledge of the facts, voluntarily pays money to a distributee of his intestate, but under a mistake of law, he cannot recover it unless the same be necessary for the payment of the debts of the intestate. Shriver v. Garrison, 30 W.Va. 456, 4 S.E. 660; Davis v. NewmanRob. 664, 40 Am. Dec. 764.
1. Compulsory Payments.
But where money is not paid voluntarily, but by compulsion, such money may be recovered back in an action for money had and received. W.Va. Transportation Co. v. Sweetzer, 25 W.Va. 434.
B. PAYMENTS UNDER MISTAKE OF FACTS.
Money paid under a mistake or ignorance of a material fact may be recovered back; and this right is not absolutely repelled by the circumstance that the payor might, by the exercise of greater diligence, have learned the material facts involved in the alleged mistake, where his ignorance of such facts was in good faith. Mayor of Richmond v. Judah, 5 Leigh 305; City Nat. Bank v. PeedVa. Dec. 623. Compare Simmons v. Looney, 41 W.Va. 738, 24 S.E. 677.
For example, where a party to a compromise, entered into in ignorance of important facts connected therewith, binds himself to pay, and does pay, more than he was originally bound to pay, he is entitled to recover back the amount he has overpaid, with interest thereon from the time of payment. Ross v. M'Lauchlan, 7 Gratt. 86.
Equity Jurisdiction.--And a court of equity has jurisdiction to decree the repayment of money paid by mistake, notwithstanding the plaintiff's remedy by assumpsit for money had and received. Wilkins v. Woodfin, 5 Munf. 183.
Diligence Required of Payor.--But it has been held, in West Virginia, that if one under legal duty to ascertain, and with means to ascertain, a fact, pays money in ignorance of it, he cannot recover back. Simmons v. Looney, 41 W.Va. 738, 24 S.E. 677.
In this case the court said: " By no means is it the rule that in every instance money paid in mistake or ignorance of fact may be recovered back. The fact not known must be material in the matter. And, even where the fact is material, that alone is not always enough. 'It must be such as the party could not by reasonable diligence get knowledge of when he was put upon inquiry; for if, by such reasonable diligence, he could have obtained knowledge of the fact, equity even will not relieve him, since that would be to encourage culpable negligence.' So the law is stated by Judge Haymond in Harner v. Price, 17 W.Va. 523."
C. PAYMENTS ON CONTRACTS THE CONSIDERATION OF WHICH HAS FAILED.
To entitle. a party to recover back money he has paid on a contract which has been wholly rescinded, or the consideration of which has wholly failed, he must not have been guilty of any fraud or illegal conduct in the transaction. Johnson v. Jennings', 10 Gratt. 1, 60 Am. Dec. 323. See Keys v. M'Fatridge, 6 Munf. 18; Sim's v. Lewis, 5 Munf. 29.
But the mere fact that an article proves to be worthless will not entitle the purchaser to recover back the price paid. Mason v. Chappell, 15 Gratt. 572.
D. PAYMENTS ON JUDGMENTS AFTERWARDS REVERSED.
Where money has been paid on a judgment or decree which is afterwards reversed, the money so paid may be recovered. Beard v. Beard, 25 W.Va. 486, 52 Am. Rep. 219; Flemings v. Riddick, 5 Gratt. 272, 50 Am. Dec. 119; Jones v. Bradshaw, 16 Gratt. 355; Effinger v. Kenney, 92 Va. 245, 23 S.E. 742.
For example, where money from the sale of property has, by order of the court, been paid, and the decree ordering its payment was void, the party whose property was sold to raise the money may recover the same from the party to whom it was illegally paid. Sturm v. Fleming, 31 W.Va. 701, 8 S.E. 263.
On the other hand, it has been held that where a judgment is collected and paid over to the attorneys who prosecuted the suit, and disposed of by them under the direction of their client, an action will not lie, after reversal of the judgment against the attorneys, to recover back the money paid by a defendant that did not appeal, because of the want of privity between him and them. Green v. Brengle, 84 Va. 913, 6 S.E. 603.
But where a defendant, with full knowledge of all the facts, voluntarily pays a part of the demand against him, and a decree is afterwards rendered against him for the residue of the demand, he cannot recover back the part so paid, because it was paid under his own mistake of law; voluntarily; with full knowledge of all the facts. Beard v. Beard, 25 W.Va. 486, 52 Am. Rep. 219.
Actual Receipt of Money by Plaintiff Necessary.--It has been held that money levied by the sheriff upon a judgment which is afterwards reversed cannot be recovered back by general indebitatus assumpsit for money had and received, without proof that the money was actually received by the plaintiff, or applied to his use. Isom v. JohnsMunf. 272; Eubank v. Ralls, 4 Leigh 308.
XI. APPLICATION OF PAYMENTS.
A. APPLICATION BY THE DEBTOR.
1. In General.
Where a debtor, who owes several debts, makes a payment insufficient to discharge the whole indebtedness, he has the undisputed right to make such application of it as he sees fit. And the direction by him as to its application may be given expressly or by implication. Chapman v. Com., 25 Gratt. 721; Pope v. Transparent Ice Co., 91 Va. 79, 20 S.E. 940; Hempfield R. Co. v. Thornburg, 1 W.Va. 261; Hanly v. Potts 52 W.Va. 263, 43 S.E. 218.
Moreover, the rule as to the application of payments by the debtor is the same, though the creditor assenting to such application of a payment is acting in a fiduciary character. Miller v. TrevilianRob. 1.
Rule Where Only One Debt Is Due.--But it is of the essence of this doctrine that there must be more than one debt to which the debtor has the voluntary opportunity or choice to direct his payments to be applied. Hence, there can be no election as to the application of payments, where there is but one debt due at the time that the payment is made. Donally v. Wilson, 5 Leigh 329; Munford v. McVeigh, 92 Va. 446, 23 S.E. 857.
Illustration of General Rule.--For example, where there are several bonds and notes evidencing the debt, he may say to which the payment is to be applied. Howard v. McCall, 21 Gratt. 205.
Principal or Interest.--And he has the right to say whether it shall be applied to the principal or to the interest of the debt due. Howard v. McCall, 21 Gratt. 205.
Thus, a debtor owing a debt consisting of principal and interest, and making a partial payment, has a right to direct its application to so much of the principal in exclusion of the interest, and the creditor, if he receives it, is bound to apply it accordingly. Pindall v. Bank of Marietta, 10 Leigh 481, approved and followed in Miller v. TrevilianRob. 1.
And, where the husband gave a receipt for $ 200 in part of a bequest to his wife, it was held that the payment should be applied to the principal, and not to the interest. Cary v. Ambler, 4 Call 605.
2. Time of Application When Made by Debtor.
A payment by a debtor, who owes several debts to a creditor, is to be applied to one or the other of the debts, as the debtor may direct, at or before the time of making such payment. Chapman v. Com., 25 Gratt. 721; Howard v. McCall, 21 Gratt. 205.
B. APPLICATION BY THE CREDITOR.
1. In General.
If the debtor makes no application, then the creditor may make the application according to his pleasure. Hempfield R. Co. v. Thornburg, 1 W.Va. 261; Poling v. Flanagan, 41 W.Va. 191, 23 S.E. 685; Pope v. Transparent Ice Co., 91 Va. 79, 20 S.E. 940; Lingle v. Cook, 32 Gratt. 262.
Thus, if a debtor, who owes money on several accounts, does not at the times of making payments or before, direct in which of those accounts they shall be credited, the creditor may enter the credit in either account that he pleases. Hill v. Gregory, Wythe 73.
May Be Made Expressly or Impliedly.--And such application by a creditor may be made either expressly or by implication. Thus, if he enters the debits and credits in a general account, as they occur, this will be considered, in the absence of any evidence to the contrary, as a general application of the credits to the debits, in the order of time in which the debits occur, thus paying first the debt that is first due. Chapman v. Commonwealth, 25 Gratt. 721.
2. Illegal Demands.
Usurious Debts.--But to the rule that the creditor may apply payments where the debtor does not, there is the well-recognized exception that the creditor has no right to apply the money paid to him to the satisfaction of what does not, nor ever did, constitute any legal demand against the party making the payment. Turner v. Turner, 80 Va. 379.
It would seem that, in accordance with this rule, a creditor cannot apply payments to usurious interest where the debtor has made no application. Turner v. Turner, 80 Va. 379.
It has been held, however, that where payments have been made on an usurious contract, which are merely credited on the bond, and not applied specially, the borrower is entitled to have such payments deducted from the principal sum loaned or forborne. Turner v. Turner, 80 Va. 379.
Thus, where payments have been made upon an usurious debt, and the debtor has failed to apply the payment specifically, the court should first eliminate the usury, if any, from the principal of the debt, and apply the payment to the sum actually loaned or forborne. Munford v. McVeigh, 92 Va. 446, 23 S.E. 857.
3. Debts Arising After the Payment.
Moreover, a payment made by a debtor to his creditor cannot be applied by the creditor to debts arising subsequently, without the assent of the debtor. Law v. Sutherland, 5 Gratt. 357.
For example, where a debtor owes his creditor a debt payable on demand, for which a third party is surety, and the debtor assigns the debts of others to the creditor, in part payment thereof, and after such assignment, but before the assigned debts are collected, the debtor contracts another debt to the same creditor for which there is no security, the creditor cannot, after collecting the assigned debts, apply the same to the payment of this last debt contracted after the assignment was made, and then recover the whole amount of the first debt from the surety therefor. Donally v. Wilson, 5 Leigh 329.
4. Time of Application When Made by Creditor.
And the creditor may make application either at the time of payment or afterwards, before the commencement of any controversy on the subject. Chapman v. Com., 25 Gratt. 721.
Reasonable Time.--Although, if the debtor neglects to make the application at the time of payment, the election is then cast upon the creditor, yet it is incumbent upon the latter, in such a case, to make a recent application, by entries in his books or papers and not to keep parties or sureties in suspense, changing their situation from time to time, as his interest governed by events might dictate. Hill v. Sutherland, 1 Wash. (VA) 128.
Application after Controversy Arisen.--But after a controversy has arisen between the parties, and a fortiori at the time of the trial, it is too late for a creditor to claim a right to make an appropriation of a credit for payment to any particular debt. Norris v. Beaty, 6 W.Va. 477.
5. Change of Application.
After the creditor has once made the application, he cannot change it to another without the consent of the parties concerned. Chapman v. Com., 25 Gratt. 721.
C. APPLICATION BY THE COURT.
1. In General.
Where neither the debtor nor the creditor has exercised the right to make an application of payments, it then becomes the duty of the court to make it. There is no settled rule, however, that the payments are to be applied either according to the presumed intention of the creditor or of the debtor, or that the payment shall be applied in the manner most beneficial to one or the other, but the rule is that the court will apply the payments according to the principles of justice and equity in the particular case. Smith v. Loyd, 11 Leigh 512, 37 Am. Dec. 621; Howard v. McCall, 21 Gratt. 205; Lingle v. Cook, 32 Gratt. 262; Coles v. Withers, 33 Gratt. 186; Pope v. Transparent Ice Co., 91 Va. 79, 20 S.E. 940; Norris v. Beaty, 6 W.Va. 477; Buster v. Holland, 27 W.Va. 510.
Presumption.--It has been held that, where neither party makes application of money paid, the law presumes that the debtor intended to make that application which was most to his advantage. Pope v. Transparent Ice Co., 91 Va. 79, 20 S.E. 940.
Agreement of Parties Controls.--But where it appears on evidence in the record, that payments have been applied in exact accordance with the agreement of the parties, the court will not disturb the application. Pitzer v. Logan, 85 Va. 374, 7 S.E. 385.
2. Rules Governing the Court in Making Application of Payments.
There are certain rules, however, by which the courts are influenced, when neither the debtor nor the creditor has exercised his right in making application of the payment in controversy.
a. Oldest Debt.
Statement of General Rule.--One of these rules is, that where there are several debts to which the payment may be applied, and neither the debtor nor the creditor makes the application, and there is no other controlling circumstance upon which the court can lay hold, then it will apply the payment to the debt oldest in point of time, and so on until all are paid. Smith v. Loyd, 11 Leigh 512, 37 Am. Dec. 621; Howard v. McCall, 21 Gratt. 205; Chapman v. Com., 25 Gratt. 721 (reaffirmed and approved in Crawn v. Com., 84 Va. 282, 4 S.E. 721, 10 Am. St. Rep. 839); Genin v. Ingersoll, 11 W.Va. 549; Rowan v. Chenoweth (W. Va.), 47 S.E. 80.
In cases of long standing accounts, where debits and credits are constantly occurring, and no balances are struck otherwise than for the mere purpose of making rests, the payments ought to be applied to extinguish the debts according to priority of time. Smith v. Loyd, 11 Leigh 512, 37 Am. Dec. 621.
Bonds Payable at Successive Periods.--For example, where a debtor by four bonds, payable at successive periods, makes payments to his creditor, which upon a settlement after the death of the debtor are ascertained to amount to more than is sufficient to discharge the first bond, it was held that the court would apply the amount remaining after discharging the first bond to the second bond, in relief of the party bound as surety for the amount of the second bond. Ross v. M'Lauchlan, 7 Gratt. 86.
Seven Notes Secured by One Mortgage.--So also, where seven notes were secured by one mortgage, given for the price of one sale of land, and payable successively each year, they must be regarded as one debt on which the interest was payable annually, and the payments made should first be applied to the payment of the interest due on the whole debt, and then to the discharge of the notes in their order. Genin v. Ingersoll, 11 W.Va. 549.
Receipts for Tax Tickets.--And where a county treasurer turned over tax tickets to his deputy for collection, and the latter made payments from time to time to the former without the former's knowing the source from which the money was obtained, the former may apply the payments to the oldest outstanding receipt for tax tickets. Bourne v. RepassVa. Dec. 694.
Arrearages of Agent.--Where an agent executed a bond January 13, 1875, for the faithful performance of his official duties in the future, and on January 30, 1875, vouchers are passed to his credit for moneys paid out by him before January 13, such credit must apply to the agent's arrearages anterior to the 13th of January. Vilwig v. Baltimore, etc., R. Co., 79 Va. 449.
Official Bonds with Different Sureties.--But if the debts be due by a collector or other receiver of public money, under bonds with different sets of sureties, then the law will so apply the payments, if possible, that the money collected under one bond shall be applied to the relief of the sureties in that bond respectively. And the creditor in such a case, if he be informed as to the source from which the money is derived with which a payment may have been made, cannot apply it otherwise, even with the consent or by the direction of the principal debtor. Chapman v. Commonwealth, 25 Gratt. 721. This case was followed in Grafton v. Reed, 34 W.Va. 172, 12 S.E. 767; Crawn v. Com., 84 Va. 282, 4 S.E. 721, 10 Am. St. Rep. 839.
b. Debt Least Secured.
Statement of General Rule.--Another of these rules is that, where there are two debts, the one secured and the other not, and payment has been made which neither the debtor nor the creditor has applied, and the court is called upon, in the exercise of its discretion, to make an application of the payment, and there is no other fact or circumstance upon which the court can lay hold to guide and direct its discretion, the payment must be appropriated to that debt which is least secured or most precarious. Smith v. Loyd, 11 Leigh 512, 37 Am. Dec. 621; Vance v. Monroe, 4 Gratt. 52 at 53; Coles v. Withers, 33 Gratt. 186; Pope v. Transparent Ice Co., 91 Va. 79, 20 S.E. 940; Poling v. Flanagan, 41 W.Va. 191, 23 S.E. 685; Hempfield R. Co. v. Thornburg, 1 W.Va. 261.
For example, the holder of different notes secured by a deed of trust may apply the entire proceeds of the sale under the deed to the payment of those last maturing, and will not be prevented thereby, either in law or equity, from obtaining judgment against a surety on the note first falling due, and which was the only note endorsed. Pope v. Transparent Ice Co., 91 Va. 79, 20 S.E. 940.
So, also, where there is a running account between the mortgagor and the mortgagee, payments made by the mortgagor generally, after the mortgagee's account is satisfied, will go in satisfaction of the mortgage debt. Thompson v. Davenport, 1 Wash. (VA) 125.
Debt Bearing Highest Interest.--And when payments have not been applied, the law appropriates them according to the equity of the case, and there is no reason why they should not be appropriated to the debt first due, undisputed, bearing the highest rate of interest, and unsecured. Magarity v. Shipman, 82 Va. 784, 1 S.E. 109.
c. Interest Preferred to Principal.
Still another rule is that, where there is no direction by the debtor, and the right of application is not exercised by the creditor, the court will always apply the payments first to the application of the interest, in preference to the principal. Howard v. McCall, 21 Gratt. 205; Genin v. Ingersoll, 11 W.Va. 549.
For example, the holder of five notes given for the purchase of land, all dated the same day, and payable as annual installments, bearing interest from that date, and it being stated in the notes, " said interest to be paid annually," receiving partial payments thereon, without any direction of the debtor as to application of such payments, may apply the same, first, to the payment of the interest on any of such notes as may be due at the time of payment, and then to the principal of such of the notes as may be due. Boggess v. Goff, 47 W.Va. 139, 34 S.E. 741.
d. Debts of Highest Dignity--Liens.
Where a creditor by two judgments and a bond obtains a personal decree against the executor of the debtor for the full amount, and the executor sells lands of his testator, and pays the proceeds to the creditor, it was held that the payments were to be applied as credits upon the judgment, because they were debts of the highest dignity, and were liens upon the lands. Ross v. McLauchlan, 7 Gratt. 86.
D. RIGHTS OF THIRD PARTIES.
In General. --The right of appropriation of payments is one strictly between the original parties, and no third person has any authority to insist upon any appropriation of such money in his own favor, where neither the debtor nor the creditor made or required it. Coles v. Withers, 33 Gratt. 186 at 187; Wells v. Hughes', 89 Va. 543, 16 S.E. 689.
In accordance with this rule, it has been held that even a surety of a debtor has no voice in the appropriation of payments made by the debtor. Pope v. Transparent Ice Co., 91 Va. 79, 20 S.E. 940.
XII. PLEADING.
A. NATURE OF PLEA OF PAYMENT.
The plea of payment is a plea in confession and avoidance. It confesses the original cause of action as charged in the declaration, and relies upon affirmative matter in avoidance. Colley v. Sheppard, 31 Gratt. 312.
A plea of payment, in an action on a bill or note, confesses the cause of action as set forth in the declaration. Hubbard v. Blow, 4 Call 224; Rand v. Hale, 3 W.Va. 495.
B. EVIDENCE OF PAYMENT UNDER GENERAL ISSUE.
1. Rule at Common Law.
The rule of the common law was that, under the plea of nil debet, payment or any other defense was admissible that tended to deny an existing debt. But this rule, so far as respects the defense of payment, has been modified by statute. Richmond City, etc., R. Co. v. Johnson, 90 Va. 775, 20 S.E. 148.
2. Rule by Statute.
The rule by statute is that, in a suit for a debt, the defendant cannot introduce evidence of payment unless such payment is so plainly and particularly described in his plea, or in an account filed therewith, as to give the plaintiff notice of its nature. Va. Code 1887, § 3298; West Va. Code, ch. 126, § 4; Richmond City, etc., R. Co. v. Johnson, 90 Va. 775, 20 S.E. 148; Arnold v. Cole, 42 W.Va. 663, 26 S.E. 312; Peery v. Peery, 26 Gratt. 320; Johnson v. Jennings', 10 Gratt. 1, 60 Am. Dec. 323.
Even under the statute, however, general payments may be proven under the general issue in debt or assumpsit, without filing an account of payments. The statute applies only where specific or partial payments are relied on. Shanklin v. Crisamore, 4 W.Va. 134; Simmons v. Trumbo, 9 W.Va. 358; Lawson v. Zinn, 48 W.Va. 312, 37 S.E. 612; Rice v. Annatt, 8 Gratt. 557.
In Shanklin v. Crisamore, 4 W.Va. 134, it was held that the common-law principle, that in an action of assumpsit, under the general issue, a general payment before suit brought may be proved without a bill of particulars, prevails in that state; that no specific or partial payments before suit brought can be proved unless its nature, and the several items thereof, is filed with the plea. If payment after suit brought is relied on, it must be pleaded, but if it is a general payment it may be proved without a bill of particulars. If specific or partial payments are relied on, they must be specified in the bill of particulars.
In Rice v. Annatt, 8 Gratt. 557 at 559, Judge Allen, delivering the opinion of the court, said: " Where the defendant relies upon a specific payment or set-off by way of discount against the debt, an account stating distinctly the nature of such payment or set-off, and the several items thereof, must be filed with the plea; though the defendant may rely on parol admissions of the plaintiff to prove such payments. But this does not apply to a case where no specific payment is relied on, as the defendant may be destitute of any evidence to prove the same and still be enabled to prove, by the admissions of the plaintiff, that but a portion of the debt sued for is due. Unless such proof be admissible under the general plea of payment, the defendant would be deprived of a defense which the justice of the case required."
C. CONCLUSION OF PLEA.
The rule laid down in most of the cases is that a plea of payment, whether in assumpsit, debt, or covenant, should conclude to the country. Henderson v. Southall, 4 Call 371; Douglass v. Central Land Co., 12 W.Va. 502; Kinsley v. Monongalia County, 31 W.Va. 464, 7 S.E. 445.
Contra.--But in Nadenbousch v. M'Rea, Gilm. 228, the court took the contrary position, without referring to the unanimous decision in Henderson v. Southall, 4 Call 371.
Proper Conclusion of Plea Determined. How.--The proper conclusion of the plea of payment must logically depend upon what allegation of nonpayment, if any, was necessary in the declaration. Thus, if a general allegation of nonpayment, covering not only nonpayment when the debt became due, but also nonpayment since the debt became due, must be alleged in the declaration, a general plea of payment which expressly denied this general allegation of nonpayment, must necessarily conclude to the country. But if no allegation of nonpayment need be made, or if the allegation of nonpayment in the declaration may properly be confined to the time when the debt became payable, then the general plea of nonpayment should conclude with a verification, alleging as it would a new fact not necessarily negatived in the declaration. Douglass v. Central Land Co., 12 W.Va. 502 at 510.
D. ALLEGATION OF NONPAYMENT WHERE THERE ARE SEVERAL JOINT PLAINTIFFS.
It is well settled that, in an action for the recovery of a debt, the plaintiff, in his declaration, must allege nonpayment of his debts, to every person who had a right to receive payment, either at the time it fell due or at any subsequent time.
For example, in debt on an assigned bond, the allegation must be that the debt has not been paid either to the obligee or to his assignee. Braxton v. Lipscomb. 2 Munf. 282. See Mitchell v. ThompsonPatton & H. 424.
So, also, in an action by a surviving executor for the debt due to the testator in his lifetime, the declaration must aver nonpayment to the testator or to the deceased executor or to the surviving executor. Buckner v. BlairMunf. 336.
Where two obligors executed a bond, and only one was sued, it was held that the declaration must negative the payment by either obligor. Hill v. HarveyMunf. 525.
And in an action for a debt brought by a surviving partner, the allegation must be nonpayment to the two partners during the life of the deceased partner as well as nonpayment to the surviving partner. Nicholson v. Dixon, 5 Munf. 198.
In an action on a bond to more than one obligee the declaration must aver nonpayment of the debt to all of the obligees Strange v. Floyd, 9 Gratt. 474.
E. REPLICATION TO PLEA OF PAYMENT.
If the plea of payment concludes to the country, the plaintiff may, without the formal addition of the similiter, proceed to trial as though the issue had been formally joined. But if the plea concludes with a verification, a replication is necessary, before the case can be tried by the jury. First Nat. Bank of Wellsburg v. Kimberlands, 16 W.Va. 555; Kinsley v. Monongalia County, 31 W.Va. 464, 7 S.E. 445.
But if a plea of payment concludes to the country, though improperly so, as introducing new matter, a replication is necessary, and the addition of a similiter will raise no issue. Nadenbousch v. M'Rea, Gilm. 228.
[*]For monographic note on Payment, see end of case.